Thursday, January 27, 2011

Talk first, sell later

Say I give you $100 which you need to share with another person, whom you have never met before. You determine the split. The other person can accept or reject the offer. If the split is rejected, nobody receives any money.

How do you split the $100? And if you're on the receiving end - what's the lowest offer you would accept?

It's called the ultimatum game. Any classic economist would assert that a rational human being would accept any offer that is greater than zero. After all, one dollar is better than nothing...

However, people are irrational (well, you might be rational, but all others are not).

Academic experiments show that 33%(!) of the splits offered in the ultimatum game are rejected.

Why? Because people perceive the split to be unfair.

Now what happens if we tweak the scenario, and let people chat before evaluating the split offer?

Researcher Al Roth conducted this experiment. Only 5% of the splits were rejected. The conversation improved "conversion" from 66% to 95%!

The point is that marketing is all about building relationship. As marketers or sales people, going directly "for the kill" would yield far worse results than gradually building relationships.

A question that comes to mind though: what if the discussions were carried out online? In Facebook? Over Twitter? Would conversion be higher or lower?

How does online relationship compare to offline relationship?

Friday, January 21, 2011

The cost of free content

Say you could post a free white paper on your website and get 10,000 anonymous downloads. Or, you could require registration and get 200 downloads. What's a better option?

There's an interesting debate between HubSpot's Mike Volpe and David Meerman Scott about putting forms in front of content. Mike thinks you should. David thinks you shouldn't.

I think they're both wrong. And they're both right.

Time and privacy are the currency in today's connected world. Ask people to give you their email, and some will go away. Ask people to make a few extra clicks, and you will lose downloads. Does this mean you shouldn't ask people to register? Of course not.

Marketing 2.0 is all about building relationships with your target audience. What you get greatly depends on what you give. 
At Zend, we have tons of content available for free. You can watch lots of really useful videos, download white papers, read insightful blog posts - no registration is required. But, "pay" us a little - give us your email address - and we will send you marketing-free product alerts or a mostly-technical newsletter. Ready to "pay" the big bucks, i.e. tell us more about yourself? We're happy to let you watch one of our many webinars, or download a free trial of our commercial products.

If you're in Mike Volpe's position (or mine), you're measured on the number of qualified leads you can generate. If you're set out to build trust and interest among your target audience with the hope of turning many of them into qualified leads, remember that relationships are built over time and take a great deal of interaction. Create a "relationship building" plan - make sure you have the right content for each stage, design the right form for the right moment, and go "sell" your content.

Sunday, January 16, 2011

Facebook marketing is too important to be left to marketers

Facebook has become an obsession.

The infographic from SocialHype and says it all. 1 in every 13 people on earth uses Facebook. Your local plumber, credit card company, detergent maker, politician and grandmother most likely have presence on Facebook.

Facebook is the new web. It's where things are happening. It's where herds of prospective buyers come for their daily doze of "like".

It's also become a preferred destination for us marketers. We want to be where our customers are. But once you land in Mark's land, what do you do?

At Zend, Facebook has become an incredibly efficient marketing vehicle. We have always looked at Facebook as an integral part of our marketing mix. Some people like talking to us by phone, some by email, and some are happy to communicate with us through Facebook. It's up to us to take a holistic view and integrate all those wonderful tools for optimal results.

Since we launched our Facebook page, the number of users and interactions have been steadily growing. Facebook has become a top 10 referring site to some of our downloads, so it helps feed our funnel. We're seeing more and more online purchases driven by our Facebook page.

Why did Facebook work well for us? Because we kept marketing out of it... sort of.

Facebook opened up the door to a new world of connecting, searching and sharing online, but at the end of the day, it's all about how you as a marketer can add real value to prospects and customers. Sure we do online contests on Facebook, we promote special offers and new product releases, but what made the difference is our focus on truly helping people solve their problems. In our case, we're helping web developers address their technical questions and issues, so they can be successful at what they do for a living.

The person in charge of our Facebook program is one of the best technical guys in our company. He totally gets the questions, the responses, the nuances, and he speaks the same language our customers do. He often posts tips & tricks, how-to online videos and interesting technical posts. He helps them solve their problems. Could a marketer do this? Probably not.

In summary:
  • Use Facebook to help customers solve their problems
  • Integrate Facebook into your marketing mix and programs
  • Measure results and optimize - users, interactions, search, conversions

Friday, January 14, 2011

"Just enough" sales process

The sales process defines the company's revenue production line. A formalized sales process, if diligently enforced, helps you ensure consistency across your sales teams, and consistency is key to measuring the health of the pipeline, forecasting, and scaling up.

At Identify Software, we had a 26(!) step sales process that covered pre and post sales activities. Sales reps were expected to religiously follow the process. They were trained on messaging and were not to divert from it. They had to document every step in the CRM system. Management spent substantial time on analyzing sales cycle metrics on a weekly basis.

Sales Process at Identify Software

At BMC, we had a 4 step sales process - interest, concurrence, evaluation, decision. Simple.

How detailed should the sales process be?

The answer depends on many factors, such as the type of the product or service being sold, desired skill set of the sales reps, management culture, geos covered and more. At Identify, the exceptionally detailed process enabled management to have stringent control over what sales reps were doing, and get immersed in analytical data.

This came at a price.

Blindly following a recipe leaves no room for creativity. No room for organic optimization. It also affects the type of people you can hire for the job. You can't ask Jamie Oliver to follow a recipe you have written.

So what is one to do? I believe in "just enough" process. Define a process that provides guidance, enables tracking and scaling, yet leaves room for creativity and local adjustments. Keep what works and eliminate what doesn't. After all, the goal is revenue and delighted customers. The process itself is not.

Sunday, January 9, 2011

There's a reason to be unreasonable

Back in the early 90's, when Mark Zuckerberg was making his first steps in elementary school, we used to say that one would tell 5 friends about a product she liked, and 12 friends about a product she didn't. While I can't remember the exact number (it's been 20 years ago, so you'll have to cut me some slack), the point was that it is more likely for customers to be vocal when they are unhappy about your product or service.

The principle holds true in our days, but the scale is vastly different.

What do you do when you're very happy or unhappy with a product? You share it on Facebook, you post it on LinkedIn, you Tweet it, you email it, and before you know it, thousands of people hear you.

What does this mean to us marketers?

As Seth Godin writes, in today's connected world you just have to be unreasonably good. "Reasonable" products, "Satisfied" customers, will not cut it any more. You need to create an experience so good (or so bad...), that it will make people go "wow, this is so cool (bad), I just have to share it with my pals!".

Back to 1991: Mercury (years later acquired by HP) launches a product called TestRunner. The concept is intriguing - one computer records all input/output of another computer to automate test script execution. The problem? It never did work (as a systems engineer, I was one of the guys taking the heat from customers who spent a small fortune buying this product just to realize that its only practical use is as a heater in their cold cubicles...). How many knew about this miserable experience? Very few. In today's world, such a poor performing product might have brought a company to its knees.I can imagine the angry posts, the "I hate TestRunner" Facebook group, and the belligerent tweets.
The point: social media is a fantastic amplifier of customer's voice, but it takes an unreasonably good product to leverage it. Seth has got it right: unreasonable is the new reasonable.

Thursday, January 6, 2011

Light at the end of the funnel

If you're involved in the demand generation side of marketing, your life must be revolving around the funnel. At Zend, funnel is the center of our (marketing) universe. It guides our marketing strategy, and we spend a tremendous amount of time analyzing and optimizing it.

Once you understand 'funnelonomics' you can easily
  • Gain visibility into the health of your lead generation efforts and sales processes
  • Find what the cost per qualified lead is
  • Compare your conversion rates across products/geos and to other companies in your market
  • Test and optimize your lead generation and lead nurturing programs
  • Prioritize marketing projects and tools

How do you measure conversion rates across the funnel?

The answer greatly depends on your marketing tactics and sales process as well as on the tools you use. At Zend, we're using Eloqua for marketing automation and for sales force automation and technical support. We track visits to our website, email opens, paid ad click throughs, downloads, registrations, opportunities and transactions. Since every sales cycle involves numerous online touches, we have ample data and can track conversions automatically.

At BMC, where we had an enterprise sales team selling large enterprise deals, we had to rely on sales people entering the correct lead source in order to close the loop between our lead generation programs and sales opportunities. It was hard, often frustrating, but with the help of our VP Sales we managed to get pretty accurate results.

Bottom line: whatever your sales model is, you should be able to measure the funnel. Mastering funnelonomics can make the difference between darkness and light.

Tuesday, January 4, 2011

Structuring the product management team at US/Israel-based startups

One of the questions every Israeli startup needs to address at some stage is how to structure the product management team. Most startup companies initially focus on the US. Most of these companies have their engineering teams in Israel.

How do you go about launching a new product and getting good-quality customer feedback in a timely manner?

Email, Skype, Video chat, Facebook, Twitter, Wikis - have all made communication simpler, yet none of these communication channels is a replacement for good old face-to-face meetings, which is why product managers need to be as close as possible to their customers. Nothing beats lunch with a customer when it comes to gathering product feedback. On the other hand, no matter how detailed your MRD/PRD is, there will always be changes and quick decisions to be made during development. A good product management team can quickly prioritize, make trade-off decisions and work with the engineers to resolve urgent issues.

Having worked at various companies throughout the years, I got the opportunity to try out every possible structure: a product manager based in Israel and a product marketing manager based in the US; a product manager based in the US and a product marketing manager based in Israel; a product manager in Israel reporting to an executive located in the US; a product manager based in the US reporting to an executive located in Israel, etc.

So what team structure works best?

I believe any structure can work flawlessly, and any structure can fail miserably. In my experience, product management worked well when:
  1. We had A players in the team
  2. We had team members in both the US and Israel
  3. We got egos out of the way
  4. We maintained very intensive communication between all team members
  5. We set clear strategy and goals
Bottom line? A cliché, but nonetheless, it's all about the people.

Sunday, January 2, 2011

Want to improve customer experience? Go under cover

In today's hyper competitive, connected world, it takes a lot more than a great product, a clever marketing plan, or an aggressive sales team for a company to become very successful. It's all about the end-to-end customer experience.

Here are two questions to ask your executive team:
1) Is customer experience important to our company's success? (hope they all say 'yes')
2) What is it like to be a customer of ours?

While most executives will be quick to agree that great customer experience is key to success, few understand what it's really like to do business with their company.

The solution? Go under cover.

Pretend you are prospect: Fill a Contact Us form. Download a product. Call the main office number and ask for help. Challenge the sales rep. Buy a product, if you can, and open a support ticket. Post a question in the company's forum. You get the drift.

I've done this exercise many times. It's typically been an eye-opener. Playing a prospect or a customer helps me understand first-hand what it is like to do business with... me. Combine the insight you get from going under cover with your customer surveys, focus groups and social media reports, and you'll have a good grasp of the true customer experience.

After all, it's not just about your dazzling website, or the call scripts you created for the sales team, or the knowledge base your support team uses. It's about the end-to-end customer experience. So go test it.