Wait, can you answer these 3 questions about your new product?

Just before you start building your shiny new product (which will undoubtedly re-define the way we think of <insert-your-market-here>), make sure you have answers to the following questions:

1. Who will be buying and who will be using your product?
2. What need does your product address for those identified in the first question?
3. How is your product significantly better than other solutions that satisfy the need listed in the second question?

Pretty basic Marketing 101 stuff, right? As bizzare as it may seem, many of the entrepreneurs and heads of marketing I meet either fail to ask these questions or fail to internally agree on what the answers are.

Before devising financial models, estimating conversion rates, building go-to-market plans, creating cutting-edge websites and investing in marketing automation, make sure you have your bases covered - truly understand your target personas, figure out if they would care about your product and why they would prefer it over alternatives.

Note that the answers will most likely change along the way, so keep asking...

PS: While in the process of posting I received Seth Godin's latest post that talks about people's reluctance to ask hard questions... great minds ;)

Social media insights from the 60's

Social media is anything but new. Social engagement, social sharing and even social media marketing have been in existence long before Mark Zuckerberg built Facebook and Reid Hoffman launched LinkedIn.

Back in 1966(!), Ernest Dichter, the "father of motivational research", conducted a large study of word of mouth. One of the questions he looked at is what's driving people to communicate about brands. He identified four motivations:

1. A product delivers an outstanding experience that must be shared
2. An individual wants to gain attention or assert superiority
3. A person wants to express neighborliness, caring, and friendship
4. A message is so humorous or informative that it deserves sharing

Dichter's findings from almost 50 years ago still hold true. The underlying concept of social media hasn't changed. What the Internet and social media tools allowed us to do is take an age long practice and scale it almost infinitely.

The research brings up another important point that I discussed in this blog. The product is the most important ingredient in the marketing strategy.

Witty social media campaigns, snazzy web sites and even good content will not compensate for a bad product...

Close a $2M software sale by phone? Yes you can!

A few days ago I attended the Sales & Marketing 2.0 executive group meetup in Tel-Aviv.

The CMO of a fast growing startup - can't say the name, but it sounds like a that of a tropical fruit :) - shared with us how they go about marketing and selling their product, a SaaS that helps IT professionals perform certain risk-related tasks.

The company targets heads of IT at mid-size and large enterprises. They're in the ERP market. Their product is by no means cheap. You won't find them in any Gartner magic quadrant.

How many enterprise sales people does this company have?

None.

100% of their transactions are done through an inside sales team based in Israel. They sell to organizations across the globe. They close deals of five, six and even seven figures - by phone.

What's the secret sauce?

I believe it's a combination of several ingredients:

• A great product that is incredibly easy to try out (SaaS delivery model helps, but is not mandatory) 
• A crisp, compelling value proposition delivered to exactly the right audience
• A well oiled marketing and sales machine that leverages automation and personalization technologies
• A good business model that is simple and aligned with perceived value and usage pattern
• Delighted customers that spread the word and lower pre-purchase anxiety levels

Companies like New Relic, SolarWinds and Atlassian have figured it out. They're selling tons of software to organizations of all sizes with little or no enterprise sales.

Is it the end or enterprise sales? Probably not. Some product and some buyers will always require the more personal touch, yet these companies prove that you can sell software - even if it's expensive, and even if it's sold to a very traditional buyer - solely over the phone or through the web. The benefits? Lower cost of sale, faster scale up.

We don't need no "Like"

Many companies are now immersed in a Facebook arms race. Frito-Lay recently set Guinness record for Facebook “Likes”, getting 1,571,161 “Likes” in 24 hours. That’s pretty impressive, yet setting aside the excitement of making it to the Guinness World Records, is it all that important?

“Like” is easy. Too easy. 

A swift click of a mouse and you’re moving on to the next person-falling-into-water-video or really-cute-friend-haircut-photo.

A “Like” in itself has little value. 

Today’s hyper-connected, always-on, information-overloaded world calls for a well thought out, integrated engagement strategy that builds on real discussions and top notch content.

Steve Rubel, EVP of Global Strategy and Insights for Edelman, recently gave an excellent talk about changing the nature of authority. Steve noted that more content will be created today than existed in entirety before 2003(!). Everyone is a writer, a video producer, a reviewer, a commenter. 

So who do you trust when you make your buying decision? Who's the expert?

Becoming a subject matter expert has become so much easier – content distribution costs have gone down to practically zero.

Becoming a subject matter expert has become so much harder – anyone can create and disseminate content. 

Experts have become the most precious marketing assets. I wholeheartedly agree with Steve’s first step to success: “elevate the experts”!

Authority in the Age of Overload

View more presentations from Edelman

Conversation is a dialogue, not a monologue

"A conversation is a dialogue, not a monologue. That's why there are so few good conversations: due to scarcity, two intelligent talkers seldom meet." Truman Capote

As I wrote here before, I strongly believe marketing and selling is all about building relationships. It's about engaging in a conversation with prospects and customers. The conversation can take many forms - it can take place online or offline; it can be carried out through a phone call made by a sales person, a discussion in your Facebook page, or auto-generated emails sent from your marketing automation system.

Here's the caveat: talking is much easier than listening.

Pitching your new product to an analyst is far easier than asking for her candid feedback. Telling your customers how they should have used your radically simple online service beats listening to their complaints.

Some vendors prefer not to go through the 'trouble' of conversing with their customers - that's perfectly fine as long as you're not a share holder in one of them. What ticks me off are the 'pretenders' - those who pretend they're interested in what you have to say. Those who ask you to respond to an email or fill out a survey, and then retreat to the comfort of silence.

For example, I recently received an auto-generated email from Tungle.me, an online scheduling service, trying to "reactivate" me:

Hi Ran,

We noticed you haven’t been Tungling.  Can we help?

This Tuesday we’re hosting a short webinar for new Tunglers.  It’s an opportunity to ask questions, share feedback and see a live demo.

The webinar is free and you can register here.

If you have questions or feedback, but prefer not to join the webinar, you can also reach out to us by replying to this email, through the Support Community, or on Twitter and Facebook.

We hope to see you back soon!

Sincerely,

The Tungle.me Team

Since I do see the value in their service, but stopped using it for various usability issues, I took a few minutes of my time and described my issues.

Did I get any sort of response? No.

There's a better way. Here's the "activation" email I received from New Relic, another SaaS company:

I was looking through the list of people who signed up for New Relic this AM and saw your email address - but it looks like you didn't deploy the agent into your app anywhere - did you have problems?  Not what you expected?  

This is NOT an automated email by the way - I do this in the morning to make sure our customers are getting what they need!

Please let me know if there is any issue! 

Cheers,

Patrick 

I responded. Patrick, who must be a very busy individual, responded back. Easy, but that's what it is all about - talking, listening, talking... 

Conversation is a dialogue.

A shiny Salesforce marketing cloud

Both marketing and selling are centered around the age-old act of building relationships. If your prospects and customers are using Facebook, LinkedIn, Twitter, or any of the myriad social networking services out there, you can take relationship building to a new level - you can share useful content, help customers do their job, drive your tribe to create content, run highly targeted promotions, and most importantly, you can listen.

Social networks are highly effective means of communications, but they must be integrated into your marketing and communication strategy. Facebook is a great new tool for us marketers, but to get optimal results we need to make it work in conjunction with everything else we have in our tool bag.

The recent acquisition of Radian6, a social media monitoring platform, by Salesforce, might be an important step towards convergence of social media marketing with "traditional" marketing and sales.

Call it whatever you want ("cloud marketing" would make you fully buzzword compliant...), but if as a result of this acquisition we marketers would be able to get a holistic view of our marketing campaigns by combining Salesforce data with social media intelligence, then marketing will become a little more 'science', and a little less 'art'.

We evaluated Radian6 about a year ago and were deeply impressed. We're a Salesforce customer. I can't wait to see how the two platforms will be integrated. For example, if we'd be able to enrich our contact database with information flowing from social media feeds, or if we'd be given the opportunity to correlate sentiment with revenue, then the folks at Salesforce have done good!

The "S" in SaaS stands for "Service"

I'm a firm believer in cloud computing.

Yes, cloud is right at the peak of inflated expectations, but if you've been around long enough, you've seen this happen with Client/Server, Y2K and Web 2.0, to name just a few examples. The fundamental concepts of cloud are sound, the technology will catch up with the vision, and cloud will become an integral part of mainstream IT.

But cloud computing not only changes the way we consume computing resources, it also presents a sea change to many marketers.

Most cloud vendors make it real easy to onboard - just sign in and you're good to go. No need to ask your IT to set up a new server, no need to install any software, no need to (and usually no way) to embark on complex customization projects. Whether you market IaaS, PaaS, SaaS, or any other Gartner-oriented-cloud-acronym, remember that the last "S" stands for "Service". It is incredibly easy to start consuming a service, but it is equally easy to stop, or switch to another provider.

When I joined Zend a couple of years ago we used a paid web analytics service from FireClick. It was complicated, slow and buggy. We decided to check out Google Analytics, and realized it could easily do what we wanted, and for an attractive cost of zero. A few web page updates later and we were up and running with Google Analytics.

If your business is a cloud-based service, you just can't afford to slip. Your service needs to be unreasonably good. If you head marketing for a cloud-based service, remember it's not just about leads and conversions. It's about delivering great value to your users day in day out.

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?

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.

Facebook marketing is too important to be left to marketers

Facebook has become an obsession.

The infographic from SocialHype and OnlineSchools.org 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

"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.

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.

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 Salesforce.com 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.

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.

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.