Archive for the 'Marketing' Category

19
Sep
09

Pay for Performance. Bring it on if you dare

Over the years I’ve been a big proponent of pay for performance when it comes to engaging clients as a marketing firm. What could be better? Clients love the concept because both parties have skin in the game and we get paid according to how effective our work is. The assumption is that we’ll do better work, go the extra mile and deeply care about the client’s success. Everybody’s happy.

However, the reality is not so simple. There are a number of issues that raise their ugly heads every time I’ve attempted to implement such a compensation strategy.

Issue #1: Most clients and agencies don’t really understand how pay for performance (PFP) works.
Most expect the firm to work for free and then be paid only if the work delivers some predefined performance – usually revenue. If the goal is met, the client will then pay the firms normal rate. Why it doesn’t work: The problem here is that no company can stay in business working for free. The other issue is that there needs to be compensation for risk – above and beyond what a firm would earn if they weren’t taking on the risk of the client (plus their own company’s risk).

The solution: The service provider agrees to a specific scope of work at a rate that covers it’s overhead plus out of pocket expenses. This would give the client a significantly lower rate for the work. If the agreed upon metrics and milestones are met, the agency would receive their usual profit margin PLUS a bonus to cover the risk incurred. This is not unlike what an investor requires. In effect, the agency is investing in the client’s business (taking on the client’s risk) and should be compensated above and beyond it’s usual “no-risk” rates. The greater the risk, the higher the compensation.

Unfortunately, clients don’t like this idea even though they are still coming out way ahead and have significantly reduced their risk. The choice is to simply pay the agency and shoulder the risk that the effort may or may not work or transfer the risk and pay a premium.

Issue #2: Metrics and goals not within marketing’s control
Most clients demand that an agency gets paid when they get paid. In other words, if an increase in revenue can be tracked directly to the agencies work, the agency gets paid. The problem here is that there are a myriad of variables that effect the realization of revenue. For example, the sales team is less than effective, the product isn’t good, lousy customer service prevents repeat buyers, market conditions change, supply chain problems, etc.

The solution: The client and agency need to agree on metrics that are measurable and tied to agency performance overall. Often, “leads” are the preferred metric. However, there are often arguments over lead quality, suitability and viability. Another challenge is tracking leads to specific activities – did the lead come from an ad? A press release? The web site? The reality is that an integrated marketing program should be measured as a whole and with a few exceptions (Pay Per Click) cannot be tracked to individual tactics.

Issue #3: Handing over the keys to marketing to the agency
More often than not, clients pick and choose what they want the agency to do allowing only certain activities to be performed by the agency. For example, the agency may insist on doing research to ensure a positive outcome (what everybody wants) but the client doesn’t think it’s worthwhile. Or the agency may build a campaign with certain response mechanisms that the client later changes. From planning to research and implementation, the agency works on a piecemeal basis with little control over the work.

The solution: The client must follow the agencies process and recommendations – including budget. The agency must also be allowed to work long enough for the strategy to work – even if the first six months don’t produce results. If the agency is going to take on risk, the client must do what the agency says. If the client doesn’t trust the agency to work in its best interest, they shouldn’t engage them in the first place. Effective marketing and promotion almost always takes more effort, money and time than any client prefers.

Again, this issue is usually a deal killer for the client. They typically refuse to allow the agency to do what it knows works. The result is a less than effective effort and everybody loses. Issue #4: Disclosure Tracking financial performance (or other metrics) takes time, money and effort. Many clients are uncomfortable sharing financial information or doing costly research to confirm that the agencies work is having a measurable impact. PFP also requires extra legal fees to create and enforce the agreements – thus raising costs even more.

The solution: There needs to be transparency and trust for a PFP arrangement to work. The process of disclosure and confirmation should be spelled out in the client/agency agreement at the beginning.

The above issues are only the tip of the iceberg when it comes to PFP. Any marketing firm or agency that’s any good welcomes a fair PFP agreement because we know our work is effective. In my experience, it is usually the client who ultimately decides that PFP won’t work.

Please post your comments on this topic. I welcome disagreement from my peers and from client organizations. How can we bring agency compensation into the 21st century?

16
Sep
09

From up on my high horse…

I just had a casual contact excitedly tell me she has hired a marketing company to help her build her fledgling business. No problem for me, I’m not competition minded. I believe in abundance – there’s enough work for everyone. What I don’t believe in is companies that overstate their expertise and take advantage of people who don’t know any better or what to look for when qualifying a potential partner.

While I sincerely hope it works out for her I can’t help but think she’s fallen victim to a slick sales pitch or hard to believe, too good to be true pricing scheme. Why might I think such a pompous thought? I went to the marketing company’s web site.

The first thing I noticed was the ads at the top of the web site for GoDaddy. Now I’m all for reducing operating costs, but seriously, getting free hosting (the site proudly proclaims this in the most valuable real estate on the site) saves a whole $20 a month. Wow. I know things are tight but…. really?

But the real issue here is that any marketing company worth it’s salt would understand that this sends a negative brand message to anyone visiting the site. Not only does it scream “SMALL AND AMATEUR”  it detracts from focusing the attention on the firm and it’s work. Another negative is that it allows a visitor a number of options to simply leave the site at the click of the mouse. And it’s ugly.

I could go on about their clip art logo, their template based free web site, the poor grammar and more but I won’t. This isn’t about trashing another marketing firm.

I’m hoping that I can help you choose better, get better results and know what to look for when hiring outside help. And the web site is a treasure trove of clues as to the sophistication of your potential partner.

08
Sep
09

Do your customers trust you?

I’m reading a very good book that hits the nail on the head when it comes to the sea change that is happening in marketing. “Trust Agents” is a NY Times Best Seller written by Chris Brogan and Julian Smith that lays it out clearly and if you plan on being in business five years from now you better pay attention.

If you’ve been reading my stuff for any length of time, you already know that I advocate building credibility and trust as a core principle of marketing strategy. Brogan and Smith’s book not only agrees but it takes the concept to a more focused level (I’ve never been accused of being focused…). What I really like about this book is that it doesn’t just tell you WHY it shows you HOW to leverage social media and other digital tools to achieve the holy grail of marketing – trust.

If you’ve been wondering why your marketing and advertising just doesn’t seem to work anymore (and it doesn’t matter if you are Proctor and Gamble or Joe’s Fish Shanty) it’s because of a  perfect storm of factors including:

  • people are tired of you shouting how good you are or your widgets and interrupting them
  • people don’t believe you anymore and they know you are just trying to sell them something
  • media fragmentation and info overload overwhelms them
  • the very nature of a “market” has changed since the Internet came along
  • buyers have scads of information at their fingertips and are better educated and more informed than ever
  • basic human behavior drives interaction and community building

I’m sure there are more but I hope you are seeing where this is going.  Buyers seek information. They buy from those individuals and brands they trust. No longer will a clever ad on TV do the trick. No longer can you hide behind a carefully crafted brand – there is no hiding on the web. No longer can you trick people into buying. The new era of marketing is about truth, reciprocity and value. It’s about being a good human. It’s about relationships.

The problem is that what works (relationships and building trust) is at odds from what company shareholders want (fast results). Creating trust takes time and dedication.

The good news is that the web is awash in tools and communities where you can shine like a benevolent diamond of value and helpfulness. I haven’t read the whole book yet but from what I have read, the deal is not technology or social media or computers. It’s about people – sharing, connecting, conversing. Take part in this conversation, do the right thing always and you’ll be awarded with trust and business will follow.

Oh, I also had lunch with Chris. He lives by his principles. We had salad.

I’ll be blogging more about this in the coming weeks. Why not leave a comment so we can have a conversation?

26
Aug
09

Coffee, laptops, wi fi, Starbucks and marketing

moochmugI’m sitting in a Starbucks right now typing this on my laptop sucking their electricity, using their wi-fi, taking up a seat and consuming a beverage. I’m the worst human being in the history of the world. I’m a freeloader. A mooch. A squatter. A parasite. A burden.

As the economy punches laid back coffee shops in the beans, in their hyper caffienated states, they are starting to make rather stupid decisions with regard to riff-raff like me. Another word for these relentless carpetbaggers would be…..uh…customers.

Case in point, one local, Austin coffee shop that is popular with business people, offers good coffee, good food and free wi-fi has been taking customers aside and informing them that they need to spend more money if they are going to patronize the place. Next, they covered the outlets saying they are tired of people stealing their electricity.

Granted, I am there about once a week working with my coaching clients. Sometimes I scarf down stuff. Sometimes not. I use the wi-fi very little. However, I do see people sitting there who never buy anything, crank the laptop for hours and generally take up space at the shop’s expense. That’s not right. And I don’t doubt that it’s a problem for the coffee shop.

But here’s the problem I have with it and why I no longer bring my clients there (none of whom had ever stepped foot in the establishment before and all of whom buy something when they are there). I understand the owner’s issue and I agree but it’s the way it’s being handled that will ultimately drive customers away and hurt the business even more.

The truth of the matter is that most coffee shops don’t market their businesses. They rely on passive word of mouth. When times are good economically, they can thrive. When things get tough, word of mouth isn’t enough. In essence, their failure to promote and market their businesses is what is causing them to hurt financially.  Blaming your customers and making draconian decisions that drive them out is not the solution.

I’m not suggesting that they start spending money on ad campaigns or start cold calling customers. But they can do some very low cost tactics that will drive customers, strengthen loyalty and communicate their expectations in a positive, supportive way. For example, how many coffee shops have an email list of thier customers and regularly touch them with offers, specials and other info? How many are strategically using social media? How many are marketing events? Partnering with other businesses to cross promote? How many have web sites that are pathetic? Developing products that people want to buy?

Even simply posting a sign saying “We welcome our wired brethren, but please do your best to help us keep the lights on and the electrons flowing” would be better than pissing off the very people you depend on for survival.

25
Aug
09

Hail to the Spammer in Chief: Where Obama Went Wrong

CORNYN: The Republican senator from Texas alleged that the administration was using the e-tip box to collect names. The White House denied the claim.

CORNYN: The Republican senator from Texas alleged that the administration was using the e-tip box to collect names. The White House denied the claim.

NEW YORK (AdAge.com) — Regardless of where you fall on the political spectrum, one of the few things about Barack Obama’s presidential campaign that was hard to criticize was its use of e-mail and database marketing. But in the past few weeks, Mr. Obama’s team has gone from a digital-marketing case study to being regarded as a lowly spammer.

White House senior adviser David Axelrod sent an e-mail touting the administration’s embattled health-care-reform plan to thousands of people who apparently hadn’t asked to be contacted. Was it an innocent mistake on the part of the administration? A Machiavellian stunt pulled off by opponents of health-care reform? Or an act of desperation mixed with some hubris on the part of the administration in an attempt to push its plan on as many citizens as possible?

Zain Raj, CEO of Havas’ Euro RSCG Discovery, said he doesn’t believe it was an innocent mistake; the Obama team simply acted like many major brands do.

“The [administration] has become so arrogant about the amount of trust and credibility they have with their constituents, they think they can take advantage,” he said. “They forget who they are serving, and that’s what has happened with the brand Obama. When the campaign was building the brand, it was part of a movement, but now it’s become part of the establishment.”

Mr. Raj said part of the reason that happened is the absence of the marketing professionals who brought a tightness and focus to the campaign’s messaging. “The behaviors seemed to parallel the rhetoric. Since they got into power, there has been a fundamental shift happening in their approach,” he said.

Placing blame
Steve Cone, chief marketing officer at Epsilon, said there is no upside for the administration in just spamming people. “I wouldn’t assume they did this intentionally,” Mr. Cone said. But he said the White House could be guilty of assuming that those who subscribed to the updates signed up their friends only after asking permission to do so.

“In their ongoing e-mails, [the administration] asks that you get as many people involved as possible,” Mr. Cone said. “They assume you will ask permission before signing your friends up, and that’s clearly not practical. If they’re guilty of something, perhaps that’s what they are guilty of.”

But Stuart Ingis, partner at Venable, a leading consumer-protection, marketing and advertising law firm, said he doesn’t think the administration is guilty of anything; this is simply democracy at work.

“If elected officials can’t communicate with the public through whatever channel to make their case on important issues, that’s a real problem for our democracy,” Mr. Ingis said. “The question we need to ask before we talk about whether … people don’t want to receive these [e-mails] is whether this type of communication should be frowned upon. And I believe quite to the contrary.”

Mr. Ingis said the administration should be allowed to send out e-mails to citizens, but if people say they don’t want to receive them, the administration should respect that.

“The law is to honor a choice when it’s offered,” he said. “It doesn’t violate the CAN-SPAM Act, because that applies to commercial e-mail and this isn’t commercial e-mail. It’s not violating any laws.”

Fueling flames
Whether it’s breaking any laws or not, Margie Chiu, exec VP-strategic services at WPP’s Wunderman, said it doesn’t look good for any marketer using e-mail if the administration is seen as a spammer. “Something like this makes it more difficult for us, because there’s already such a distrust of e-mail and spam,” Ms. Chiu said. “And an incident like this fuels that mistrust.”

She also said the White House handled the aftermath very poorly by not taking the blame.

In the wake of “Spamgate,” two things happened. First, the White House issued a statement laying the blame for the snafu at the feet of “outside groups of all stripes” who may have added the disgruntled recipients to the e-mail list without their knowing, and apologized in a roundabout way, saying: “We regret any inconvenience caused by receiving an unexpected message.” It also shut down its e-tip box, which was being used to collect misinformation or “fishy” allegations about the administration’s health-care plan. John Cornyn, a Republican senator from Texas, alleged that Mr. Obama was using the e-tip box to collect names, a claim White House Press Secretary Robert Gibbs later denied.

“It was really bad form,” Ms. Chiu said. “In general, whether or not it was a third party, the fact is that they need to own up to it and be accountable for something that came from their delivery system. Blaming a third party is just not great form.”

But Euro’s Mr. Raj said the Obama administration, like other brands that have stumbled before it, will make the necessary adjustments. “For every big brand, there’s an event that shakes them,” Mr. Raj said. “The Obama brand is going through that, and my hope is they learn from that and don’t continue to deflect to somebody unnamed, because that’s the political way. I hope they learn, like all good brands do, that it’s better to listen to our customers vs. not.”

24
Aug
09

Ask for advice then go with your gut

Research or Gamble?

Research or Gamble?

How many times have you reached out to friends and business partners to get advice about a marketing or branding concept? And how many times have you received fifty different opinions leaving you more confused than you were when you started? Over my two decades of marketing consulting, I’ve seen this situation play out over and over. In fact, I’ve fallen into this trap myself.

It’s a good idea to vet ideas, concepts and designs with people who fit your target profile. Their advice and input can in invaluable. But you need to look at it as research – not as a substitute for making a decision. In other words, there are things to be learned during this process – things that you may not have considered before you asked. However, ultimately you need to make your own decision as to which direction to go. Only you have enough information to make these decisions and only you will bear the consequences if you get it wrong.

The problem with vetting marketing and creative decisions with a group of “outsiders” (people who are not trained in marketing) is that they will not understand the criteria used to develop the concept or approach. They will simply make a knee-jerk comment or reaction (which has some value) but keep in mind that most people feel that they must “critique” the effort – finding something wrong with it is part of their perceived responsibility. It is almost impossible to put your approach in context for them.

Another issue that skews this sort of advice is that people generally prefer concepts and approaches that are safe, familiar and predictable. They will invariably suggest you remove any aspects that create tension, that are interesting or provocative. This is death for effective marketing. “Safe”, “Familiar”, and “Predictable” equals weak “me-too” marketing.

On the other hand, if everybody simply loves your approach this is a clue that you haven’t pushed it far enough to be compelling. Effective marketing takes measured risks. If you are slightly uncomfortable about your approach,you are probably on the right track.

Now, I’m not saying you should go nuts and be offensive. The key is to find enough edge to be interesting and stand out of the clutter. Marketing by committee is well known to kill good strategies. Bouncing ideas off of your peers is not a bad idea. However you need to be careful not to base your ultimate decisions on this input alone. It is a great way to bring additional data into your process. But at the end of the day, your gut will tell you if it’s right. I don’t know about you but my gut is almost always right.

If you need some objective input on your marketing approach, message or brand, I’m happy to help. Contact me at http://www.claritymarketingsupport.com and I’ll give you my opinion as a professional marketer. Just take it with a grain of salt.

10
Jun
09

Is Coaching Right For You?

I admit it. I’ve finally engaged a coach. I know what you are thinking. “Pete Monfre, the guy who has been self employed his whole life, founded and grown his own companies, consulted with the best and brightest of corporate America needs a coach?!! Say it isn’t so!!!”

The reality is that even I need some outside, objective advice and a sounding board for my ideas (I’m full of ’em). My coach, Rafe Beeson, is helping me prioritize and focus on the key issues that will help me grow my company. The sessions are short, weekly and to the point. I would say the sessions are even pretty fun. But most importantly, it is a very affordable way to get the support I need.

Coaching is a widely misunderstood concept. Coaches are not consultants but they do offer ideas, suggestions, connections and clarification. Sometimes they play devils advocate, other times they just listen. They always hold you accountable.But the most amazing thing about it is that somehow, someway things become clearer. It’s just that simple.

I’m so convinced that coaching is a great value that I’m offering it to a very limited number of clients (NIA members get a hefty discount) who need marketing advice but can’t afford to bring in consultants, ad agencies, design firms, etc. They can do most of the work themselves but need some guidance as to what to do and how to do it. The bottom line is high end expertise without the sky high fees. It’s no wonder so many people have coaches.

For me, I really enjoy helping business leaders hammer out their marketing challenges. It doesn’t seem like work to me. I have an uncanny ability to see through complexity and get down to the real issues and solutions.We still do projects and hefty strategic planning but coaching is my way of offering some help to smaller companies and organizations who normally couldn’t afford to engage my firm in a full service capacity.

Learn more about my coaching program here: http://budurl.com/8pzk or call 512-663-7393.




Who is Pete Monfre

CLICK HERE to visit my web site

I'm a serial entrepreneur, marketing and media guy, raconteur, writer, producer and consultant. I write this little blog to help you unravel the mysteries of marketing and selling, to expose the silliness that masquerades as marketing and help you make better decisions that will grow your business. And I have fun with it. Why not comment? That way we can have a conversation. Or better yet, hop on over to my web site and drop me a line.

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