Best Practices in Pipeline Velocity?

A client of mine is having challenges forecasting and managing the pipeline. They sell servers and storage (typically smaller deals 25K - 100K).

Was curious what others have traditionally seen in terms of deal cycle times (defined as length of time from qualified lead to deal close) and how they are varying in today’s environment. Would also be interested in understanding typical cycle times…

• From when customers respond with an interest until they are connected with the appropriate channel/sales rep


• From sales rep contact to a proposal


• From proposal to deal close
  

Also, would be great to get any best practices for segmenting, covering, and tracking these types of deals?

Thanks,

Andy Hasselwander

Are we in a Depression or a Recession... and what are the Implications for Marketing Strategy?

There are a lot of articles on the value of marketing in a recession. Most of these were written around three recessions: 1982; 1991; and 2001. These recessions ranged from severe (1982) to mild (1991 and 2001). The current "downturn" is definitely a "severe recession"--the question is, is it a depression? I'll set the following rules, somewhat arbitrarily, about separating a recession from a depression. A depression must satisfy 4 of the following 5 conditions:

• Negative GDP growth for at least eight consecutive quarters
• Unemployment > 10%
• Stock market down > 50% from peak
• Real Estate values down > 40% from peak
• Deflation in corp CPI for at least two consecutive quarters

So, using my definition above, which probably passes a sniff test and little else, are we in a depression? We'll have to use probabilities, because these data aren't complete yet.

Negative GDP growth for at least eight consecutive quarters. We're at three now. It'll definitely be five (no one sees growth in the 2nd quarter.) Bernanke says we "might" see growth this year... I'd put the chances at 33%. So let's call this 66%.

Unemployment > 10%. Most are calling 9% this year. I'd argue we could easily see 10% late this year or early next year. I'd put the chances at 50%.

Stock Market Down 50% from Peak. Dow peaked at 14,164 and hit 7,114 yesterday. Good enough for government work. Bingo.

Real Estate Value Down 40% from Peak. Home prices are down 27% since the 2006 peak. Most see 30% as inevitable. I'd put 40% at a 25% chance.

Deflation in Core CPI for at least 2 Quarters. Core CPI slowed to 0.8% in 4th quarter. It'll probably be slow in the current quarter too, but I doubt it'll go negative. So let's call this one 5%.

So I'd put our chances of being in Depression at about 10%. (.66 * .5 * .25). So, one in ten. Unsurprisingly, that's better than Joe Biden's 30% comment, into which probably no thought went. The hair spray probably just got into his brain for a few seconds and he was overwhelmed.

Why all this analysis? It's because if we're in a recession, there's a lot of past data to rely on, but if we're in a depression, we don't have much to go on. So, I'd argue we have to follow recession marketing rules. Here are some snippets gleaned from the press with the help of our friend Dr. Spekman at UVA / Darden about recession marketing rules of thumb / observations:

• An American Business Press / Meldrum and Fewsmith study showed that companies that increase / establish an aggressive market stance coming out of recessions (the 1970 one, in this case) do much better coming out of the slowdown.
• A similar study showed the same thing for the 1974-75 recession.
• A McGraw-Hill study found that 600 B2B companies that increased their spending in 1981-82 grew significantly more than competitors that did not.
• A Cahners and Strategic Planning Institute study of the 1981-82 recession showed that larger companies who spend more on marketing do better in downturns than their smaller competitors. Not surprisingly, this is already being borne out in 2008-09, with Ford and Sears taking share from sick competitors (Ford from GM and Chrysler; Sears from Circuit (bankrupt) and local appliance shops).
• AMA found a similar trend in 1990-1991, with larger / healthier companies spending more and taking share.
• BMW grabbed share after 9/11 in 2001 and credited its success to taking an aggressive market stance with advertising and event marketing. Good quote from BMW: "We change before the market forces us to change."
• After the 2001 recession, B2B Magazine found B2B ad spending recovering and focused on three areas: Supporting established brands, focusing on integrated marketing campaigns (multi-tactic, same creative and targeting) and measuring ROI.
• In 2005, Arvind Rangaswamy and Gary Lilien at Penn State did an analysis of the 2001 recession and found that well positioned companies benefit from increasing spend in downturns. A good analogy was "Athletes often choose times of stress to mount attacks; strong runners and bicycle racers may increase their pace on hills or under other challenging conditions."

The message is both (1) don't cut back on advertising, because that's silly. But it's also that larger, healthier companies with cash get a triple effect in recessions:

1. There is less ad spending out there so your ads / DM get more attention.
2. Ads are cheaper because media companies are struggling for business.
3. You force weaker competitors into an arms race they can't win, forcing them to choose between bankrupting themselves or losing share.

This sounds an awful lot like the arms race in the 1980s. Ronald Reagan's 600 ship navy, high-tech fighters and bombers, and stealthy submarines never fought the Soviets, but because we had more cash, we basically forced them to either (1) lose the arms race or (2) bankrupt themselves. So, if you're strong, now's the time to beat your competitors to a pulp. Not sure I have much insight for the weak in this post. I'll try to think on that problem though.

Looking Forward to the Snarky Ad Backlash

I have had it with snarky ads.



Snarky: Rudely sarcastic or disrespectful; snide (Dictionary.com)



I'd add this definition: The sarcastic, know-it-all, snotty sense of humor that has become the lingua franca of the late 00's among a certain class of too-cool young adults.



The front-line of the snarky cultural revolution seems to be advertising. It's driving me nuts, and I'm hoping I'm a leading indicator for the rest of the world. The sooner we're rid of the snarky ad revolution, the better. Here are some of my absolute most hated snarky ads. If, after watching these, you can't see this trend, then I must be crazy.



T-Mobile Butt Dialing. Can these two people hate each other any more? The absolute awfulness exhibited by these two idiots turns my stomach. I hope each of them butt-dials 911 and a SWAT team traces the call and accidentally blows them away. This makes me despise T-Mobile and Blackberry.

E-Trade Baby. Hey, it's not cute, it's creepy. However, beyond that, the baby is a snarky jerk. Would anyone want to hang out with this creep, as an adult or a baby? Once again, E-Trade is literally out of my consideration set on the basis of these obnoxious ads alone.


Bud Lite Drawing Guy. The UPS drawing guy isn't snarky, he's just a walking cliche. But the Bud Lite drawing guy is snarky and enjoys making meaningless, ironic comments. I don't like any of the "drawing" ads, but the skier one is particularly bad.

Old Spice Neil Patrick Harris. The snarkiness emanating from Doogie Houser in this one far exceeds any nasty body odor one might have. I guess this has just become the only way to talk to the 20-30 generation (at least that advertisers understand.) Troy McClure was funny--in 1994. It's not funny anymore.

I'd love to come up with more, but to do that I'd have to watch more TV. Any comments suggesting other examples of this awful ad genre will be posted. And yes, I'm grumpy.

Measuring the Value of Relationship Marketing

Relationship marketing, unlike direct marketing, is about cultivating a customer (in the case of B2B, this could mean many different audiences inside one company) over the long-term, and ultimately driving loyalty. Customers’ attitudes change in a positive direction; they become satisfied with the brand; they ultimately perceive the brand to be high-quality, caring, etc. and will stay a customer for life. At least, that’s the idea. The problem with relationship marketing is that you can’t try too hard. The dangers of spamming, coming across false or fake, engaging in only one-way communication, or being too pushy have sunk many well intentioned relationship marketers.

Measuring relationship marketing can be a good way to get a handle on how to do relationship marketing right. I’ve seen a lot of companies troll around for best practices and never truly understand what impact they’re making on customers until they start truly tracking spend, engagement and resultant attitudes.

There are three important components of measuring relationship marketing:

1. Develop an RM taxonomy and track spend. This is basically carving out your vehicles into meaningful categories. It is not tracking campaigns. In fact, a relationship marketing “campaign” is a bit of a misnomer. The goal of RM is to keep consistent engagement going, with no gaps longer than six months. So you want to divide your vehicles up into things that are really different in the mind of customers. I’d also recommend using a hierarchical approach. A simple example is shown below. Once the taxonomy is established, start tracking spend, by audience, at a granular time scale. Weekly is good, but monthly is probably fine too.



2. Track engagement. Engagement is different than spend. Spend will be really useful to track ROI, but engagement tracks two-way interactions. Use the same taxonomy you use for spend, but this should be the actual interactions with the customers. Engagement is an “in process indicator” for the success of relationship marketing. It is a good leading indicator for success, and can be tracked frequently, giving marketers frequent updates on their efforts. Important: Don’t just track outbound activity—track both inbound and outbound. People in relationships talk to each other, at least those whose relationships last. It’s also a good idea to track reach over a total audience.



3. Track core attitudes and the ultimate attitude. Core attitudes and perceptions need to be determined by market research. I talk about SEM and how to do this here. But once these attitudes are defined, these should be considered as the ultimate goal of RM. Advertising has an effect too, so these metrics will be shared, but people in good relationships feel good about their partners. It’s important to track both the “ultimate attitude”—something like net promoter—and predictor / component attitudes that marketers can message too. Once again, the goal is to provide guidance back to marketers on where they should be re-mixing their efforts.
   

With the three above metric families in place, relationship marketing can become much less of a mystery. Tactics can be chosen on the basis of empiricism vs. gut feel, and companies can truly improve their relationships with customers. After a time, you’ll realize that your taxonomy for parsing out vehicles can be improved. Core attitudes measured will also change with changing business objectives and customer landscape.

Mobile Codes and B2B

Over the past decade, I’ve been involved with many projects to “de-tangle” digital marketing for big companies. Big companies want to know what’s out there in the digital landscape, and how it all fits together. Most importantly, they want to know why the latest trend is important to them. Take Twitter, for example. Is it a real, honest-to-goodness life changer that will be used addictively by a whole generation of digital influentials? Or, will it be the Segway scooter of web 2.0, a tool in search of a solution, that enjoys a surge of activity followed by a slow decline into boredom and malaise? I won’t comment on Twitter (at least not for now), but I will mention a truly cool tool that could be very, very important for B2B marketers.

QR codes were invented in Japan in 1994 and are used a lot in Asia. They’re all over the place in India. The basic concept is simple—a mobile two dimensional barcode. Instead of putting barcodes on merchandise for use in payments, you can put them anywhere. Here’s what one looks like. This is the one for wikipedia's home page:



Microsoft’s biggest announcement at this weeks’ CES was their version of QR codes called Microsoft Tag. These are two-dimensional color codes that contain a lot of information and are very readable by mobile phones’ cameras. A key to adoption of these codes is ease. How close do you have to be to the code to take an accurate picture; how much light is necessary; how good does the camera have to be to pick out the contrasts in color. From what I’ve heard through some savvy friends, the new Microsoft technology is best-of-breed on all fronts. Here's what a Microsoft Tag looks like for B2B Marketing Confidential:





However, we’re back to the Segway question. Will this thing take off, and will it last? I think it will. For one thing, it’s taken off and lasted in the more mobile-phone-savvy countries already. For another, it’s got a lot of real, honest-to-goodness business applications. Microsoft points out several of these:

• Real Estate Listings: Snap a code of a for sale sign, take a virtual tour on your phone.
• Business Cards: Snap a code on a business card and download the person’s contact info.
• Dating: Print out a t-shirt with your code. If people are interested, they snap you and get your digits (my friend Jeremy came up with this, I agree, it’s a bit sick).
• Linking to Facebook / Twitter: Snap codes and people automatically see what you’re looking at and where.

There are lots of others that I’ve thought of for B2B marketers:

• Put codes on retail displays / end caps. Snap the code and you download a coupon and get loyalty points
• Put codes on all of your hardware components. Snap the code and you’re automatically routed to the best tech support person for that device, along with the device’s serial number and configuration.
• Put codes on drug posters. Snap the code and a doctor downloads all the clinical data and prescription guidance.
• Put codes all over at events. Snap the codes to create a customer event portfolio, complete with time visited. The sponsors also know who you are, who else you visited, etc.

There are probably 10,000 other applications. I came up with the above in three minutes; I think with some heads-down time you could come with many more meaningful B2B applications. So B2B marketers, start planning for mobile / QC codes in your planning. Some open questions:

• Is Microsoft going to out-innovate Google here for a change, or will Google release their much better version shortly and snap up all the share?
• What does this mean for GPS integration? Didn’t even go there but imagine that…
• Implications for privacy? Is there a way to streamline “opt-in”?

So, so cool. I don’t say stuff like this too often, but this is exciting.

Thoughts on and Definition of Inbound Marketing (Listening)

Marketing is a word that has lost its meaning, and marketing is a discipline that has lost its way. When I say “marketing” to most people on the street, the first words that are mentioned are overwhelmingly negative. Marketing is thought of as “advertising”, “spam”, “pushy offers”, or “tricks”.

Here's an ironic and unlikely hypothesis--marketing accountability has driven this trend. This is meant to be a controversial statement. Marketing accountability, otherwise known as “ROMI (return on marketing investment) measurement”, has forced the marketing function into a single role driven by a single metric—driving incremental, short-term revenue. Of course, this is an oversimplification. Many companies think “long-term” and do care about their long-term customer relationships. But, there has been, over the past fifteen years, an undeniable trend toward the short-term profit-driven marketing function.

• At AOL, in the late-1990s, marketers pushed an obsolete product to customers with such relentless efficiency that the company’s infamous CD-ROMs became the gag in its own television ads.
• Through the 1990s and 2000s, credit card companies pushed a product to customers that they knew will destroy them in the long-run, unapologetically. Letter after letter came for pre-approved cards, even when customers are teetering on the brink of bankruptcy.
• Pharmaceutical companies have given in to a seemingly never-ending arms race of more direct-to-consumer advertising and more physician detailing, leading patients to develop a deep distrust of companies that keep them healthy.

This sounds borderline socialist, but I assure you, I'll get around to making money. The question, however, is whether marketing must be considered a “zero-sum game” where a company treats its customers as wells to be tapped as deeply as possible, as quickly as possible. In future posts on inbound, I will make the argument that this objective is deeply flawed and must be changed by companies across the landscape. The goal of marketing must became customer advocacy.

Inbound vs. Outbound Marketing
A colleague of mine loves to talk about “inbound marketing”. The problem is, most marketers at big companies these days usually respond with a blank stare. For marketers at Fortune 500 companies, 90% of jobs are “outbound”—getting customers to buy stuff or feel a certain way. The inbound function is usually encapsulated in market research. But, even this has been gutted. Market research departments spend a lot of time figuring out how to sell better to customers. Their business customers are compensated on “selling more stuff” so they need “actionable research.” This is all great, but something has been lost in the shuffle.
Here’s a first attempt at a definition for inbound marketing:

Inbound Marketing: The voice of the customer manifested inside the company.

• A good start, but not very descriptive. The voice of the customer, manifested inside the company, could be one person aggregating a bunch of customer feedback speaking to no one in particular.

Inbound Marketing: The voice of the customer manifested inside the company, that acts as an empowered advocate for customer needs across all company functions.

• This is much better, because now the voice of the customer is actually changing the way the business operates. But something is still missing, which is how this customer advocacy is gathered and communicated.

Inbound Marketing: The voice of the customer manifested inside the company, that acts as an empowered advocate for customer needs across all company functions, gathered through the ever-increasing digital interactions and channels available.

• This definition brings together the what, the why and the how, and seems pretty comprehensive and precise. A lot more work needs to be done to flesh this definition out, which will be the subject of future posts on this topic.

Corporate vs. Product Advertising in Tech

When talking about allocating a marketing budget, one of the most important questions is the split between corporate and brand spending. In other words, is it better to lift the brand as a whole, or hawk specific products? Peeling the onion another layer, when doing corporate advertising, should a company focus on "hard" attributes--also called "corporate ability" or CA advertising--or on softer "corporate social responsibility" or CSR?

I hadn't really thought about this much in the context of tech until today, when I started running through various ad campaigns and realizing just how bereft most are of CSR advertising in tech. Literally the only company I can come up with that does CSR is Microsoft. Am I missing someone? I guess you could argue that Google does it, but that's not really advertising as much as big PR stunts.

I think the reason for this is simple: most tech companies don't really do anything "bad", or at least they're not accused of it. Have any tech companies recently changed the climate? Cut down a rainforest? Enslaved children to mine silicon? If they have, it doesn't make the news because they're so far down the value chain from these activities. And of course, this is why Microsoft has to run ad campaigns on its CSR.




Keep in mind, the above table contains estimates I put together in five minutes. They are 100% wrong.

This leads me to wonder, does CSR even work to a technology environment? Does it almost backfire? I mean, I watch these Exxon Mobil / BP greenwashing ads and I literally want to vomit. Maybe Microsoft would be better off ignoring CSR because the audience is so savvy. I think there's probably a big inverse correlation between CSR effective and audience sophistication.

What about product vs. corporate spending? Apple doesn't do any corporate spending. They market their products only, and yet have an incredibly strong brand. This is because their products are (1) linked together through design, creating an "idea" of an Apple brand just by handling, viewing and using their products, and (2) are advertised in very similar ways. So, they're getting the double-whammy of getting product SKUs out the door with product advertising and strengthening their brand.

Could any company do this? Could Microsoft do this? Are they better off just abandoning CSR and CA altogether and advertising products through a unified portfolio approach? I think it's worth a shot.