Posts Tagged ‘marketing tips

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?

11
Dec
08

web site hurting your sales effort?

by Pete Monfre

When many companies talk about marketing, they inevitably end up focusing myopically on their company web site.  Do a search in any search engine for “marketing” and the vast majority of topics will be on-line marketing. It’s as if the web has become the singular representation of  of marketing and sales tactics.

While your web site is important, it is a mistake to consider it as the only factor in reaching prospects and converting them to customers. For most companies the web is a critical focal point during the early stages of your sales process for prospects. The trouble arises when the we attempt to make the site everything to everyone. I’m not saying there are many different uses for a corporate web site (service, support, education, social interaction, etc.) but most of my clients expect their site to primarily help drive sales. Whatever you are trying to achieve with your site, the key is to have a clear understanding of what it the end game is and then focus your efforts accordingly.

If you want your site to contribute to successful sales, you have to understand how it functions in the sales cycle, align the content with how you sell,  and take into account customer evaluation and buying criteria.

This is not as easy as it sounds. One thing that makes this idea difficult to implement, and indeed one of the main reasons most sites are deficient in this area is that the wrong people control the content on the site. Most companies put the marketing or I.T. department in charge of the company’s web site. Neither of these groups typically have any incentive to collaborate with the sales team so the content of the site often conflicts with how sales functions. A better method is to assign someone who can lead a cross functional team in a strategic process to determine the optimum approach. My process creates a collaborative environment between sales, marketing and I.T. to first establish a foundation of requirements and desired outcomes. Then, we work to align these requirements with how prospects typically use the web to vet potential suppliers.

In the majority of B2B and B2C selling environments, the web site is the primary tool a potential customer uses to decide if you qualify for their business. Once a buyer is aware of your company (either through search engines or via referral or other demand generation work) the first thing they do is check your site. My research indicates that customers visit potential suppliers sites initially with three primary questions in mind:

Do your company’s capabilities match my needs?
Is this company capable, credible and trustworthy?
Should I include them on my short list of potential suppliers?

If you pass these initial tests, you will make the short list. If you don’t, you’ll never know because the prospect won’t inform you of your failure. They will simply move on to your competitor.

The typical B2B buyer spends only minutes at your site with the vast majority never making it past your home page. You need to make sure you’ve at least answered the above questions and offered some incentives to invite the visitor deeper into the site or to contact your sales team. One way you can do this is to offer special reports or other valuable information in return for revealing the visitor’s identity (usually in the form of an email address or other contact information). Many of these people won’t be ready to buy yet, so offering a subscription to an electronic publication is effective to maintain an ongoing conversation with people who have shown some level on interest in what you offer.

At the same time, your site must be attractive, professional and easy to navigate. Visual organization is key – if the visitor is presented with a chaotic layout of graphics, text, widgets and other elements they will simply determine that it is too much work to evaluate your company and with a click of the mouse, they are gone. This is where a professional designer is worth his or her weight in gold.

If your site aligns with your marketing and sales processes and delivers the right messaging at the right time, you will pass more buyer’s tests, make more short lists and, ultimately, more sales.

11
Dec
08

How to choose keywords for SEO

The first step for increasing traffic to your web site is to gain a good understanding of how your customers use the search engines. In other words, the words you use to refer to your products and business are not necessarily the same words your customers use. So how do you find out what words are used most?

A strategic keyword analysis is the answer to this question. Using a variety of tools and techniques, we can find out how many people are searching on certain words, how much competition there is for these words, what companies are paying for keywords and much more. Typically, we find out that the words we thought customers were using are rarely searched and other terms we didn’t think of are killer keywords!

Choosing the right keywords and phrases is critical. If a search engine can’t connect your Web site to the words and phrases people are searching for, you simply wont be part of the search results.

Once you have a long list of words (some companies have thousands of keywords) it’s time to figure out on which ones you can actually compete. For example, if one of your keywords is “insurance” you will find that millions of searches on “insurance” are done every month. It would seem like this is a good keyword to use, right? Wrong – there is also a ton of competition for this word – thousands of companies trying to claim the number one spot for “insurance”. The key is to find words and phrases that have a high incidence of searches and a relatively low level of competition.

One way to compete would be to narrow the focus and geotarget – for example, “auto insurance Austin” – or “home owners insurance Texas” or “insurance brokers Austin”. While there will be competition for these words, it won’t be nearly as competitive for the most obvious words.

Contact me for more information about the Strategic Keyword Analysis.

17
Jul
08

The Magic Marketing Bullet – revealed

For years now I’ve kept this highly guarded secret to myself because I didn’t want to let clients in on something that would surely render me useless to them. It’s not like I haven’t been asked a thousand times to reveal this secret – it comes up all the time in various forms but the essence of the question sounds like “What is The Magic Bullet marketing thing I can do to instantly transform my business into a customer acquisition powerhouse?”

I know it is selfish of me to keep this magic to myself – after all, a guy’s got to eat and pay the rent. A client who knew this sacred information would know how easy it is to dominate competition and grow their customer list and that doesn’t make economic sense for the marketing and advertising industry. In fact, the Industry has kept this information locked up in secret, hidden file cabinets for years to ensure they have an unending stream of clients who will pay them to reveal bits and pieces of The Magic Bullet – but never revealing the entire Bullet. I can’t say I blame them either.

So, lucky reader, I am going to risk banishment from the marketing industry by revealing what nobody will ever tell you – the secret behind The Magic Marketing Bullet. Are you ready? Are you sitting down?

THERE IS NO MAGIC BULLET.

That’s right. You read that correctly. No magic. No secret sauce. No universal inspiration. Nothing. Zip.

I think what is so intriguing about The Magic Bullet is the idea that you could just do one simple thing and and it would instantly create demand and drive customers crazy to the point where they can’t wait to write a check. But nothing in business (or in life) works this way.

A successful marketing program is implemented on many fronts – more like a constant stream of highly targeted bullets. No single tactic drives the success of the program – although certain tactics will rise to the top in terms of effectiveness. The real secret (if it even is a secret) is that the bullets will all work together to produce an effect that is greater than the sum of the parts. Some will hit the target, some won’t and some will ricochet and eventually hit a target.

Marketing and sales programs don’t just happen. These days building a strong client base takes time and is hard work. It’s not a sprint race – more like a slog through an obstacle course. A lot of the work isn’t sexy or fun – it just has to be done.

I wish I had some Magic to share. If we meet, I can probably pull a quarter out of your ear or shove a salt shaker through the table but if you need me to transform your business, that’s going to be a bit more work.

The good news is: It is totally possible. We just need to commit to the process and execute consistently. Maybe that’s the magic bullet right there. What do you think?

15
Jul
08

The single most important thing you can do to grow your business.

First let me say that I’ve been guilty of what I’m about to share with you. In the past, as the founder and owner of a successful marketing firm in Milwaukee, I thought I knew everything I needed to know about what my customers want and how they buy. My biggest mistake was thinking that my company could do no wrong when it came to servicing clients. I thought we were the best and I knew my clients knew it. The sky was the limit and my ego was pushing this limit to the max.

The irony is that my team regularly developed and executed customer surveys for our clients but we never did one for ourselves. After a particularly perplexing client phone call, I called my friend, Bill Lowell from Business Development Directives and asked him to perform executive interviews with a random sample of my clients. Something wasn’t right and I realized I was too close to the problem to put my finger on it.

Bill performed interviews with thirty past and present clients. While we scored very high in overall satisfaction, around 98%, our survey went beyond satisfaction metrics and focused on where we could improve; attitudes about pricing, buying criteria and more. After all, even a satisfied customer will still buy from someone else if the circumstances are right. We learned that many of our clients also bought from our competitors – including some we had never heard of before! I learned that clients wanted to see more of me – and less of a certain staff member who was described by more than one client as “obnoxious”. The biggest thing we discovered is that many of our clients thought our pricing was too low!

Since then, I’ve come to personally understand the importance of working with customers to refine, improve and focus marketing and sales efforts. I’ve developed a process that moves beyond mere “customer satisfaction” and provides answers to the questions that keep you up at night.

You might be wondering why I brought in Bill to do my survey when we were in the business of doing this type of work. The reason is simple. This is one of the few tasks companies should never attempt to do themselves. Of course I encourage you to have regular dialogs with your customers to gain insight and create strong personal bonds. However, customers are reluctant to tell you about issues that they think may insult you or hurt your feelings – the very issues that are hurting your business! By performing anonymous interviews with an objective, third party, customers are more willing to be completely candid.

Not just a conversation – an Executive Interview
Furthermore, a casual conversation is much different from the executive interviews performed during the research process. This process produces very specific data used to spot trends. Each question must be carefully developed and delivered in exactly the same way to ensure that respondents are not “led” by the researcher to a biased answer. The survey is done in a tightly controlled manner and is designed to answer specific questions.

Generally the surveys I implement are designed to uncover the criteria and process used to select one company over another. Is reputation more important than price? Is location important? Is industry specialization the key factor? Once this criteria is identified and ranked, we’ll ask how we compare to competitors based on this criteria. Using a combination of structured and open ended questions, (remember, this is a conversation, not an interrogation), we get down to what is really important to your customers; how you can do better, what they really think of your business, how they make buying decisions, other needs they may have, who your competitors really are, and much more. Each survey is tailored to what you need to know to sell more, increase profit and close more deals.

The million dollar question
It’s difficult to predict the outcome of these surveys. Typically, we find out that our clients’ perceptions and assumptions are about 90 percent accurate. They know their business and generally make good decisions. What makes the biggest impact is the 10 percent they are getting wrong and the customers are more than happy to set us straight. For one client, we learned that a majority of their customers felt that a certain employee’s involvement was critical to continue doing business with my client. In other words, if this employee left, the customers would leave with him. Another client discovered that a customer was buying from a competitor simply because they didn’t know my client provided this type of product. This resulted in an additional $2.5 million dollars in revenue – simply because we asked the question!

Customer surveys should be a regular part of your operations. Done properly, they can have immense impact on the success of your business. There are no shortcuts here. The good news is that your customers are chomping at the proverbial bit to tell you what’s on their minds. All you have to do is ask.




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.

Pete’s Tweets