Where is the SKAM in Marketing and Sales

Where is the SKAM in Marketing and Sales

 

In many major companies, there has been a number of new positions created in the last decade to try and accommodate the changes in the strategic and competitive environment.

Among them has been the ‘Chief Revenue Officer’ (CRO)

In some cases, this reflects the need for increased collaboration and sometimes convergence of marketing and sales. In others, it is just the fashion, the latest management fad.

This seems to be particularly the case in businesses where another of those-acronym driven fads has evolved, ABM, (Account Based Marketing)

The barriers to the integration of Marketing and Sales are high, and deeply set into the functional status quo of most organisations, and highly resistant to change. However, the emergence of digital tools has accelerated the trend, and the recent Covid challenges have been a catalyst for further and quicker evolution than would otherwise have been the case.

For years I have been advocating ‘Alignment’ of marketing and sales to the needs of specific customers, and the ways to achieve that outcome.

Removing the Marketing and Sales labels has proved to be useful to the integration. The emerging combined function recognises that the responsibility of each is simply Revenue Generation, or ‘RevGen’

The first substantial consulting assignment I had 25 years ago introduced my client, a domestically owned multinational supplier of ingredients to the food industry, to Strategic Key Account Management. (SKAM)

We went through a process of identifying the specific needs of key customers, and tailored our marketing and sales effort, to the expressed and often jointly uncovered needs of customers, with whom we engaged in the process.

Those workshops and subsequent implementation efforts are as relevant now as they were 25 years ago, probably more so. It is now just a component of Revenue Generation, a descriptor of the best way to make profits by delivering value to customers.

The core assumption of SKAM is that that only by doing one or more of the following, could we be successful.

      • Assisting our customers to increase their sales,
      • Actively reducing their costs,
      • Increasing their productivity.

We set ourselves the task of identifying how we could achieve at least one of those three things, preferably two, and focussed our efforts on delivering those outcomes.

Predictably, it was a successful initiative, customers loved the collaboration. Inventory levels reduced, as customer service levels and responsiveness increased, generating increased trading profits.

Perhaps it was too successful, as the business was then sold by its parent company, at a very high multiple to a multinational competitor.

Should housebrands be illegal?

Should housebrands be illegal?

 

Retailer ‘brands’ have taken a huge toll on the ability of proprietary marketers to profitably market their brands and build markets in FMCG.

A proprietary marketer may spend several years and make a huge investment in product R&D, market research, advertising and listing fees in various forms in order to get a product on shelf. They carry all the risk in this exercise.

Retailers carry no risk beyond the inventory risk when they choose to stock a new product. That inventory risk would normally be mitigated by the supplier, at least partially in the deal to secure initial shelf space.

Retailers have at their disposal detailed information about the performance of every product on their shelves. Volumes, margins, behavioural data such as what consumers have in the same basket, what products have been removed by consumers from their basket, and price sensitivity and elasticity.

Based on this information, they can reverse engineer formulations, and have a contract manufacturer supply a direct copy very quickly, with very little risk.

An innovative proprietary product will normally be supported by advertising, which will also often benefit the housebrand product.

If a small manufacturer copied a product and launched it into the market, perhaps via alternative channels, the proprietary marketer may have the option of legal action for passing off. It is illegal to mislead consumers, yet this is happening every day on supermarket shelves, in the name of choice.

It seems a different set of rules applies to the major retailers who have all the power in the relationships.

Over the time I have been watching FMCG markets, the level of investment in product R&D, and brand building has declined substantially. Many brands that had created and built markets have virtually disappeared. The investments previously made in product and brand growth  have been directed towards retailer profits, and to be fair, consumers have benefitted by lower prices in some product categories. The downside is the lack of innovation and category building which delivers benefits over the long term, that has occurred as a result.

I do not have an easy answer to the dilemma faced by marketers, and it would be suicide for any manufacturer to sue Coles or Woollies for passing off a housebrand, but in an idle moment, it may be a question worth asking?

 

 

 

 

Ultimate Test: How much do consumers value their privacy?

Ultimate Test: How much do consumers value their privacy?

 

A few weeks ago, Apple released an upgrade of their operating system,  iOS 15. This release includes a (potentially) monumental change in the digital world of communication. Its default is to turn off the ability of a third party to track your online activity. If you are relaxed about being tracked, you can opt in and continue to be tracked.

This will be an opening shot in a war between very powerful vested interests.

For years there has been genuine and rapidly increasing concerns about the volume and use of the data collected by apps, and the privacy invasion and leverage that data can generate. As the concerns grew, so did the mumbling from the advertising industry about the value of targeted ads, and soothing bullshit from Facebook.

Apple has gone in hard by making opt-out of tracking the default of the new release. I suspect Apple sees it as a point of competitive leverage that they can exploit. Their advertising is making this differentiation not just clear, but an explicit reason to move to Apple.

I think it is an absolute game-changer.

There are several dimensions to the vested interest battles I expect:

      • Facebook Vs Apple. The business model that has made Mark Zuckerberg one of the world’s richest men, and arguably one of the most powerful, is based on the ability of Facebook to track activity and market their ad services based on that ability to target. Removing that ability will compromise that model, and Zuckerberg has not demonstrated any sort of tolerance to any interference to his ability to accumulate more and more billions.
      • Apple Vs Android. For many consumers, the ability to turn off tracking will deliver a valuable competitive advantage to Apple over Android. This presents Google, the owner of the Android system with a dilemma. Do they follow and compromise their own ad business, or allow Apple to retain such an advantage in mobile computing? Indeed, is the attraction of an automatic ‘No cookie’ environment as strong as I anticipate?
      • Regulators Vs Tech. For the past 5 years or so, regulators have been suggesting that some sort of regulatory framework was necessary to protect the privacy of consumers from the rampages of ad targeting. At the same time, regulators have demonstrated a rancid inability to even understand the basics of the challenges that such regulation will face in implementation, enforcement and unintended consequences.
      • Advertisers Vs Ad fraudsters. The emergence of ad fraud because of so called ‘programmatic’ digital advertising, has offered fraudsters the opportunity to milk billions out of the system unhindered. Advertisers controlling large budgets have been largely unwilling, and perhaps unable to stem these losses, so just paper them over with cliches and bullshit. In a 2017 presentation to the IAB, Marc Pritchard the CMO of P&G publicly took a stand against the ‘crap’ as he called it spawned by digital channels. Crap ads, and the fraud perpetrated by those who assembled digital advertising inventory. The P&G initiative to stop advertising in the absence of hard data about the reach to humans rather than bots, and the location of ads placed, was followed by several other major advertisers. Sadly, the words were more hollow than substantial, as the fraud continues. The fraudsters will not go quietly, and based on performance to date, advertisers are too timid, or seduced by the seeming ease of reach, to do much. Dr Augustine Fou in his research highlights the tactics, breadth and depth of the fraud being accepted by advertisers.
      • Consumers Vs advertisers. Marketers have found their ability to communicate compromised by the never-ending demand for new and different content to throw at the digital channels. They no longer have the time, and increasingly the inclination, to do the foundation work that leads to creativity and advertising cut-through.

 

Apple’s advertising revenue is very modest, by comparison to Google and Facebook. It has little to lose from this change. Facebook and Google by contrast have huge ad revenues. In Facebooks case, advertising is 98% of its total revenue, for Google the number is about 80%.

This change by Apple, if it creates a surge of iOS market share from its current 15% will compromise these revenues, and erode the business model of both Facebook and Google.

It certainly creates a strategic dilemma for the Google owned Android software, powering around 85% of mobile devices currently.  Do they follow Apple, or take another route?

For marketers who understand ‘marketing’ as distinct from the digital ‘new shiny thing’ syndrome, who treat ‘marketing’ as an integral part of their investment in future prosperity, it will be a boon. They will be much better placed to leverage real marketing skills that the large businesses have lost.

To the question posed in the headline: the degree to which consumers demonstrate they value privacy, will be measured by the rate at which they will switch to Apple to protect it. Alternatively, if Google decides to follow with Android, game over.

 

Note, an hour after publishing: I omitted to mention above that Google pays Apple something around 12 billion a year to remain the default search engine on iOS and Safari. This is so Google can collect information on your searches on Apple. For Apple, it is money for jam. If I am right, and there is a significant move towards the auto opt out in the new iOS upgrade, this 12 billion will erode over time, so Apple does have a bit more skin in the game than noted above.

Header cartoon credit: Dilbert explains tracking codes.

Simple and true are not the same

Simple and true are not the same

Part of the job of marketing is to make the complex simple and understandable, while retaining the essential core of the proposition.

As Einstein said, ‘Everything should be made as simple as possible, no simpler’.

This is the same logic used by ‘Occam’s Razor’, which summarised tells us that the best theory is the simplest one that still explains all the facts. Arthur Doyle’s character Sherlock Holmes was referring to both these when he said:  “When you have eliminated the impossible, whatever remains, however improbable, must be the truth’

However, there is a point beyond which the process of simplification becomes corrupted by the selective choice of facts and variables, of leaving out those that might deliver a conclusion different to the one that is preordained, and preferred

People are not stupid, but sometimes they are lazy, do not have the technical knowledge to fully understand, or their cognitive capacity is consumed just by living, and a host of other mental barricades.

However, that is no excuse to oversimplify the complex when the complex is important, or to be sufficiently selective with the facts to be grossly misleading.

Successful long-term marketing depends on the truth, expediency may be attractive in the short term, but is poison over a longer period.

Our current PM, labelled ‘Scotty from marketing’ by that most reverential publication, the ‘Betoota Advocate’ has gone too far.

He has been conducting a masterclass in oversimplification on one hand, and obscurification on the other, for political purposes. It has been going on for some time now, and it is time to stop.

To be fair, ‘Scotty’ is not alone in the political sphere, (and I use the word political in its broadest sense), but he does set a very high bar.

We, the electorate, are not stupid. We may be disengaged, cynical, selfish, and mostly put our immediate family and community above the greater good, but treating us as stupid is a bridge too far.

It is easy to go too far in simplifying a message, which then is read as patronising, self-interested, and with little relationship with the facts. This erodes credibility, and therefore the ability to get anything done by any means other than leveraging institutional power.

Header cartoon courtesy Tom Gauld in New Scientist magazine.

 

 

 

What drives brand strength in B2B?

What drives brand strength in B2B?

Brand is underplayed as a source of economic power in B2B. We seem to default to the tactical marketing tools used in B2C too easily.

Over the years I have concluded that there are only two core elements in B2B brand strength:

Trust.

Service.

They are mutually reinforcing, or indeed, depreciating, and are both multi-faceted, with variations that are as varied as the businesses that deal with each other.

The dictionary definition of Trust is something like:” A statement that is taken as truth in the absence of anything more than the word of the party giving it”.

So, trust is based on doing what we say we will do.

The definition of service would be something like: “An act of selflessly helping someone else”.

Again, as varied as the contexts in which it is used.

Clearly however, service drives trust, and trust is the fodder of service, and both go both ways.

You still must do all the stuff to get customers inside the tent, once there, they have at least once, accepted that you will do as you say. Do that, and the reasons they might move on for the next time are way more limited than if you fail on some dimension of the service that they believe is important.

Therein lies the dilemma. Every business sees ‘service and trust’ in their own context, within their own definitions of ‘Value’.

It is your task, as the seller to unravel that often unclear ball of expectations.

When you think you would benefit if your customers trusted you more, give me a call, an audit of your trust profile with customers may be enlightening.

 

Header cartoon credit: Scott Adams’ alter ego Dilbert does it again.

 

 

 

Social media marketing brain dump.

Social media marketing brain dump.

 

‘Social Media Marketing’ has become a substitute in many people’s minds for ‘Marketing’.

It is sensible to have such a strategy, just as it is sensible to have an email marketing strategy, and a telephone marketing strategy, in the appropriate circumstances. However, to treat it as anything more than another tool in the marketer’s toolbox is to completely misunderstand the whole process of marketing.

Following is a reproduction of a note I sent after a long conversation with a potential client who runs a large function venue in a regional area. It all happened pre-covid, but it seems the sentiments were still valid, based on a similar conversation last week.

Thanks for taking the time to talk to me yesterday, you clearly have some challenging issues to be dealt with.

I suspect that the social media “brain-dump” over the phone I delivered yesterday may have been a little unclear, so I thought I would follow up with a few points that have consistently come through over the course of the work I have done in this space.

  • To achieve anything at a cost that delivers leverage on your investment, you need a plan.
  • A core part of that plan is establishing objectives for your activity, and in social media marketing the real objective should be to generate “leads”. Not sales, leads. Social media will not be effective directly selling a product such as yours. It can, however, be a very potent tool to identify and feed leads into a sales process that can be at least partially automated.
  • There will be investment required in the process, particularly the development of the ‘content’ and messages you send, irrespective of the level of automation.
  • The starting point to developing the messages as it should always be, is the definition of the value of the product you are selling to the receiver of the communication. This is the point where your mix will be challenging, as the wedding reception product you have will be different to the corporate function product, although held in the same room, just re-arranged, and with differing support services. Similarly, the person to whom you are marketing the wedding product will be different to the one likely to be the buyer of the corporate function. Defining all this is critically important, much more now in the time of social media because of its ability to deliver a specifically targeted series of messages to a well-defined individual potential buyer.
  • You can develop metrics that will give you indications of the effectiveness and impact of your activity. However, the problem of attribution is a significant one. Which piece of content, or ‘marketing collateral’ was the driver of the move towards the objective of a sale? Any digital agency that tells you they have that absolutely nailed is dreaming. However, you do now have the opportunity to test all parts of the process in a multitude of ways and optimise over time.
  • The nurturing requires a “toolbox” of content, aimed at the individuals inhabiting specific target markets that you are setting out to reach. Some of this content can be challenging to create, but once done, can be used, and re-used, improved, and used again for little cost, providing your investment with considerable leverage. In your case, you do not have to do everything at once, pick a market (like weddings) and create a few pieces of content, such as the “Guide to the big day” I suggested yesterday, together with a few supporting pieces such as photos of decoration options, flower seasonality guides, and checklists of the really little things that make a difference on the day. These will both alleviate the planning headaches of the wedding planner, and make your life easier by neutralising those last minute panics.
  • Once you have some of this, you can utilise social media to target the buyer. For example, Facebook and Pinterest will probably work for the bride to be, but LinkedIn may be better for the corporate buyer. In corporate it is rarely the one signing the cheque that does the investigation into venue options. Having such targeted message recipients means you can get some useful measurements of the outcomes of your social media spend, that can be supported by some of the other media options you are already using. I am however, a great believer, based on the results of the years, of being able to create a “conversation” with potential customers via social media, but this is just an automated and ubiquitous version of the opportunities we have always had to communicate, as evidenced by this story which goes back many years that I related in a post back in 2013.

As a last word, it is really difficult to find people who genuinely understand all this stuff and can implement as well. There are many around who will promise the world, and deliver something entirely different, when they deliver anything beyond an invoice. However, if you are curious, and prepared to explore the options, much can be done very effectively, and the outcomes are measurable and cost accountable.

If it costs you $50, or even a couple of hundred dollars to find, nurture and convert a prospect for a wedding reception into a sale, is that a worthwhile investment? I suspect so.

Let me know if I can help you develop and implement a plan that will deliver a return on the investment you have made in a terrific venue. Just do not be seduced by the hyperbolic nonsense sprouted by many self-styled ‘Social media experts’

Header cartoon credit: Hugh McLeod at www.gapingvoid.com