Creating a Trend

3/4/09 - Click on "Twitter" in the 5th paragraph for an update on this story...we're getting closer.

What if you could create a trend that could make your product “THE” hot product? Think it’s impossible? Maybe now, but in less than two years IT WILL HAPPEN.

I saw something a few weeks ago that gave me chills when I thought about the potential uses. The tool is...in a sense...the world’s largest and most sophisticated digital listening device. It was built to monitor chatter by those "not so friendly" folks that see the US as the “evil empire”. (Let’s just say that Homeland Security has got this one nailed.) Yes, other companies have similar tools but nothing reaches the size, scale and scope of this one (consider this, it has archived ALL the web pages in the ”www” for the last three years).

Anyway, we’re helping to develop a commercial use for the tool and I as was watching the demonstration, I couldn’t help but think about Malcolm Gladwell’s book The Tipping Point. Many of the concepts he wrote about, I was now seeing play out in real life. This gigantic ear could easily determine who the “connectors” of the digital world are (in real time), “The Power of Context” as Malcom refers to it (in over 20 languages), and when something is going “viral”….all with very sophisticated algorithms and complex math.

It got me thinking, could it also determine how to create a trend? According to the team that developed the tool , it can’t yet because it doesn’t assess and/or integrate a number of important factors needed to understand the audience and what drives behavior. But if you combine the power of this tool (and other similar tools) and social networking…I believe that we are getting close.

A few days later a colleague sent me this post. Facebook is studying “sentiment” behavior. Right now it’s limited to things like how “nasty news is impacting stock” and when folks are “going out” but it can, and will evolve quickly. To this point, Zuckerberg has not really monetized his platform yet, unlike Murdoch with MySpace. So could this be the “killer” app that drives Ad sales into Facebook? It's too soon to tell at this point but it sure sounds good. With 222 million unique visitors sharing very personal information with most of it in the public domain this might be the next piece to fall. Throw in Twitter and marketers will soon have the ability to understand what’s “hot” or has the potential to be “hot”, who says it’s “hot”, why they’re saying it, where they like to buy “hot”, etc.

So the question to marketers is…if you have the opportunity in the near future to make your product the “hottest” thing…could you? You currently have the ability to access massive amounts of consumer data today and that will grow dramatically over the next few years. What are you doing with it now and what might you do with this information in the future? One thing is for certain, it will require new capabilities, vendors, and tools to interpret and draw out insight. Get ready now, it’s coming… and in this situation there will be a clear early mover advantage.

For now, go back and re-read The Tipping Point (replace Hush Puppies with UGGs) and start dreaming about the possibilities, especially what it would take to make it happen. Think about this for a second: you could start a trend for a product that doesn’t exist…demand before supply…yea, that’s “HOT.”

The Goldmine in Your Backyard

This post was recently featured on the DemandGen Report
How to Identify Opportunity in Your Existing Accounts

In my blog post on December 16th (The Myth of the Foot in the Door) I shared with you some thoughts on where NOT to look for new business.

So it’s only fair that I share some ideas on where to look for new business…we try to keep it “fair and balanced” here the B2B S&M Knowledge Sharing channel. And this one is a winner. A guaranteed tip that works 100% of the time or your money back. And the reason it works 100% of the time is…because sales force behavior is predictable and consistent regardless of industry, company, etc.

Here’s why:

• Show me the money – a good sales force sells what they GET PAID on…we like to think of them as “good corporate citizens” but they’re not. And they don't have to be, they're trained and motivated to sell those things that retire quota. Ever heard of the expression…”tell me how I get paid and I’ll tell you what I’m going to do” Who do you think created it?
• Company priorities – good companies pay comp on priority products/solutions. Many times those products are new. Typically, companies have three priority products and/or reps sit on a patch that they need to grow by an incremental 5-10% a year. The best way to achieve that goal for most…sell a few new customers or new things to existing customers.
• Shiny New Thing – sales forces love the latest and greatest. Whether it’s a new product/service and/or customer…if it’s something new to talk about (we’ve done research on this see my blog post, the 2008 Sales Effectiveness study is being released soon). Combine those to ingredients, stir and voila, you have the makings of a goldmine in your backyard.

Here’s how to discover the goldmine:

• Segment your customer database into date acquired using ranges (0-2yrs, 3-5 yrs, etc.
• Segment your products based on when they were launched using ranges (same as above)
• Then create a cross segment with the two sorts (see below)

What I really love about this analysis is that it is simple and actionable. You don’t need to get the Ph.D propeller heads involved who have a tendency to overcomplicate things. Do the analysis and here’s what you will find:

• New customers will be well penetrated with new products (see reasons above)
• Old customers will be well penetrated with older products (ditto)
• As a result, you will most likely find opportunities for new products in older customers and… yes, you guessed it…older products in new customers

We discovered this pattern years ago when building out new sales channels for companies. To avoid channel conflict we had to find “white space” to create opportunity for the new channel. If you have dedicated product specialists this pattern will be even more extreme. You’ll need to do some work on the products (in particular, the older ones +5 years) to see if they’re still relevant. It’s particularly useful for finding opportunities for products that are “rev. 2.0, 3.0, etc". Sales reps tend to take a pass on a product enhancement or extension.

Give it a try, and if you do, please report back your findings. The need for "easy to access" opportunity couldn’t be greater in today’s economy and, as everyone knows, the value of gold goes up in a recession.

Are You a Better Seller than a 6th Grader?

What a Girl Scout can teach us about the customer experience...and how to sell

Last week I had the pleasure…to my surprise…of hearing my 6th grader work the phone selling Girl Scout cookies. She’s been a Girl Scout for a number of years and has achieved “Cookie Diva” (Cookie VIP this year) status numerous times by selling more than 150 boxes of cookies. Although I had helped her over the years by selling some cookies at work, I never actually got to hear her sales pitch, until last night.

Sure, it’s hard to resist a Girl Scout selling cookies, but as a sales and marketing consultant for the last 12 years, I was struck by how well a simple, honest approach to selling worked. It was an interesting and enlightening 30 minutes.

Here are some of things I heard:

• Niceties/Pleasantries – started every conversation with “happy new year”, and talked about their holiday, children, etc. She invested the time in catching up with them even though she had limited time to make calls between homework and bedtime. She didn’t jump to “getting the order.” It made me think about how often I rush through this important step because of time constraints, pressure on revenues, and/or proposals. If customers think that the only time you call them is when you want something...this certainly confirms it.
  
• Customer Knowledge – no sophisticated databases, profiling or scripts. She did her homework by knowing what they ordered last year, what girls were no longer Girl Scouts, etc. which made it easy for customers to place orders because she knew them well.
  
• Attitude – sometimes people consider sales as a “dirty job” and/or that we may be they are inconveniencing/imposing on someone by pitching them…like a stalker (maybe that’s just me). Could this stem from the fact that perhaps we don’t believe in our product or the value it can deliver to our customers. Listening to my daughter, I heard her talk about how good some of the cookies are and know how much they and/or their children love them, how she likes to put the “Thin Mints” in the freezer because she likes to eat them cold or dunk the “Do-Si-Dos” in a glass of milk before bed. Having seen boxes of GS cookies disappear from our shelves, I can attest to how much she loves her product.
  
  She’s not imposing on others, even though she caught some folks at dinner, she’s turning others on to a great product that she loves. What a difference that makes…
  
• Product Knowledge – not only did she know all the cookies, including the new and classics, but also how many where in a box and how they were packaged. The best part was describing how to consume them…see above. I can’t tell you how many marketers I’ve worked over the years that don’t know the products their companies sell. I’m convinced that this lack of product knowledge is the leading reason why sales organizations dismiss or don’t respect marketing/marketers. Want to improve sales and marketing integration, train your marketers on products and see what happens.
  
• Reference/Customer Testimonies – when her personal testimonials weren’t getting the job done she started to talk about others in the family and/or someone they knew. It made me think, do customers really care to hear reps experience with their own products? Maybe not, but do they listen to how convincingly or passionately they’ll testify…you bet! Customer testimonies are always the best --the more relevant the situation the better, but they also judge reps consciously or unconsciously on how well reps make their case (see the bullet above).
  
• Handling Objections & the True Decision Maker – she went after a new customer who told her that they usually buy from a girl in the neighborhood. She then asked for the lady of the house recognizing the dad/husband was not the real decision maker (home schooled on this trick). She got an order but not the full order…the girl in the neighborhood will still get hers...but it will be a couple of boxes short.
  
  How often do our reps stop at “no” or get stuck dealing with the first contact vs the real decision maker? We all know that we’ll have to work harder to get the order than in the past, maybe we don’t go for the home runs as often, and settle for few singles instead.
• Incentives – simple and straight forward, no complicated % or calculations…sell this much…get this. A compensations consultant’s dream, straight forward and easy to implement. On the order sheet, it lists the prize the girls receive based on their sales. As she reached certain level (25 boxes, 50 boxes, etc) she would tell us what prize she was won and what she was going for next. But the big one, the President Club, the one that screams “I’m the Diva” was the Cookie VIP patch.
  
  Good old fashion recognition for a job well done that lasts all year. Oh, how we’ve complicated incentives plans over the years. The search for the ultimate motivator has many times led us down the wrong path. Is it time to simplify, not sure, but I would bet it’s worth investigating.
  
• Connecting it to Social Causes – this is the primary fundraising vehicle for the Girl Scouts and people know it. Can you write off the $3.50 per box as a donation? No, but you do feel good about placing you order, sure. We’re all so socially aware nowadays, are there opportunities to connect your products to the “greater good?” You may have seen the latest ads from IBM and how they’re products and services can help companies “go green.” It’s time to add this to the value proposition…or at least consider it.

Yes, I know that many of us have much more complicated sales processes and products/services, but how much of that is self inflicted? At the end of the day, don’t all customers want the same thing…a good product or service that satisfies a need/want representing good value acquired through a pleasant experience?
During this difficult economic environment, listening to my daughter was a good reminder of how well having a good product, knowing your customers and believing in the value that you’re providing can work. Is it time to simplify our products, value proposition, how we compensate our reps? It may depend on the company, the situation, the market…but I would bet it wouldn’t hurt.
At the end of the night, ten phone calls, 10 closes and over 70 boxes of cookies sold in the matter of 30 minutes (pleasantries, product description, and an order every 3 minutes). Not bad for a junior telemarketer with no training. The GS’s will sell over 200 million boxes of cookies over the next month…more than any cookie manufacturer will sell the entire year.
Does simple work…for some, extremely well. The question is will it work for you?

Managing the "U"

Happy New Year! Well...I'm not sure if happy is the right word, maybe we should just hope that it will be better than 2008.

Anyway, I know that the current economic conditions have many executives scrambling to cut costs and keep their heads above water. As I mentioned in my post on November 6, 2008 entitled Best Practices from the Last Downturn, we’ve gone back and looked at what leading companies did to weather the storm, steal share and come out of the downturns ahead of their competition.

In the video above, MarketBridge CEO Tim Furey looks at what leading companies are doing this time around, and shares some best practices for firms going into 2009.

In Part 2 of this discussion Tim will more closely examine how a few specific companies (namely HP and CapOne) are utilizing the downturn as an opportunity to position themselves as market leaders.

Pre-register Here

The Myth of the "Foot in the Door"

Given our average deal size we used to think we needed to have a scaled down offer to get a foot in the door. Once in, we could then grow the account. We were wrong.

Considering the current economic situation, I know that many companies may be tempted to come up with a “door opener.” A subscale and/or entry level product/service intended to get a foot in the door with a new client and/or a new business division. You’re also probably thinking about going down market into smaller accounts. Although this shift may help satisfy short term revenue needs it will do little to nothing in helping grow your business. Most likely those accounts will not expand and/or even be retained next year.



Here’s how I know. Looking back at the new accounts acquired over the last four years we found some interesting trends and confirmed some things that we knew intuitively (click on the image). When we measured the value of customers in their first year against the average time spent engaged with the client a few key insights emerged. First, three “clusters” of accounts emerged;

1. Customer that grew to beyond $800K in their first year
2. Customer who had first year revenues between $350-$600K
3. Customers who represented under $250K in total billings from the year.

Let’s start with the bottom and work our way up. Customers in cluster 3 had an average value of $150K. Accounts on the lowest end of the spectrum in the “One and Done" zone” (under $10K for example) were “workshop”…our “foot in the door” offer. Guess what, of the 8 that fit that description zero, zippy, nada, grew beyond the initial workshop. The other bad news…only 2 accounts led to follow on work and no company in that grouping was retained the following year.
I was speaking with Larry Emond, CMO of the Gallup Organization the other day and he mentioned that they saw a similar trend; “We found that only 4% of customers who were acquired under a certain price point grew to be substantial customers.”

On the other end of the spectrum are the occasional customers who are big right out of the gate. The “Rare Birds” zone in cluster 1 includes those few customers who start big and for the most part remain large customers YOY. The key to success with this cluster is that they had/have a tendency to have a need for multiple service lines and/or desire a complex solution. This group was looking for a strategic partner versus a vendor for an immediate need. Year over year retention was also good at over 50% and if they used multiple services lines it was almost a sure thing they be retained….and grow.

As Larry also mentioned; “Our big customers today came in as big customers…”. We’ve had the same experience and have grown our top 5 largest accounts by an average of 90% over the last two years.

Customers in cluster 2, the “Sweet Spot” represented the best of both worlds. Although their value was not as high as the “Rare Birds” they were more plentiful. They also had higher price points, high percent of follow on work and YOY retention than the “One & Dones.” Retention rates although not as high as the "Rare Birds" was good (a little over 33%). Bottom line – they represent the model that we need to build our coverage and services bundle against. We have also realigned our resources to help account development/retention activities against this group.

Why do low price point and short engagement acquisitions perform so poorly? We discovered five main reasons for this;

• Length of the engagement – too short to learn business/issues/meet folks/create a relationship, etc.
• They get the “B” team - the "A" team is on existing accounts, as a professional services firm that measure FTE productivity this will always be the case.
• Short term need vs long term problem - we were successful in building a relationship with target buyers within targeted accounts. So much so that they decided to “give us a try.” The problem with that is that it was usually a piece of work that wasn’t strategic.
• Size matters – our win rate and retention rate dropped dramatically on companies that had under $1B in revenues. The only exceptions were situations we were able to sell a solution as the first engagement.
• Culture/Attitude – some companies just don’t have a culture of working with outsiders. This very difficult to know until you’re in the door.

So as you are thinking about 2009 focus on aligning resources and efforts on;

1. Retaining and expanding your biggest customers with new lines of business.
2. Find your "sweetspot” based on this type of analysis…what is the right mix of services and price.
3. Targeting big companies with big needs…there are many out there now just make sure you have the right offer.

Because at the end of the first engagement…a foot in the door just isn’t enough.