Thursday, February 28, 2013

Inbound vs. Outbound Marketing: 7 Decision Factors


How do you find the right mix between inbound and outbound marketing.  I have seen the wrong model  bring down marketing efforts, jobs and even entire companies.

Here are a few examples:

Example 1:  Two years ago I was having a lunch with a CMO of a small company claiming to generate 90% of leads of his company from trade shows.  They were working at 2-3 trade shows a week.  It is obvious why that model didn't scale - CAC (Customer Acquisition Cost) was way too high. It required too many resources and time-to-revenue was too long.  A year later, that CMO was gone and now the company is almost dead.

Example 2:  A company called Intronis decides on the outbound-driven lead generation model.  It hires lots of cold callers and does tons of trade shows.  The lead generation model fails.  The whole company has to go through painful layoffs.  Here is a quote from an article that appeared yesterday:  "Marketing is non existent…..sales team gets axed…engineer in the drivers seat. Sounds and smells like a sellout…Keep the barebones to support the product but not the partners…not so channel focused anymore. "


Example 3:  On the opposite side of the spectrum, another small company I knew was generating most of their sales from blog entries.  The CEO was a Blog Black Belt.  It worked really well for a while.  Good news - his company got acquired.  The larger company added some outbound efforts.  Not so good news - they are currently having hard times with the number of leads, quality and customer acquisition costs - not being able to scale neither of models.

So, how do you find the right answer?

Before giving up to inbound marketing zealots or caving in to outbound lead generation agencies, you may want to take several factors into consideration:

1.  Your target buyer's persona.
    - Who are the decision makers for your product / service?
    - Who are the influencers?
     - What are their job titles?
     - What are the key challenges they are trying to address?

2.  Where do they fit on the innovation curve?
Are your target buyers innovators, early adopters, or laggards?  This will define to a large degree how to approach them.

Example: If you are marketing a revolutionary new product to innovators, you may want to start with an outbound networking-type campaign through your industry contacts to recruit your first customers.  Later, you can integrate a targeted social media-driven PR component, as well as an inbound campaign focused on people who are looking for relevant solutions.

3.  Channels where your customers find information and get influenced
Where do they look for information relevant to your offering?  Is it trade shows, industry forums, search engines, communities, newsletters, etc?

Example: If you are marketing to decision-makers that don't spend much time online or you are in an industry where the phone is still a more traditional communication method, an outbound model may be the appropriate one.  Conversely, if you are marketing to an audience that relies on social media and online communities for research, contracting a call center to generate leads would be an absurd idea! 

4.  The value of each sale and Customer Acquisition Cost (CAC)
At the end of the day, marketing is an economic tool.  If a certain lead generation model is working really well, but costs too much, then it is doomed to fail.  You have to find the model that works best for you - in terms of BOTH conversion rates AND costs.

Example: We were using PPC for lead gen and it was generating high quality leads that regularly converted into sales.  But the cost of each sale (the marketing part) was about 200% over our target.  And after trying to bring it down for a few months, we had to pause it.

Outbound call center leads generated sales that costed 500% over the goal.  So, we focused on the inbound marketing leads - search engines, communities, social-driven PR, etc.  This proved to be the right model, bringing down our costs significantly -- even below the target CAC.  

Eventually, we revamped the messaging, did complete keyword map revamp, rebuilt landing pages, and changed 3 PPC agencies (before we found the right one)-- and "voila!" CAC is tracking right around the target!

  

5.  Your sales team readiness

No matter how many good leads you bring, you have to make sure your sales team and channel partners are capable of converting these lead types into sales.  I have seen a mismatch here causing many failures.

Example: At one of my previous companies, we started generating lots of inbound leads that needed a moderate amount of follow-up before they closed.  However, our sales team had only channel experience - they did not have the skills or desire to follow-up directly with the prospects.  Result = failure.  Until we upgraded the sales team.

6.  How easy is it to scale?
Some programs can be scaled easily.  Others may require a major upgrade to scale, putting CAC out of whack, at least for a while.

Example: You may be able to scale PPC.  But to substantially scale search engine-generated leads, you may need a sizable investment and patience.  However, longer term results can be huge! 

7.  Mix and change.
My final suggestion is to constantly experiment.  Marketing has been undergoing a major change over the last 3-4 years.  What works today may not work tomorrow at all .  So it is critical to always look for new lead channels.

First, create the foundation with the proven channels.  Then, experiment with 2-3 new ones at a time. By the time one of your foundational channels stops working, you will have 2 new ones that generate even better leads!

And with that... Happy Hunting!



Thursday, January 17, 2013

Inbound Marketing - Lead Generation, Metrics and Growth Hacking

Marketing and Sales have been growing closer together in many areas over the past few years.  One such area is lead generation.

Lead Generation itself has recently morphed into growth hacking -- finding new sources and channels for high quality leads and nurturing lower quality ones into opportunities that indicate "near-buying" behavior.

NO MORE COLD CALLING!  Today, marketing can completely relieve the sales team from majority of lead gen tasks, such as cold calling, dialing for leads, "pounding the phones," etc.  The idea is to get prospects educated and sold online - before they even speak with a sales rep.

Unlike the interrupt-driven outbound model, by implementing inbound marketing, you are reaching a completely different type of prospects.  These prospects are more qualified, since they have a specific need and they are actively looking for a solution.  By providing them a variety of relevant tools and information, you are helping in their decision-making process.  By the time they decide to contact you, they are well educated on the product and are most likely willing to take the next step.  Contrast that with a sales rep cold calling and trying to pitch a product to people that don't have a problem they are trying to solve in the first place.

Implementation.  This approach significantly shortens sales cycles, increases conversion rates and drives down cost of each sale.  But how do you implement it?  The first step is lead classification -- understanding what are the most and least desirable leads, as well as all types in between.  Here are some recommendations:



1. Lead Types.  Find out what kind of leads are you getting today.  For example:

- Demo Requests
- Free Trials
- Phone calls
- White paper downloads
- Email contact requests

Brainstorm with your sales team to see what works for them best and worst, as well as what other types of leads you may want to be getting moving forward.

2. Analytics.  Look at your metrics for the last 12 or 24 months.  Even though you can build some very complex models, I would start with basics:
     - Conversion rates - lead to opportunity, opportunity to deal, lead to deal
     - Time to conversion - same as above
     - Costs -  per lead, per opportunity and per closed deal
     - Effort - how much time does your sales team invest in converting these leads?

3. Trends and scalability.  How did these numbers change over time?  Can you grow them easily? Would scaling costs be linear or would they require a significant investment -- to take to the next level? Can your marketing team handle the growth (team size, budgets, skills)?

4.  Pyramid Map.  Next, build a pyramid like the one on the left, as a visual representation of types of leads you are going after.

5.  Lead Inclusion / Exclusion.  Decide on which types of leads you are going to focus moving forward.  At this point, you may decide that some types of leads are too expensive.  You may find out that some low quality leads are even not worth pursuing due to the effort required. 

For example, after this type of analysis, we have decided that leads generated by an outsourced lead generation agency were too expensive and required too much effort from our sales team, making them completely ineffective in comparison with other lead types.  Instead, we shifted our focus on higher quality leads that required significantly less effort from our sales team.


6.  Planning.  Once you have the lead metrics, analysis, lead map and your sales plan, it is very easy to put together weekly, monthly and quarterly plan of how many and what type of leads you need.  Knowing the cost per lead and conversion percentages will help you accurately forecast marketing budgets - in terms of their size and timing.

7.  Metrics.  Finally, I suggest monitoring lead metrics daily, weekly, monthly, quarterly and annually - to measure how you are executing against the plan.  Sometimes, you may need to to adjust activities - due to market changes, competitive moves, opportunities, etc.

You can add more advanced metrics later, like lead scoring, heat map, etc. But it is critical to intimately understand the effectiveness of each lead type before implementing these, otherwise lead scores are useless and the sales team will stop taking them seriously.

We have created a daily lead generation report that gets emailed to marketing, sales and relevant executives at the end of each business day.  This report covers number of leads in each category, broken down by source, type, relevant lead details, etc.  The same group of people receives a weekly lead composite report that looks not just at weekly numbers, but weekly and monthly trends in each category, enabling us to discover very interesting and useful micro and sometimes macro trends.



In my next blog entry in CMO Guide to Inbound Marketing, I will discuss the lead gen mix: outbound vs. inbound.

Wednesday, January 2, 2013

CMO Guide to Inbound Marketing - Overview

One of my observations from SMX 2012 was the disconnect between marketing executives and their marketing teams around the importance of online marketing and SEO.

It was interesting to see hundreds of marketing managers and directors struggle with selling the true value of SEO, PPC, rich content and inbound marketing to their executives.

Looking back at the path I traveled from brick and mortar to online / inbound marketing in the last 3-4 years, I thought it may be useful to put together a series of blogs for fellow marketing executives that are starting this journey.

Here are the key elements I will cover in my subsequent posts:

--------
1.  Inbound Marketing (vs. Outbound) 

2.  Keyword strategy

3.  Messaging

4.  Content and editorial strategy

5.  SEO

6.  PR

7.  Social and Community Marketing

8.  PPC

9.  Online Brand Building 

10.  Growth Hacking

11. Offline marketing

12.  Metrics and attribution

13.  A/B testing   

14.  Marketing team building / mix / talent acquisition 
-------

Just to give you an idea on the results so far, this approach has helped us to bring down lead and account acquisition costs by more than 70% and significantly decrease conversion times.  Today, high quality inbound leads constitute over 90% of all leads, enabling sales people to focus on converting prospects into customers instead of wasting all their time on cold calling.
   

Sunday, February 12, 2012

5 Tips On Selecting a PR Agency

  PR is dead, right?  Not really.  It has just morphed into something with much stronger social media and inbound marketing components.  

Unfortunately, many PR agencies / pros did not evolve, which makes it hard for marketing executives to decide whether their agency is effective or not, as well as picking the right one to partner with.

As we revamped our messaging and had several major announcements coming up, we decided to shake things up a little and went through the process of finding a new PR agency.  Here are tips that worked well for us.

1.  Set your goals.  What is the primary reason behind PR efforts in your company?  Is it to bring new business?  Raise money?  Get acquired?  Get noticed?  The primary reason will define the type of agency you will go after.  

In our case, the primary reason was business expansion.  We had over 500% growth last year and we are gearing up for more this year!  We wanted to augment our SEO and inbound marketing activities with increased social media, relevant industry press, blogger and vertical community campaigns.  We have also a major launch coming up.  All that made it a good time to look for the right PR / social marketing agency.


2.  Understand your target markets.  Who is your buyer and how do they find products / services like yours.  If you are marketing to SMB segment, it probably is not the most effective strategy to go heavily after top industry analysts and major publications.  A better strategy may be going to after tier 2 / 3 analysts that blog a lot, as well as vertical communities, bloggers, etc.   


3.  Define success criteria.  How do you recognize the right PR agency when you come across them?  Here is my high-level checklist:

- Industry experience.  It is much easier to work with an agency that has experience in your market segment.  They typically know your sub-segments, market trends and competitors.  They would probably  have have ideas what worked and what didn't in terms of messaging and launch / marketing strategies.  They would most likely have relationships and a database of contacts with key industry figures, analysts, bloggers, and journalists.

Otherwise, you may find yourself spending lots of time bringing your PR agency up to speed in all these areas.  It would take time for them to build a database of contacts, build relationships, etc. 

- Inbound marketing / social media experience.   You would be surprised how few agencies "really" have these skills.  Most claim they do.  70% of the ones we looked at, did not have these skills.  20% thought we would win if only we could be active on Facebook, Twitter, Google+ and LinkedIn.  Clearly, we don't need a PR agency for that level of social media presence.  Finally, 10% really understood what it took to win the "inbound marketing battle" with detailed plans and tools that went far beyond the typical social media efforts.

- Track Record.  We wanted to see previous success stories with other clients.  In all fairness, there is only certain level of success even the best PR agency can bring to a company.  However, you can look at their past / current clients' press releases, media coverage, SEO rankings, and messaging and get an idea on how creative is the agency.

- Available Resources.  If a great PR agency is slammed with work and more clients than they can handle, you may not get the attention you need for your success.  So, it is critical to find an agency with enough resources and time to dedicate to your success.  It is also important to find out who specifically will work on your project.  You would want to be comfortable with that person's background, attitude, availability, etc. 

- Proximity.  In this day and age, proximity seems to be not important.  There is Skype, email, IM, and social media for effective remote communications.  That is mostly true.  

All other factors being the same, I much rather work with an agency that is local.  For example, we have spent two days with our new PR agency in person to kick off our upcoming launch planning.  I can't imagine having the same interaction quality, chemistry and results via Skype, con call or email.  

- Attitude. It is critical to find a PR agency that REALLY wants your business.  There  are plenty of stuck up, unfriendly agencies out there.  It will be very ineffective and frustrating to work with them.  

For example, one of the finalists presented really well at the first pass.  However, during the second meeting their attitude turned into, "we get enough business without you" and "you should feel lucky that we are taking you as a client," "sign the agreement now and don't waste our time."

There is no place for an attitude like that.  If they are acting this way before getting the contract, imagine how difficult would be to work with them through the launch when you need their presence most.

- Budget. There is a wide spectrum of prices - from a few thousand dollars a month (typically from PR contractors) to tens of thousands dollars per month (from "high end" PR agencies.)  More expensive does not necessarily mean better quality.  It could mean overhead, bloated infrastructure or just arrogance.

The "stuck up" PR agency was double the price of its competitors.  They "justified" it by more services they provide.  However, after looking in-depth, they were offering half of what others were providing.  

This said, I would warn against the "nickel and dime" approach.  You have to recognize a good deal and know when to stop the bargaining process.  PR agencies are in business to make money as well.  If we are not being fair to them, the relationship may not last.   

4.  RFI. After you know approximately what you are looking for, try to obtain a list of PR agencies that are active in your segment, as well as the ones you have worked with before.  Send out an RFI (request for information) outlining things you are trying to accomplish and what kind of help you are looking for.  You can easily find templates online.

5.  Proposal / Selection.  We ended up with around 50 RFIs sent out.  We got 12 responses.  Picked 3 finalists.  We invited each one of them to pitch the final proposal with expected results, resources, dates, plans, etc.  This step brought some surprises too.  The strongest candidate at the RFI stage turned out to be a "fluff" agency. 

However, #2 agency came in very strong.  We were very impressed with every single attribute of their final proposal.  And we made our selection.


Once the selection process was over and we signed the contract, the winning PR agency came into our office the following week for a 2 days kick-off session.  We refined out social media / inbound marketing plan,  brainstormed on the messaging,  and assigned specific action items.  So far, we are very happy with our choice.  

The proof will be, as everything in Hack Marketing approach, in our launch success and the delta in the overall metrics we have identified.


Sunday, January 29, 2012

It's all about content... and metrics

How important is content quality in your marketing efforts?  Lip service aside, many organizations treat it  secondary at best.  Yet, in the modern world of online marketing, content is one of the most important components of your success.

Let's take an example of email nurturing.  Last week we were planning an email campaign with a very strong article written by an expert and a decent landing page.

We wrote the email and were thinking about the subject line.  My team member had it as "7 ways to ..."  To me, it seemed a little too "fluffy."  So after some more brainstorming we came up with another line that was more informative (at least IMO), like "xx  xx failure rates."

The theory behind it was that the "email receiver" would click on it because it would appear to be more of an informative email vs. "push my products" one.  We spent about an hour on the subject line debate.  Most organizations I know would have considered this as wasted time.  Was it though?

We conducted A/B test during the next few days.  Same email, same call to action, same landing page.   Different subject lines.

Results:

Subject Line 1: "7 ways..."   Open rate: 4.4%, click through rate: 0.2%
Subject Line 2: "...rates"  Open rate: 7.0%, click through rate: 0.5%

As you can see, there is a huge difference in these rates, which translated to 12 (SL1) leads against 50+ (SL2).  This is one of the best demonstrations (supported by metrics) of the difference that content quality makes.

The next A/B test will be this week.  We are going to be testing the email text.  We tuned it on Friday.  Given we see interesting results, I will blog about it later.

Thursday, November 24, 2011

"Not Provided" by Google


Metrics and analytics are easily available to marketers today.  They have changed the way marketing is done.  We measure almost every aspect of sales and marketing data - from costs per lead / opportunity / deal to conversion rates / times, as well as details of each marketing and sales campaign.

It is not a secret that often organic search-generated leads are among the best from the cost-efficiency and conversion perspective.  Naturally, many marketing organizations work on increasing these by SEO and other means.  It is a process of trial and error, where you change one variable at a time and measure the outcome.

In this process, Google Analytics has been a great tool.  It was great to know the keywords prospects find you by.  Furthermore, you could study the customer behavior for each keyword, identifying the best keyword phrases and improving messaging, marketing programs and sales tools.  Everybody won - prospects got relevant content / products; search engines provided better results; vendors got better leads.

Well, that all changed a few weeks ago, when Google decided to "mask" searches from people who are logged in a Google service, such as Google Docs or Google+.  Instead of seeing results for specific searches by these folks, now we see just "Not Provided."  This makes major elements of SEO analytics useless.  And if you are marketing to SMB It, where a large percentage is using some kind of a Google product, about 30-40% of your searches fall in "Not Provided" category.

This is very un-Google like. I hope Google figures out a way around this problem.  And AdWords is not the answer, because there is a big difference in buying behavior of people who are clicking on paid search vs. organic search links.  But for now, "Not Provided" is our new reality.

Wednesday, August 24, 2011

Marketing to SMBs: Lead Generation, Conversion Rates and Sales Tools

This post is the continuation from 8 Key Elements for SMB Marketing (Part 1).  In this entry, I would like to focus on effective lead generation and nurturing practices, sales tools, as well as an integrated sales and marketing approach.


Lead Generation.  With small deal sizes and large number of customers, enterprise-style 1:1 marketing is usually ineffective.  Instead, I have seen great results with marketing into communities, such as Spiceworks.  Many IT professionals from SMBs use such communities to exchange ideas, to learn about new offerings and ask questions to peers.  It is important to identify and establish presence in these communities - engaging participants, answering questions, working with customers and prospects, as well as running cost-effective marketing campaigns.

Another very effective way for generating high quality leads is creating unique and relevant content.  You can use it for blogs, IT community posts, social media, and PR.  In my experience, this has been one of the most cost-effective and sustainable sources of strong leads with very high conversion rates.

A lot has been said about the importance of PPC and SEO.  I usually like to experiment with PPC for SEO messaging before putting lots of effort into SEO.  This way I can get good results from a small PPC effort short-term, while SEO is gaining strength.  Once SEO is strong, I still keep a small budget for PPC for experimenting with new keywords, ideas and marketing messages.

Call center lead generation campaigns can work well for certain offerings.  However, to make these campaigns successful, there is typically a sizable upfront time and money investment - finding the right vendor, creating training materials and scripts, training agents, listening to calls and having an ongoing QA process.

One huge benefit of listening to lead generation and sales calls is the ability to witness your marketing and sales messages in action, see what works and what not, change as necessary and try again in real time.


Lead sorting and nurturing.  With thousands leads from different sources and at different stages of buying cycle, it is virtually impossible to keep up with all of them manually.  I have had success with designing a "funneling logic" for lead nurturing, where the leads get identified and categorized based on various factors and how far down are they in the sales funnel. Some types of leads get matured and closed using online tools (landing pages, content, emails, online store, chat, etc.) with minimal human interaction, saving sales lots of time.  Other types get passed to the sales team for closing.

I have been using Marketo for lead nurturing.  However, we quickly ran into the need to customize landing pages for further lead nurturing and "heating" to drive prospects closer to the purchase decision before handing them to the sales team.



Marketing and Sales Tools.  I try to have a minimal set of marketing collateral with an emphasis on online tools, especially for cloud-based services.  Many SMB IT folks don't have time to read through complicated materials.  They prefer seeing and experiencing the actual product.  Tools like screenshots and sandbox environments have been extremely useful for me, providing very high conversion rates.  I also use podcasts, brief videos, blogs, datasheets, customer testimonials, and industry press articles as necessary.



Patience.  With all these elements built properly, SMB sales can indeed be lucrative.  However, these efforts require a dedicated team that is experienced in marketing and selling into this space, willing to stay engaged and transform along with the industry.

It also may take some time to get the messaging and programs right, people trained, see what works and what not in your environment, before you can start seeing results.  However, the results can be great in terms of a strong revenue stream, high customer satisfaction rates and lower marketing costs.