9 reasons to be wary of marketing automation

9 reasons to be wary of marketing automation

Aug 16, 2016 | Governance, Marketing, Small business

Marketing automation is the new game in town, it builds leverage onto marketing investments. Absolutely right, and I am a believer. Scott Brinkers amazing work illustrates just how rapidly it is advancing.

Automation delivers the opportunity for huge leverage when used well.  For small and medium enterprises it offers the opportunity to look and act like their much larger competitors, and win by outmanoeuvring them with their inherent agility.

However, there are risks not being talked about very much, if at, all in the rush into the automated tools.

  1. A tool is not a strategy.

There is so much smoke and mirrors and just plain bullshit being sprayed around by the vendors of many tools that the basics risk being ignored. When you need to drive a nail, the tool you need is a hammer, not an all singing, all dancing, multipurpose expandable screwdriver. Digital tools are all driven by algorithms and logical progressions, based on assumptions. Problem arises when the tool does not accommodate the myriad of behavioural realities that occur in the real world. I am seeing automation seen as a strategy way too often, without due consideration of the context in which the tool will be used, and the outcomes that can reasonably be expected.

2. Ownership delivers leverage.

Those who ‘own’ the tool are able to use the output to further their particular perspective. Outcomes predicted by some tool often takes on a credibility greater than it should simply because somebody has done the number crunching through a tool. These things do not think, they do as they are told, so being constructively critical of outcomes that appear at odds with common sense is usually a pretty good practise. The next time I see a course of action that sits uncomfortably with my instincts being pursued just because it appears justified by some algorithm will not be the first. Getting the balance between the wisdom of experience and domain knowledge and the output of some algorithm wrong is akin to letting the kids loose on a 1000cc racing bike. Great for a while, but destined for a nasty prang.

3. The danger of complication.

Steve Jobs has been credited with the words “simplicity is the ultimate sophistication’ which is simply an extension of what we have known for ages. Einstein said (amongst many other insightful strategic observations) ‘Everything should be as complicated  as it need to be, and no more’. Automation has within it the opportunity to overcomplicate, when the simple is all that is needed. I still have (SME) clients to whom Excel pivot tables represent automation of their sales analysis, and sometimes that is all that is needed. Setting out to implement a ‘marketing stack’ in this sort of environment, with this existing level of digital sophistication will only lead to tears.

4. Business is not absolute.

The formulas in a tool are absolute, they do exactly as they are told. As noted, business is not absolute, there are multiple shades of grey all over the place, often confusing and conflicting. Digital algorithms are yet to be able to learn and apply the judgements born of that learning to a situation facing them, and indeed, in analysing adequately the situation confronted.

5. Marketing ROI.

Marketing has long suffered from the accusation, that it is all smoke and mirrors, supposition and judgement along with the long lunches, and too often the accusations have had some merit. “Where are the numbers?’ is a pretty common question when marketing is chasing its slice of the available resource pie, and in their absence, Marketing is the first to be cut in a squeeze. Now there are tools that supposedly, and in fact do deliver an ability to do reliable calculations, they are often grasped like a drowning man will grasp anything that floats by. Pity an attractive lead weight can be tarted up to look like a life jacket.

6. Financial ROI.

Implementation of marketing technology is no cheap exercise, as anyone who has had anything to do with this stuff will attest. The cost of the software is only the beginning, and the time taken to project completion usually confounds even the most pessimistic forecasts made in the blush of the original ‘let’s do it’ decision. In many instances I have seen, taking some of the money thrown away in marketing automation, and putting it against genuine customer oriented activities would generate a far superior ROI.

7. Automation for its own sake.

Automating a crap process just leaves you with automated crap. One of the most common mistakes I see is believing that an implementation will solve a problem, when in my experience, automation just makes an existing problem worse, harder to find, and more expensive to fix. Never automate until the existing processes are working seamlessly, or alternatively, when you automate, throw all existing processes out the window, and start with a completely fresh page. The danger here is that without a rigorous outside intervention those that allowed the former processes to resemble a dog-pile will be the ones writing the new routines. Usually not sensible.

8. Automation is different to decision making.

Automating can deliver information that provides the data required to make informed decisions, but cannot in itself make decisions that require judgement. At best an automated decision tree can be an ‘if that then this’ logic sequence. If ever you needed convincing of this; just look at the May 2010 ‘Flash Crash‘ of the Dow Jones. The decisions surrounding resource allocation are challenging, requiring a multidimensional view of the options that balance the relative outcomes, risks and rewards.

9. It all becomes too easy.

Let’s face it, life is really busy and stressful, so when there is an answer provided that has corporate  credibility, the easy way is to go along with it, not rock the boat, and often not run the gauntlet of questioning the status quo.

 

My thanks to Tom Fishburne for the header cartoon. You continue to demonstrate the power of the cartoon to make a serious point.

6 strategies to build a brand on a shoestring

6 strategies to build a brand on a shoestring

Aug 15, 2016 | Branding, Small business

Small businesses everywhere suffer from the unequal access to the marketing funding they have compared to their larger competitors. Some complain about it, others get on and short circuit the system by turning it on its head.

Large companies overrun  with so called marketers do things in a pretty standard sequence.

Advertise to build awareness,

Generate some customer trial,

Build on trial for repeat purchase.

Small businesses need to find a way to get people to trial their product without all the mass advertising, they need to be able to target their ideal customer specifically, without the investment of mass media, and these days, paid social media which has replaced much of the mass media, but still needs to be managed.

Following are 5 strategies that have worked for my clients, often in tandem.

Sampling. 

If for example, you run a restaurant, stand outside at lunchtime and give samples of your signature dish to passers  by who match the profile of your ideal customer. Don’t waste money on advertising in the local paper, or sponsoring the local footie team (although that may be a good thing to do for other reasons)

Amazon allows you to sample the books on their lists in a number of ways. You can look inside most books, typically you are shown the contents page and often the first chapter. Sometimes you can download a sample chapter, and from time to time there are deals for a limited time on one book in a series, and of course there are the recommendations tailored on your search and purchase history, and reader reviews. All sampling.

Meadow Lea, a brand icon built through the late 70’s and into the eighties had a hugely effective media persona, ‘You ought to be congratulated’, but was supported with an extensive program of sampling in supermarkets that continued for   many years. Getting consumers to sample the product on a bit of bread in store, where the purchases are made was a hugely effective, but low key, slow burn, strategy

Identify your ideal customer.

Identify the most profitable market, by identifying your ideal customer, not just the ones who say they like you, but those who put their money where their mouth is. It amazes me how often a target market turns out to be other than the most profitable market when you do some data digging.

If you are an architect, the most profitable market is unlikely to be first home  buyers, far more likely to be successful 40 plus professionals. They might be harder to find, and sell, but way more likely to be able to spend the necessary money to get what they want.

Differentiate yourself.

Create some sort of differentiation that has some emotional component, so it is likely to be something personal.

I drive an old Mercedes, love it to bits. Whenever it gets a service, the car comes back cleaned, not something I ask for or pay for, (at least not directly) but very nice. Last time I picked it up after a service, there was also a matchbox car of the same model as mine, and a note “for your new grandson” on the passenger seat. In casual conversation when I dropped the car off, I had shown a picture of my new grandson. Think anyone else would ever get to service my Merc?, probably cost them 10 bucks for the toy to ensure I never went anywhere else.

Use direct response techniques.

Direct response advertising provides a huge portfolio of ideas and techniques to learn from, and from long experience, we know direct response works. Even after social media has destroyed much of the advertising industry as we knew it a few years ago, direct response has adapted and thrived. Virtually every offer you receive in your inbox has been crafted with the disciplines of direct response that originated and were refined in the back half of the 20th century. Always have a call to action in an ad, an email, or piece of copy if the reader does not know what to do next, they will wander off.

Direct response advertising is absolutely  and immediately measurable, you know what you get, and can test varying treatments, so being able to calculate an ROI on your investment is now a reality.

Create or highlight a problem, then solve it with your product.

Purchases are made for a reason, and while  the reasons vary from the rational response to a problem, to the emotional solution to an imagined one, the rules are the same. If your product can deliver the solution better  than the alternatives, you will be successful.

Colgate used variations of this technique from the mid 70’s with the Mrs Marsh series of ads, which is to my mind the best example around. However, you do nit need to have Colgate-like budgets to use the same formula. Almost every  ad for weight loss products, gym membership, and a myriad of other things uses the same formula, varied in a range of ways.

Fix your website.

Most businesses these days have websites, and most websites I see are just bloody awful, at least they are if their objective is to build business. If the objective is to stand around and do nothing, then they are fine. There is tonne of advice out there on how to make your site more effective, and this is not about SEO, although that cannot hurt, it is about making the site more ‘sticky’ for when people visit.

There are some pretty simple things that will help add ‘stickyness’:

  • Understand your Bounce Rate. When a visitor to your site fails to move past the first page, it usually indicates that you have failed to engage them, they ‘bounce’. Experiment with differing treatments on your site, noting those that do not work, and ‘doubling down’ on those that do.
  • Ensure there is a prominent headline that leads to an action, top and centre of the page. As  noted above, problem/solution headlines work well in this context
  • Make it clean and uncluttered, so as  not to distract the visitor from the next thing you want them to do
  • Use video. Up till recently, Video was not a common tool, but as site visitors become more fussy and less likely to stay out of curiosity, and video gets better and cheaper, its use has exploded, as have the expectations of visitors.
  • Have social proof prominent, especially video testimonials prominent on the site. People want to be assured by people they can relate to that you are trustworthy, and will treat your money with the same respect they treat theirs.
  • Collect emails and mobile numbers. The old saying, ‘The money is in the list’ still holds, but in these days of mobile, having mobile numbers is becoming increasingly important, SMS messages have an almost 100% open rate, and is remarkably flexible. For example, if you run a restaurant, and have 20 seats available one evening, and you have mobile phone numbers, send out an SMS offering a bottle of champers with dinner as an offer to fill the seats, tonight. It may be that the average revenue on a table is $150, with marginal costs only for the food of perhaps $25, and you have just given away $20 to get the seat filled. Seems like a good deal, and the those who get the champers will be pleased, and talk about your restaurant.

Finally, and importantly, get stuff done. So often I see the results of procrastination, and self doubt, don’t let it hamstring you, and if you need a nudge, call me.

4 simple measures of Digital Marketing Effectiveness for small business

4 simple measures of Digital Marketing Effectiveness for small business

Aug 4, 2016 | Marketing, Small business

Marketing has always been a bit like juggling. Lots of balls in the air, and everything seems fine until… it isn’t.

Digital has just added significant complication, try juggling on a unicycle.

Many small businesses shy away from measuring the effectiveness of their digital marketing investments, to hard, too small to be bothered, no time. I have heard all the excuses.

Too often they do not even see their marketing expenditure  as investments, they are just table stakes, one of the costs of doing business.

Digital enables measurement of marketing effectiveness as never before.

Why should small businesses miss out? Indeed, their agility is the source of their greatest advantage over their larger rivals, as they can make decisions quickly and act on them immediately, usually before their bigger rivals have finished the first meeting to discuss the situation.

Too often the ease of measurement, lack of real understanding of what the measures mean, and easy availability of pro forma “vanity measures” such as “likes” substitute for meaningful measures that guide decision making and shine a light in the digital corners.

Digital has many paths, many options, and layers, but the common factor in all of it should be the presence of a functional and well maintained website as a focal point of activity.

It makes sense therefore to have a few simple measures of the effectiveness of that focal point.

Following are 4 that I have used effectively for clients

Registration.  It has become common practise to seek email addresses in return for some item of value. In effect this is registration. The registrant is offering you the permission and  opportunity to market to them. The simple measure is the number of visitors divided by the number of registrations. It is in effect the first step in the development of a process that can lead to a transaction, and we have all heard the cliché ‘The money is in the list’.

Activation. This can come in many forms, and is often driven by the reason for registration. For example, how many of those who register for a webinar actually turn up and listen too the whole session. Again this is easily calculated as registrations divided by the activation activity.

Retention. Once activated, how many are retained? In other words, they become active participants in the activities you have on offer. This may be purchasing after a webinar and returning for a further stage, perhaps just turning up for the next webinar, but at some point there needs to be a transaction, often offline.

Referral. How often does an active and retained customer refer others to you? We all understand the most successful marketing tool is a satisfied customer motivated to refer their networks to a product or service. This being the case, measure it.

12 common & avoidable marketing mistakes I see small businesses repeating.

12 common & avoidable marketing mistakes I see small businesses repeating.

Aug 2, 2016 | Marketing, Small business

How true is the old chestnut “those who do not know history are destined to repeat it”?

It is an unfortunate truth, but in a business environment where 75% of new businesses fail, and 61% of actively trading businesses have no employees, it may be understandable. The new ‘entrepreneurs’ come and go, many having no background in business for themselves, and little beyond an often significant functional skill that they think will lead customers to their door.

That strategy may have worked in the past, but no longer.

Being an employee is generally a lousy training to be an entrepreneur, of any type.

Following are a number of the most common causes of those failures I see, several on a disturbingly regular basis.

Funding ‘institutional’ advertising & promotion.

Most advertising I see is for an institution, or business, not for  the benefit of the customer and potential customer. The “buy from me, I am better” type advertising. Instead, advertisers should  think about every piece of communication as a piece of direct response advertising, something that requires and points to an action. Advertising should be just a media centric form of direct response, otherwise, why do it? Spending money on advertising without directing people to a course of action  is a waste.

Many will wail at that, and point to the need to build a brand. True. But it gets the order in which things happen back to front. You do  not build a brand just by advertising to attract customers/consumers, you build a brand by performing, delivering value to those who try you out, then come back again and again because the value is terrific, and in the process tell their friends. Advertising is just a tool to apply leverage to this process.

Not testing.

These days everything, or almost everything can be tested. Test so you can generate the maximum leverage for your activity. Any marketing activity costs a fixed amount of money, it is the maths of the responses that give you leverage. Spend $100 on an activity, and you get $150 back might seem OK, but if you got back $300, or $500, or $5,000 how much better would that be? The leverage you are generating from your activity is greater. Test for  the elements that will generate you the leverage, as adverting is just leverage applied in a different form.

Not having some sort of differentiator

Delivering value to your specific target audience that they cannot get elsewhere is essential.  Whatever is your key value, it has to be unique to somebody or you are just competing on price, and when you compete  on price, even if you win, you lose.

Not sufficiently recognising the value of their existing customers.

We all know at some level that is it easier to get more from an existing customer than it is to get a new one, but we still insist on going looking for new customers and to some degree ignoring the value still to be gained from the existing ones. Even if you bring them value for someone else that is complementary to what you can deliver, and perhaps clip the ticket, by bringing them that value you ensure you are  always on their radar, and they are receptive to any offer you make. This applies as much to heavy machinery and capital intensive industries as it does to the way Amazon flogs you more books by knowing what you have bought and looked at in the past, and comparing that to others that seem similar.

Insufficient customer research and understanding.

The clearer the understanding you have of your customers and  prospects needs, the  better able you are able to craft a compelling offer, negate objections, and solve their problems. Once you solve their problems they are yours forever, they will always have you on the short list, if  not be the only choice.

Do not have price as the only motivator to a sale. Winning the race to the bottom of the price curve, you also lose. When you use price as the motivator, as you might if you make a blue  and have a warehouse full of stock you need to flog, find some other way to add value. Provide a a guarantee, or assurance that this cut price is only available for a short time and then only to the most valued customers you have, there are many tried and true tactics . This puts a sense of urgency and exclusivity in the offer which obscures the discount as a motivator, so it does  not erode the full price that you need to be profitable when things return too normal.

Not making it easy to do business  with you.

We all know how annoying it is to be shunted from person to person, not  getting answers, we all hate it, so why do we do it to our customers?? Make it easy to do business with you. Often this requires that you give the decision making power to those at the front lines, those who have the first contact with the customer. Ensure they are sufficiently well trained and informed that they can answer all the questions that may be asked. How bloody annoying is it to ask a question, and be asked to wait while they go and get their supervisor! Make it easy, even fun to do  business with you, find ways to add that bit of extra value that others leave out, the little things make all  the difference.

Not being transparent and answering “Why‘.

‘Why does this cost more than the opposition?’… ‘Because it is hand made from rare materials, not some imitation, or it is twice as durable, so is really cheap at the price’.  Failing to communicate your ‘Why’ is a grave failure. If you have lots of inventory, and want to get rid of it quickly, as often happens in many forms of  retailing, tell them why, that this is a one time only limited to available stock offer, created  by your buying ability with your suppliers. Tell them why, is a very powerful tactic in selling.

Not being persistent 

When you have done the work, be prepared to stick with it, and not change tactics mid stream just because there is a bump in the road. Strategy is about the long term. When activities are consistent with the strategies and add to the long term, be prepared to hang in there, and not be seduced by the newest shiny thing that comes along and seems attractive, Most businesses get tired of their own marketing well before the market does, so stick. An old boss of mine used to say that consumers were just getting to see our advertising about the time we were getting sick of it, and that is so true. Stick with what works, vary the tone and tactics to keep it fresh and new as necessary, but stick to the strategy.

Lack of focus. Any sort of activity should be directed at a specific target, the more focused the better. When others see it and act on it, great, but the clearer the focus on a benefit to a target customer you have the better. This clearly requires that you have a very clear idea of the ‘where what how and why’ of your ideal customer, but without that you are just spraying messages and hoping they hit something that looks like a prospective customer, rather  when focusing on one and ensuring that you are adding value to them.

Not educating your customers.

Never sell to customers, educate them to the benefits they will see by the use of your solution to their problems and opportunities. By setting out to add value to your customers by educating them, you can earn the right to have them buy from you. The old fashioned hard sell rarely works any more.  Instead, educate, appeal to their emotions, and show them the benefits, as did Don Draper in this Man Men classic.

lack of understanding ‘lifetime customer value’.

In most markets, customers are customers more than once, so understanding the arithmetic supporting the value of your customer is crucial. If you spend 150% of the first sales value to acquire a customer who then stays on for a further couple of  sales that cost you little to get, you are way ahead. Never burn off a customer once you have them by failing to live up to expectations. Over-delivering to customers is always a great strategy, and maximises the lifetime value.

Ignoring the value of Social media.

Social media is deceptively hard to get right, and getting it wrong can be a disaster. However, every business should be leveraging the potential power of Social media, recognising the downside. The help of the 14 year old down the street can be useful, but it can also be hugely misleading, and potentially commercially dangerous.

There are many more, but these 12 are the most common marketing mistakes, but I cannot leave without adding another. Know your numbers. Failure to  understand the financial realities of a business brings more unstuck than all the rest put together.

9 point plan to create your business model

9 point plan to create your business model

Jul 18, 2016 | Governance, Management, Small business

One of the major things most small and medium businesses give little thought to, and which can have a major impact on their financial outcomes is their business model.

There has been much written over the years, huge volumes of academic and consultant driven tomes , full of jargon and long words. Mostly, the owners of small and medium sized businesses,  starved of time as they are, have not read or absorbed this stuff, and even if they have, the day to day struggle has taken over.

The options open to construct a business model vary with every business, and every set of circumstances. Trying to copy what somebody ese is doing will only go so far, the great value is in tailoring the elements to best suit your objectives,  resources and competitive circumstances.

Thinking about it in this business model framework can be enormously valuable.

Most recently, Alexander Osterwalder wrote a book called ‘Business Model Generation’ that outlined a framework that simplifies all thing you  need to think about, without the jargon.

That framework has 9 elements

Business model canvas

Customer segments. Any successful marketing is dependent on defining your primary customer segments. These days you can go further, and in my view need to go further for SME’s, to having a detailed customer persona, perhaps several of them, to better enable the direction of marketing communication directly to the needs of very finely defined customers.

Value proposition. Defining the value you add to your target market is fundamentally important. If you cannot articulate the value, why would you reasonably expect anybody else to understand it? Value comes in many forms, simplicity, performance, design, degree of customisation, risk reduction, and many more, including the default, Price. However, if you define your value proposition in terms of price, you have already lost.

Channels. How do you communicate with your customers and potential customers, and then deliver on your value proposition? This item is a combination of the logistics and operational side of the business,  with the marketing and sales sides.

Customer relationships. What type of relationship do you have, or want to have with customers, and how might they want to deal with you. Are they intimate and personal, or automated over the web, collaborative or purely transactional? The choices will be driven by the alignment with your value proposition and customers.

Revenue streams. No business can survive without revenue, it is perhaps the only constant of business as well as the public and non profit sectors. Determining the best way for you to be paid for the successful delivery of your value proposition to your customers is a major item in the model construction. Is it purely cash, or licencing, franchising, what sort of trading terms will apply, are you seeking recurrent income as for membership?. Obviously the price you charge is a major decision, but prices should be driven by the model, and your competitive profile, not by costs, or a guess.

Key resources.  Every business requires resources of many types to grease the wheels of the business model. Defining what they are and how they interact is really fundamental, as they are the enabler of the value proposition, and without alignment to the value proposition you will have sub optimal performance. The key resources can be physical, human, intellectual, financial, whatever is required to deliver on the value proposition.

Key activities. There will also be a few key activities. Things that simply have to be done to make the business model work. Production operations if you are a manufacturing business, problem solving if you are a consulting business, and stock management if you are a retailer. They make the rest possible.

Key partnerships. These are the networks of suppliers that make the business model work. Who they are, what they contribute to the value proposition, how they how yoou choose to interact with them all make a significant difference to the manner of business model performance.

Cost structures. Finally, what are the costs incurred to operate and sustain the business model, those that are fixed, those that are variable, and how they might swing between these two. What are the economies of scale and scope that may apply under different circumstances?

 

I have used this canvas, and some of the iterations that have evolved in workshops with medium sized businesses with considerable success.

What you realise  very quickly  is that there is no right answer, and no  easy path. There are cause and effect chains that operate across the board, changing one thing always has a string of impacts. The best way to manage all this and come to some actionable conclusions is with a directed brainstorm that records the ideas and cause and effect chains, followed  by an experiment or research of some type that involves real customers.

What I call “getting out of the building”

 

 

When template business plans are useless

When template business plans are useless

Jul 4, 2016 | Change, Innovation, Marketing, Small business

In Australia, only around 5% of new businesses survive past the 5 year mark, and make money in excess of the cost of capital.

Scary, because most of them had a business plan, certainly if they ever borrowed any money from a bank, they had one that probably doubled as a door stopper.

50 pages of assumptions, rosy projections and financial outcomes delivered via by a suite of complex excel files to the wazoo. It is essential to recognise that the purpose of a business plan of the lender is to ensure that they get their money back with interest commensurate with the risk, and to weed out the dreamers. That is why banks insist on Directors personal guarantees, mortgages over personal assets, simply to ensure that you do not risk their money.

So much for business plans.

Seriously, why would you waste the time and energy?

Most start with what they think is a great product, without realising that a product is just the starting point.

You also need at least a hypothesis about who the customers are, how you will find them, what sort of prices they may pay, how do you deliver the product, what the competitive reaction might be, and on, and on, and on.

Finding a way to turn all this stuff into a business model that makes sense is challenging, but it is what turns a product idea into a business.

A traditional, templated business plan makes sense when there are a lot of knowns, there is an existing market, ruling prices, you know who and where the customers are, and how they might be reached, and there is not much going on. Then plan to deploy resources for productivity and efficiency, but this is rarely the situation with start-ups with an innovation to bring to the market.

Being an entrepreneur setting about marketing a product with few direct competitors is experimental, requiring iteration, practice, persistence, and preferably mentoring from someone who has been there, seen the traps and is able to navigate around at least some of them.

Planning for the unknown is a touch different from planning for the known.