Last week I was appointed to the Conservation Advisory Council (CAC) for my area, a part-time volunteer role that I am excited about. I joined 4 others and our team is tasked with recommending ways to conserve the environment in our area.

Clients like this one because they get a brief intervention that can change their trajectory for the whole year. I take a look at your current activities and recommend the best courses of action going forward. I will give you concrete strategy and tactics that make sense for you, based on your situation. You can then execute with your team if you want. If you need help I will recommend partners to help you out (there are 7 approved partners I work with). The project typically takes 2 weeks. Then I move on to the next company. Therefore I share everything I can with you in 2 weeks so you can be successful.

This includes:
- Audit of your technical marketing architecture (you need to get this right)
- Audit of significant sales and marketing spend (this alone should pay for the whole project)
- Audit of your search engine marketing (including third-party SEO audit)
- Audit of sales and marketing process (including your lead scoring if you have it)
- Audit of email marketing (includes a portfolio of campaign samples)
- Marketing automation analysis (this is a core component of your infrastructure like CRM)
- Audit of tools
- Information dump for your team
- Vendor recommendations
- Comparable recommendations (what others are doing that works)
- Starting point for lead scoring model (will need to be refined)
- Strategy document
- Tactical specifications (so your people know exactly what to execute)

Contact me if you are interested.

By now most technology marketers realize that activities should produce a return, however, I think in many cases company leadership is not good at valuing marketing assets.

So let’s say you are a business owner and you hire someone so sell a new line of business. You hire a person to make sales and this person generates all the leads by outbound calls and emails. I will assume here that they are selling into a new market to keep it simple. Your thinking might be:

Cost better be <= value created

So you take the cost of the activity and measure it against the sales made in the period.

The problem with this approach is that you are not counting other assets that may have been created.

So for example let’s say that you had the following activities:

3,000 outbound contacts made
800 people added to house email list
50 face-to-face visits
12 trials
1 deal signed

Using traditional logic you might look at the single signed deal and say that is not enough.

In this case the cost of the activity was $30,000 and the deal was worth $25,000

Cost = 30k vs. value created of 25k

There has been value created in addition to the sales made. So how do you value those assets?

I would argue that the value of each asset is directly proportional to its correlation to the final sale. OK this is a mouthful but what I mean by this is:

If a deal is worth $25,000

And 10% of (a certain type of) lead converts to deals

Then those leads are worth $2,500

Using the same logic a proposal might be worth $12,500 (50% will convert to a deal so it is worth half a deal)

Maybe a member of your house email list is worth $7. (Deal value generated by list divided by list size and discounted for time)

Let’s say you created a whitepaper that increases your conversions by 3%, the whitepaper is worth $75,000 if it will be part of 100 deals.

So when you run a marketing activity, my belief is that you should look at increases in all assets generated by the activity to get a better idea of the real value created.

So in our example here:

800 people added to house list = $5,600
50 face-to face visits = $10,000
12 trials = $30,000
1 deal closed = $25,000

If you add all this up the total value created far exceeds the cost of the activity of 25k. So now it is a worthwhile pursuit vs. not being worthwhile if you only look at deals closed.

Important note: Please note a few assumptions that allow this all to be true:
- This assumes that the activity will be ongoing. If you will terminate the activity then the values will drop to zero because you will not reap the value in the assets you created.
- Also please note that the assets will degrade over time. Anything more than a few months and you should start discounting asset values.

Let me know if I missed something, let me know if this helps and let me know what you think!

Sincerely,
Rajiv

Allow me to explain this chicken scratch. The channels on the left can be added one-by-one. However, there are key components of a b2b architecture that should be in place. Most companies that have a sales force use a CRM like Salesforce.com. Once you have assets like thousands of potential clients on a list and/or a good number of leads being generated by the channels then there are other key components of your architecture like inside sales and marketing automation. Many of the components on your strategy will work together and reinforce each other.

The bottom of the chart lists all the skills you will need to make this all happen. Functions with an “o” next to them can be easily outsourced so you can decide which skills you want to keep in-house and which you want to outsource.

If you want to discuss any of this drop me a line!

Marketing automation can be a key component of a b2b marketing strategy. What I am realizing is that very few companies are getting past basic use of marketing automation tools – which is not really marketing automation at all. Advanced marketing automation is where the value is. Here is a presentation which talks about the differences between basic and advanced marketing automation.

It is too easy to get access to a list, create some content that you THINK is good and blast it out there creating pain and suffering for others. This process will ensure that you don’t send garbage out there.

Step 1 – Create the campaign and send it to yourself until you are happy with it

Step 2 – Send the campaign to other relevant team members to get their reactions

Step 3 – Send it to a small portion of your audience (say 10%)

Step 4 – Talk to that audience and see if they have anything to say about it

Step 5 – If the feedback is positive, roll it out to the rest of the audience
(and if the feedback is not good go back to step 1)

This ensures that only 10% of your audience are exposed to bad ideas and the best ideas reach everyone.

Let me know if this makes sense to you.

“The top 10 things to look for in a startup marketer”

1. Do they favor efficient channels? - Do they rely on the most efficient channels like SEO, email marketing and business development? The best candidates will recognize that channels can be ranked by effectiveness and they will always start with the most efficient channels and work their way down the rankings.

2. Are they aware of best-practice metrics? - Look to Dave McClure for best-practice startup metrics. It is always a challenge to establish and track the right metrics. Dave has an awesome presentation on this on his site at: http://500hats.typepad.com/

3. Do they follow best-practice lead generation? - The best lead generation talent comes with a direct marketing or interactive marketing background. There is no better way to learn lead generation than to try hundreds of campaigns and see what people respond to (it is not what you might think!). For more information on lead generation see my site at: http://www.chaistartup.com/

4. Do they practice customer development? - Customer development means soliciting ongoing feedback from the marketplace to define the product and the positioning. There is a movement out west on this subject. Steve Blank first wrote about this concept in his book “4 Steps to the Epiphany.” Sean Ellis also has a blog on the subject: http://startup-marketing.com/

5. Do they understand new segmentation techniques that include behavioral segmentation - In the old days you would segment by demographics like title, company size, location etc. Now you can segment in much more exciting ways like who visited what web page, who clicked where, and who downloaded what and when. This way you can have a real 2-way communication versus a broadcast relationship.

6. Do they understand marketing automation (for b2b)? - Marketing automation provides a ton of benefits like a. Sophisticated lead scoring to get the right leads to the sales team at the right time b. Lead nurturing with automated campaigns vs. one-off campaigns c. A repository for the history of interactions vs. no memory of past interactions. Vendors in this space include Eloqua, Marketo and Silverpop.

7. Can they aggressively manage third-party vendors? - If you know their business you will get more out of them.

8. Are they systematic bold and creative? - The methodology needs to be systematic and at the same time the offers and incentives need to be creative because the same-old same-old will not perform well (because there is a psychological element to response).

9.Have they done it before? - People that have worked with venture funded startup companies or startup companies in general will have a better feel for building out capabilities that are more efficient. Large company marketers often rely on expensive tools and vendors because they tend to have less of a feel for what will result from a given activity.

10. Do they pass tests you throw at them?- Let them present their plan. Then if you hire them you already know what they will work on!

This is actually quite simple and I am surprised how many companies don’t do it.

Knowing your allowable acquisition cost:
- Helps you determine how much you can spend to acquire customers
- Gives you an idea of what marketing channels you can use (some will be cost prohibitive)
- Prevents you from engaging in loss-making activities!

The formula if creating in Excel is:
=-PV(cost of capital,average customer term,average revenue per customer*gross profit)

More detail on the variables:
- cost of capital – I recommend the cost at which you will acquire capital to spend on marketing
- average customer term – How long your average customer stays with you
- average revenue per customer – The average revenue per customer per year
- gross margin – This is your profit margin excluding marketing

Here are some example assumptions:
- cost of capital = 40%
- average customer term = 3 years
- average revenue per customer = $300
- gross margin = 60%

The formula in this case is:
=-PV(.4,3,300*.6)
=$286

So assuming there are no other significant drivers of value (like virality), you should not spend more than $286 per customer. At $286 you are getting a return on your investment that covers your cost of capital.

You want more leads so you grab your machine gun and start spraying bullets – that is your newsletter. You proudly announce the launch of your new product but the market for new product announcements is really not that large. You don’t know what you are getting from your Google Adwords but you let it run because god forbid you might lose something if you turn it off.

You are not doing a/b testing but they should be. Of course all your marketing is ROI-based, but your reports are broken – which is just as well because clarity is the enemy of tenure. Your customer satisfaction is a key indicator of your success but you don’t measure it because you are scared of the result. You don’t make any money attending events, but you go to events because what would people say if you were not there?

Much of this hoopla would not be necessary in the first place if the product was better – oh yeah marketing is in charge of that too. 87% of people in my mind think marketing is fluff. Good marketing equals sales. You really would like some competent help but there are only 2 trades that are an unlicensed free-for-all, marketing and parenting.

There must be a better way.

All else being equal incentives are a tool often used to drive interactions. So how much response do you get for a given incentive? The below chart is built using data from select marketing campaigns and it shows a direct relationship between perceived value and response rate.

A few points related to this:

- I see these incentives as tools like a shovel. It is up to the marketer to apply an appropriate incentive to a situation to get the desired outcome.

- The absolute response rates will only hold true if all other critical factors are in place. Screw up something else and the incentive will not work.

- And finally you should expect different absolute and relative outcomes based on unique campaign factors.

One thing I have not had experience with is contests with a large value – I presume those would lie somewhere in the mid-range.