Laura Ramos on B2B Marketing Trends

Laura Ramos runs Forrester's B2B Marketing programme. I follow her research closely as, although it's US-centric, it produces some fascinating data on what B2B decision-makers do. Laura's latest comments focuses on B2B Marketing Trends. Pretty much consistent with what we see in the UK - the highlights are (with my notes):

• Commoditisation leading to a lack of differentiation, which leads to marketing all sounding the same (so true);
• B2B buyers buying like consumers. Using peer reviews and social media as decision making inputs (perhaps less true in the UK?);
• Ad avoidance and sales call avoidance - using web sources to delay contact with vendors (I think there is generic 'marketing avoidance' going on);
• Globalisation. Uh huh.

Laura suggests that the outcome of these trends will be the death of B2B Marketing. I agree, at least insofar as B2B marketing can't exist in the way it does. The justification that marketing "creates demand" is slammed by Laura as a cop-out. It needs to be more measurable in sales terms and more aligned with sales.

I'm looking forward to Part 2 of Laura's comments...

Marketing in times of uncertainty

Someone told me that recessions cycle around roughly every 18 years. What do they know?! It seems just like yesterday when the IT industry was flattened by the post Y2K and post 9/11 gloom. An now here we are again. If you’re in any doubt of what’s coming, read Richard Holway’s pessimistic but usually accurate view of the short term future.

Marketing’s core purpose comes to the fore in times of recession. If it doesn’t impact sales, directly and measurably, then it’s impact is questionable. Demonstrable short term sales impact is the best defence against cuts, because in a recession it’s all about short term sales.

Budget cuts are inevitable. This is good news, if you’re still in a job to be able to spend your diminished funds.

Firstly, it means that you must stop doing things that don’t work, or can’t be measured. What would happen if you didn’t do the next event you’ve got planned? What’s the impact of not doing PR for a quarter? Is that DM campaign really worthwhile? Cut what doesn’t work and invest it activity that truly generates sales. Be bold. Ask tough questions.

Budget reductions also mean that you have to be creative, which is what marketing types should be good at. So try new things. I expect more companies to invest in social networking technologies, as they try to reach their customers in new and innovative (and cheaper) ways. I think word-of-mouth campaigns will grow, looking for referrals and leads from existing customers. And I believe vendors will engage more with partner organisations in structured and sophisticated ways, like SAP’s Industry Value Network approach.

Recession is tough for everyone. But there are opportunities to take, if you’re brave enough to chuck out old and ineffective ways of marketing.

Batten down the hatches. Good luck.

Holiday thoughts on marketing

Just back from holiday during which I had time to reflect on fundamental stuff while horizontal and sunkissed. In fact I had some great “being marketed to” experiences, which just confirmed the basics in market. (Context: tourist volumes are down by (some say) 30% in Tenerife.)

1. Have a great product. Let people try the great product, for free. If it’s truly great they’ll buy it. Example: every restaurant along the beach front is touting for business, showing their menus and encouraging reluctant holidaymakers to venture inside. One restaurant, not even on the beach front, is full. That’s the one that’s handing out free samples of fried cod. It tasted great. There was a queue just to get the free samples. Why did no other restaurant try this, and hand out samples of paella? Near-zero incremental cost, ROI in one order.
2. You can differentiate in a commodity market. In Tenerife, all the resorts look basically the same. All the beaches look the same. All the restaurants serve the same food. All the shops sell the same stuff. Differentiation comes through service, through care for customer needs, through creativity. (Note to self: not everyone will appreciate attempts at differentiation. Elvis impersonators appeal to a niche market.)
3. If you have to lie to your prospects to get their attention, there’s something fundamentally wrong in your approach. I’m not sure exactly what the young people offering prize draw scratch cards were selling (timeshare?) but after the fifth time of being accosted even my kids recognised the script. No, you cannot hand the winning ticket in to the tourist office. There are not only three winning tickets each day (or I am improbably lucky, since I won five times). No, I haven’t possible won a cash prize, but I’ll bet you a tenner I’ve won the “free” holiday.

And they say holidays are relaxing…

Marketing efficiency versus marketing effectiveness

How do you measure marketing?

I think that marketing should be measured by sales. Whether you use incremental sales, or total sales, or marketing-budget-to-sales ratio, or sales velocity, or some other metric, it all comes down to sales. Market awareness or “propensity to purchase” and other such things are pointless if they don’t ultimately lead to sales.

The difficulty comes in tying specific campaigns to sales. How do you know if the event you ran caused someone to buy when they wouldn’t have otherwise? So most marketing organisations track overall operational effectiveness and/or efficiency.

Fair enough. But I was shown the following chart by a client. It plots IDC's assessment of 99 firms on two scales: how efficient marketing is (vertical scale), and how effective it is (horizontal).

The chart comes from IDC’s CMO programme, Marketing Investment Planner 2008: Benchmarks and Key Performance Indicators, published in September 2007. (You have to subscribe to this service, which I recommend if you want to benchmark your marketing against peers, or purchase the report to see the whole document,).

What does this chart show us? The startling thing about this scatter diagram is the degree of scatter. It looks pretty much random. I’m guessing that if there is any correlation between effectiveness (how useful marketing is) and efficiency (how well marketing is performed) it’s tiny.

For example, the most efficient marketing operation faired no better in its effectiveness than many less efficient operations.

Put simply, how well you do marketing has little effect on how useful marketing is.

Ouch! What we have here is a case of measuring for measure’s sake. It’s a problem I’ve detected with the whole Marketing Performance Measurement (MPM) movement. It’s all very well measuring marketing, but does it actually help?

Focus on marketing effectiveness, measured in sales, and you won’t go far wrong. Efficiency can come later.

Hugh on marketing

I'm on a roll - third post today and it isn't even noon!

Hugh synopsises The trick to marketing.

Marketers - please read this!

If you're a marketer, or ask the marketing department to do things for you, then read this.

http://sethgodin.typepad.com/seths_blog/2007/08/is-good-enough-.html

Then think, and act, differently.

CMOs have zero impact on sales - official

Sometimes marketing shoots itself in the foot (example: voting to carry on lying). Other times, research does the dirty work. So it is this week. Ad Age reports a new study that demonstrates no impact from marketing on sales. None, nyada, zilch.

The study, to be published in January 2008 in the Journal of Marketing, analysed the performance of 168 firms and concluded that CMOs have zero effect on their company’s financial performance. The firms surveyed include IBM, Intel, Procter & Gamble, Microsoft and Apple.

What’s more worrying, though, is Ad Age’s analysis, questioning whether CMOs should be measured in financial terms, or in such “amorphous concepts” like brand equity or awareness. It’s questions like these that get marketing into trouble in the first place.

Why would a firm reward a CMO for awareness? Awareness of the BBC has just shot up, but for all the wrong reasons. Kwiksave has high awareness – so what?

Brand equity is a great response by marketers to weasel its way out of an awkward situation. “Look at the value our brand creates,” they say, citing the latest study from Millward Brown. But brand value is an outcome of sales, not marketing. It’s a proportion of the market value of the firm less tangible assets. Market value is driven largely by financial results, not by marketing campaigns.

Ad Age also contrasts the short term financial targets with longer term marketing goals. I agree that the impact of marketing programs can take some time to emerge, but we should be able to measure some impact in the course of a financial year. Perhaps not the quarter, but within two-to-three quarters. Otherwise, why are we doing it? The study cited by Ad Age tracked performance over five years. How long does marketing expect to take before it affects financial performance?

As long as the marketing community continues to debate whether it should be measured in financial terms, it will be subject to regular criticism by those that wield the real power in firms: the finance director and the sales director.

End of rant…

IT prefigures marketing by 20 years

The IT industry has seen massive change in the past 20 years. Clearly the technology has advanced in all directions. But I think the biggest change has been the role that IT plays in business. There are few firms, big or small, than function without some form of IT. Some industries, such as financial services, are now completely dependent upon it. It is now typically regarded as a strategic asset underpinning operations, sometime even offering competitive advantage.

It wasn’t always thus. IT argued its importance for most of the eighties and nineties. Should the IT director have a seat on the board? Is IT just a cost centre, or can it add business value? Why does IT cost so much, yet appear to deliver so little?

Most firms adopting technology did so with blind faith, many projects failed to deliver benefits (other than to the vendors), and the industry’s reputation was low.

Most of these issues are now solvable, due to increased professionalism, better measurement and improved management. Importantly, there is also a wider understanding of the benefits and limitations of IT throughout business, not just within the IT industry. It’s not that these issues have gone away –