Situation: In traditional marketing, many marketers are more focused on activity than results. In the digital environment, top marketing organizations must become better at listening to their customers, watching them, and tracking their purchase decision behavior. What does this mean for the marketer?
The digital world has changed marketing.
The traditional marketing campaign was led by creative. Through the early 90’s marketing was directed by media players and large publishers. Once a campaign was developed the pitch was “buy lots of impressions and customers will come.”
During the dot.com boom and into the 2000s there was a shift to ROI – spend $x with Google, get y clicks that will yield z buying customers. This was very transactional and could be expressed relatively simply.
Behavior is now changing, and the model is becoming more collaborative:
A potential customer expresses interest and a need.
A supplier offers a solution.
The potential customer verifies and validates the offer through online communities, Twitter, Facebook or other resources, and eventually may make a buying decision based on what they find along the way.
The buying decision today is very different from the traditional offer-driven process.
All of this can happen in minutes.
For the marketer, this means moving far beyond the simple advertisement.
The marketer needs a presence on Facebook, Twitter, and many more sites, in addition to their website, to woo potential customers.
For marketers this is expensive and requires a different level of resource commitment. It is, therefore, important for them to attribute the appropriate value to each online presence that the customer engages as they evaluate their buying choices.
Only through developing complex metrics, which change real time as customer behavior changes, can the marketer track and understand customer behavior and adapt the offer to the needs of the customer.
As individual consumers increasingly engage employ new forms of digital technology the challenge to marketers only increases.
The digital marketer who will thrive will develop a sophisticated, metric-driven understanding of the multiple touchpoints and social interaction of a given transaction.
Situation: A company has established market leadership in an emerging market. When you innovate in a niche, focusing on early adopters, eventually you run out of early adopters. The challenge is broadening the appeal to a larger mainstream customer base. How do you cross the chasm from early adopter to mainstream?
The challenge is both messaging and cultural.
In messaging, you must support the new norm. This means convincing the customer that if they are not with you, they’re being left behind. You need to demonstrate that your established, proven solution is the new norm.
The cultural challenge is maintaining a culture of innovation and attracting the right talent while becoming a mainstream company. An attraction to new talent is that you are cutting edge – changing the world. This aura is critical to a start-up. You must maintain this innovative culture as you become the market leader.
How do you overcome these challenges?
Finding people who’ve been there and done that increases the odds in your favor. We hired a marketer who had helped take SuccessFactors through the same transition.
Hire for excitement, energy and enthusiasm. Quickly remove new hires that turn out not to fit.
Maintain a freedom to fail atmosphere. You need people who will take risks, but who will also step back and quickly change direction when the risk isn’t productive.
Decision-making speed is a great advantage of small companies.
Create an organization that celebrates innovation.
We have “Hack Days” when employees are free to work on projects of their choice. A new product that brings business audience targeting to social media came from a Hack Day project.
Keep everyone informed. We have company-wide daily stand-ups. Individual updates are quick – 30-45 seconds. This fosters open communication and awareness, and surfaces issues before they become problems.
Weekly, we send out full disclosure emails including key financial metrics, successes and failures.
Monthly we have executive-only stand-ups. These are longer, but updates are quick and focus on progress to goals, as well as next month’s goals.
Situation: A company was recently acquired. The acquirer wants to merge benefit structures between the two entities. While company contributions are similar, distribution of benefits between retirement plans, health plans, and other benefits between the entities varies considerably. How do you approach the staff about the changes in a positive manner?
Advice from the CEOs:
Ideally, you want to survey employees on what is and is not important to them about their benefits before the package is finalized. This will help you negotiate on your employees’ behalf.
Ask the acquirer whether a “cafeteria” benefit program is feasible. This would allow your employees to make choices among benefit options, and to fund these choices either at a company-paid base level or to supplement their choices through payroll deductions.
Inform the acquiring company of your state’s regulatory policies on state-specific benefits.
Once the new benefit package is finalized, ask for assistance communicating the new package to your staff. Create a simple and concise grid for the program:
Amount of company contribution,
Old program and benefits,
New program and benefits,
Use the grid to demonstrate that while the allocation may be different, the company contribution remains the same and the total value of benefits offered is unchanged.
If you know that a highly valued benefit is being reduced, consider a short-term subsidy to ease the shift.
Be clear about decisions that your employees must make in the new program.
If you have access to industry or regional comparisons for like-sized companies, you may wish to share these.
Situation: A rapidly growing company is expanding both in its primary market and into new verticals. A number of companies are interested in strategic partnerships. How do you select the right partner in the right space?
At the end of the day it’s about a connection with the partner which extends across both organizations.
Look for cultural synergy with the other company. Do your and their managers and employees “click” or are they oil and water? This is a gut assessment.
Is the quality of people in both companies complimentary? Is there similar drive for quality and attention to detail?
Will technical integration be smooth? Are systems complimentary? At a minimum are there the right skills on both sides so that this won’t hinder the project.
Are sales and marketing approaches compatible? Will teams be able to work together? What about other departments?
You need to have strategic commitment across both organizations.
Partnerships don’t work if there is only alignment at the top. Executives can’t shove a new opportunity down the throats of those who report to them. There must be excitement about the opportunity across both sides of the partnership.
There must be complimentary competencies, capabilities and commitment.
Is there a clear understanding of the goals and objectives succeed?
Reward structures and incentives must be aligned down through the two parties. Conflicts will lead to struggles.
There must be a strategic alignment between the two organizations so that both see the partnership as complementing their broader strategic plans.
There must be a fundamental strategic win-win. The venture must be seen by each party as core to their business, plans and results. If this isn’t present, the collaboration can be drowned when a better opportunity that comes along.
Look for some gauge that the partnership is as important to the other party as it is to you. What other partners do they have? Is the size of the opportunity enough so that you are assured of their ongoing attention?
Situation: A mid-sized company has learned that a much larger company is entering their geography and market niche. This company is known to enter new markets with a low pricing strategy to “buy” market share. How do you respond to significant new competition?
Advice from the CEOs:
Accept the fact that you will lose some business; particularly from customers who driven more by price than quality and service. The flip side is that these customers are likely not your best customers.
Research the reputation and business practices of the new entrant in their traditional territory. What is their reputation? What are their weaknesses? Do your homework by networking with their current competitors and customers.
Take a lesson from those who have survived a move by Walmart into their territory:
Boutiques survive Walmart – especially those that focus on personal service. Upgrade your customer base based on personal service.
Use your knowledge of the marketplace and your long term relationships to your advantage – including your reputation with existing customers when going after new customers.
You may remain more profitable than the larger company, on a per transaction basis, based on your knowledge of the territory or business niche.
Don’t assume that all large companies are Walmarts. Walmart has a unique set of talents and a tightly controlled process. This may not translate to other markets – especially those involving personalized service.
If you are a family business, consider promoting your “old world skill” and established reputation and expertise.
Key Words: Competition, Geography, Market Niche, Walmart, Price, Personal Service, Reputation, Contacts, Boutique, Profitability, Family Business
Situation: The dynamics of an early-stage business require balance between focus and opportunity. The challenge is in the balancing act. When do you focus on the plan, and when do you adjust?
Advice from Phil Bookman:
Never allow your friends to become statistics. We call our customers our friends. Our most loyal and vocal friends were our early adopters and got us where we are today. They remain important participants in the conversation and are always in our focus.
Along the same lines, when using social media to communicate to your audience, remember that this is a face-to-face conversation. This is a key point of focus.
Remove as much friction from online interactions as you can. Make it as easy as possible for people visiting your web site to buy. This requires both live interactions with users and attention to detail. If a question keeps coming up, answer it; put the answer right up front on your web site where it cannot be missed.
We’ve made hundreds of tweaks, each tiny. Each has removed a point of friction. As the company grows it is easy to lose sight of these details. Never lose sight of details.
Much of what we face in business is transitory. It is important to stay nimble so that you don’t get stuck fighting the last skirmish. For example, in 2009, we found that a subscription service was difficult for institutional users like purchasing departments in schools to understand. It isn’t now.
You must be careful not to chase bright shiny objects – opportunities that take you outside your principal market competence. Would you try to modify a hammer to put in screws?
Our principal product TapToTalk is a communication device for kids with verbal challenges. Some have suggested that it could also be a teaching device. Possibly in the future there will be room in our plan for a teaching device, but we will address this as its own market and application when we are large enough to diversify.
Situation: A new start-up has developed a SaaS application focused on helping sales people and small businesses leverage LinkedIn and other social media for prospecting. The Company’s customers build Private Shared Networks which can be used by sales people to accelerate the Pipeline. Their concern is that historically sales people have not adopted sales productivity and prospecting solutions. What have you done to attract and accelerate trial and acceptance when addressing a resistant audience?
Advice from Pradeep Bakshi:
Keep it simple and make the application very intuitive and easy to use.
Do not try to change behavior; make it easier for sales people to do things they already like to do.
Create an instant “I get it” experience.
Bias the interface toward instant gratification. This is critical to generating viral marketing.
Make it easy to tell others what you’ve found – similar to a “Like” button to share a YouTube video.
There are 15 million sales people in the US.
You won’t get everyone, but you want to get the “believers” and avoid the “haters”.
You must quickly find segments of the market who are likely early adopters. For us, the early adopters are in the SMB segment (startups, 25-200 emp.) and the service provider industry.
Select channels which are open to your messaging and solution.
LinkedIn Groups are becoming an excellent way to network with like-minded people who can spread the word.
Look to past contacts to whom you have provided value and who value you. They are more likely to get your value proposition and introduce you to others.
Allow customers to collaborate with referral sources: potential business partners and collaborators who aim at the same audience that you will serve; and lead sharing partners. These individuals can help you find customers who will value your solution.
Situation: The Company is shifting focus from project-based to relationship-based client interactions –from a short to a long-term perspective. This is a challenge. How do you adapt employee behavior to a new strategic focus?
Assume the best intentions.
Everyone wants to do a good job. The challenge is making sure everyone knows what constitutes a good job.
Be clear on objectives, and why they are important. Be clear on the new roles.
This is most difficult when the shift is counter to a well-established company culture.
You have to have the right people.
Avoid smart people with no role, or a role for which they are ill-suited.
The organization IS the people. There must be absolute commitment to assigning the right talent on any job, and the right people to the right team.
Players must fit in terms of skill set and culture. The company is who, not what!
Focus efforts and objectives on the long-term vs. the short-term.
Paint the end state – the vision. Add tangible steps to guide people to the right path.
Don’t micromanage. Set direction and initial moves, but let staff blaze the path.
Provide feedback and recognition.
Negative feedback is always difficult, but best when delivered directly and quickly.
Recognize success and contributions both 1-on-1 and in all-hands meetings.
We hired an experienced manager with a strong track record. Initially this created discomfort; however discomfort was quickly resolved as this person produced positive impact.
We cited the wins in all-hands meetings to support the shift.
Make people feel that their opinions are heard, and their solutions.
Be clear on objectives and rationale. Assure that your perspective as leader is grounded in a credible reality that you can communicate to the team.
Conduct workshops which focus on the practical steps that will produce the desired result.
Listen to feedback from team members, and include what you hear in the agenda for future discussions. Involve the team in developing the solution. Delegate and recognize!
Situation: The Company is interested in acquiring either the intellectual property (IP) of another company or the company itself. The target is a minor division of a larger parent company. The CEO contacted the parent and confirmed their interest in a deal. What are the key factors to negotiating an IP acquisition?
Advice from the CEOs:
You need to assure your rights to both current IP and future enhancements. This applies whether you or the parent is the final holder of the IP.
Look for clear language as to what constitutes base IP, derivative IP and extensions of the IP. You want to preserve your interest in future derivatives and extensions that you create.
There is a material difference between your position and the parent’s.
If the parent retains the IP, they also gain certain rights to IP extensions based on the current IP. If you own the IP, their potential rights to future IP are lost.
If the parent feels that the IP has strategic value – whether or not they are currently taking advantage of it – this will be one of the more difficult aspects to the negotiation.
What options are there besides acquiring the company?
The parent can grant a fully paid license to the technology, with access to the people and assets, waiving residual rights to future IP extensions, and no restrictions on transfer.
Another option could be a one-time royalty fee that is a perpetual license.
Within your due diligence, try to get a sense of the parent’s motivations and concerns for entertaining your interest in the acquisition. This will help you to frame a deal that works for both parties.
If the parent has been an active licensor or seller of IP, look for lawyers who know the company. Try to secure one of these as counsel for your negotiation.
From a liability standpoint, it is better to buy or license the IP and technology than the company. Liability travels with the company. Part of your negotiation will be who inherits any carry-over liability.