Inbound vs. Outbound Marketing: 7 Decision Factors

How do you find the right mix between inbound and outbound marketing.  I have seen the wrong model  bring down marketing efforts, jobs and even entire companies.

Here are a few examples:

Example 1:  Two years ago I was having a lunch with a CMO of a small company claiming to generate 90% of leads of his company from trade shows.  They were working at 2-3 trade shows a week.  It is obvious why that model didn't scale - CAC (Customer Acquisition Cost) was way too high. It required too many resources and time-to-revenue was too long.  A year later, that CMO was gone and now the company is almost dead.

Example 2:  A company called Intronis decides on the outbound-driven lead generation model.  It hires lots of cold callers and does tons of trade shows.  The lead generation model fails.  The whole company has to go through painful layoffs.  Here is a quote from an article that appeared yesterday:  "Marketing is non existent…..sales team gets axed…engineer in the drivers seat. Sounds and smells like a sellout…Keep the barebones to support the product but not the partners…not so channel focused anymore. "


Example 3:  On the opposite side of the spectrum, another small company I knew was generating most of their sales from blog entries.  The CEO was a Blog Black Belt.  It worked really well for a while.  Good news - his company got acquired.  The larger company added some outbound efforts.  Not so good news - they are currently having hard times with the number of leads, quality and customer acquisition costs - not being able to scale neither of models.

So, how do you find the right answer?

Before giving up to inbound marketing zealots or caving in to outbound lead generation agencies, you may want to take several factors into consideration:

1.  Your target buyer's persona.
    - Who are the decision makers for your product / service?
    - Who are the influencers?
     - What are their job titles?
     - What are the key challenges they are trying to address?

2.  Where do they fit on the innovation curve?
Are your target buyers innovators, early adopters, or laggards?  This will define to a large degree how to approach them.

Example: If you are marketing a revolutionary new product to innovators, you may want to start with an outbound networking-type campaign through your industry contacts to recruit your first customers.  Later, you can integrate a targeted social media-driven PR component, as well as an inbound campaign focused on people who are looking for relevant solutions.

3.  Channels where your customers find information and get influenced
Where do they look for information relevant to your offering?  Is it trade shows, industry forums, search engines, communities, newsletters, etc?

Example: If you are marketing to decision-makers that don't spend much time online or you are in an industry where the phone is still a more traditional communication method, an outbound model may be the appropriate one.  Conversely, if you are marketing to an audience that relies on social media and online communities for research, contracting a call center to generate leads would be an absurd idea! 

4.  The value of each sale and Customer Acquisition Cost (CAC)
At the end of the day, marketing is an economic tool.  If a certain lead generation model is working really well, but costs too much, then it is doomed to fail.  You have to find the model that works best for you - in terms of BOTH conversion rates AND costs.

Example: We were using PPC for lead gen and it was generating high quality leads that regularly converted into sales.  But the cost of each sale (the marketing part) was about 200% over our target.  And after trying to bring it down for a few months, we had to pause it.

Outbound call center leads generated sales that costed 500% over the goal.  So, we focused on the inbound marketing leads - search engines, communities, social-driven PR, etc.  This proved to be the right model, bringing down our costs significantly -- even below the target CAC.  

Eventually, we revamped the messaging, did complete keyword map revamp, rebuilt landing pages, and changed 3 PPC agencies (before we found the right one)-- and "voila!" CAC is tracking right around the target!
  

5.  Your sales team readiness
No matter how many good leads you bring, you have to make sure your sales team and channel partners are capable of converting these lead types into sales.  I have seen a mismatch here causing many failures.

Example: At one of my previous companies, we started generating lots of inbound leads that needed a moderate amount of follow-up before they closed.  However, our sales team had only channel experience - they did not have the skills or desire to follow-up directly with the prospects.  Result = failure.  Until we upgraded the sales team.

6.  How easy is it to scale?
Some programs can be scaled easily.  Others may require a major upgrade to scale, putting CAC out of whack, at least for a while.

Example: You may be able to scale PPC.  But to substantially scale search engine-generated leads, you may need a sizable investment and patience.  However, longer term results can be huge! 

7.  Mix and change.
My final suggestion is to constantly experiment.  Marketing has been undergoing a major change over the last 3-4 years.  What works today may not work tomorrow at all .  So it is critical to always look for new lead channels.

First, create the foundation with the proven channels.  Then, experiment with 2-3 new ones at a time. By the time one of your foundational channels stops working, you will have 2 new ones that generate even better leads!

And with that... Happy Hunting!

5 Tips On Selecting a PR Agency

  PR is dead, right?  Not really.  It has just morphed into something with much stronger social media and inbound marketing components.  

Unfortunately, many PR agencies / pros did not evolve, which makes it hard for marketing executives to decide whether their agency is effective or not, as well as picking the right one to partner with.

As we revamped our messaging and had several major announcements coming up, we decided to shake things up a little and went through the process of finding a new PR agency.  Here are tips that worked well for us.

1.  Set your goals.  What is the primary reason behind PR efforts in your company?  Is it to bring new business?  Raise money?  Get acquired?  Get noticed?  The primary reason will define the type of agency you will go after.  

In our case, the primary reason was business expansion.  We had over 500% growth last year and we are gearing up for more this year!  We wanted to augment our SEO and inbound marketing activities with increased social media, relevant industry press, blogger and vertical community campaigns.  We have also a major launch coming up.  All that made it a good time to look for the right PR / social marketing agency.

2.  Understand your target markets.  Who is your buyer and how do they find products / services like yours.  If you are marketing to SMB segment, it probably is not the most effective strategy to go heavily after top industry analysts and major publications.  A better strategy may be going to after tier 2 / 3 analysts that blog a lot, as well as vertical communities, bloggers, etc.   

3.  Define success criteria.  How do you recognize the right PR agency when you come across them?  Here is my high-level checklist:

- Industry experience.  It is much easier to work with an agency that has experience in your market segment.  They typically know your sub-segments, market trends and competitors.  They would probably  have have ideas what worked and what didn't in terms of messaging and launch / marketing strategies.  They would most likely have relationships and a database of contacts with key industry figures, analysts, bloggers, and journalists.

Otherwise, you may find yourself spending lots of time bringing your PR agency up to speed in all these areas.  It would take time for them to build a database of contacts, build relationships, etc. 

- Inbound marketing / social media experience.   You would be surprised how few agencies "really" have these skills.  Most claim they do.  70% of the ones we looked at, did not have these skills.  20% thought we would win if only we could be active on Facebook, Twitter, Google+ and LinkedIn.  Clearly, we don't need a PR agency for that level of social media presence.  Finally, 10% really understood what it took to win the "inbound marketing battle" with detailed plans and tools that went far beyond the typical social media efforts.

- Track Record.  We wanted to see previous success stories with other clients.  In all fairness, there is only certain level of success even the best PR agency can bring to a company.  However, you can look at their past / current clients' press releases, media coverage, SEO rankings, and messaging and get an idea on how creative is the agency.

- Available Resources.  If a great PR agency is slammed with work and more clients than they can handle, you may not get the attention you need for your success.  So, it is critical to find an agency with enough resources and time to dedicate to your success.  It is also important to find out who specifically will work on your project.  You would want to be comfortable with that person's background, attitude, availability, etc. 

- Proximity.  In this day and age, proximity seems to be not important.  There is Skype, email, IM, and social media for effective remote communications.  That is mostly true.  

All other factors being the same, I much rather work with an agency that is local.  For example, we have spent two days with our new PR agency in person to kick off our upcoming launch planning.  I can't imagine having the same interaction quality, chemistry and results via Skype, con call or email.  

- Attitude. It is critical to find a PR agency that REALLY wants your business.  There  are plenty of stuck up, unfriendly agencies out there.  It will be very ineffective and frustrating to work with them.  

For example, one of the finalists presented really well at the first pass.  However, during the second meeting their attitude turned into, "we get enough business without you" and "you should feel lucky that we are taking you as a client," "sign the agreement now and don't waste our time."

There is no place for an attitude like that.  If they are acting this way before getting the contract, imagine how difficult would be to work with them through the launch when you need their presence most.

- Budget. There is a wide spectrum of prices - from a few thousand dollars a month (typically from PR contractors) to tens of thousands dollars per month (from "high end" PR agencies.)  More expensive does not necessarily mean better quality.  It could mean overhead, bloated infrastructure or just arrogance.

The "stuck up" PR agency was double the price of its competitors.  They "justified" it by more services they provide.  However, after looking in-depth, they were offering half of what others were providing.  

This said, I would warn against the "nickel and dime" approach.  You have to recognize a good deal and know when to stop the bargaining process.  PR agencies are in business to make money as well.  If we are not being fair to them, the relationship may not last.   

4.  RFI. After you know approximately what you are looking for, try to obtain a list of PR agencies that are active in your segment, as well as the ones you have worked with before.  Send out an RFI (request for information) outlining things you are trying to accomplish and what kind of help you are looking for.  You can easily find templates online.

5.  Proposal / Selection.  We ended up with around 50 RFIs sent out.  We got 12 responses.  Picked 3 finalists.  We invited each one of them to pitch the final proposal with expected results, resources, dates, plans, etc.  This step brought some surprises too.  The strongest candidate at the RFI stage turned out to be a "fluff" agency. 

However, #2 agency came in very strong.  We were very impressed with every single attribute of their final proposal.  And we made our selection.

Once the selection process was over and we signed the contract, the winning PR agency came into our office the following week for a 2 days kick-off session.  We refined out social media / inbound marketing plan,  brainstormed on the messaging,  and assigned specific action items.  So far, we are very happy with our choice.  

The proof will be, as everything in Hack Marketing approach, in our launch success and the delta in the overall metrics we have identified.

8 Key Elements for SMB Marketing (Part 1)

Mysterious SMB market.  For many years, I have been hearing the same story, "SMB market is lucrative and really fragmented.  It represents a tremendous opportunity for us."   Yet, I have witnessed many companies enter this space over and over, just to fall short of their expectations.  So, what gives?

The challenge is that neither enterprise, nor consumer programs alone are effective in this market.  I spent last 1,5 years on finding effective approaches for marketing and selling IT products and services into SMB.  Here are my findings:

1. Market Definition.   First, how do you define SMB?  I break it down into 4 segments:
     
           a. Small Office / Home Office (1 - 5 employees)  Consumer-like buying behavior.
           b. Very Small Business (6-30 employees).  No dedicated IT.  Use of consultants.
           c. Small Business (31 - 250 employees).  1-3 IT employees.
           d. Medium Business (251 - 1,000 employees).  1-5 IT employees.  More sophisticated network / apps.  Elements of the enterprise IT.


2.  Analyzing Strengths.  If you already have presence in this space and analyze your historic sales, you probably will discover that sales have been coming from one or two of the sub-segments above.  This exercise will point to success in certain types of your activities or channels.  And, visa versa, you may see opportunities in sub-segments that are not performing well.  You can also define which of these sub-segments are best matched for your product / sales force / channel presence.  This is critical, because even if you have the best product, but lack the right sales force type, your efforts may stumble.


3. Different Target Audience.  IT folks in SMB find, purchase and consume products differently than their peers in large enterprises.  SMB IT employees are typically generalists.  Having to compete with much larger companies, IT departments with only a few people have to take care of everything from fixing computers to maintaining the network infrastructure and deploying applications.  This often means no time for a deep dive into any area.  This also means no time to read fancy white papers, or try every product feature, or attend industry IT mega shows.  These characteristics make enterprise-type marketing fairly ineffective.


4.  Product Approach.   Ease of use is the name of the game here.  I have seen many simple and easy-to-use cloud services beat out complex, difficult-to-use and deploy, yet feature-rich products.  When building a product or a service for SMB market, it is critical to keep ease of use in mind.  It is a somewhat difficult concept for enterprise software vendors, who customize products to the needs of very large customers.  For these vendors, it may make sense to have a simpler and cheaper offering with reduced functionality that is easy to use, fast to deploy and doesn't require lots of support.  That is one of the reasons behind success of many cloud services in SMB space.  It is a worthwhile exercise for product managers, especially the ones with little SMB experience, to hold several focus groups to understand the simplicity requirements.

5. Messaging.  Since simplicity is so important, most of the enterprise (complicated and long) messaging approaches won't work.  SMB IT folks have absolutely no time to translate complicated technology of fluffy marketing messages into benefits.  Product Marketing has to create a message that connects quickly and uses their target market's language.  The reward can be huge - quick decision-making process and faster time to revenue.  A successful example of such messaging is what we did for Panda Security: www.forgetsecurity.com


More... Not to bore you with too long of a post, I broke it down in two entries.  In the second part, I  discuss lead generation, lead sorting and nurturing, sales approach and channels, and marketing / sales tools.

7 Steps for Turning Twitter Into an Effective Market Research Tool

Twitter:  Waste of Time or a Business Tool?
I used to think that Twitter represented no significant value for business needs.  Just to be familiar with it, I opened an account a while ago, and tweeted here and there.

That all changed as I began working on a startup, developing a technology to prevent cyberbullying.  In that process, I discovered very effective ways of using Twitter as a practical tool for market research.

Challenge
Many business executives, product managers, marketing professionals and sales reps find it hard keeping up with  industry news, competitive info and market trends.  Even though there are plenty of tools, keeping up with the news still requires hours of finding, sorting and reading articles.  People are usually busy with tens of different tasks, leaving market research as something that often gets pushed down in priority.

Enter Twitter
There are armies of people who are tirelessly tweeting 24 hours a day.  Tweets are brief.  It takes less than a minute for us to determine if they are useful or not.  We can use Twitter as tool to quickly get up to speed with the relevant news, spending just 5-10 min a day.  Here is how I do it:

1.  Create a Twitter account that contains the words of the main business problem you are trying to solve.  In my case, it has "Cyberbullying" in it.  This will be useful later, when you would want to use Twitter for marketing needs.

2.  Find people tweeting on the subject of your interest.  You can use the search bar for that.  Play with multiple keywords to get the content you want.  Then check profiles of people you found and make sure they fit your needs.

3.  Create your Twitter list.  Follow as many relevant users as possible.

4.  Get a mobile app.  It may be easier to get quick updates on an iPhone or Android.  I am using TweetCaster on Android.  It gives me updates in a very easy format.  It takes me only 5-10 min to go through the daily news.  I often discover news before they show up in RSS feeds or other major news sources and tools.  The most relevant ones get lots of retweets from many people.  It is sort of "crowd voting."

5.  Trim your list.  As you are finding people who are tweeting irrelevant things for whatever reasons, unfollow them, until you have a "golden list" of sources that bring you the best quality news.

6.  Check few times a day for 3-5 minutes each time and you will be abreast of the latest industry news.

7.  Augment this with your more in-depth research from various sources when you have time.

That's it!  
In military terms, Twitter became my Special Forces team for getting the dirty job done quickly and effectively.  Other tools are like my regular military units for thorough, longer-term type projects.

Microsoft's Social Network Strategy?

Microsoft has been suspiciously absent from the whole social networking game.  That is very much unlike them.  There are several trends that should  drive Microsoft to drastic steps in establishing  strong presence in social networking space... fast.

1. Windows OS is becoming less and less essential with the emergence of Apple, tablets, and smartphones.   More and more businesses are using MacBooks instead of PCs; Apple is winning in the tablet space; Windows is way behind in mobile devices, dominated by iPhone and Android.

2. Office is becoming less relevant too with the emergence of Google Docs and similar free or low cost cloud-based services.  Yes, many of these services lack all fancy Office features, but majority of people never use them anyway.

3. Internet users are becoming less aware of Microsoft too.  IE is being pushed by Firefox, Chrome and Safari.  Bing  is interesting, but not dominant.  Microsoft created a lot of hype on its cloud, but Azure or their other offerings are not dominant - neither in business space, not in consumer.

4.  "VOS".  Daily communications are steadily moving to social networks, both on personal and business levels.  Email is moving to the cloud.  A lot of personal applications are moving to mobile devices and social networks - consumers complete micro-purchases on AppStore, Android Market, Facebook credits for games, etc.  Business apps are moving to the cloud, making the client OS unimportant.

To summarize, Social Networks are becoming the center of consumer computing experience, sort of a "virtual consumer OS."  And all they require are a computing hardware, a browser and an Internet connection.  Microsoft is not dominant in any of these areas.

Google is steadily taking over the "Virtual OS" space.  This has to be a mortal threat to Microsoft.  It has to worry Microsoft.  The questions is, "what is Microsoft doing about it?"  Well, for starters there was recently a "leak" on that subject.

But Microsoft today is not the same fighting machine it used to be.  During the last two decades, Microsoft was a staple of computing.  Competing against them was never a good experience.  It got quite a few companies and industries destroyed.  However, Microsoft went from being an innovator that revolutionized computing to a competition destruction machine to a somewhat civilized corporation to a huge company that is becoming too slow, unfocused, decentralized and stuck in the past.

On the other side, it still has lots of money, really good talent (I know quite a few amazing professionals there) and a huge presence both in the consumer and business space.  I would use that as entry point for its social platforms.

DISCLAIMER!  Back seat driver perspective.  I would start with Outlook.  Why not create a native and rich Web UI for Outlook that would integrate really nicely with Facebook, LinkedIn and Google+?  It would transform into a web app that provides business users with an integrated and seamless communication experience that includes email, social networks and documents creation / cloud storage / sharing.  Since many corporate users still "have to" use Outlook, this would benefit them in a way of simplicity - they wouldn't need to switch between applications and services.  It would also benefit Microsoft by making Outlook "stickier" and increasing the usage of IE and Office.

Microsoft could also create a light version of it for consumers.  Do I dare to say a "free," or a "freemium" version for less technology-savvy consumers (that don't buy MS Office anyway, so not much will be cannibalized.)   This would become a gateway to social / cloud experience.  Maybe even as a part of Windows UI in the future.  Having lots of interesting components, Microsoft could offer certain nice to have components as upgrades.  For example, from a free cloud word processor or a MS Word in the cloud.

Then I would grow the business by M&A.  LinkedIn could be an interesting target to build on the business space.

Of course, this is me thinking out loud.  There are many smart folks at Microsoft that may be working on similar functionality as I am writing this.  It is never that easy for a large corporation to switch gears in a dramatic way.  But soon Microsoft will have to make a drastic move or risk becoming a dinosaur.

Google+... Why does it matter to marketing professionals?

Google+ means duopoly.  Facebook's honeymoon is over.  It has a real competitor now.  The "social media" industry took another step to its maturity.  It is now Google+ vs. Facebook.  Just like Microsoft vs. Apple.  Or Toyota vs. Honda.  USA vs. USSR.

Google+ can put an end to the fragmentation in social networks.  Until now, we had Facebook for personal connections and LinkedIn for professional ones.  And most people have been separating personal and business contacts.

Google+ allows combining all your contacts in one place, organized in various "circles", like family, friends, soccer teammates, fraternity buddies, security community, blog audiences, etc.  Then you can communicate with all these circles from one command and control center.

Google+ gives us a new way to simplify and unite connections, social networking, as well as conducting business, e.g. creating user communities, doing research, managing forums, blogs, etc.  It also becomes another way to market - reach target markets, customers, partners, communicate with remote teams, generate leads / demand.

Given Google+ adoption rate stays high, it would be critical for business and marketing professionals  embracing and using it.  The exciting part is that it gives new and creative ways of reaching our audiences, which can turn into a competitive advantage for early adopters.