Smart is Dumb, and..

...dumb is smart.

I was reminded of the importance of what I read about years ago in the best-selling negotiating guide, Getting to Yes, watching TURN, AMC's new drama about America's first spy ring in the American Revolution. In episode two, a Captain in the Continental army charged with creating the spy ring, serves dinner to a captured British Captain in a gesture of apparent civility between officers. At the end of the meal, the British Captain, wishing to reciprocate, gives away the exact information the the Continentals needed. The dialog:

British Captain: "Now then, to business. What is it you wish to know?"

American Captain: "Oh nothing, sir. We already know all we need to know."

BC: "Truly? You know where we mean to strike after retaking New York?"

AC: "We know you have four thousand men stationed at Throgs Neck in Brooklyn, New York, as part of your occupation force."

BC: (incredulously) "Four thousand??? (derisive snort) Try six!"

Good information is critical to success, whatever your decision-making endeavor - military, negotiations, strategy, marketing, sales... And, it requires careful planning to obtain, and validate.

Just don't let your ego get in the way.

How Good Are Your Marketplace Insight Capabilities?

Since posting Insight is Where the Game is Won and Lost, many have asked "how can we assess our insights capabilities to identify where to focus?" Building on both internal work I did in the early 2000s, and an article published independently by Herring and Leavitt in 2011,* here is a framework you can use to quickly evaluate your organization's insights capabilities. There are five dimensions to rate your organization on (directions at the bottom):

• Insights culture
• Sources used to generate the information base to help create insights
• Marketplace focus
• Personnel
• Early warning of emerging threats and opportunities

The organization's culture sets the tone for insights creation, which can address markets, customers, technology or competition. Initially reactive (Level 1), executives ask for data and task available personnel to gather information for a presentation or meeting, invariably sourced from easy-to-access published data, such as annual reports, existing market research or industry analyses. The initial focus is on traditional markets, customers, technology and competitors.

Soon, a frustrated executive or ambitious analyst determines that standardized profiles, newsletters and databases will improve organization awareness. Dedicated, often part-time individuals (becoming full-time as demand increases) standardize outputs, create delivery schedules and expand the fact base to include subscriptions to specialized industry publications, and start to focus on partnerships and alliances which impact growth and the ability to compete (Level 2).

Success begets more challenging questions, such as what does this data mean? how will the trends play out? and what emerging customers, technologies and competitors should we be concerned about? Improving capability requires teams of skilled analysts under a functional manager (Level 3). Since the answers are rarely contained in published data, analysts must incorporate validated opinion and observations from individuals who don't have the time to write it all down - customers, channel partners, R&D and sales personnel, their own executives, and industry observers and experts.

The expanding organizational knowledge base generates new requirements: what are the implications of these projections? what options do we have? what should we do about them? how might customers or competitors react? how feasible is a new technology? Mature organizations assign or recruit a senior leader to answer these, using increasingly sophisticated research and analysis techniques and a well-nurtured source network. And the organization expands its focus to better understand the interactions within the industry value chain and how these will play out (Level 4).

Finally, a radical shift occurs, from an emphasis on producing reports to facilitating dialog: the organization structures insights-driven strategic decision-making sessions (Level 5). Key executives interact directly with well-prepared internal and external experts, to determine how to best position the enterprise for future success. Topics might include identifying and evaluating the strategic risks of potential new initiatives, untapped sources of customer value, the next generation of customers, emerging competitive threats (frequently through business wargames) and new growth opportunities.

The importance of early warning. 

The organization's ability to avoid surprises - a major executive concern - increases with the sophistication of its insights capabilities. Fledgling operations frequently start by looking at any of a variety of "megatrends" (example here), "boiling the ocean" to try to find a something the organization can act on. They progress to tracking studies, targeted assessments of specific marketplace issues and systematic monitoring of the periphery (emerging customers, competitors and technologies). But real breakthroughs occur when organizations form heavyweight teams, consisting of both internal and external experts, to address critical emerging issues through innovation and new business models.

How good is your organization's insight capability? Identify where it is in each category, sum the associated levels, and divide by five. If it is:

• below 2.0, it is drowning, with little chance of a lifeline in the next round of budget cuts
• between 2.0 - 3.0, it is treading water, with increasing odds of getting a lifeline
• between 3.0 - 4.0, the shore is in sight, but beware of undercurrents
• above 4.0, the beachhead is secured and the insights function is capable of making a real difference

Now ask what will it take to improve? And, importantly, what will be the impact on the business?

* Herring, Jan and Judith Leavitt, "The Roadmap to a World-Class Intelligence Program," Competitive Intelligence, January - March, 2011 

What Role Does Marketing Play in Your Organization?

Is it

Reactive? Does it focus on promoting new initiatives or products developed elsewhere?

Passive? Does it respond to requests for marketplace information to strategy, sales or new product development teams?

Proactive? Does it actively develop marketplace intelligence as inputs to decision-making processes?

A driver? Is it actively engaged in creating new initiatives and developing the necessary insight required for innovative new factor, operational, organizational and marketplace strategies and plans?

Which role should it play?

Rice, Autos and Online Retailers

Winning Marketplace Strategies

The biggest threat to success comes from failing to understand and incorporate all aspects of a winning marketplace strategy.

Success arises from differentiation in one or – better – more of three domains:

• Customer strategy (identifying and meeting unmet needs, branding – not just advertising – or finding new ways to go to market); 
• Factor strategy (raw materials, supplier relationships, logistics, manufacturing, technology); or
• Organization strategy (new business models, different systems and processes, new culture).

Many marketers focus exclusively on the first. But because differentiation is critical, marketing, perhaps surprisingly to some, has a significant, if not dominant role to play in understanding buyer behavior through the second and third, and then driving necessary changes through the organization.

To many Americans, rice is a simple foodstuff, something we eat in place of potatoes or bread, and as a side dish in Asian restaurants. And, like many, I grew up on Uncle Ben’s, Rice Krispies and Rice-a-Roni. Yet a master sushi chef in Japan might insist on Uonuma Koshihikari, which costs an order of magnitude more than the rice you’ll find in supermarkets (you can buy a 5kg / 11lb bag online for $130).

In 2009, both GM and Chrysler (for the second time) declared bankruptcy. Yet in 1990 – 20 years before – three MIT academics, James Womack, Daniel Jones and Daniel Roos published The Machine That Changed the World, a book detailing the Toyota Production System (TPS) that simultaneously cut costs and increased quality. Worse, intelligence on this radical new production and organization system was available to Detroit in the 1960s – the ideas that led to the TPS came from Ford, which opened its doors to extensive benchmarking by Toyota executives in the 1950s.

And new internet-aided business models can inhibit if not completely destroy your business. Perhaps the best known examples are the bankruptcies of Circuit City and Borders 2011 and, just this month, the announced closing of the remaining Blockbuster stores, driven by online retailers modeled on amazon.com, founded in 1994, almost 20 years ago…

Rice retailers, restaurants and food processors have multiple factor strategies to choose from, influenced by and influencing their customer strategies. And imagine if, when Chrysler first declared bankruptcy in 1979, US auto marketers had focused on understanding the role of Toyota’s factor and organization strategy on consumer behavior. Finally, only a radical shift in strategy to embrace an Internet business model confounded expert opinion that Best Buy would soon follow Circuit City.

Next: Surprise

Opportunity or Afterthought?

Support

How many great customer service calls can you recall? If you’re like me, you’re more likely to remember the endless prompts, being put on hold, or dealing with someone who can’t or won’t solve your problem.

How many trade shows or conferences have you returned from with a slew of unremarkable collateral? Admission: I don’t really collect a lot and mostly throw out what I do.

How many vendor capability presentations have caused you to take action? Or, as a consumer, how many unsolicited calls or emails have actually caused you to buy something? In my case, close to zero.

I once inherited an under-performing business development (cold calling) function. The sales team had hired a bright, engaging and outgoing young professional with the intent of qualifying leads and setting up sales meetings. But after six months and zero meetings, something had to change.

The reason soon became abundantly clear. This erstwhile and eager individual had received no training: not in the offering, not in the sales process and not in how to identify needs and nurture leads.

Six months completely wasted.

Support, or lack thereof, can make or break a customer relationship. Done well, and accounted for properly, it can pay for itself many times over. I willingly pay extra for a premium credit card because of the support I get – the company handles our inquiries with personnel whose sole purpose appears to make me a satisfied customer. And because of that, I almost invariably use that credit card for my purchases. Same with my bank: I maintain a high balance, initially to eliminate monthly fees, but more recently because it enables me to get through quickly to knowledgeable personnel who address my concerns promptly.

The subtitle of George Day’s must read book, The Market Driven Organization** says it all: your job is “Understanding, Attracting and Keeping Valuable Customers.”

This requires great support which, in turn, requires training.

Training is an opportunity, not an afterthought.

*Cartoon posted by Joel Leonard in a LinkedIn update
**Day, George, The Market-Driven Organization: Understanding, Attracting and Keeping Valuable Customers, Free Press, 2007

Get Out of the Office

Sales Readiness

“Everyone lives by selling something,” wrote Scottish author Robert Louis Stevenson.
And perhaps the ONLY thing I disagree with Peter Drucker on is his observation that “the aim of marketing is to make selling unnecessary.” Selling is necessary. While marketing is about understanding and preparing customers to buy, selling is about turning marketing programs into transactions.

That said, the lines between marketing and selling in the digital commerce age have become increasingly blurred. In many cases, when you buy online, it is without human intervention. Gerhard Gschwandtner projects in SellingPower that the number of outside sales personnel will decline from about 18 million today to about 4 million in 2020. He writes, “as the number of software applications is exploding and computing power is accelerating, we will see more sales tasks move online, requiring fewer salespeople. ”

The sales process (human or digital) requires the right collateral, sales tools, presentations and demos and comparative value propositions, albeit it in different formats. Take reference selling, for example. Spokespeople and endorsements are important in both B2C and B2B sales (either through advertising or through a list of references the buyer can call). In the digital world, online ratings and comments by buyers are now supplementing and may eventually become the standard for reference selling.

As this shift occurs, marketers, with their understanding of buyer motivation, will have an important role to play. But to take on this role, many will need to expand their worldview to include revenue generation. Says Sergio Zyman, ex-CMO of Coca Cola, the definition of marketing success is to "sell more stuff, to more people, more often, for more money, more efficiently." To do this, marketers will need to develop a deeper understanding of the sales process.

And the best way to do this is get out of the office and accompany sales people on sales calls.

*Gschwandtner, Gerhard “How Many Sales People Will Be Left in 2020,” SellingPower

Hammering a Nail with a Screwdriver

Awareness Building

Marketing, in many respects, is about building awareness. After all, if customers aren't aware of your offering, they won’t buy it.

Unfortunately, awareness building is perhaps one of the most misunderstood aspects of marketing, by both non-marketers and inexperienced marketers alike.

In your marketing career, you've probably received an ad-hoc request to run an ad, post a press release or write a brochure. Each of these has a place in the marketer’s toolkit, but far too often someone reaches for the tool before adequately assessing the situation. It’s like trying to hammer a nail with a screwdriver because that’s what you have – it might work, but the odds are against it.

Successful marketing communications requires discipline. While there are occasions when you need to run, say, a spot ad as part of an existing initiative, you’ll be better off if you've done the heavy lifting of developing your marketing strategy and plan. Every single communication should be thought through and evaluated against the selected target markets and customer sets and the value proposition, whether it is an individual Tweet or a comprehensive thought leadership campaign. As a marketing executive you can’t, of course, micro-manage every detail, but that’s where the awareness-building plan, with associated tasks and responsibilities comes into play. Everyone should know his or her role, expectations, accountabilities and how he or she will be evaluated.

Start with the value proposition

A value proposition is a clear statement of the promise of value (expressed as a benefit or business result) you will deliver in answer to a customer need or problem. It answers the question “why should a customer buy from us?” Writing a great value proposition is neither easy nor quick, but here are some steps that will help.

1. Clearly and precisely identify the target segment you wish to communicate to. You may have multiple segments which, of course, means you’ll need multiple value propositions.
2. Prioritize the customer’s needs or problems identified in your insights work. 
3. Then list the primary benefit your offering provides for the expressed problem. For businesses, these often focus revenue generation or cost reduction; consumers might see more benefits in terms of status, ease-of-use or service and support. A useful exercise, once you've developed the initial benefits list is to look at businesses as consumers and vice versa. 
4. Compare this to competitive offerings and list the key points of differentiation.

With this information, write out the value proposition. Here is a “starter” I've found helpful:

For [buyers in priority segments] who need [statement of customer's problem], we provide [statement of the solution / key customer benefits].

Unlike [primary competitors], our offering has / does [statement of major points of differentiation]. 

Then test the heck out of it, both internally (especially with product developers and sales personnel) and with a sampling of target buyers.

With a differentiated value proposition, your marcomms team has a tool to create a powerful awareness-building strategy through the available communications channels: traditional advertising, digital advertising, website, direct, social media, events, word-of-mouth and point-of-sale. Assuming they know their stuff, they'll do an outstanding job.

Next: Creating Meaningful Differentiation: How Much Do You Know About Your Competition?

Don't Talk About Marketing

Marketing Strategy and Planning

Many marketing plans look somewhat alike: executive summary, situation analysis, SWOT, objectives, marketing strategy, action plan and financials, with assorted appendices.

And most are equally ineffective.

The biggest deficiency is the lack of a business case: what business results will occur, and for what cost. This is not easy (see the post Meaningful Metrics), often because of the difficulty of proving, for example, the impact an awareness-building initiative had on sales. But building the business case is an absolute must.

It starts with the company objectives. Are you pursuing organic growth? If so, how? By expanding the customer base for current products, increasing sales to existing customers, or entering new markets? Then (yes, this is simplistic, my apologies), how will each marketing initiative support the objective?

Take increasing sales to existing customers. One organization, with two distinct offerings, wanted to increase cross-sales into accounts where one offering dominated. The challenge was that not only did the account executives not know enough about the other offering to create selling opportunities, they didn't know who in the organization to talk to. Marketing got sufficient funding by working with sales to agree on account penetration objectives and identify what programs and investments were needed to "open new doors" (offerings education, easy-to-use collateral and reference-selling coaching).

In another case, the "objective" was to increase sales, based on the assumption that was the only way to increase profits. The research marketing then unearthed a critical insight: consumers saw multiple benefits to the product that were not being communicated. This led to a new communications strategy that both increased unit profits as well as unit sales.

These plans succeeded - that is marketing got the budget it needed - because they focused on business results. The material that makes up many typical marketing plans was available during the strategy discussions, but not "presented" - when the rest of the business leadership team asked specific questions, the marketing team knew the answers.

As Andy Berndt, Head of Google's Creative Lab says, “my advice to marketers is don’t talk about marketing. Bring the CEO ideas that can make the business better or solve a problem.”*

*"What Do You Want From Me: How High-Performing CMOs Exceed Expectations," Spencer Stuart, November 2010

Setting the Marketing Agenda

The marketing agenda is critical to your success. It lets others know what is important and creates a framework for evaluating resource allocation and hiring decisions. While developing the marketing agenda will require input from a variety of constituencies, controlling it will make or break the CMO.

Successful agendas focus on business objectives which, for the CMO, generally fall into one or more of the following categories:

• Acquiring new customers and growing market share
• Retaining high value customers
• Increasing brand awareness
• Leading the charge into new areas

Whatever the objective, effective CMOs focus on five distinct processes:

• Market insight and analysis
• Marketing strategy and planning
• Awareness building
• Sales readiness
• Support

Upcoming posts will take each of these in turn.

Next: Winning Over Time

Meaningful Metrics

First Things First discussed the first of five key things the CMO must do well*, getting the marketing mandate right. Allies, Agnostics and Antagonists focused on the second, building meaningful relationships with functional and business leaders. 

The third is agreeing on how to measure success.

Once you've agreed on the marketing mandate and started the process of building meaningful relationships, it is absolutely imperative that you agree on how success will be measured.

Joe Tripodi,  Executive Vice President and Chief Marketing & Commercial Officer of The Coca-Cola Company, advises CMOs to make the CFO a partner in their leadership teams as they develop marketing budgets and metrics. “Unless you have full transparency on everything going in your budget, you’re going to continue to have this marketing-as-a-black-box philosophy. Once you bring people into the tent and then say, ‘Listen, we have nothing to hide here,’ and jointly determine the metrics for measuring marketing effectiveness, you take marketing out of the little black box”

Says Maureen McGuire, CMO of Bloomberg, “every marketer has had this kind of experience: You want to run an advertising campaign to raise awareness and then everybody’s looking for leads and revenue and you say, well, the metric to measure this is whether or not we actually raised awareness. But people are saying, ‘How many leads did it drive and how come my phone wasn't ringing off the hook?’ One of the most difficult things to convince people of is that you should measure your marketing effort according to the objective you’re setting.”*

John Dragoon, CMO of Houghton Mifflin, says “we've rotated (maybe over-rotated) to marketing metrics – I’m fond of the term ‘the ROI of a handshake.’ No one’s written about the softer things – just because you can’t measure it doesn't mean it shouldn't be done.”

So, how do you set meaningful metrics?

Allies, Agnostics and Antagonists

First Things First discussed the first of five key things the CMO must do well*, getting the marketing mandate right. 

The second is building meaningful relationships with functional and business leaders.

After the CEO, the most important constituents for the CMO are his or her peers. Senior leaders look to the CMO to be a thought leader on the businesses’ critical issues. They want the CMO to learn how other functions and businesses work and what their challenges are and be willing to engage them early in the development of marketing plans.

“I want my CMO to be sincere about enabling cross-functional success; he’s in a position to tear down walls. Get out of the office and spend time with customers, at the factory, attend the national sales meeting. Take an interest in other functions,” said the president of US sales for a consumer products company.**

“As much as possible, try to understand where they’re coming from and make them the hero. Come in humbly and say, ‘You make great things. I can help you tell the world about them. Let’s figure out how our skills are complementary,’” said Andy Berndt, Head of Google’s Creative Lab.***

This is going to require all the political and networking skills you've acquired over the years. You’ll find allies, agnostics and antagonists:

First Things First

Congrats! You're a Marketing Exec - Now What??? listed the five things SpencerStuart* identified that CMOs must do well:

• Get the marketing mandate right
• Build meaningful relationships with functional and business leaders
• Agree on how to measure success
• Collaborate with external partners
• Cultivate the best talent 

Let's take these one at a time.

Most Growth Programs Fail - Part II

Most growth programs fail because they require changes to strategy. And changes to strategy nearly always require changes to the organization: new tasks must be defined, new skills built, a new culture must be nourished and leadership must be aligned up and down the hierarchy. Inattention to these increases the odds that a promising strategy delivers disappointing results.

In addition, many companies aren’t fully aware of how far they must go to differentiate new products or offerings. Effecting these changes requires building commitment on the part of those charged with driving the growth initiative.

Building the necessary commitment begins with the creation of a collective understanding of changes in marketplace dynamics: evolution of customer defined value, technology changes, channel shifts, and new competitive strategies. It strengthens as the team jointly assesses and selects the opportunities, builds a robust strategy and identifies the necessary organizational changes. It solidifies as the team identifies the key elements of a go-to-market plan that creates the platform for sustained performance. And the commitment becomes action through follow-up monitoring.

Most Growth Programs Fail - Part I

The operational efficiency programs that have dominated most organizations during the recession actually erode growth capabilities, according to Betsy Morris (New Rule: Look Out, Not In) who writes in Fortune that of 58 large companies with Six Sigma programs, 91% trailed the S&P following implementation.

Thus, simply identifying changes in the competitive space, brainstorming the “right” opportunities and then demanding performance without changing the business model, the management systems, the cultural inhibitors and leadership mindsets throughout the organization, doom many well-meaning initiatives to mediocrity. The shift to growth as a core competence requires the commitment of everyone involved to explore, select and support new opportunities.

Listening II

Do you listen to understand?

Or do you listen to respond?

Sales v. marketing II

Sales can be outsourced.

Marketing can't.

Sales v. marketing

Sales sells what's on the truck.

Marketing determines what should be on the truck, and where the truck should go.

And both need to understand - directly or through research - what is selling, what is not, and why.

Questions

Do you ask questions?

Or give answers?

Which do you think is more likely to be successful?

Experience matters.

Selling trust

At a Meetup group sponsored by I Love Marketing (lots of good tips and videos), we listened to a local entrepreneur who has developed a 6-figure home cleaning business. She has built both a loyal clientele and workforce by delivering consistently superior results and is able to charge a premium - heck, who hasn't gone through multiple cleaning ladies (this tends to be a female dominated profession) and thus is willing to pay for reliable results.

A cardinal sin

I (try to) regularly attend a variety of Meetup (*see below for a description) groups, for learning and professional and social networking. Basically, you can find a group of people who have similar interests: books, kids, art, food, sports - something for almost everyone.

Mostly, I appreciate deeply the effort of the organizers, and I have no issue if they personally benefit.

What I abhor, though,