Does Positioning Get the Attention it Deserves at Your Company?

My answer would be "no" based on most of the companies I’ve worked for and with over the years.  What is your gut response before reading this article?

All marketers learn about the original "Four Ps" of marketing and use them in all aspects of marketing strategy, planning, development and execution:

1. Product – deals with the dimensions of the product being marketed.  This applies to all types of 'product' – whether it’s tangible, intangible, service, practice, etc.  The product dimension addresses characteristics such as the branding, functionality, design, quality, safety, packaging, warranty, etc.
2. Price – deals with the dimensions of pricing decisions such as pricing strategy, suggested selling price, discounting, wholesale pricing, seasonal pricing, bundling, flexibility, price discrimination, etc.
3. Place – deals with the dimensions about how the product reaches the customer.  Marketing decisions on place include distribution channels, coverage, channel members, inventory strategy, order processing, logistics, etc.
4. Promotion – deals with the dimensions of promoting the product including decisions on promotional strategy, advertising, campaigns, promotions, selling, public relations, publicity, marketing communications, etc.

Al Ries and Jack Trout introduced the concept of Positioning as a key marketing strategy during the 1970’s and popularized Positioning as a core marketing discipline with their seminal book; Positioning: The Battle for Your Mind.  Since then many marketing practitioners and academics have included Positioning as the 5th P of marketing.  However, doing some quick checking around while writing this article, I was surprised to see many recently published materials, some from reputable sources, still referring to the original "Four Ps" without mentioning Positioning.  In spite of these surprising omissions, it does appear that most university curricula do include Positioning as one of the updated "Five Ps" of marketing.

So why is positioning most important?

Positioning deals with what you want to do in the mind of the prospect – i.e. how do you want prospects and customers to uniquely perceive your product in their minds regardless of exposure or familiarity with other similar or competing products – e.g. "safe vehicle" = "Volvo".  Positioning is the promise of the value you create for your customers.  Positioning cuts across the other 4 Ps and determines how you develop the specific dimensions of the other 4 Ps within the overriding positioning.

Positioning dictates what you do with a product and/or how you develop a product.  Pricing decisions must support the positioning.  Place is determined from positioning to define how to take a product to market.  Promotion is how you consistently communicate the positioning to the mind of the prospect.  If any of the 5 Ps are out of sync, your marketing strategy and execution will not produce good results.

According Philip Kotler of the Kellogg School of Management, all good marketing planning starts with Research, which reveals potential customer Segments, which determines the Targeting of specific segment(s) a company can serve better than anyone else.  The next step from this process is Positioning which must be done before considering Product, Price, Place & Promotion of marketing planning and execution.

A previous article discusses why positioning should take precedence over branding.

Where does Positioning fit in your business planning and marketing process?  Do senior management and other functional areas in your company understand and appreciate the importance of positioning before everyone runs off to build, market and sell product?  Your comments are always welcome.
Copyright © 2010 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Targeting B2B Buyers with Occasion-based Marketing

Mention occasion-based marketing and most marketers think about B2C holiday marketing –the special offers and promotions for Mother’s Day, Valentine’s Day, Christmas and other real or fabricated holidays.

Most businesses and marketers want to improve their marketing response and conversion rates – i.e. the number of responses to a marketing campaign and subsequent conversions to a sale.  Occasion-based marketing is a proven tactic to boost response rates – people are more receptive to buy something related to a relevant occasion.

Occasion-based marketing is more than just doing promotions around holidays.  Think about the definition of occasion in broader terms:

• A particular time when something happens.
• A chance or opportunity to do something.
• A cause or reason for something.
• The need for something.
• The need to do something.
• An important or special event.

Using these broader definitions, think about what occasions would make your prospective B2B buyers more receptive to buy and/or respond to your marketing campaigns:

• News – look at current news topics and who is paying attention.  Is there any relevance for your offer and the audience that you can leverage?  For example, if a group of businesses are paying attention to carbon tax legislation, do you have relevant products or services to position and offer to take advantage of this news and attention?
• Events – there are all sorts of events happening all the time – which of these events may make buyers more receptive to buy or consider your product/service/solution?
• Holidays – although this is most visible in B2C, consider where your product/service/solution may fit in the value chain.  For example manufacturers have to supply distributors who supply retailers in anticipation of a future holiday promotion.
• Associative – we drink orange juice with breakfast, wine with dinner at restaurants and sports drinks when we exercise or play sports.  Why?  Because marketing has made us associate these products with these occasions.  Are there opportunities to associate your product/service/solution with an occasion?
• Business Cycle – businesses have cyclical occasions that present occasion-based B2B opportunities.  For example, when they do budgeting is a good occasion to get your product/service/solution in their budget plans for the following year.
• Customer Occasions – such as management changes, mergers, acquisitions, new product introductions, business expansion, etc. are opportunistic marketing and sales events.

This is not an exhaustive list of all occasion-based marketing opportunities.  The key to successful occasion-based marketing is to find targeted and relevant occasions when prospective buyers are more receptive to buy your product/service/solution and respond to your marketing campaign or promotion.

Cyclical versus ad-hoc or unplanned occasions – it’s straightforward to schedule marketing campaigns and promotions for cyclical occasions.  Do you have the means to respond quickly and appropriately to relevant ad-hoc or unplanned occasions?

Consider occasion-based marketing as an overlay to your previously established market and customer segments – it adds timing and positioning dimensions for executing campaigns and promotions when buyers are more motivated and receptive to buy.  Try a test to compare response rates between a regular schedule-based approach versus occasion-based for the same marketing campaign or promotion.

Have you had success or otherwise with occasion-based marketing in B2B situations?  Your comments are always welcome.
Copyright © 2010 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

How Much Should Analyst Surveys Shape Your Marketing Strategies?

I recently reviewed the results of the 2010 Gartner Executive Programs (EXP) survey of CIOs who influence $126bn of IT spending in 41 countries and 27 industries.  Besides the headline that IT budgets in 2010 will be at 2005 levels, there are some interesting changes and trends that B2B IT and business software vendors and marketers should consider.

Enterprise applications (ERP, CRM and others) is not a Top 10 business or technology priority in 2010 – this is a startling finding and dramatic change from previous years.  Enterprise applications were the #2 technology priority since 2007.

After being the #1 technology priority since 2006, business intelligence applications have dropped to #5.

Business process improvement continues to be the #1 business priority – this has been the #1 CIO business priority every year on this survey since 2006 (the earliest edition of this survey I could find).

Virtualization, cloud computing and Web 2.0 are the top 3 technology priorities in 2010 – while this may not be a big surprise to most people in the industry, it is the first time any of these technologies have appeared in this Top 10 survey.

So this got me thinking about the relevance of these surveys for influencing product, marketing and sales strategies:

• Are vendor marketers paying attention?  Given that ‘business process improvement’ is the #1 business priority for CIOs since 2006, one would expect this to have some prominence for relevant vendor marketers.  Looking through the websites, collateral and marketing campaigns for several business software vendors, there’s scant direct attention to the business process improvement value proposition.  While it is mentioned within other propositions and contexts, it doesn’t have the headline attention or prominence for vendors that one would expect for the #1 business priority of potential buyers.
• Should vendor marketers pay attention?  Considering the scope of this survey and the influence of the respondents on buying decisions, it would seem logical that marketing and selling to these priorities would yield better results.  Although the reality for actual buyers that transpires during the forecast period may not exactly match what they indicated in a particular survey, the priorities and trends in surveys provide good directional information for connecting with buyers relative to their top-of-mind interests.
• Which survey(s) do you pay attention to?  While this is a good survey from a reputable source, it is just one of dozens or possibly hundreds of good surveys from many reputable sources published each year.  Relevance to your markets and industry are obviously critical.  Aggregating results across multiple relevant surveys may provide a more balanced perspective.

While these types of surveys do provide valuable insights for market trends and what concerns potential buyers, they should be considered as just one of a number of inputs for shaping marketing plans.

How do you use surveys to shape your marketing strategy, campaigns and programs?  Have you seen beneficial results from paying attention to these surveys?  Your comments are always welcome.
Copyright © 2010 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Key Decisions That Determine Whether B2B Buyers Will Buy From You

Last week’s post discussed the 3 reasons that motivate B2B buyers to find and consider buying a product / service / solution:

• Solve a problem
• Pursue an opportunity
• Improve performance.

In this article we’ll look at what the key decision factors are that determine whether they buy, what they buy and who they buy it from.  Based on work I’ve done over the years reviewing countless win/loss analysis reports from thousands of deals, there are always 3 key decision factors at play that determine what a buyer decides to do:

1. Meets their needs – B2B buyers set out to find something that will enable them to pursue the goals they have established based on one or more of the 3 primary motivators and supporting objectives.  While this may be intuitively obvious to anyone who has been around B2B marketing and sales for any time, meeting the specific buyer needs based on their buying motivators and business goals is the #1 reason that determines which product / service / solution they buy.  These needs are frequently expressed as lengthy lists of requirements, Requests for Proposals (RFPs), demonstrations and other nitty-gritty details for vendors to show that their proposed solution will meet the customer needs.  While it is possible for vendors to influence some of the specifics to suit their solution, the ultimate decision is still whether the buyer believes a specific choice will meet their needs.
2. Affordability – the most frequently mentioned reason for a deal loss from salespeople is price, but affordability for buyers is much more than just the price of the product / service / solution.  Firstly, many B2B buyers usually have underestimated expectations of what they are willing to spend to pursue the goal of the buying motivators.  Secondly, it’s more than just the purchase price – it’s the total cost of ownership over the projected lifetime of the solution.  Thirdly, it always boils down to ROI – buyers determine the value to the business for achieving the goal they identified based on the buying motivator(s).  From a vendor perspective, the discussion with the buyer should be more about value creation for the business and less about the actual price.  If you create the right value for a business, the price becomes incidental.
3. Trust – while this is not an overt discussion topic like needs and affordability during the buying process, it is a significant influential factor that determines who a buyer buys from.  All things being equal in meeting the needs and affordability factors, buyers will choose the vendor and people they most trust.  I’ve seen cases where buyers don’t choose the best fit and most affordable option because they don’t trust the vendor and/or the people representing the vendor.  Salespeople usually put a lot of effort into building a good rapport and trust with buyers.  Trust extends to every aspect of a vendor company and all the vendor people all the buyers deal with.  Building trust with buyers should be a major objective for all marketing, sales, consulting, management, support and other interactions.

Sometimes B2B buyers decide not to decide and defer buying to some undetermined future time.  When you delve into these cases, the reason for the non-decision is probably because one or more of the above 3 decision factors wasn’t met.  The buyer doesn’t believe they can achieve the goal of the original motivators and decides against proceeding.

Vendors can significantly improve their marketing and sales performance by understanding and focusing on the 3 motivators that initiate the buying process and these 3 key decision factors that primarily influence the buyer’s decision of what they buy and who they buy it from.

Your comments are always welcome.
Copyright © 2010 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

The 3 Reasons That Motivate B2B Buyers to Buy

An interesting (more like disconcerting) observation from some of the work I do is the dichotomy between Information Technology vendors and buyers on why a customer buys a solution.

IT vendors tend to focus a lot on the features and functions of the solutions, their claimed technology leadership, their innovations, and how they are better than the competitors. It’s all about them and how wonderful they are and how wonderful it would be to be their customer. While these might be selling points worth mentioning, they are hardly the reasons most buyers decide to buy.

When I talk to vendors, a lot of the discussion centers around who they can sell something to and how to best go about marketing and selling it to get buyers. When I talk to IT users and buyers, they’re primarily concerned with creating value for their company. Buyers frequently need help interpreting the vendor gobbledygook and vague statements into what a particular solution actually does and how it can create value for their business.

Based on what I’ve seen and experienced over many years in the IT industry, there are three fundamental reasons that motivate IT buyers to buy a solution:

1. Solve a problem – something is wrong or not working properly in the business that seemingly cannot be resolved with the processes and technology they already have. The scope of the problem can be in one or more functional areas or across the company. The scale of the problem may range from a serious detriment to an annoyance. The scope and scale of the problem determines the urgency and budget to resolve the problem.
2. Pursue an opportunity – companies find new opportunities to expand or grow their businesses beyond their current confines. In many instances these opportunities require new or additional business processes and solutions (e.g. a manufacturer adding an aftermarket service center) that they currently don’t have. The scope and scale of the opportunity determines the urgency and budget to buy what is needed to pursue the opportunity.
3. Improve performance – it could be argued that underlying every buying decision a business makes is a goal to improve performance. That’s true, but businesses do have specific performance improvement initiatives such as decreasing inventory investment or reducing days sales outstanding (DSO) that may require the acquisition of specific solutions and/or services. The scope of the performance improvement goal can be in one or more functional areas (e.g. reduce overtime wages in the service department) or across the company (e.g. increase operating cash flow). The scale of the problem may range from imminent demise if not fixed soon to a long range continuous improvement process. The scope and scale determines the urgency and budget to buy.

While all three of these buying motivators could be present in many situations, there is usually one primary motivator. Look for the primary driver and primarily focus on that, but don’t overlook the importance of the other one or two secondary motivators to support the buying decision process.

Marketers and Salespeople can significantly improve their odds of finding and converting suspects and prospects into buyers by paying attention to these three reasons that motivate buyers to buy and by connecting with prospective buyers based on why they want to buy.

In my next post, I’ll explore the next step for buyers – the three reasons that cause them to finally decide to buy and who they buy it from.

Your comments are always welcome.
Copyright © 2010 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Does Your Marketing & Sales Engagement Sync with the Prospects Interests?

Despite highlighting this problem for many years, I’m still regularly dumbfounded when I see what Marketing and Sales organizations do when they engage with prospective buyers after they’ve expressed interest.  This practice regularly exasperates buyers, and I would contend that it’s a major reason buyers look elsewhere after expressing initial interest in a particular company / product / service / solution.

This is the type of scenario that leads to the problem I’m referring to:

• Marketing formulates an appealing value proposition for a target market segment
• A marketing campaign uses typical awareness programs such as white papers and webinars to create awareness and attract prospective buyer interest
• A prospective buyer sees this, the specific value proposition connects with their needs and they express interest by responding to the call-to-action for the marketing program
• Marketing immediately get the prospect into their marketing database for follow-up
• Marketing assign a tracking identifier to designate which campaign / program / webinar / landing page / offer / etc. originated this lead
• The marketing lead qualification and nurturing process kicks in – usually based on a set of standard scripts and progression steps to eventually get a qualified lead to Sales.

But what does marketing do with the tracking identifier that links to the specific value proposition which is the key reason why a prospect expressed interest?

• They primarily use the tracking identifier to analyze the effectiveness of a campaign / program / webinar / landing page / offer / etc. to determine what’s working and what they should continue doing, change, update or drop.
• However, what many marketing organizations fail to do sufficiently is to use the tracking identifier to determine how to specifically engage with each prospect relative to their specific needs – the reason they expressed interest in the first place.
• What is frustrating for buyers is that they see a great value proposition and offer that attracts their attention, but when they express interest they are dumped into the generic marketing sausage factory.

And what happens when Sales get the qualified lead?  The tracking identifier might be visible, but is there anything to highlight what it means and identify how sales should specifically engage with each prospect relative to why they expressed interest?  From what I’ve seen over the years, sales tend to pay insufficient attention to this – they jump on the lead and use the standard selling cycle process to engage with prospects.

The buyer’s perspective and interests get lost in the internal marketing and sales processes.

And what does this look like from a prospective buyer’s perspective?  Put yourself in the buyer’s shoes.  The buyer expresses interest because a very specific value proposition attracted their attention, but the engagement process with the vendor is mostly based on the vendor’s processes and perspective to eventually get a sale.  This is downright frustrating for buyers and makes vendors look incompetent because they can’t connect the dots between why the buyer expressed interest and how they engage with the buyer.

It’s a buyer’s market; the buying cycle takes precedence over the selling cycle.  It’s tough to find prospects and convert them into sales – improve your conversions by paying attention to how your marketing and sales organizations engage with buyers relative to their expressed specific interests.

Your comments are always welcome.
Copyright © 2010 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Marketing & Selling the Service Differentiation in SaaS Solutions

My previous post ‘Are there Differences for Marketing SaaS versus On-Premises Solutions?’ proffered that customers need to make 2 buying decisions with the increasing availability of mainstream SaaS alternatives to traditional On-premises solutions:

1. Which solution best fits their business needs
2. Which acquisition / deployment option best fits their IT strategy.

The second buying decision means that prospective buyers will want information and comparisons to help them make the best decision for their business.  This creates a need and opportunity for marketing and sales to establish additional differentiation for their solution based on the Service aspect of Software as a Service.  It may help to consider the following three questions more broadly to develop your Service differentiation for marketing and selling your SaaS solution:

Who are you competing against?
In the first buying decision of solution fit you are primarily competing against other vendor solutions.  In the second buying decision of acquisition / deployment options you are competing on multiple fronts such as:

• Other vendors on service costs, terms and delivery
• Other vendors on the delivery platform – is it just a SaaS solution or are there Platform as a Service (PaaS) and/or Infrastructure as a Service (IaaS) cloud computing differentiators?
• Customer’s internal IT organization’s perspective on SaaS solutions
• Other vendors and customer’s internal IT on service delivery – Service Level Agreement (SLA), operational controls, security, SAS 70 compliance certification and whether it’s Type I or II, etc.
• Financial – operational expenditure versus capital expenditure considerations
• Total Cost of Ownership – there’s a lot of spin from both On-premises and SaaS marketing and sales pitches about which model costs more over three, five or more years
• Inertia – some buyers and/or companies may be reluctant or even resistant to having their business systems run in a data center they don’t control.

Considering all the possible competitive points will help formulate your best competitive differentiation.

What are customers buying?
Although a customer needs to make 2 decisions during the buying cycle, once they decide on going with a SaaS solution, they are buying one inseparable solution comprising of the application functionality, acquisition method, services, deployment, provisioning and other elements to make it work.  In a previous post I suggested a bifurcated marketing approach to attack the market from two positions to find prospective buyers on either decision track.  However, the overall marketing and selling strategy should be on the goodness of the complete SaaS solution, because that’s what customers are buying.

What are you really selling?
The bottom line is that you’re selling trust – that the customer trusts your company, product and the representative people they’ve dealt with to provide the solution to satisfy their core buying motivations of solving business problems, developing new opportunities, improving performance, increasing profitability, etc.  This isn’t different for SaaS versus On-premises solutions, but SaaS adds another major dimension of trust in the Service aspect.  With the continuing commoditization of business software and minimal functional differentiation between products in the same category, Service is the operative word for differentiation of Software as a Service solutions.  Marketing and selling the Service differentiation will attract and engage prospective buyers, and trust in your company’s ability to deliver the Service will make the sale.

Do you have additional suggestions and ideas for marketing and selling the Service differentiation in SaaS solutions?  Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Are there Differences for Marketing SaaS versus On-Premises Solutions?

From a customer perspective Software as a Service (SaaS) and On-premises business software solutions have the same objectives of creating business value by providing applications and functionality for improving business processes and performance.  The customer buying motivations are the same – solve business problems, develop new opportunities, improve performance, increase profitability, etc.

Marketing SaaS and On-premises business software solutions have the same objectives of developing a credible market presence, creating awareness, generating leads and enabling sales to efficiently sign up new customers.  The marketing tactics are the same – using a familiar mix of webinars, events, collateral, PR, SEO, web content, analyst reviews, email marketing, videos, social media, etc.

When SaaS solutions first emerged as viable alternatives to the traditional On-premises approach, the marketing focus was primarily on the different acquisition and deployment characteristics of SaaS.  More recently the marketing focus for SaaS solutions has shifted to the application functionality and business value for customers as more SaaS and On-premises vendors compete for the same customers in target markets.

So what’s different?  The real difference is that customers now need to make 2 buying decisions:

1. Which solution best fits their business needs
2. Which acquisition / deployment option best fits their IT strategy.

Customers can take two different paths to making the buying the decision:

1. First develop a short list of best fit solutions and then decide on available acquisition / deployment choices as part of the final decision process.  While SaaS versus On-premises may not be the initial primary decision driver, it could be a key final decision factor.
2. First decide which acquisition / deployment option they want and then find the best fit solution that meets the selected acquisition / deployment criteria.  SaaS versus On-premises is the initial primary driver, but functional fit between qualifying solutions will be the final decision factor.

This has implications for marketing both SaaS and On-premises solutions for positioning and differentiating according to each decision choice and path in the customer buying process.  It also has implications for sales to determine how to engage with prospective buyers depending on which decision path they are following.

Given that customers need to make 2 buying decisions and usually take two different paths to reach a decision, business software vendors may want to consider a bifurcated marketing strategy for positioning and differentiation:

1. Traditional functional fit solution marketing approach emphasizing business benefits and applicability of the solution functional capabilities.
2. Acquisition and deployment marketing emphasizing the business and IT benefits of each available acquisition / deployment option.

“If you're attacking your market from multiple positions and your competition isn't, you have all the advantage and it will show up in your increased success and income." – Jay Abraham

I’ll explore the differentiating and positioning possibilities in future blog articles.

Have you faced this situation and how are you approaching it?  Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Marketing Budgets Depend on Measurability

Last week’s article about Are Marketing Budget Cuts Here to Stay? prompted interesting discussions about the role of measurability for supporting marketing budget proposals.  In the current scenario of declining or flat marketing budgets, measurability is a key factor that determines what is funded and what gets cut.

In recent years, marketing organizations have greatly improved capabilities to gather data, do analysis and produce meaningful metrics about most marketing tactics and activities.  This is all good – executives and other functional areas of a company now have a measureable view of marketing’s contribution to the business. Marketing has more insights into the effectiveness of what they’re doing and tracking their activities and results as never before.

Given the constrained business conditions and expanded availability of marketing metrics, it’s no surprise that executives are insisting on more measurable supporting data to determine what and how much of marketing budgets receive funding.  While this may seem like a reasonable approach on first impression, there are some concerns that marketers should consider to ensure that the right mix of marketing plans are approved in their budgets:

• Inbound marketing channels such as websites, search engines, blogs, social media, videos, etc. are online and have built-in data gathering capabilities to produce a vast array of metrics.
• Various research studies and anecdotal information from various marketers indicate a substantial shift of marketing budget allocations to inbound marketing from traditional outbound marketing channels.
• While there is substantial proof that inbound marketing works, is it possible that some of the budget shift is influenced by it being so easily measurable and therefore more quantifiable for budget discussions with executives?
• It’s generally more difficult to get meaningful metrics with direct correlation to outcomes from outbound marketing channels.
• For many B2B and IT companies, outbound marketing channels such as trade shows, conferences, live seminars, etc. used to be the staple marketing tactic to find buyers and engage with customers.  These are the areas that are being cut the most in marketing budgets.
• Although attendance at these type of live events have declined, are we possibly cutting back more than we should because we don’t have good supporting metrics?
• I have talked with many salespeople who lament the continuing trend of decreased participation in these live outbound marketing events.  For many B2B and IT salespeople, meeting people face-to-face and speaking with them at these type of events is still the best way to find qualified prospects.
• Although some metrics such as response rates, unique website visitors, clickthrough rates and others are easy to get and meaningful within a specific performance context, are they really meaningful for determining budget allocations?
• Many marketing metrics are primarily about measuring activities.  But business results are what really count in the end.  Are the metrics for supporting marketing budgets based on funding activities or producing results?
• What about funding for longer-term strategic marketing such as positioning, branding, developing market presence and credibility in target segments, engaging with influencers, etc.  These are vital for producing business results, but tough to measure and maybe more difficult to justify in constrained marketing budgets.

Are you seeing an increasing requirement and importance placed on metrics to get budget allocations and approvals?  How are you dealing with some of the concerns raised above?  Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Buy One Get Another Free – Is this a Good Marketing Tactic for Business Software Vendors?

A major business software vendor recently offered buyers at midsize companies CRM product licenses at no charge when they purchase a particular version of their ERP product.  There are qualification requirements to get the free CRM licenses.  The catch – customers must pay the regular annual maintenance fee on the no cost CRM licenses.

Other business software vendors have made this type of offer either directly with buy one get another deals or indirectly through product bundling deals.  The real objective is to get more of their software and more users in a client site which produces additional implementation services and annual maintenance revenues in exchange for foregoing the initial license fee.  I’ll discuss the business perspective of doing this in next week’s post, and focus on the marketing aspects of this tactic in this post.

From a strategic marketing perspective, considering that everything a company does is marketing and impacts marketing, I think there’s more downside than upside to this tactic for the following reasons:

1. This type of offer smacks of a wheeler-dealer approach to marketing and selling.  We’re talking about serious business buyers, and major industrial strength business software from major well-established vendors.  Do they really want to project a wheeler-dealer type of image for their company in that market?
2. There are a number of qualifying requirements for these types of offers and there’s always the back-end implementation and annual maintenance costs.  Even though the vendors may be upfront, open and honest about disclosing all these terms and conditions, there’s always the risk of the customer perceiving they were taken in by a bait-and-switch type of tactic.
3. The vendor is debasing the product they’re giving away by openly declaring that it has no license value.  The product they’re giving away will be viewed as adjunct or subordinate to the main product customers have to buy.
4. Is there any going back?  Although it may be a limited time special offer, buyers will remember that they attached zero value to this product, and may never be willing to pay for it again.
5. How do you explain this to existing customers who paid for the product that is now being given away?  If I were a customer who previously bought ERP and CRM, I would be on the phone with my sales rep asking for a refund or credit for the CRM I paid for and others are now getting for free.
6. What about customers who previously bought the core product (ERP in this example) but didn’t buy CRM, can they now get the CRM at no cost on the same terms?  If I were a customer in that situation, I would certainly ask for it if I need a CRM system.

While I can see this type of offer generating some activity and sales, I’m struggling to find anything positive from a strategic marketing and market positioning perspective.  I think the product being given away will be forever devalued or debased.  Is that a fair trade for the annual maintenance and short-term service revenues in the vendor's business and product plans?

What do you think about this marketing tactic for major business software vendors?  Have you tried something like this and if so, how did it work out?  Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Is the RFM customer analysis model relevant for B2B marketing?

Continuing the discussion about customer metrics and analysis from previous posts; this post explores the relevance of the RFM (Recency, Frequency, Monetary) customer analysis model for B2B marketers and businesses.

The RFM customer analysis model has been around for over 40 years and is commonly used by Retail, Database Marketing, Direct Marketing, Non-profits and other primarily B2C businesses and marketing organizations. I have personally only encountered minimal use of RFM in B2B marketing but believe there is value in using this model in some aspects of B2B marketing depending on the specific circumstances of a business.

The premise of the RFM model is straightforward:

• Recency – when did a customer last buy? Research shows that Customers who purchased recently are more likely to respond to an offer than those who purchased some time ago.
• Frequency – how many times has a customer bought? More frequent buyers are more likely to buy again.
• Monetary value – what is the value of their lifetime actual spend? Big buyers are more likely to spend more than small buyers.

The RFM analysis ranks each customer for each RFM factor on a 1 to 5 scale (5 is highest). The 3 scores together are the RFM ‘cell’ for each customer ranking their historical propensity to buy with a 555 customer ranking being the best.

The RFM model has limitations and risks such as:

• Historical behavior does provide indicators for future behavior, but it’s not truly predictive.
• Continually targeting high-scoring customers could annoy or alienate them.
• Neglecting lower-scoring customers that should be nurtured.
• Just analyzing the numbers without relating the RFM score to specific business, product and marketing events and circumstances.
• The 125 cell (5x5x5) RFM model is too granular – rather group scores into clusters or bands to get a better picture of what the data are communicating.

The RFM model could be a valuable marketing analysis and segmentation tool to complement and qualify other analysis and segmentation tools used by B2B marketers:

• Relating customer RFM scores to lifetime customer value (LCV) can provide insights for developing and improving revenues from existing customers.
• In addition to the RFM score, the trend or migration between cells over time can provide further actionable information for marketing.
• The RFM score trend over time for major customers or segments of similar customers can provide insights into changing buying behavior and revenue performance.
• Relating RFM scores to results for various campaigns can provide insights into the effectiveness and appeal of particular campaigns for different RFM segments of customers.
• Relating RFM scores to products or product categories. For example, if a customer buys something in a product category do they usually buy more in that category or does it lead to cross-sell opportunities in other categories. Or if they buy something of low monetary value does that lead to buying something of higher monetary value or vice versa.

Do you use a RFM analysis in B2B marketing and if so, how has it worked for you? Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Are you Branding or Positioning?

Two interesting observations I’ve found over the years during discussions with B2B companies about Branding and Positioning:

1. There always seems to be some confusion about what constitutes Branding versus Positioning
2. Too many seem to want to start with Branding or do a Branding exercise.

A Brand is a visual, emotional or cultural identity in the minds of your buyers. Branding is the promotion of this identity in the market to place the visual, emotional or cultural association of your brand in your target buyers’ minds. However, Branding actually comes from Positioning, which must be developed before you even consider doing Branding.

According to Al Ries and Jack Trout in their seminal book Positioning: The Battle for Your Mind, “Positioning starts with a product. A piece of merchandise, a service, a company, an institution, or even a person. Perhaps yourself. But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind [and context] of the prospect.”

Both deal with placing something in your buyers’ minds. The key distinction is that Branding is an identity whereas Positioning is the promise of the value you create for your customers.

Here’s an often cited example to illustrate the difference – Volvo set out many years ago to build the safest vehicles on the road – that was an intentional position they wanted to claim in the automobile market. Volvo did not set out to brand the name, they focused on delivering on their positioning promise and proved it was real, not just some marketing eyewash. Today when someone mentions “safe vehicle” they think “Volvo”, or vice versa. The positioning, and delivering on the promise of value created the brand – not the other way round. That’s where the confusion arises, people look at companies like Volvo today and see a brand, but don’t realize how the brand identity actually evolved from the original positioning.

Branding takes many years, lots of money and consistent delivery on your positioning. When people think about great brands, it’s mostly consumer products like Coke, Nike, Starbucks, etc. I would argue that very few B2B companies qualify as great brands when you don’t confuse brute-force name recognition with branding.

“Nowadays, branding is often what you do when you cannot differentiate. So much of current marketing communications is shouting but with nothing special to say.” – Steve Johnson, Pragmatic Marketing

Most B2B marketers don’t have the resources, time or wherewithal to do a thorough job of branding. Successful B2B companies have great positioning and focus on delivering the promise of that positioning. Positioning is where you should start and spend your time as a successful B2B marketer. Branding will come from good positioning and delivering on your promise.

Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com

Do Psychographics work in B2B Marketing & Sales?

B2B marketers regularly use demographic data of tangible characteristics such as company size, industry classification, number of employees, etc. to segment and target relevant markets. While B2C marketers do use demographics, they also use psychographics to really understand what interests their prospective buyers. Psychographics classifies prospective buyers by psychological attitudes such as aspirations, interests, attitudes, opinions, etc. From a marketing perspective, demographics define what buyers commonly need whereas psychographics define what specific groups of buyers want.

From what I’ve experienced and seen, B2B marketers typically make little or no use of psychographics. The supposed issue is that you’re selling to a business, so there are no psychographics. IMO, that’s wrong and B2B marketers are missing out on connecting with the real context of their prospects and customers.

I see an over-reliance by B2B marketers on industry classifications (SIC, NAICS, NACE, etc.) and company size (revenue, employee count) demographic data for market segmentation without relevant psychographic qualification. A CEO/President of a $50m company doesn’t think of his/her business as ‘small’ – they may see the company an innovative market leader in their vertical industry and market. Their solution requirements may be very different from what the ‘small’ demographic typically defines. While the standard industry classification may tell part of the story, it provides you with same analysis as your competitors and no qualitative differentiation for defining your market segments. The point here is that the product, service, solution that a group of companies really want could be quite different from what the broader pack needs.

“Continue to surprise those who would put you in a neat demographic. Be insistently curious.” – Gordon Gee

The other aspect of psychographics in B2B marketing and selling is that your prospective buyers, influencers and decision makers are real people with psychographic profiles. The production manager may view him/herself as the de-facto COO with broader purview in the business, or the material planner may aspire to be the production manager. You need to market and sell to the views, aspirations and interests of the people who will ultimately decide whether or not to buy your stuff. Does your value proposition and solution support these views, aspirations, opinions and interests? The material planner, who is probably an influencer, will only support your solution if he/she can see it directly supporting their aspiration to be production manager.

You can’t just go out and buy psychographic data like we buy demographic data – it generally requires primary research. This is actually a good thing since the primary research will be tailored to your situation, providing valuable data and analysis to really differentiate yourself from competitors and connect more specifically with buyers in target markets. The primary research doesn’t have to be a major expense – a well constructed online survey can provide good data.

If you are a B2B marketer, do you use psychographics and if so, how do you collect the data, and how has this worked for you?

As always, your comments are welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC. http://marketing.infocat.com