People, language is for communication and marketing terms, abused as they are, fall somewhere within the scope of language.  To communicate you need to learn the terms.  To practice marketing or to hire a marketer you need to grasp some basics. Please.

Marketing Help Rule 1.

(<> means “not equal to”)

Blogging <> PR <> Brand <> SEO <> Logo <> Advertising <> Tagline <> Messaging <> FaceBook <> Positioning <> Twitter <>Lead Gen <> [Enter mktg term here]

Marketing Help Rule 2.

Trust me, you don’t need all the marketing tactics listed in Rule 1.

Marketing Help Rule 3.

The right marketing tactics for you, right now depend on WHO your prospective customers are and WHAT stage your company is in.

Marketing Help Rule 4.

All Marketers have a core competency (or two).  Regardless, (almost) all Marketers will sell (almost) all marketing services.

Marketing Help Rule 5.

You need marketing to grow your business.  And more likely than not, you need or will soon need help marketing.  Admit it.

For a moment, forget everything you know or think you know or have heard about marketing.  Start with a clean slate.

Now imagine you are a new customer of a particular product or service.  You just finished buying.  You are a bit giddy:

• You’re eager to get started.
• You’re excited at the prospect of reaping serious value.
• You’re determined to at least get your money’s worth.
• You have a small fear in the back of you mind that you spent too much or made the wrong choice.
• You both want to show it off and hide it from view until you’ve proved it’s worth.

Now like a bad movie flashback, go back to this morning right before your alarm clock sounded.  Better yet, go back to the moment BEFORE you realized you had a NEED that you MIGHT eventually purchase SOMETHING from SOMEONE to RESOLVE the need.  Your experience from this moment –pre-realization –to the moment of sale is marketing.

Your maybe want to tell me it’s sales.  But no, the seller sells.  The buyer experiences marketing.  Whether you agree or not, analyze all the marketing advice you’ve received in this context.  Think about all the people telling you that you must use social media marketing.  Think about magazines, news, commercials, blogs.  Think about your logo and your clever slogan.  Think about “your brand must be consistent!”  Think about your color palette.   Did any of these things affect your path from pre-realization to purchase (as far as you know)?  No, yes, maybe?

Ruminate on this concept:

Ms. pre-realization will eventually buy from me because:

• I’m a good person
• I try hard
• My technology is the best
• I don’t oversell
• I’m ethical
• General Haig interviewed me on some TV show on a plane somewhere, sometime.  I think.
• I tweet

Marketing feels daunting because you are being shown a dozen yellow brick roads that weave off gloriously into the colorful horizon.  That and the promise that the chosen path is flowering with ROI poppies.  Walk forward in your customer’s shoes from before purchase; from pre-realization.  How do you get to you?

A technical CEO learning marketing is the equivalent of a sales/marketing CEO learning development engineering.

Not.

I am not a developer.  If push comes to shove, I can code in PHP, or develop shell scripts, and truth be told, I did take a couple of ECE courses in college; courses which inexorably told me I was not going to be a developer.

My path to becoming a marketer was unusual, I think, which has had both its advantages and disadvantages.   I like to think I’m a “technical marketer,” rather than what I call a “Madison Ave” marketer; not to dis the later, since they have their role to play in the grand scheme of marketing.  By technical marketer, I don’t mean one who only markets technical products, or who does only “product marketing” in the industry vernacular, but rather a marketer who uses processes and actionable metrics to achieve near term business objectives that lead to realizing company vision.

IMO, development is harder than marketing.  The phrase “everyone is a marketer” is a mocking one, but it contains a granularity of truth.  Most people at one time or another promote themselves (to get a job), or reflect on messaging (e.g. self-awareness that an advertisement hit home), invent pithy, creative phrases, etc.  These things are not unique to marketers.  I am not going to claim that technical CEOs learning marketing is the equivalent of marketing CEOs learning development.  They simply are not.

That being said, the recurring theme that CEOs and entrepreneurs should avoid hiring marketers, that a marketer only “creates web sites, corporate presentations and sales materials… [and] hires a public relations agency to refine the positioning and to begin generating early “buzz” about the company,” and that in the end, CEOs should formulate marketing strategy themselves, is misguided.

This is not the 1990s.  High tech marketing people don’t have backgrounds in retail window displays.  High tech marketers’ primary ambition is not running a Super Bowl ad.

I am the first to admit that marketing can be a nebulous concept, a vast space that includes smarmy hucksters, spammers, tin men, and all those “want 16K followers for free” tweeters you have in your DM bucket.  I get that.   But I also get this:  1) specialization of labor was fundamental to the rise of capitalism; and 2) you can’t scale if you don’t delegate.

The point is this:

CEOs and technical entrepreneurs need to be better educated about marketing not so they can formulate strategy or do it themselves, but rather so they can make the best hiring or outsourcing decisions and know how to evaluate performance.

When formulating a problem team and solution team, or otherwise rejecting traditional “product development” process for sales and marketing (concepts I heartily recommend), a decision to not hire a marketing (or sales) executive is arbitrary and reflects a fallacy of cause and effect reasoning.

Not hiring a VP of Marketing because all marketing professionals practice antiquated marketing methods is equivalent to not hiring a VP of Engineering because all engineering professionals practice waterfall development methodology.

Don’t conflate titles with roles; hire the right person for the job.  Technical CEOs are confident in their ability to either direct engineering themselves or to hire the appropriate executive to lead that team.  Likely, the CEO will choose to hire someone who is  philosophically compatible.   The same approach should be taken with sales and marketing executives.  A CEO, however, doesn’t need to be able to do marketing or formulate marketing strategy, but must be able to espouse his or her philosophy and in order to do so, needs to understand something about marketing!

One purpose of this blog is to help educate CEOs and technical entrepreneurs about marketing.

Let me know how I’m doing.    Tell me what you’d like to learn more about in comments.  Or Ask me a Question.

In 1991, Geoffrey Moore in Crossing the Chasm defined a market segment as:

• a set of actual or potential customers
• for a given set of products or services
• who have a common set of needs or wants, and
• who reference each other when making a buying decision.

Most of this is pretty intuitive.  In a nutshell, a market segment is comprised of like buyers who share the same pain.  But there’s more to it.   The reference part trips some people up.  The key point to understand is that the customers and potential buyers must be willing AND able to reference each other. 

So, for example,

• a CEO may not reference an IT manager buying the same product;
• a smaller company CEO might look to a larger firm’s IT manager for guidance, but is there a means for referencing?  Do they visit the same forums or social networking sites?
• a Network Engineer likely won’t reference an IT Manager in the same company;
• A Telco Network Engineer likely won’t reference a same level network Engineer for a Fortune 1000 enterprise;

And so on.  Why is this important?    Leverage.   Each group of similar individuals is likely to be similar in terms of:

• what is their pain (compelling reason to buy)?
• how much budget authority?
• what is their buying process?
• who do they listen to?
• where do they congregate?
• what pubs do they read?
• what are likely product requirements?
• what is the method of finding and reaching them?

Clearly, the impact on the business plan is huge.  The answers to these questions determine:

• who your competitors are;
• what your sales model should be;
• pricing;
• product roadmap;
• marketing activities;
• resources required.

It boggles the mind to think a business might only go through the process of determining potential market segments after writing a business plan, let alone after obtaining funding, scaling headcount in all departments, and marching to market with product in hand.

Market segments affect additional factors entrepreneurs should consider:

• Does they have a passion for a particular segment, or lack a passion in another?  In other words, a particular segment might demand a particular product based on their technology, that solves a specific problem and therefore needs to sold through a reseller channel.   Perhaps there’s something about this that is not gratifying to the entrepreneur.
• Does the segment fit within the core competency of the company?
• What is the proliferation potential?  Does it enable a “bowling pin” strategy?
• How long will it take to get to market; to sell product?

Most businesses naturally fall into a market based on their business model, technology, or key differentiators.  A SaaS company, for instance, is typically carving out a niche in an existing market.   A company selling wireless equipment to carriers already knows who each of its potential customers is.   Such knowledge ripples through the entire business plan.  There’s not a great need for lead generation, for instance.   Likely an expensive direct sales force is required, the members of which have high quality telecom contacts.   They must plan for a long sales cycle and the ability to provide equipment for a pilot program.

You start with the company truths — the reason you’re in business — and flesh out your possible segments from there.  How do you decide?  Two versions of an opportunity matrix should get you through the process.

The first, uses weighted criteria.  Score the different criteria by importance, 1-5.  Next score each segment for each criteria.  For example, criteria A is the level of competition and may be very important (5).  The 1st segment may have several entrenched competitors, so you score it a (1).   Product fit, criteria B is important, but you have some flexibility so weight is (4).  1st segment represents is a good product fit, so you score a (4).

The normalized weighted mean is =(scoreA * weightA/sum all wt) + (scoreB * weightB/sum all wt)

or, (5/9*1) + (4/9*4) = 2.3

Some business plan characteristics are easier to evaluate in terms of costs, rather than subjective evaluation.  So the second method uses a cost estimate comparison.   Using real dollar estimates, presumably based on primary research, you attempt to compare the cost of doing businesses vs revenue potential.   Marketing dollars, product development, sales model, time to market, length of sales, etc., are dependent on market segment.  A simple spreadsheet tallying up the burn based on different scenarios should suffice.

If you are going to build a hosted platform for wireless mobile video, for example, out of a technology originally introduced as a 10K SMB software package, you had better figure out carefully whether there are enough customers who are willing to pay enough money to keep the datacenter operational.

Finally, a quick note on what a segment is not:

• a vertical.  Healthcare is not a market segment;
• a horizontal.  “IT Manager” is not a market segment;
• Big.  A small, focused niche is better.  Choose a segment you can dominate.

Comments welcome!

• need to be revenue focused, rather than # of leads focused;
• marketing taking greater responsibility for pipeline management;
• measuring, testing, refining every step of way through pipeline;
• identified information and activity overload problem;

A few key points still missing, IMHO.

First, in today’s environment, business needs to be profits-focused, not just revenue-focused.  This is a critical distinction.   An expensive advertising campaign may add more leads to your pipeline, some of whom eventually buy.  You’ve increased revenue, but hurt the short-term bottom line.   (Arguably there may be longer-term benefits from raising “awareness” through advertising.)

Second, this may just be a language thing, but I’m guessing not.   Marketing and sales professionals continue to talk about the “sales process,” e.g., the necessity to create activities and produce collateral that “nurture” customers through the sales cycle.   Despite the fact that this webinar correctly identified information overload as a problem, the end recommendations still pushed for “getting all the information the sales team needs into their hands.”  Step back!  This is classic reactive marketing and emblematic of VP of Sales (& Marketing) driven marketing.

Key question to ask:  what is the buyer’s process.

Third, “who is the prospect” was asked at the end of the webinar, when it should have been slide 1.   Even if your company was able to handle multiple segments before the economy tanked, you need to reassess to determine what are your profitable segments now. See point 1.

Comments welcome.

I was told I needed marketing, so I hired a PR firm and after 6 months and a lot of money, I got nothing.

Paraphrasing, a local venture capitalist admits:

Most CEOs lack marketing skills.  They need marketing help.

Yet his portfolio is dominated by companies without dedicated executive marketers.

According to the uninitiated,
PR = Marketing = Advertising = Branding = Logo + Slogan = Lots of $$ and yet, sales suck.

Both the initiated and the uninitiated think sales suck because so does the web site, and the collateral, and the webinars, and the white papers, and the demo, and there are no leads, and they’re attending the wrong trade shows, and there are neither counterpoints to the competition nor answers to buyer objections, and the product is missing this feature — no that feature — well, really, both features.

Is this really what’s wrong?

In a seminar on venture financing we put on the other night, one of the presenters rightfully stated that the amount of money the entrepreneur is asking for will be important in determining the type of capital investors willing to fund the opportunity. $3M, for example, is often considered to small for many VCs. While true, I’m not sure the entrepreneurs got the point.

Typically, they’ve already decided they want VC money. So they pick the sum of investment based on the type of money and build their plan around that.

I am curious, do these opportunities get funded? Do “top-down” business plans, if after months of tweaking the spreadsheet numbers add up, get funded?

If they get funded, is the CEO held accountable to the revenue projections of the first several years of this top-down business plan? Is that what leads companies to the “classic failure” of many start-ups?

So I have lots of questions.  Do I have any answers?  Here’s one:  there’s got to be another way.  Maybe a bottom-up approach:

Who is your customer?  I don’t mean does he wear glasses, or whether he’s a he or if he wears Hawaiian shirts on casual Friday.  But who are all the people who would benefit from your technology?  And which is the one you should be addressing.

There are at least a dozen criteria you should use to determine the answer, e.g. pain level, competition, price/budget, sales model required, partnerships needed, product fit, segment size, core competency, cost to reach buyer, length of sales cycle, proliferation potential, etc.

In other words, which is your optimal market segment? Your entire business plan will derive from the answer to this question.  This is market-driven business planning and its marketing worth investing in.   BTW, It’s more important than your logo.

In the Bay Area I was a small fish in a large pond.  In San Diego, at least I’m a small fish in a small pond.

bah-dump, bump.

The San Diego market for marketing professionals certainly is different and has, not surprisingly, both its ups and downs.  Clearly, fewer opportunities exist for software and Internet high-tech marketers.  There are just not as many companies as in the SF Bay Area, including Silicon Valley.  San Diego has a strong bio tech industry, but the cross-over is not simple (or at least that’s the perception).  Wireless technology is big here, led by, of course, Qualcomm which has resulted in a number of wireless/telecom start-ups.    There certainly is some crossover into this market.  It’s my view, however, that a mini-bubble exists in that there are serious business model issues with some wireless start-ups, and I’m guessing the current economic downturn will expose these.  (I talk more about this in a separate post.)

Generally, I’m not feeling a lot of marketing love in San Diego.  Perhaps it is simply the natural evolution of a technology ecosystem.   First a region must build a strong technology base and then a demand for marketing expertise will emerge.  Despite the fact that San Diego-based WebSideStory was instrumental in leading the marketing ROI trend through its web analytics products, and the fact that there are several marketing related start-ups here, e.g., JuiceMetriQs, Island Data (now Overtone, I see), and Certona, generally, the idea that Marketing doesn’t mean Madison Ave, appears to me to be poorly understood.

(BTW, I don’t know the motivation, but Overtone moved its marketing organization to the Bay Area.  Aside from founders, until recently the entire Ortiva Wireless management team was from outside San Diego.   The same goes for Paraccel. Trend or merely emblematic of the state of San Diego resources?)

There is upside:

The community is tight.  The atmosphere is collegial and in general, one gets the feeling that all are “in this together” — this being the flourishing of San Diego’s tech community.  As I made my networking rounds when I first arrived, I heard the same people that I needed to get to know, repeatedly.  Several individuals made an effort to introduce me around, for which I am grateful.  Some of these include Leo Spiegel, Ruprecht Von Buttlar, Jeff Belk, and Carlton O’Neal.  (Much thanks!)

There are a number of good groups and organizations in town, including CONNECT, Tech Coast Angels, San Diego Venture Group, MIT forum, CommNexus, and San Diego Software Industry Council, but not so many as to make one feel inundated or incapable of keeping up.  They offer a steady stream of networking opportunities, workshops, quality speakers, etc.

Finally and most importantly, if it is the case that many San Diego entrepreneurs, technologists, or investors lack knowledge of process-oriented, metrics-driven high-tech marketing, well then, that represents an opportunity for education and for new voices to be heard.

Hmm, a pain point, an opportunity, I better get to work!

Hence, Market By Numbers.  Marketing by numbers goes way beyond measuring ROI, however.  “Market by numbers” also evokes an analytical, process-oriented approach to marketing.

Process-oriented and metrics driven marketing go hand-in-hand.  While I wouldn’t say that such marketing derives from Engineering processes, it is similar, and is also born of analytical thinking.  We’re not talking Madison Avenue here. (Not an inconsequential benefit of such marketing is the potential for a better relationship between marketing and technologists.)   While “market by numbers” is maybe not so easy as “paint by numbers,” the point is that there is a process — distinct steps one can take — which provides CEOs and boards:

• business plans with tight and defensible financials;
• marketing plans with well-defined, cost-effective budgets;
• fast and optimized customer acquisition;
• well-defined, scalable, and replicable sales;
• mistakes, but assurance that lessons were learned.

So you might ask, if this is so great, why has it taken so long to get here?

In all honesty, metrics-driven marketing is not truly new.   I have friends in advertising who serve Global Fortune 500 firms and they tend to chuckle at high-tech marketers who, like Columbus “discovered” America despite the fact native Americans were already living there, believe they’ve discovered something new that traditional marketers have known since the beginning of time — or at least since the beginning of advertising.

It many respects they’re right.  There are fundamental principles of marketing, including branding, copywriting, advertising, direct mail, etc., which old school marketers learned by moving up the ranks of advertising and traditional direct marketing firms, and not by the trial-and-fire methods of many high-tech marketers, myself included.

But I daresay, much is new.  technology itself is part of the marketing.  Early adopters of computers and Internet technology represented a different market segment that required specialized outreach methods.  The experience in opening e-mail vs. snail mail, for example, while the former benefits from best practices of the latter, is fundamentally different, so ultimately, must be treated differently.

Similarly, ROI tracking is not only different, but incredibly more precise.  Ponder the difference between knowing how many people have visited your web site, from where they came, what search phrases they used to reach you, what ads they acted on, what they did when they arrive,  etc., versus the Nielsen Families, ostensibly representing millions of viewers, reporting which TV programs they watch.  It can be argued that the present advertising pricing structure is built upon a house of cards, which the TCP/IP protocol  crushes.

No, marketing ROI is not new, but technology takes it to a whole new level.  My first introduction to this was listening to the VP of Marketing Analytics of Yahoo speak at a CMO Council conference.  (I cannot track down the woman’s name, so would appreciate it if anyone could help me out here.)  This is not about unique visitors, or even what field in a form in which a user abandons registration.  My eyes were opened-wide to learn that there was an entire department of mathematicians and statisticians developing internal models that reward Yahoo groups that produced products that were successful, and eliminated those that weren’t; automated resource investment and divestiture.  While I’m not sure I completely agree with such a methodology (couldn’t a tweak of  intuitive dramatically change the outcome?), I was fascinated by the utilization of the power of numbers.

Here, on Market By Numbers, I hope to contribute to this metrics-driven marketing discussion and perhaps touch on areas not extensively covered.   I highly recommend you visit the writers listed on my blogroll, made up of industry executives with far greater experience than I, who have valuable inputs into developing process-oriented, metrics-driven go-to-market strategies.

Some of the topics I hope to cover in the coming months include:

• What marketing means to high-tech B2B start-ups;
• Details of process-oriented marketing;
• Low budget, high impact marketing;
• How to relate marketing spend to corporate objectives;
• Relationship between Marketing and Sales;
• Relationship between Marketing and Engineering;
• Your suggestions?