My thanks to Bristol Strategy for this infographic. It strikes me as a good summary of the fundamental concepts, much like an online marketing primer for 2018.
Close your eyes. Step away from the daily routine. Answer the essential ‘why they buy’ questions. Why does anybody buy what you’re selling? What do they get out of it? What need does it fill? Do you offer identifiable benefits? What are they?
Drills vs. holes
Some 30 years ago Harvard marketing professor Theodore Levitt said: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” That illustrates the ‘why they buy’ that we all need to understand and remember.
For examplle, one thing I’ve learned from 30-some years in business plan software is that people want the plan, not the software.
It seems obvious but we quickly forget. You think about features, not benefits.
Benefits not features
For example, think about affordable luxuries like the latte at Starbucks, the lobster dinner, the fancy mustard. Starbucks sells a lot more than a cup of coffee, and Gray Poupon mustard is a lot more than just mustard.
Look at hamburgers. McDonald’s and Burger King sell fast and easy and reliable. On Saturdays they’re full of parents with kids between soccer games. It’s not a hamburger, it’s a quick solution to a lunch problem. Then there are the gourmet hamburgers. You can pay 4-5 times what the cheapest hamburgers cost. That’s another affordable luxury.
With high-tech products we’re lured into thinking of features, details, bells and whistles. This is okay for a lot of the market. Some of the market, however, doesn’t buy for features but rather status or prestige or peace of mind or some other intangible.
This kind of thinking is essential for better planning. It helps you build your strategic positioning. Some people buy for price, some for location, some for ease of use, fast delivery, or because their annoying neighbor said they should.
Why do people buy expensive beautifully-packaged sweet-smelling bath soaps? Most of the time they don’t, but imagine it’s February 14. You plan better when you really dig into the buyers’ real motivation.
Whether you’re planning for a start-up or to grow an existing business, start with buyer motivation. Why do they buy from you? What do you do better, or at least different, from your competition? How can you build that difference into strategy?
Sometimes segmentation itself – dividing a market into meaningful segments – is strategy. I knew a consultant who divided potential small business clients up according to their decision-making process. Small businesses divided into a range that varied from the seat-of-the-pants autocratic owners, on one extreme, to the consensus-with-the-team owners, on the other extreme. And I was consulting with Apple Computer in the early years when they changed their marketing from focusing on the model and power of the device (Apple II, Macintosh, etc.) to the nature of the users (home, classroom, small business, enterprise, government). That changed the marketing overnight.
One new spin on this that intrigues me is something I want to call segmentation by strategic market intersection. But, I confess, I’d like a better tag for this. I haven’t found it in a book or article, I just started using it.
I developed it first for havepresence.com, in its lean business plan, which defines its target market as an intersection of traits of small business owners. Have Presence does social media posting for business owners. Its potential market consists of owners who match three specific traits:
- They understand the value of social media;
- They want outside help (not doing it themselves, or with an employee);
- They have available budget to pay for the service.
I can draw that as a Venn diagram, showing the intersection of various factors, as shown here:
This intersection is also potentially a good example of how market numbers are sometimes educated guesses at best. This one isn’t going to angel investors. However, in a hypothetical pitch for a scalable defensible product, the vast majority of the angel investors I know and work with would accept this definition without having to put hard numbers behind it. They’d understand that the variable of wanting outside help eliminates most businesses with more than 20 or so employees, narrowing the U.S. version of this market to about 5 million with employees and another 25 million without employees. And they’d understand that the variable of having available budget would eliminate most of the 25 million without employees. They wouldn’t demand exact numbers and they would understand that there is a market there. The potential market is clearly big enough to operate in.
And I also mentioned a hypothetical market definition of a business addressing women between 50 and 70 with a minimum income. That’s another intersection.
Finally, I was working recently with a company that wanted to address the needs of entrepreneurs outside the U.S. who had relatively high disposable income and were regular users of social media. That diagram is shown here:
In that case, available information gave these entrepreneurs reasonably good numbers of Facebook and Twitter accounts in various countries. And they had to estimate what percentage of the adult populations of these countries were entrepreneurs; and what percentage of those had sufficient disposable income. The result is their target market.
Disclosure: I have a financial interest in Have Presence (my daughter’s business).
My Friday video this week in six years old now but still important. This is what is slowly and steadily replacing advertising. Here’s a quote:
There is good news around the corner — really good news. I call it the idea of tribes. What tribes are, is a very simple concept that goes back 50,000 years. It’s about leading and connecting people and ideas. And it’s something that people have wanted forever. Lots of people are used to having a spiritual tribe, or a church tribe, having a work tribe, having a community tribe. But now, thanks to the internet, thanks to the explosion of mass media, thanks to a lot of other things that are bubbling through our society around the world, tribes are everywhere.
Here’s the link to the TED site that hosts this talk: Seth Godin on the Tribes We Lead.
Here’s a mistake I made that taught me a lot and helped me teach others.
Many years ago, I took a new product – early business planning software – to its first trade show. We did the standard booth thing, brought along products, and sell sheets, business cards, and so forth. And we put a plastic fishbowl on top of our main table, in front of a large sign that said “Free Drawing. Drop your business card here for a free business planning software.”
Each of the three days, at the end of the day, we drew a card from the bowl. Later we sent the winners their software. And when the trade show was done, we ended up with four fishbowls full of business cards; in fact we had more than 500 cards.
And those cards were completely useless to us. The people who left them weren’t really leads for us. They didn’t actually want business planning software. They had brought cards to the trade show and they dropped those cards into every box, hat, or bowl that offered them something free. The leads were way more expensive to follow up than what they yielded in sales when we did. Thank heavens we had the sense to test a few dozen first, before we went to the expense of getting them all typed into an accessible list.
The following year we took the same product to the same trade show and the same fish bowl too. That second year, however, we put a sign by the bowl that said: “For more information about Business Plan Pro, drop your business card here.”
After that trade show we ended up with a few dozen good leads – dozens, not hundreds. Those people were actually interested in what we were selling. Calling them back was worth the effort.
I’ve used this story often in teaching and seminars and managing my own company because to me it illustrates the importance of target marketing and focus. In this example, quality of leads is much more important than quantity. Hundreds of bad leads are worth nothing, while a few dozen good leads have real value.
What distinguishes the good leads from the bad leads is their interest. People walking the aisles at a trade show drop their business cards in any fish bowl offering something free, whether they are interested or not in what that exhibitor is selling. We didn’t want a lot of cards. We wanted cards from people interested in our specific product, business planning software, and not cards from anybody (via lucica at dress head). The marketing follow-up was expensive , whether it was inputting data from business cards or mailing information, and the marketing yield was good with well-targeted prospects and bad with generalized prospects.
Some businesses depend more on targeting than others. Think about that for your business. Do you sell to everybody? Or do you sell to a specialized group? What kind of fishbowl do you want?
It’s a common question. How do I know market size?
Of course what one does for that depends on the type of business. What works for a web app won’t work for a restaurant. The kinds of information available in one market differs from another. Local demographics might be quite enough for a retail business, but irrelevant for a web business.
Know Your Market or Prove Market Size
What you do, how much research you do, also depends very much on your real business need. Do you want to feel comfortable taking a risk, for yourself; or are you looking to prove a market to the satisfaction of outsiders (such as investors)? Knowing the market is one thing, proving it quite another. Many entrepreneurs will skimp on market research when they are comfortable with their feel for their market. And why not? Business information is worth the decisions it causes, and if you are going to take the risk anyhow, and market research is difficult and expensive, then it’s not good business. But you really do need to know your market. If you don’t know, for sure, find out.
Think of it as like a crossword puzzle. You search for clues. You put clues together to fill gaps. And with that in mind, figure out how many customers are potentially in the market as a whole, and how many of them you can reach. Use available demographics, industry-by-industry data, web searches, financials of existing companies, whatever sources are available.
Try to divide the market into meaningful groups, called segments. That will help you guess how much potential there is by segment. As an example, a computer manufacturer might segment the market by usage, as in homes, schools, small business, enterprise, and government.
Avoid Tunnel Vision
Don’t get tunnel vision about data and research. Way too often I see people struggling to find information to fit their preconceived notions of what’s needed instead of accommodating what’s available. For example, I dealt with a person who was going crazy trying to divide businesses into categories of annual revenue, which is impossible, instead of just defining categories by numbers of employees, which is easy to find. Take what information is available, if it works and takes you to meaningful business decisions; not what information you thought you wanted.
- If you want to divide U.S. businesses into segments according to size, use the numbers of employees data the government offers; don’t insist on some other size factor such as revenues or office space.
- If you want to divide businesses into size using employee numbers, use the government classifications. The U.S. economic census divides employee numbers into the classifications shown below. It obviously makes no sense to decide to break the sizes into 1-15 and 16-20 when the government already uses a different classification.
- As you look for market information you’ll often find classifications established by somebody else, before you started looking. Be flexible. Use what’s available.
The point? Do what you have to, to make your business decisions. If you have to prove your market, watch sources and validators.
I think we’ve gone too far on marketing and metrics. We used to do most of our marketing blind, essentially guessing whether or not it worked. Now we have analytics to measure almost everything. Where we’ve gone to far now is we’re tempted to discount, entirely, what we can’t measure. And that’s just wrong. We are headed for a crisis of social metrics.
“Not everything that can be counted counts, and not everything that counts can be counted.”– Albert Einstein
It used to be mostly pay and pray
To those of us old enough to have done marketing in the last century, to know click rates, conversions, email opens, visits, hits, downloads and all of that is heaven. We used to guess at the message, guess at the medium, guess the delivery, then pay and pray.
Don’t think “and where did you hear about us” ever worked well. Most of the time, the phone operator forgot to ask, or chose not to ask to focus on getting the order, not the info. And when they did ask, two thirds of the time the answer was useless. They’d cite some magazine we’d never advertised in.
We lived with it because we had to. Big companies had research, focus groups, surveys, better answer to our collective hunger for knowing. But really, it was all just guessing. I routinely made marketing decisions based on what maybe a fourth of our customers told us about the source of their interest.
Show me the money became show me the analytics.
I’ve read some of the best minds in marketing confuse “measurable” with “valuable.” Now that we have analytics, we want analytics. What can’t be measured isn’t worth doing. What’s the value of a like in Facebook or a follower in Twitter? Where are the metrics?
To some extent this makes perfect sense. Clicks are attention. Clicks become visits, and visits become conversions, and conversions become money. Why guess. You can know. You can get amazing detail on what works and what doesn’t work on a website, a landing page, a checkout page, and emails of course. A/B testing means immediate feedback and fine tuning results. As the Huffington Post rode its meteoric rise to fame, they did real-time testing on headlines and changed them, improved their traffic impact, in minutes.
Compared to what we used to do, this is heaven. Count me in. Except …
But aren’t there values we can’t measure?
Consider this case. Put yourself in this place. So you’re running a business. You get featured, favorably, in a segment in the local television news. Tens of thousands of people see you as a local expert in your field. Is that valuable to you? Will it show up in your website metrics? Of course it probably will, right? You’ll see a bump in traffic.
But think of this problem: Let’s say that win the other night was the result of years of local speaking dates, lunches with journalists, meetings, conferences, and, well, call it just showing up. That ended with the TV reporter calling you. Right? So where were the metrics? You have the bump now, months, years, later. But were you able to track the analytics of every article, blog post, conference presentation? Were there analytics? Did you have metrics? No. But you still did the work. And it was still worth it.
Voila. There is still marketing that isn’t immediately measurable. Not everything is clicks.
Crisis of social metrics
Now we have social media. It’s amplified word of mouth. It’s like a giant conversation. People who focus on analytics – clicks, leads, visits, hits, downloads, conversions – are going to question the return on relationship, the analytics of long-term relationship, offering useful content, contributing, standing up for values, representing something. So they are tempted to focus their social media representation on what is essentially self-centered selling. Offers, promotions, product announcements, and all the equivalents of shouting slogans, don’t generate relationships. They don’t generate empathy, trust, or – the ultimate definition of marketing – getting people to know, like, and trust you and your business.
And a fascinating trade-off. Social media done right generates long-term relationship, know-like-and-trust. I’m convinced it’s critical to business now and is going to be steadily more so in the future. But what works takes time, and doesn’t generate instant analytics. It pays off over the long term. So is that not also valuable?
(Note: I posted this last week on the SBA Industry Word blog as 10 Essentials of A Marketing Plan in 2016.)
Clearly, technology has changed marketing a lot. We fast forward through ads on television and block them on our devices. We have amplified word of mouth in social media. We pour over analytics and metrics. But what about the marketing plan? Has technology changed marketing planning?
One thing for sure: The fundamentals still apply. As much as ever, marketing is still getting people to know, like, and trust your business. As much as ever, marketing still needs defining target markets, knowing those market segments, reaching the right people with the right message. Pricing is still the most important message, and the lowest price is – as always – not necessarily the best price.
Another thing for sure: the marketing mix, the tactics, are changing rapidly. Goodbye to the yellow pages, hello Facebook. Goodbye public relations, hello social media. Goodbye advertising, hello content marketing.
And where is the marketing plan, in all this? Let me suggest 10 marketing plan essentials for 2016. The fundamentals still apply, but the specifics are changing.
- Target Market. The better you define it, the better for the marketing. Experts recommend describing an ideal target customer in detail. Don’t try to please everybody. Instead, please some specific kinds of buyers who have the right set of needs, habits, locations, etc.
- Messaging. A summary of the main tag lines, key selling points, value proposition and so forth (we could call this messaging). There are a lot of different jargon words for this, so be flexible.
- Media. Discussion of media, which almost has to be social media and content marketing these days, but used to be advertising budgets, placement, and so on. I’m growing more interested in taking steps beyond just content marketing, to distributed marketing, and real engagement. That means something more than “post and pray.’ As you think about this topic, think about where your potential customers will see your message. What else do you do to help the right people find your message? To track what they say about it?
- Pricing. You have to make pricing match product or service, market, or messaging. Don’t assume that the lowest price wins. Pricing is your most important marketing message. Would you buy day-old sushi because it’s cheap? Your price needs to synchronize with your product offering and your target market. If you discount excellence, it becomes less credible in the eyes of your potential customers. And if your strategy is selling an undifferentiated lowest price product or service, make sure that matches the rest of your marketing
- Channels. For product businesses you have the classic question of channels of distribution, either direct (usually web and mobile these days) or via distributors and retail, or direct to retail. Information and service businesses need to consider channels too, even though the channels are marketing channels, such as web and mobile. We all need traffic of one sort or another
- Promotion. These days promotion might be as simple as consistent presence in the main social media platforms. It might be email marketing, advertising, affiliate sites, public relations, price promotion, and events.
- Tasks and major milestones. Every good plan requires some specific tasks and major milestones to make it concrete. Otherwise it’s just theory. You need to be able to track progress against the plan. Milestones help us get things done. We work towards goals.
- Important metrics. It takes real numbers to actually work a plan. That might be sales, web traffic or store traffic, leads, presentations, seminars, conversions, tweets, posts, likes, follows, or whatever. Make it measurable.
- Review schedule. Keep your plan as short as possible, just lists and tables, because it’s only good for a few weeks before it needs revision. The real world keeps intervening. You need to plan ahead for a monthly meeting to review results and revise that plan.
- Budgets. You have to manage the money. A good marketing plan needs to include budgets for expenses, and the sales that result from the different activities.
In the stadium, on the field, confetti everywhere, the Super Bowl is over, the winners celebrate. Team, journalists, and celebrities surround the star quarterback, 39 years old, whose team has won. This is the perfect end to a stellar career in pro sports. He has millions of eyes on him as he says: “I’m going to drink a lot of Budweiser tonight.”
Welcome to 2016. The like and follow and threatens old-style advertising. Big brands have big budgets, but we buy what our online friends tell us too. And the quarterback, so the big brand hopes, is our friend. And the Peyton Manning’s beer call sparked a storm of social media. And maybe business lessons learned. Search the web or any social media platform for #manning #budweiser and you’ll see.
Beer and Disney World
It’s not that different from 29 years ago when that Super Bowl’s winning quarterback said “I’m going to Disney World” in exactly the same situation. Phil Simms, that quarterback, said Disney paid him $50,000 to say it. Of course there was no storm of social media back then. And, according to Wikipedia, other sport stars who did the same as Simms at championship moments included Joe Montana, Tom Brady, Magic Johnson, Kareem Abdul-Jabbar, and along list of others. The Disney World remarks continued through last year’s Super Bowl, when New England Patriot stars Malcolm Butler and Julian Edelman both did it. The U.S. women’s soccer team did it in 1999. Ellen DeGeneres’ television character did it in the 1997 TV episode when she came out as lesbian.
So what? Sure, there’s the obvious problem with plugging beer in that situation. Last I looked, drinking “a lot of” beer rarely correlates with success on any playing field.
It’s also a marker of change. Big brands struggle as ads become less effective because of blocking, fast forwarding, or just plain ignoring them. And opinions published in social media swirl and engulf celebrity and business personas these days.
Business Lessons Learned
My conclusion, for startups and small business: It’s a reminder. You can’t ask for the close so quickly anymore. Nobody gets fooled. Peyton Manning may or may not have made some big bucks with that comment (there are lots of competing facts about how much), but his brand suffered. You and I don’t have the opportunity and spotlight he had last night, but we do have our equivalents, here and there. Don’t blow it with anything that obvious. People see through it. They might ding you in amplified word of mouth. Or, maybe worse, they will probably just ignore you.
(My latest column in the Eugene Register Guard. Click here for the original. Reposted here with permission)
Social media marketing earthquake
The social media marketing earthquake is already here. And, in keeping with the forecast theme in this month’s blue chip, here’s a prediction: content marketing tsunami.
The shaking started as social media took off with Facebook, MySpace, LinkedIn and early blogs. It continued with Twitter, Pinterest and Instagram.
So-called content marketing emerged. Marketing is getting people to know, like and trust you. Content marketing does that with blogging, online videos and other online content that businesses offer to people for free, through social media. Content marketing is theoretically free to businesses because they don’t pay for space, like they do with traditional advertising. But what isn’t free is the production of content that is interesting, useful, funny or just plain not boring on social media and blogs, as an alternative to advertising.
You can find examples of successful content marketing on the Web. Anita Campbell of Small Business Trends turned a thoughtful blog into a multi-million-dollar information business. John Jantsch of Duct Tape Marketing turned a book into a multi-million-dollar blog, consultant network, and speaking business. Gary Vaynerchuk of VaynerMedia made a fortune in writing and speaking. They were individual experts, but these businesses grew because people found their content interesting and useful. Readership became relationship, which led to customers.
This earthquake has already changed the business landscape. Marketing stories are more important than ever. Smaller companies with good stories can compete effectively against big brands. Advertising is no longer as simple as value proposition message repeated in media. The bigger budget doesn’t always win.
Content marketing tsunami
And the tsunami? Billions of dollars that have been flowing into big-brand advertising budgets are now going into social media and content marketing. What we’ve seen so far, however, is a trickle compared to what’s coming.
Those big budgets are managed by a generation that grew up with advertising as the key to big-brand marketing. Those people are being dragged, kicking and screaming in many cases, into this new world. They may not like it. It’s not what they grew up with. It’s not what they came to power with. But these are smart people and more of them get it.
For example, Target created a free iPad app, “Made For U College Styler,” that helps college students design their dorm room decor. It gathers information from their social media accounts to guess at style, then suggests items they can buy at Target. They want loyalty so they offer utility. Zappos, originally an innovative online shoe retailer, rode social media to a lucrative sale to Amazon and big-brand success. One of Zappos’ biggest successes was a Pinterest page that posted pictures of free products. Burger King, Snapple, Red Bull, and BMW are offering brand-related content on multiple social media sites.
The big-budget attention is going to create increasing competition in content marketing. The innovators had the field to themselves when it started 10 to 15 years ago. Not so much in the future.
Yet few people understand how evolving social media and content marketing will carry an implicit trade-off between short- and long-term success. The kind of tactics that might generate immediate business leads won’t work for the long haul. Long-term success in this new world is about legitimately helping people, offering useful information and being interesting — or at least not boring — to establish long-term relationships with potential customers.
Long-term success will be won by people and businesses that create, curate, and share legitimately good content, not self-serving, thinly disguised infomercial-like content. New technology has leveled the playing field in ways that neutralize advertising budgets and reward real sharing.
It’s going to take work and patience. But here’s the good news: Business owners who stick with it will be rewarded through long-term relationships with customers, which, by the way, is what marketing is all about.