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by April Dunford

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The Risks of a Low Cost Provider Strategy, Even in a Recession

01/04/2009

We’re in the middle of a recession and suddenly all of the smaller companies I’m talking to are concerned about whether or not they should be dropping their prices.  The thinking is that in times of tighter budgets, the lowest cost provider has a market advantage.  Is that really true?  And if it is, are there longer-term risks to such a strategy?

I don’t usually go all marketing scholar on this blog but this is one that deserves a look at some first principle marketing thinking.
The Godfather of competitive strategy is Harvard professor Michael Porter.  Most of what is taught about competitive strategy is based on the foundations that he laid in a book called “Competitive Strategy: Techniques for Analyzing Industries and Competitors”. This book is now in it’s 60th printing (yeah, you read that right, that’s six zero) which gives you an indication of how often it is used in marketing classes.
PortersGenericStrategies
Diagram from Wikipedia
Porter argues that one of the major factors that determine the success of a company (after the attractiveness of the industry the company is in) is how the company positioned itself within that industry.  He argues that there were only three major types of strategies with respect to positioning.
Differentiation - this is where the company goes after the entire market but positions itself as clearly differentiated from other players in the market.  This is usually pursued by companies that are doing highly innovative things and whose products are generally high quality.  Customers will pay a premium for these types of products because of their perceived greater value.
Cost Leadership – like it sounds, this is where the main differentiator is the lower price for the product.  These companies have figured out a way to produce and/or sell their products for lower costs and can then sell them for less with the same profit as competitors or for a lower margin to simply gain market share.
Segmentation (sometimes called Focus) – a segmentation strategy is where the company focuses on a target segment and then adopts either a Differentiation strategy or a Cost Leadership strategy within that particular segment.
Where things get really ugly, according to Porter, is where companies try to mix these strategies together.  He refers to this problem as “Stuck in the Middle”.  Now, you and I have both seen Resevoir Dogs and we know when we hear “Stuck in the Middle”, bad things happen.  Porter stressed that he saw too many companies that were essentially getting beat by their competition both in terms of Differentiation as well as Cost.
So let’s go back to the original problem.  Now that we are in a recession, should you drop your prices to be the lowest cost option in your market?  Really the question is bigger and more complicated than that, unfortunately.  The question is actually – Should you change your strategy to compete on price rather than differentiation?  This mean you have to go back to your original Value Chain Analysis and figure out where you are going to cut some costs.  Can you stop selling direct?  By how much can you reduce your staff?  Can you significantly reduce your cost of service?  If you catch yourself saying “Yeah, but we will still do all the cool stuff we are doing today, we’ll just reduce the price!”, you just might be kidding yourself.
Now, I’m not saying that there isn’t going to be price pressure on software vendors over the next 12 months.  There sure as heck will be.  Smaller companies in particular will be forced to be more flexible on price than they have ever been before.  Short-term dealmaking does not represent a shift in strategy however, and any company that decides that they will now compete primarily on price should take a long hard look at what that means for their overall business.

Messaging Botox – A Quick Fix for Saggy Messaging

12/27/2008

I’m back after a break for a couple of weeks to change jobs (more on that in a later post) visit my friends in New York and host a rather large group of folks including 4 kids under the age of 5 at my house of the holidays.  I now need a break from my break. Did you miss me?

During the break I also got a chance to meet with a number of different startups that were interested in doing something about their messaging.  They all had similar problems.  When they had launched their product/services they had put a lot of time, effort and attention into primping their messaging to make it as attractive as possible.  But then time passed and that same messaging that was once so radiant started to droop.  By the time it becomes obvious that the messaging is getting a bit, shall we say, mature, the thought of investing the time and effort required to perform a messaging facelift was enough to scare these startups into doing nothing at all.

But it doesn’t have to be that way!  What you need my friends is a quick shot of messaging botox. Unlike a full-blown messaging facelift which can take months a quick hit of messaging botox can be done in a couple of weeks.  Sure it won’t leave your messaging looking as spiffy as it did a couple of years ago, but it’s quick and painless and will make your messaging much more attractive.   Here’s how it works:

  1. Make sure you have a problem – Before you go under the needle it is important to make sure that things are as bad as you think.  Remember that you will get bored of your messaging well before anyone else will.  Don’t let the mirror play tricks on you and make sure you aren’t fixing something that isn’t broken.  If your messaging is starting to fade your sales folks and customers will let you know.
  2. Work on the most important areas first – There is a reason why people aren’t getting cosmetic surgery on their feet.  Focus on your lead moneymaking product or service and leave the rest for later.
  3. Determine your top 3 to 5 features from your customer’s point of view – You might think it’s your sense of humor that gets you dates but some honest feedback might tell you otherwise.  Spend a day or two talking to your sales folks, your customers, and your services folks.  Get a feel for what your strengths and weaknesses are from the customer’s point of view and list out the top 3 to 5 of them.  Don’t spend more than a couple of days on this.  Trust the feedback and don’t worry about capturing everything, just the top 3-5 things.
  4. Inject your new messaging into your critical parts – Refresh your home page, your key product/solution pages on your web site and your sales presentations.  You don’t need to re-write every piece of content you have and you don’t need to do a fresh rewrite from scratch.  Keep the 3-5 points you outlined in step 3 in mind and work those points in.  Get rid of the parts of your messaging that highlights things that may have been critical at one point but no longer make your top 5 list.  Remember this is a refresh and the alternative is to do nothing and leave it the way it is.  The goal is quick hit improvements and not perfection.
  5. Recover and update the rest when the opportunity arises – Yes I know there are other important pieces that you need to update, especially whitepapers.  In a perfect world you would update everything at the same time.  But unless you are Michael Jackson, you can’t afford to disappear for a few months while you get all that work done.  There are times when those pieces will naturally need to be updated (when there is a new release for example).  Wait until then and do the messaging update at the same time.
  6. Repeat for the other saggy parts – Once you have your key product/solution updated, move on to the next most important one when you have a couple of weeks with some spare time.

That’s it.  Nothing beats doing a full-fledged messaging update but when you only have a couple of weeks, a quick fix is better than just letting yourself go.

Networking for Marketers, Twitter and Ho Ho TO

12/11/2008

Ah the holiday season.  The decorations!  The music!  The crazy,
stressed-out sprint to the end of the quarter!!!  This time of the year
always gets me pondering why some people are so amazingly
execution-oriented and others, well, let’s just say if these folks were
in charge Mussolini probably could have gotten away with a stern
talking to.

I talked in my last post about how I thought small
tech companies should hire a product marketer instead of a marketing
communication person as their first marketing hire.  The idea was that
if you have only a few headcount to work with, why wouldn’t you spend it
on someone that could do analyst briefings, help set product strategy,
create sales materials, do messaging and positioning, etc.

Now
that said, I’m not saying that Product Marketers know how to do
everything.  They sure as heck don’t.  I personally am graphically
challenged (my friend Georgina, who has a gift for non-verbal
communication once described the look of this blog by sticking her
tongue out and pointing a finger in her mouth).  Some can write well,
others can’t.  Some have great relationships with analysts but lack
press contacts.  You get the idea.

This is why your network is so important.  Your
CEO would laugh you out of her office if you asked to hire a full time
graphics person but you might have budget for a few weeks worth of
contract work.  If you have a great network you might be able to barter
some of your time in exchange for some of theirs.  Even if you can’t
get folks to do the actual work, having the advice of someone who is
more skilled than you at something is pretty darn valuable.  My network works well on the beer barter system.  Hey, I’m Canadian.

As far
as tools go, I am a big fan of LinkedIn, mainly because my contacts and
I tend to move around a lot so it is great for keeping track of folks
that I know.  But lately my favorite tool for finding new folks that know
something about a particular topic is, by far, Twitter.

Here’s my amazing example of Twitter networking that I have watched come together over
the past couple of weeks.  Some folks in Toronto decided they wanted to
hold a holiday charity event in Toronto in support of our local food bank, The Daily Bread Food Bank.
In short order a group formed, a face to face
meeting happened and the next day I see a Tweet asking if anyone wanted
to help out.  I sent my email address in and the next thing you know I
am part of this execution MACHINE called Ho Ho To.

There is a person who knows how to build websites.  The site is up in a few hours.  Someone designs a logo.  Then another.  There are event management people organizing volunteers.  Someone knows someone at a venue (the Mod Club) and convinces them to give it to us.  For free.  With cheap drinks.  Someone else knows a caterer and they give us food.  At cost.  There is a graphics guru who sorts out formatting sponsor logos for the web and other places.  A photographer is taking pictures.  A PR person is drafting a press release and gets it on the wire for free.  Someone
decides that it is too tricky for the Food Bank to pick up the bin at
the end of the night so calls in some friends from the army to pick up
the bin.  The frikkin’ ARMY.  Everyone reaches out to their network for
sponsorships and the
next thing you know it’s a week into the project and there are 27
sponsors and the group has raised over $13,000 for the food bank,
effectively making it one of their top fund raising events for the
entire year.  And the news is
all over town.  I’m not even mentioning half of the stuff going on.  In
a week.  What the heck!?  Did I mention that I have never met a single
person on the team face to face?

Dear readers, if I had to
design a logo, do you know how long it would take me?  Ages.  And would
people be doing the universal gesture for throwing up when they saw
it?  You can bet money on that.

So what have I learned from
all of this?  Some folks on Twitter are pretty amazing at what they
do.  If you’re looking for them, or if they are looking for you, it’s a neat way to connect. If you want to work together you can do truly
amazing things.  Yes, I know that running a project for a company is
different from running one for charity.  You might have to pay.  It
might be in beer.  But trust me, there are superstar people out there
that you can help and that can help you back.

First time reader?  Why not subscribe or follow me on Twitter?

Product Marketing vs. Marketing Communications (and MarComm Must Die)

12/07/2008

Traditionally really small software companies have Development, Marketing, Sales and that’s about it (Ok I am generalizing here – there might be a lawyer, a finance person or two, possibly an IT person, work with me on this one, ok?).

Once the organization has landed a customer or two, and have started thinking beyond release 1 and basic survival, they typically start thinking about forming a real product management group.  The idea is that these folks will focus on the product roadmap and future releases, competitive analysis and they will also do things like product demos, and a lot of more technical sales support.

Meanwhile there is the “Marketing” department which is really pure marketing communications and is focused on things like building the website, maybe creating a brochure, and writing press releases.  They might book an analyst meeting or set up press interviews but they would rarely be the spokesperson.

This set up is broken for lots of reasons but the main one is that there is this idea that marketing doesn’t need to understand the product.  In some cases, I have heard folks argue that it is better if marketing doesn’t get “bogged down” in product details and stays “creative”.

If I look at the Pragmatic Marketing Framework (you product management types will know this thing by heart.) where they break down the responsibilities of product managers/marketers and recommend something called “The Product Management Triad” to cover the larger product management and product marketing functions.

Here is what that looks like (here’s me crossing my fingers it is ok for me to reproduce this here – let me know Pragmatic Marketing folks if I’m breaking the law.  Click for a larger image):

Product management triad

Here’s the thing that I keep thinking every time I come across the Product Management/Marketing Communications setup.  Why wouldn’t you start with Product Marketing and add a marketing communications person later?

If I look at the boxes under Product Marketing – what else is left to do?  A solid product marketing person can do all of the stuff in the Product Marketing Manager boxes (a senior one can cover product strategy too) and probably most of the communications stuff too.  Can they write press releases and brochures?  Sure they can.  They are going to outsource graphics (or hire a graphics person), the same way the marketing communications person did.  Sure when you get big enough maybe you can afford to hire a person that just worries about the look and feel of the website but this person shouldn’t be the first marketing person you hire.  The first marketing person you hire should have a solid product background (or the ability to pick it up quickly) so that they brief analysts, build presentations, write white papers, do a competitive write-up as well as manage the vendor building the web site and execute a lead gen program.

Let’s face it, we are way past the days where the first marketing thing a company had to worry about was advertising.  Why are we still building companies that way?

Winning is Fun – Why Companies Should Give Awards

11/30/2008

Participating isn’t fun.  You know what’s fun?  Winning is fun.  Telling your friends you won is fun.  Being recognized for doing something very well is fun but you know, beating other people who are clearly better than you is really fun too.

This time of year there are a lot of awards being handed out.  Sure, people might make fun of them, particularly the folks that don’t have a chance of winning but seriously, I don’t believe anyone dislikes getting an award. I don’t understand why more people aren’t giving out awards.  In particular, I don’t understand why more companies don’t give awards to their customers and partners.  It’s such a cheap, simple, easy way to make your customers happy – why wouldn’t you do it?

Top 5 Reasons Your Company Should Give Out Some Awards to Customers and Partners:

  1. Winning Makes Winners Happy – Seriously, you do all sorts of other things because you want to keep your customers or partners happy, don’t you?  Why not recognize your best ones with a trophy?  You’ve probably spent hundreds of dollars taking them out to dinner but they can’t display dinner on their wall and trust me, everyone wants a wall full of trophies.
  2. Winners Talk About It – I was chatting with a CEO of a mid-sized company last week and he showed me an award that they had won from Microsoft.  They got to meet some senior folks from Microsoft, they put out a press release, they talked about it on their web site.  They didn’t know exactly why they had won but as he said, “Getting an award is cool.”  OK, so getting an award from your little company may not warrant a press release but I bet it still makes it into the display case and I bet they still talk about it.
  3. Award-Givers Get to Talk About it Too – I mentioned this in an earlier post but the neat thing about giving a great customer an award is that you get to highlight in public that the award winner is a great customer of yours.  They may not admit in public how much they love you but once you admit how much you love them you are officially dating.
  4. Account Champions are People too – There is a person in every account that stuck her neck out for you or fought like heck to make sure your software didn’t get thrown out.  Say “thank-you and please do that again sometime” by letting them put “IT Rock Star of the Year Winner” on their resume.
  5. It’s a Good Excuse for a Party (and to get employees talking to customers) – Developers complaining that they never get to talk to any customers?  Feeling like the company could be more customer-oriented?  Fine, your holiday party just became a customer awards celebration with tinsel.  Seat a set of customers at every table and watch what happens.  You can’t afford to fly everyone in your company out to talk to customers but you can bring a few customers in to talk to your folks.  Tell those customers they are getting an award at a party held in their honor and they might even show up.


And One More Thing (aka The Part Where I Ask You to Vote
)

First of all, due to some sort of MASSIVE oversight on the part of the folks that run the Canadian Blog Awards, I have not been nominated but I am pleased to say that my pals at On Product Management have been so please CLICK HERE right now and vote for them.  You don’t have to be Canadian, OK, this isn’t the Oscars.

Secondly, I am very pleased to have bribed my way into being nominated for been nominated for (turning on the echo machine) Canada’s Most Influential Woman in Social Media!!!!! (turning off the echo machine).  OK, so the other gals here look hard to beat because some of them have like, professional photographs and all that but trust me, I am super influential.  Just yesterday I convinced a guy at work to buy me a coffee simply by saying I didn’t have any cash on me.  Don’t think about it.  Just click here and vote for me so that I can win that sucker and put whatever it is they are handing out in my trophy case right next to my award for being the most popular female marketing blogger in Toronto with brown hair and big boots.

Innovating Through Recession

11/24/2008

Paul Dunay at Buzz Marketing writes a post here pointing to a research paper by Andrew Razeghi from the Kellogg School of Management on Innovating Through Recession.

Andrew makes 7 great points in this paper but I love the first one where he states:

Listen to the market. It’s quieter when it’s less crowded. Unmet needs abound.

And here is the quote I love the most in that section:

During difficult economic times, market needs are more exposed than they are during an economic boom when the market is saturated with everyone’s “great idea” – many of which are chasing needs that have already been satisfied. When markets turn south, it’s easier to discern what the market needs precisely because the market is thinking more about what it needs and why it needs it. We are simply more thoughtful, more aware, and more focused during economic downturns.

I think it is hard for companies to stay focused on customers when they have their own economic problems to deal with.  During tough economic times, a focus on innovation is more important than ever.  Innovation thrives on constraints.  What is a recession other than a time of great constraint?

Customers are trying to do more with less.  Enterprises are looking for ways to decrease their cost of sales, shorten their sales cycles, reduce costs associated with business travel, decrease their need for physical real estate, improve their time to market, reach more customers while spending less – the list goes on and on.  What a perfect time for great product managers and marketers to take a step back and listen to their customers.

Your Company Can Ignore Social Media but You Can’t

11/24/2008

I am not a Social Media Marketer.  I am a Product Marketer.  I’ve worked on products where we’ve done a lot of social media related things and others where we have done almost nothing.  In my mind, that is perfectly OK.  As a marketer however, I think it is essential that I’m participating in social media, even for no other reason than just to understand what the heck is going on.

There are lots of growing, successful businesses that ignore social media for the most part.  I can name a dozen startups that don’t blog, don’t Twitter, don’t have a facebook page, etc. and are doing just fine.  In almost every example, these folks are selling fairly big-ticket software to large businesses where the key decision makers aren’t big social media consumers.  Yes, these decision makers are likely influenced by folks that DO consume a lot of social media but for these startups, influencing this second tier is a much lower priority than building better product demos, running a better advisory council or doing a better job of managing their relationships with industry analysts.  Could they see benefits from participating more in social media?  Absolutely!  But marketing is a game of making the most with scarce resources and sometimes it isn’t at the top of the list.

My point here (you were wondering if there was ever going to be one, I know) is that there is a difference between making a decision as a company or related to a particular product, to prioritize social media participation lower on the list and not putting social media on the list at all because you’ve never really participated in it and therefore don’t have a clue about it.

I’m tired of marketers asking me why Twitter is important.  They should already know about Dell and Comcast and Zappos.  They should have already figured out that they key industry analysts are out there talking about them or their competitors on Twitter.  These stories have been told over and over.  I can’t believe it when I come across a marketing exec with 2 connections on LinkedIn.  I am shocked when I’m questioned by a marketing person about something I’ve written here or something someone on my team has written elsewhere on a blog.  Any decent marketer out there is keeping on top of this stuff and at a minimum playing around with it to make up their own minds whether or not it’s important.  In my opinion, the best ones understand that the world has changed and are diving into it as deeply as they can.

I don’t understand the marketers that don’t think social media is interesting enough to even dip a toe in the water.  Maybe they are too busy buying print ads and booking big trade shows and scheduling meetings with executives trapped on boats.  Who knows?  All I know is that things are changing quickly and it’s my job to keep up.  I hope I have the good sense to retire or change careers the minute I catch myself blocking anyone else from doing that too.

Killing a Killer Product in 5 Easy Steps

11/20/2008

First of all I have to stay that this week totally stank.  It stank like a poopy diaper, like a bag full of used hockey equipment, like a movie with John Travolta that isn’t Pulp Fiction.  Yes people this week was *that* bad.

One of the reasons this week was so darn smelly was that one of the really promising products that I am working on has been suddenly besieged by “helpful” folks that haven’t had much experience with new product introduction.  This got me thinking of all ways that a great product could be managed right into non-existence and I give you this:

Killing a Killer Product in 5 Easy Steps

  1. Remove the Passionate Leaders and Replace Them with “Professional Management” - People that drive new products to market aren’t like the professional managers you know.  They’re nuts.  They are so personally invested in their product they make Steve Jobs look uncommitted to Apple.  They will get past any roadblock and solve any problem.  They are changing the world.  They might not be the right folks to grow it past $20M or $100M revenue but replace them too soon and what do you get?  You get an organization driven by someone who sees the product as nothing more than a step on his/her personal career ladder.  Will they fight your CEO when he makes a bad call?  Will they be at the office at midnight on Saturday elbow to elbow with the rest of the team getting product out the door?   Will they personally concern themselves with all of the stupid piddling little details necessary to get the first 5 customers up and running and happy?  Maybe.  And maybe I’ll wake up tomorrow in Ponyville and my name will be Sparkleworks.  Hey, it *could* happen.
  2. Give it a Completely Unrealistic Revenue Target - This is a very easy way to kill a great product.  Take something that is released this year and give it a $100 million target for next year.  By next summer everyone will decide it is a complete failure, just in time for fall restructuring.  Who knew murder could be so easy!
  3. Assign only Junior Level Marketing Support that Reports Somewhere else in the Organization – I will bet Joey in corporate marketing can build you a brochure but don’t expect him to give a decent product demo or develop a relationship with an industry analyst or produce decent messaging or even show up to a meeting when his boss assigns him to work “part-time” on something else.  That stuff wasn’t important anyway, was it?
  4. Under-Staff to Make the Business Case Look Better – Ah life is so simple when you just look at the finances.  This product doesn’t need 2 years to be cash-positive!  Look I just reduced the number of people in development from 12 to 6 and presto!  Cash positive in 6 months!  That means we’re successful, right?  Right?
  5. Give it To A Sales Force that Has Never Sold Anything Like it Before – Selling a software solution?  Give it to some folks that sell hardware.  Do you have a direct sales model?  Try giving that one to some folks that are used to mainly managing sales through the channel.  The target buyer for your product is the C-Suite?  Give it to a bunch of sales people that have only sold to first-line IT managers.  Hey those folks are smart, they’ll figure it out as they go along.

I hope this doesn’t happen to any of the products I’m working on currently.  I’m an optimist.

Now if you’ll excuse me, I have to get to bed early because I’m hoping to take a trip to Ponyville tomorrow morning.

Customer References 101

11/17/2008

We all know references are critical to closing deals but most companies don’t get around to actively managing them until the 2 referenceable customers they do have are all yelling “Am I your only crummy reference?!  Pick on someone else!!”  I launched a customer reference program from the ground up once and it was PAINFUL!  I’ve now seen it all from big companies and small ones and here’s what I’ve learned.

Starting a Customer Reference Program – A Few Things to Think About

  • Partner with Your Sales and Professional Services Teams – The key function of this program is to increase revenue.  Never forget that.  You need to understand how to build something that the sales team will find valuable.  Decide up front who does what.  Professional Services needs to be involved because they are going to help you qualify the reference, figure out who the spokespeople should be and how to articulate the value of the solution.
  • Set Goals and Success Metrics and Revisit them Often – Here is how a customer reference program gets started and killed.  Marketing spends all their time writing success stories that sales never uses. Sales continues to use their own set of references because “the marketing references are crap.”  One day the execs get in a room and the CEO says, “What about this reference thing?”  Everyone looks at each other and says “I have no idea what they do.”  Snip, snip and the program is history.  Figure out how you are going to measure the success of the program and make sure Sales, Marketing and anyone else involved agrees.  These cannot be just soft goals like “increased awareness”.  Are you shortening the sales cycle?  Increasing your win rate?  Revisit these goals regularly and solicit feedback.
What To Do When the Customer Won’t Talk
We’ve all been there.  You are working on a great new product with a hot customer and as you are closing the deal they refuse to be a public reference for you, usually citing the reason that your solution is such a competitive differentiator that they don’t want any of their competitors to know they have it. Worse, their lawyers get involved and say flat out “We don’t do those.”  Here are some ideas of how to move forward.

Give as Good as You Get (aka Bribery) – Most customers can’t accept gifts or payment for being a reference (and let’s face it, that’s just no way to do business) but that doesn’t mean you can’t do something for them.  The obvious one is to give them a product discount or free premium support.  Get creative and don’t be afraid to ask them what they want.
Give them an Award or Invite them to Speak – An oldie but a goodie this one works surprisingly well.  Many customers can’t give a public reference for your product but would love to be your keynote speaker or Customer of the Year.
Give them More Than One Way to be a Reference – The definition of referenceable customer is that they agree to talk to other customers about your solution.  Some customers don’t want to go beyond that because they automatically think you want them to do a customer case study.  Give them some other options though and you might be surprised when they say yes (and let’s face it, that case study thing is getting a bit old isn’t it?).  Here are some ideas and I’m sure you can think of more:

  • A Guest blog post on your corporate blog
  • A video/audio interview with pre-set questions
  • A Q&A interview by text
  • A quote Agree to be a reference for press interviews
  • Agree to be a references for analysts
  • Agree to speak at your conference or local events
  • Agree to speak at your sales conference or internal kickoff
  • Agree to being on a public list of members of your advisory council

Let Them Promote Themselves – A lot of the ideas above involve letting the customer promote their products and/or services.  Oh and don’t forget that even IT folks are interested in raising their personal profiles.  Figure out a way for them to do so that benefits you both.
Develop a Relationship – Although the point of running a a customer advisory council IS NOT to convince members to do things for you, a well-run council will leave them feeling like they are actively engaged in the success of the company and therefore more likely to say yes if and when you ask.  For key customers, the head of marketing needs to develop a personal relationship with the key spokespeople.

One More Thing

Always ask for Video – Video is customer reference GOLD.  Having a customer give a well-articulated couple of sentences about why they chose your product or what the product has helped them do with their business (preferably both!) is simply much more powerful than written case study or quote could ever be.  I once got a CIO of a major account to say that his company was going to save “One million dollars a day” using our software.  Every sales rep on the team used that clip on every sales call for over a year.  That video was completely priceless.  Video used to be an expensive undertaking that cost thousands of dollars for a camera crew.  Now you can buy a high quality HD video camera for less than $1000 and edit the stuff yourself if you are short on budget.  Chances are you already have a YouTube savvy editor on staff somewhere.  There is no excuse for startups to not be doing video.
More Information
Marketing Profs has a great 2 part article on Customer References Programs.  Part 1 has some very practical advice for starting and running a customer reference program and Part 2 goes into a thoughtful discussion of the role of the customer reference program with other customer programs and the overall customer centricity of the corporate culture.  Well worth a read.
Forrester’s Jeremiah Owyang has a great post on The Impacts of Social Media on Corporate Customer Reference Programs.  A lot of this advice is more relevant to larger BtoC type organizations but pay attention to the “opportunities” section where he outlines non-traditional ways of using/working with a reference.
*Update* As pointed out to me in the comments, Joshua has a blog focused on customer references and I think it totally rocks.  Check it out here and in particular this post on why references are important in a down economy.

The Broke Marketers Guide to Brand Tracking

11/14/2008

I’ve had a lot of branding discussions this week that were spawned from my branding rant earlier.  One of the most frequent questions I get is “How do I measure branding?” and then “How much does it cost to do that?”

At the bigger companies I have looked at there were two big pillars of
activity going on: monitoring media mentions over time and brand
tracking surveys.  But just because you don’t have the budget and
market intelligence department of a bigger company, doesn’t mean you shouldn’t be
tracking this stuff.

Brand Tracking the Big Budget Way - The Brand Tracking Survey
My
experience is that large companies spend a lot of time and money doing
brand tracking studies.  These tend to be very well architected surveys
to measure awareness, consideration and preference of a brand vs. other
folks in the space.  These surveys also get into brand attributes where
your brand gets ranked against others for things like reliability,
performance, ease of doing business with, etc.  The results from these
surveys are hugely useful.  The only problem is that it took a squadron
of Market Intelligence professions to get it, and more importantly
interpret it.  There are outside agencies that can do this stuff for
you too, but as you might imagine, this kind of work is time intensive
and therefore not cheap and getting decent post-survey insight without
a deep understanding of your space and customers is difficult.

Customer
Satisfaction surveys aren’t a lot better.  I’ve worked at companies
that spent months of effort building and executing these surveys only
to get questionable results.  One company I worked for (which not
surprisingly, no longer exists) boasted about 98% customer satisfaction
yet never in my life have I worked with as many unhappy customers.  You need to spend time to get the right set of questions and then interpretation of the results is critical.

Brand Tracking the Small Budget Way – Net Promoter Score

There are ways you can get some insight
from customers that isn’t totally complicated and time consuming.  I am
a fan of Net Promoter Score (NPS).  This comes from the book “The
Ultimate Question”
.  From their website:

Just as net worth
represents the difference between financial assets and liabilities, Net Promoter quantifies
the difference between customer assets and liabilities. With one question, we can sort
customers into three categories: Promoters who are loyal and enthusiastic; Passives who are
satisfied but unenthusiastic; and Detractors who are unhappy but trapped in a bad
relationship. Quite simply, you calculate the NPS score by applying the formula P – D = NPS,
where P and D are the percentage of promoters and detractors.

What is the question you ask?  How likely would you be to recommend
our company to a friend?
Now, I know that this isn’t perfect and I
know if you had loads of time and money you might get something
better (you can read some criticism of NPS here).  But in my mind if you want to get an idea of the health of your brand in the eyes of your customer easily and quickly, you can’t get any better than this.

Brand Tracking Dashboard the Big Budget Way – PR Clipping Services

If you are lucky enough to be working with a PR agency one of the standard
services they offer is a press clipping service that shows you all of
the press mentions for your brand in the media.  This is fine if you
can afford it but with the rise of blogging, microblogging and all
other sorts of user-generated content, some of those clipping services
are missing a lot of what’s out there.  We are now starting to see folks out
there that do a great job of monitoring social media.  If your business
relies heavily on that, it is probably well worth the investment to
look into these companies.  I’ve used Radian6 and those folks get it.

The Do It Yourself Brand Tracking Dashboard

Oh but poor you, you have zero budget and aren’t likely to get some
anytime soon.  What do you do?  Measure what you can and over time
refine your measurements based on what you have learned.

1.  Press mentions – you are doing this now (I hope) and
tracking if they are positive, negative or neutral.  The important
thing to note is that the actual number doesn’t actually mean much.
The change over time is what you are looking at.
2.  Blog mentions – Some folks put this with press
mentions but if you are doing different things to reach out to bloggers
than you are to reach our to mainstream media then I would separate
it.  I use Google Alerts to track this.  Before that existed for blogs I used Technorati.
Do a search on your brand name and then hit the subscribe button on the
top right to view the updates to this search in a reader.
3.  Twitter – Everyone should be tracking what is being said about their brand on Twitter. Go to http://search.twitter.com/
and type in your brand name.  Again the actual number of positive or
negative mentions means little but the trend over time is important.
(Note – there are a lot of media publications twittering headlines – I
leave those out and only count live people).
4.  Other Social Media – Depending on your business there
are probably a number of forums or other places where your customers
gather that you want to monitor.  This will be specific for your
business so you need to do some digging on this one.
5.  Web Traffic and Searches – The trend over time gives you an idea of the level of awareness for your brand.

The key with all of this stuff is to measure and look at the changes
over time.  As you go along it will get easier and easier to fine-tune
your measurements.

That’s it for me and branding this week.  I gotta go – I have a report to run.

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