“Make it a double” barked Chris to the bartender to be heard above the restaurant din.
“Guess your boss came down on you pretty hard, huh?” said Jo.
“Well, I’m angry with myself more than anyone else for not being able to keep a two hundred thousand deal from evaporating” replied Chris.
“That’s why I wanted to buy you a drink, Jo” said Chris with a note of humility.
“I know you’re CFO of a publicly traded company and I figured you could coach me. You know…how to sell someone like you” whispered Chris as he began sipping his martini.
“Aren’t you the slick, seasoned sales exec my daughter married?” kidded Jo.
“Yeah I know but it seems like every deal these days lives or dies in the CFO office and I can’t rely on just selling to IT or the business manager any more” admitted Chris.
“Okay, so let me ask you. Why did you lose this deal?” asked Jo.
“The CFO felt our company was too risky to bet on” explained Chris. “But both IT and the business love the product and our people.”
“The way I look at things it all comes down to risk and reward. I know you’re a small tech company up against some big competitors who are a lot less risky in the CFO’s eyes” mentored Jo.
“Yes, that’s true but our product is more cost-effective, faster to deploy, and just plain better” countered Chris.
“We both know the best product doesn’t win, Chris. You have to find ways to raise the rewards and lower the perceived risk” urged Jo.
“Ok, I’m listening” said Chris.
“Well, on the risk side, did you try tying the $200k deal to specific results?” challenged Jo.
“No. I wanted my $200k PO not a bunch of little deals” Chris reacted.
“I’m not saying you have to make it a $50K deal. What I’m saying is to offer some guarantees. You know, like offering to credit back some percentage if you don’t deliver on the expected ROI” offered Jo.
“Now my CFO would probably hate that” replied Chris.
“True. But if your product is so hot why wouldn’t you stand behind it financially?” said Jo.
“I could explore that with our CFO but I know he’s not going to like it” Chris anticipated.
“Yes but it’s your job to make a deal between the two businesses so you have to bridge the two needs” counseled Jo. “Remember, it’s about lowering risk to the customer’s CFO and yours.”
“So what else besides guarantees?” asked Chris impatiently.
“CFOs talk to CFOs” said Jo in between bites of her bruschetta.
“So you’re saying I should’ve lined up a reference phone call or two with a peer CFO, right?” asked Chris.
“I already reference sold the VP/GM and the IT director but didn’t think to do that for the CFO” admitted Chris.
“Why not? CFOs will trust a peer over just about anyone else” remarked Jo.
“Ok, I’ll get our marketing VP to help me line that up” said Chris perking up.
“Then you also have to be prepared to open your books to the customer’s CFO” said Jo.
“Chances are the CFO already knows the business and techies want your solution but they just needs convincing that this isn’t a stupid vendor choice in terms of liabilities” continued Jo.
“Most startups brag about how much money they have in their war chest from the VCs or how big the company is. But, frankly, what impresses me more are profitability and cash flow” commented Jo.
“You see a profitable, cash flow positive company is actually a lower risk than some flashy, hot company that Gartner puts up on their magic quadrant slide as an innovator” gestured Jo.
“Well, I’m definitely competing against dozens of well funded startups. Maybe I should really play up our profitability rather than getting defensive on our so-so marketing” responded Chris.
“CFOs like profit and cash flow, kid” said Jo. “And you have to convince your CEO or CFO to be willing to show their books to your customer if they want the $200k deal” said Jo. "Of course, the books have to be worth showing."
“Ok, I hear you” said Chris as the double martini was really loosening him up. “Now tell me more about the reward side since you did a decent job helping me on the risk side” said Chris with a smirk.
“Ok wise guy. The good news here is that you can sell benefits. CFOs do respond to rewards that the business unit will derive beyond just functionality” said Jo.
“What do you mean” asked Chris.
“Turn a negative into a positive Mr. Sales Executive” pressed Jo.
“If the customer’s CFO prefers to do business with a bigger competitor of yours just say that you can offer much greater responsiveness as a small, nimble company” aid Jo.
“Appeal to the CFO by saying that they’ll have far more influence on your company’s product roadmap and get much better service and support than they are going with the big player” said Jo. “I wouldn’t exactly say it this way but you could say the CFO’s company can ‘own’ or ‘control’ your company better than the big alternative.”
“I was actually deeply discounting to show the CFO we wanted their business and were hungrier than the big competitor” confessed Chris.
“You may still have to discount. Remember the issue of lower risk. But the point here is to turn the small size into an advantage when it comes to things like control, ownership, and responsiveness” elaborated Chris.
“Alright, Jo, you’ve been a big help here” sighed Chris as he thought of the new game he’d be playing here.
“I’ve already had to learn financial selling with tools like ROI and TCO” said Chris with a depressed tone.
“And CFO’s hate it when vendors waltz in pretending to know their business better than the CFO” retorted Jo.
“So don’t go in with an ROI/TCO analysis to the CFO. Yes, you should do that with the business/IT guys and bring along some customer case studies while you’re at it” said Jo as she finished off her chardonnay.
“What I’m saying is to emphasize all the rewards or strengths you bring” emphasized Jo. “For example, how have you helped other CFO’s deal with Sarbanes Oxley compliance? What have you done to help their capital and operating expense? Where can you show an undeniable contribution to revenue and profit growth?” pushed Jo.
“So don’t talk ROI/TCO. Talk value for money. And show them with real customers of yours. Preferably with customers that are in the same vertical” said Jo.
“Well that’s really not what my marketing VP and CEO are telling me” said Chris questioningly.
“Well they’re probably MBAs who respond to ROI/TCO stuff. Most CFOs are getting high skeptical of that. Remember, the CFO is all about risk. They are surrounded usually by optimists like the CEO, VP of Sales, VP of Marketing, and even VP of Engineering. All of them over promise and under deliver. And the CFO is the one who usually has to reset expectations….downward” said Jo as she motioned with her knife.
“Ok, so I hear you on the reward side by showing how we have actually done things to affect issues like compliance, hard costs savings, revenue growth, etc.” said Chris. “But that sounds like ROI/TCO all over again, isn’t it?” queried Chris.
“The difference is that you don’t walk in plugging in your customer’s supposed figures into your dumb little spreadsheet. Instead, you just present what you’ve done with other customers. We will run our own more own numbers anyway” advised Jo.
“Well, Jo, I guess I’m lucky to have such a terrific mother-in-law and a mentor” said Chris.
“Just keep my daughter happy and we’ll consider it a fair exchange” winked Jo.
| Lower Risk | Raise Benefits |
| Setup reference calls with CFOs | Be more responsive/flexible |
| Consider guarantees | Forget TCO/ROI; show case studies quantifying benefits |
| Open your books; profit/cash flow rule | Tie payments to results |
A Fish’s Business Case for Legs
In my last post, I talked about some of the radical changes that are impacting marketing. Many technologies that marketers have only just begun to integrate into their marketing programs are already being elbowed out by a new generation of technologies.
These new technologies are often first dismissed as fads, and then embraced, only to overwhelm marketers with new strategic and tactical requirements.
But there’s a pattern to this ongoing cycle of disruptive technology, and an apparent direction as well. The clues are everywhere—especially in the efforts marketers are making to salvage the fading programs they’ve just begun to master—and they point to a shifting balance of power between businesses and markets that is significantly changing the practice of marketing.
The most dramatic clue is one that is continually trumpeted in the marketing trade press as some kind of modern corporate tragedy. The average life expectancy of a CMO in an American business is now somewhere between 18 and 23 months. If you ask senior marketers to explain this phenomenon, the most common lament is that CEOs, corporate boards, and Wall Street analysts and investors, just don’t get it. No one understands the incredible value marketers deliver. Put aside the inherent irony that marketers are somehow unable to effectively position their own profession, and it looks to me like a simple case of natural selection. Companies will continue to cycle through marketers until they find a survival advantage. Is it pretty? No. Is it fair? Life rarely is. But when a CMO tells me dismissively, as one recently did, that technology is “not strategic” and is better left to “the younger set”, I start looking over his shoulder for something looming with big teeth.
Here’s the thing. Technology has always been strategic to marketing. In the earliest days of marketing as a corporate discipline, when marketing literally meant “getting your products to market”, technology was significantly focused on transportation. Canals. Railroads. Steam engines. Livery vehicles. Technology and marketing hand in hand. Printing presses and merchandising. Radio, television and advertising. Databases and direct marketing. Computers and mass customization. Internet and electronic commerce. This is an oversimplification, but you get the idea. There’s been a long trajectory of symbiotic relationships between technology and marketing. And yet somehow we live in a world today where marketing and IT are more often at odds than in partnership.
Of course that’s changing, but the transition is chaotic. Beyond all the hype about social computing and Web 2.0, there are three technology meta trends that I’m particularly intrigued by today.
The first is the drive toward greater metrics of performance and accountability. There’s a complex economic drive at work here that I’ve laid out elsewhere, but there’s also a simple technological factor. We’ve evolved incredibly powerful applications and methodologies for measuring complex business systems, and marketing is under a microscope because businesses have a growing capacity to connect the dots between expenses and outcomes. CFOs aren’t breathing down marketers’ necks because they don’t understand the art of marketing, which most don’t, but because they subscribe to the science of measuring risk and return. Marketers come up short in this duel not because they’re unable to adopt the dogma of ROI, but because they parrot this dogma and accept its limitations without seizing metrics to build their own momentum. There are a few beacons in the fog here. Multivariate testing. Dynamic optimization. Contextual ads. Behavioral analytics. But week after week I meet marketers who say they want to embrace innovation, and then put up a barrier to each new technology until someone can prove ROI so they can make a business case to finance. I’ve said this before, but it’s like a prehistoric fish in a dying inland sea demanding a business case for legs.
The second trend is the oversimplification of marketing technology to make it consumable by the lucrative segment of technology challenged marketers. To some degree, this is a positive trend—vendors are being increasingly forced to vastly simplify complex client-server applications to get them through the decision-making process. If IT is a gate-keeper for your marketing applications, you can forget about scaling revenue. SOA. SaaS. On Demand. There’s a whole lot of streamlining going on. But there’s already a strain of hubris showing up among some marketers who suddenly find their annoying IT brother isn’t around to cramp their style anymore. Integration? We’ll worry about that later. Give me some of that point solution over there. Security? That’s what we pay a monthly service fee for. Hey. Let’s get a little open source over here so we customize this baby.
The third trend that’s amazing to watch is enterprise marketers getting cowboyed up with marketing applications. CRM. SFA. BI. EMM. And that’s just the big iron. But when you dig below the surface, as I discussed in my first post in this series, most marketers in this environment are so distracted by the demands of collecting and integrating so much data about their customers that they don’t have any time to build actual relationships with their customers anymore. This trend is of particular interest to me because it dovetails with another major trend. Just as enterprise marketing is fragmenting under the weight of technological complexity, the exact opposite is happening for consumers. Technology is making the buying process simpler. And while marketers are getting so distracted by technology they have little time for conversations with their customers, customers are finding technology makes it easier to carry on conversations amongst themselves. If that sounds poetic, I suspect it’s because the trends are fundamentally intertwined.
I won’t belabor the whole argument now—you can tab through a bunch of posts on the subject starting here—but we come full circle to the argument that the balance of power between business and customers is changing—or more accurately, returning to a state of greater stability. In its simplest form, the argument goes like this: 150 years ago, technology enabled businesses to scale far beyond the regional communities that previously sustained them. They could manufacture great surpluses of products, and advancing transportation enabled them to reach new markets where they had no business reputation, but where the development of branding and advertising could fill the gap. The cost of creating, serving and communicating with mass markets was overwhelmingly expensive, and concentrated in the hands of enterprise. But as technology continued to advance, the simpler technologies became less expensive and more available to the masses. Until we reached the tipping point where consumers could connect to each other directly, and branding and advertising could no longer stand in place of a company’s reputation within the community that sustains it.
The more consumers find it easier to compare notes on the companies they patronize, the more marketers struggle to retain the control they’ve long taken for granted. Sometimes this shows up as denial: You know this whole social marketing thing? It’s just a passing fad. Other times it shows up as hubris: Once we get all these applications fully integrated, we’ll have a demand generating machine! But sometimes it inspires a few really smart marketers to step back and question the whole design of their marketing machine, and to take a new look at their relationship with technology. Whether this will happen among today’s generation of marketing executives, or whether we’ll have to wait for the next generation to take over, I guess just have to watch to find out.
Start your engines: Survey uncovers heightening reliance on search
It seems that businesses, whether they're small or global 2000 concerns, are buying more supplies using search at some point in the B2B procurement process.
Some people begin and end a procurement journey with search.
They actually buy the B2B products through a strictly search-dependent process.
Yet many business buyers still use a combination of word-of-mouth, search, and traditional information-gathering to guide them to the best deals on the most goods. Indeed, there’s still a lot of back and forth: Offline factors influence online activity, and vice-versa, for a merging of the online and the offline worlds.
To find out just how much B2B buying behaviors are shifting, research firm Enquiro Search Solutions earlier in 2007 conducted a survey on B2B buying habits and Web search. They found that online search was consistently employed throughout the entire buying process, from awareness right through to purchase.
I recently had a chance to interview Gord Hotchkiss, president and CEO of Enquiro in Kelowna, British Columbia, as well as Bryan Burdick, COO of ZoomInfo, a B2B search engine based in Waltham, Mass.
Here are some excerpts from our discussion:
We did the original survey in 2004 and, at the time, there wasn't a lot of research out there about search in general, even on the consumer side. There was virtually nothing on the B2B side. The first survey ... certainly proved that search was important. We found that online activity, in particular that connected with search activity, was consistent in a large percentage of purchases. In 2007, we added more insight to the methodology. We wanted to understand the different roles that are typical in B2B purchases -- economic buyers versus technical buyers versus user buyers. We also wanted to get more understanding of the different phases of the buying cycle.
As far as the main takeaways from the study, obviously online activity is more important than ever. In fact, we asked respondents to indicate from a list of over 30 influencers what was most important to them in making the purchase decision. Online factors, such as interaction with the vendor Website and interaction with the search engine were right up there with the traditional winner, word of mouth. What we see is a real link between those and looking for objective information and specific detail.
We did notice an evolution of behavior as you move through the funnel, and the nature of the interactions with the different online resources changes how you navigate to them and how you go to different sites for information. But, online research was consistent through the entire process, from awareness right through to purchase. There’s a lot of back and forth. ... We saw a merging of the online and the offline worlds in making these decisions and trying to come to what’s the right decision for your company or what’s the right product or service.
We just found increased reliance on online to do that research. When we say "increased reliance," we're probably talking 10 percentage points up over the three years. So, if 65 percent of the people were doing it in 2004, 75 percent of the people are doing it now. That’s primarily where we saw the trends going.
When we looked at the different phases of the buying cycle, it starts with awareness. You become aware that you need something. There was a high percentage of people -- in the high 60-percent range -- who said, "Once I become aware that I need something, the first place I'm going to go is the search engine to start looking for it." A lot of that traffic is going to end up on Google. It was the overwhelming choice among general search engines for B2B buyers.
But, as you move through the process, you start doing what we call a "landscape search." The first search is to get the lay of the land to figure out the information sites that have the information you are looking for. Who are the main vendors playing in this space? Where are the best bets to go and get more information to help make this purchase decision?
So, those first searches tend to be fairly generic -- shorter key phrases -- just to get the lay of the land to figure out where to go. As you progress, search tends to become more of a navigational shortcut, and we’ve seen this activity increase over the last two to three years. Increasingly, we're using search engines to get us from point A to point B online.
We also wanted to get a retroactive view of a successful transaction. So, in the second part of the survey, we asked them to recall a transaction they had made in the past 12 months. We wanted to see whether that initial search led to a successful purchase down the road, and, at the end of the road, how the different factors influenced them. So, we actually approached them from a couple of different angles.
Now, 85 percent of these people say they're using online search for some aspect of this purchasing process. It strikes me that this involves trillions of dollars worth of goods. These are big companies and, in some cases, buying lots of goods at over a hundred thousand dollars a whack. Do you concur that we're talking about trillions of dollars of B2B goods now being impacted significantly by the search process?
Absolutely. The importance of this is maybe the most mind-numbing fact to contemplate. Traditionally, the B2B space has been a little slow to move into the search arena. Traditionally, in the search arena, the big advertisers tend to be travel or financial products. B2B is just starting to understand how integral search is to all this activity. When you think of the nature of the B2B purchase, risk avoidance is a huge issue. You want to make sure that whatever decisions you make are well-researched and well-considered purchases. That naturally leads to a lot of online interaction.
The business information search is a primary factor driving [ZoomInfo's] growth. Our company right now is growing on two fronts. One is our traditional paid-search model, where we have subscription services focused on people information that is targeted at salespeople and recruiters as a source for candidates and prospects.
The more rapidly growing piece of our business is the advertising-driven business information search engine, which I think is a really interesting trend related to the concept you guys were just talking about. Not only does the B2B advertiser spend lots of money today trying to reach out, but the B2B searcher has new tools, services, and capabilities that provide a richer, better, more efficient search than they’ve had through the traditional search engines.
Everybody needs to be focused on search. I can’t see an exception. You mentioned the percentage that said they would go online. We segmented out the group that didn’t indicate they go online to see what was unique about them. The only thing unique about them was their age. They tended to be older buyers and tended to be with smaller organizations, where the CEO was more actively involved in the purchase decision. That was really the only variants we saw. If it’s a generational thing, then obviously that percentage is going to get smaller every year.
... From a vertical business information search perspective, that we’re really in the first inning here. A lot of interesting trends and enhancements are going to be coming down the road. One in particular that may have an influence in the next year or two is the community aspect within the search. ... I think that you’ll start to see a marriage of, not only B2B search, but also online community and a factoring into that whole process. Then, who knows where we’ll go from there? ... The word of community.
Read a full transcript of my discussion on the trends of B2B search at http://briefingsdirect.blogspot.com/2007/09/briefingsdirect-podcast-transcript-on.html.
On Alignment between Marketing and Finance
Many marketers are quickly approaching their favorite time of year. Okay, not really. I'm of course talking about budget time.
When I see the challenge that marketers face when it comes to getting their budgets approved, I wonder why it has to be so hard?
Last year, I highlighted a report by MarketingSherpa which concludes that marketers need to do a better job capturing and communicating their value.
According the MarketingSherpa research, "...only 17% of B-to-B marketers we queried were sure their CFOs understood the value of lead generation programs."
Last week, I read a short BtoB article by Carol Krol that shows that this continues to be a challenge. Her article summarizes some new research by the Association of National Advertisers in conjunction with Marketing Management Analytics.
Krol writes, "The study found that a relationship between marketing and finance is often lacking. Sixty-one percent of marketers surveyed for the study said there is “some” cooperation between the two departments when establishing metrics and methodologies for measuring marketing ROI, while only 22% said there was “full” cooperation."
Each discipline is vital to the success of the company and they must work together as team. But I believe that most of our colleagues in finance don’t fully understand marketing. It’s not a surprise that financial executives still view marketing as an expense, a.k.a. cost center, rather than viewing it as an asset that creates revenue.
As marketers we need to do more to educate our peers on the value of marketing. We need to act as one team and seek to understand each other better and learn each other’s language. Bottom line: it's the numbers. So why not begin with that?
Also, I think financial executives should invest time to understand how their marketing team works by sitting in on meetings, observing marketing programs in action and participating in the planning process.
Marketing is tough and often financial people (those who haven't done it) can't fully appreciate the challenges of marketing in a vacuum. They need to get involved especially when they are supporting a more complex sale. Finally, I recommend financial executives seek to understand how well their sales and marketing teams are working together to generate revenue.
I think the late Dale Carnegie has a great quote in his perennial best seller, How to Win Friends and Influence People that summarizes my point.
He writes, “I go fishing up in Maine every summer. Personally I am very fond of strawberries and cream; but I find that for some strange reason fish prefer worms. So when I go fishing, I don’t think about what I want. I think about what they want. I don’t bait the hook with strawberries and cream. Rather, I dangle a worm or a grasshopper in front of the fish and say: “Wouldn’t you like to have that?” Why not use the same common sense when fishing for people?”
5 Practical White Paper Marketing Tips
So you put the hard work and sweat into producing a killer white paper. Now what?? The “post and hope” syndrome is unfortunately a common outcome. Post the white paper up on your website and hope…
What follows are five things you can do to gain more exposure for your white paper:
1. Advertise ONLY your paper in your pay-per-click ads: Rather than advertising your company or product, advertise the paper and see your clicks increase along with opportunity. Reading a “free” white paper might be more compelling for many prospects.
2. Use as a “call to action” in direct mail ads: If you send existing direct mail to prospects, use the white paper as a “reason” for people to visit your site. Create a star burst with a blurb for your paper and a special URL.
3. Email your list: Either notify your readers about the new white paper in a dedicated email or simply create an ad for your white paper and place it into you existing newsletters. This gives your readers a reason to go to your site and helps move prospects into the sales funnel.
4. Add a white paper ad to your blog: Put a thumbnail image of your white paper into your blog’s navigation column. People that frequent your blog might want to find out more and placing the white paper where they can find it is a smart move.
5. Advertise the paper in your email signature: If you’re like me, you send and reply to hundreds of emails daily. Why not use your email signature as an ad for your white paper? “See our latest white paper: 10 Reasons You Fail and How to Succeed…” You get the point.
Have you tried any of these? What are your thoughts?