Marketing

The Grass Isn’t Always Greener

(this is a repost of a post written by me for PAKRAgames. It is part two of a series of four.)

Here’s a scenario that will disturb most of you: You are happily in a long-term committed relationship. Then you meet someone interesting, attractive and with a personality similar to your current partner. You figure your current partner isn’t going anywhere, so you spend lots of time developing a new relationship with this new person. You spend time together, you spend money on gifts and activities, and you find you have common interests. You end up in a relationship with this new person. Are you still assuming your first partner hasn’t gone anywhere? I think we can all agree that’s a pretty bad assumption.

So why do we treat our customers this way?

As I pointed out in Part 1 of this series, we invest far less time and effort (and people and money) in ensuring our customers renew than we do in acquiring them in the first place. But whether your annual subscription is worth $100 or $100,000, the second year is worth just as much as the first (as is the third, fourth, fifth, etc.)

The bonus is that we know our customers already. We know (if we did a good job tracking the initial sales cycle) why they bought from us. We know what value they expected to receive. We know how they did in the on-boarding process. We know why they called in for tech support or service. These are all things we don’t know about new prospects that can help make the renewal cycle so much easier.

My recommendation: Create a sales and marketing process and sales cycle for renewals that matches (with appropriate variation) the acquisition sales cycle.

Once a customer signs up, that is only the very beginning of the relationship. The process should start with translating the value the customer said they expected in the sales cycle into an on-boarding program that will help them achieve that value. The marketing process might include everything from tips-and-tricks newsletters, to periodic offers, to user conferences, to community resources.

But just like your acquisition marketing process, your renewal marketing process needs to capture how much value the customer is actually getting from your product and how they value the on-going relationship. This is precisely analogous to lead scoring in acquisition. The goal is to create a method to evaluate how likely a customer is to renew.

Your renewal sales cycle should start with your best renewal prospects. Unlike your acquisition sales cycle, this will be nearly everyone. This means you have a much fatter pipeline. The good news (for those of you who are now afraid of the staffing requirement) is this sales cycle is much lighter weight. But just like your acquisition sales cycle, you need to define the steps, ensure your customers meet certain criteria to move to the next stage and include opportunities for adding more products or services (upsell).

If you think you already do this quite well with your customer service reps, ask yourself one question: What one person in your company has responsibility for renewal revenue? This person is analogous to the head of sales for acquisition. If you don’t have that person, you don’t have a renewal sales process.

This is no small undertaking, so here is my recommendation to get started: First, create a method for evaluating how likely a customer is to renew (I include some recommendations on how to do this in parts 3 and 4). Then assign a small number (maybe only two or three) sales reps to focus on the subset of customers who are unlikely to renew but you believe are close enough that they can be saved (those very likely to renew probably will anyway; those who really hate you are probably leaving anyway — focus where you can make a difference). Give that team a quota, and let them at it. Then add marketing processes and programs to make sure you don’t lose touch with customers after on-boarding or renewal.

Then measure. The most important measurement is the difference between renewals among the marginal customers before you did this and after. You can even create a control (assign the team only half the marginals, and let the other half use your current process).

I think you and your customers will be much happier, and there won’t be so many clamoring to get out your back door next year.

customers, Disruption, Engagement, Innovation, Marketing, Relationships

The Missed Marketing Opportunity: Your Customers

(this is a repost of a post written by me for PAKRAgames. It is part one of a series of four.)

Why would you let as much as one-third of your revenue walk out the door every year? And knowing it will, why include it in your forecast, and consider it a “success” as long as it’s no more than one-third?

This is exactly what many companies with subscription-based business models are doing.

The move to subscription-based business models has accelerated in the past decade, led by technology-services companies moving to cloud-based offerings. Most companies that have made this shift have benefited from having a recurring revenue stream and the ability (generally) for more automated sign-up and service options for prospects and customers.

But we missed something.

Recurring revenue means it’s critical to ensure that customers who walk in the front door this year don’t walk out the back door next year. Put another way, it means the value of renewing your customer’s subscription is just as high as starting the subscription in the first place.

A few of you who are doing this right may take exception to this, but in most of the organizations with which I’ve worked, the effort devoted to renewing customer subscriptions is not even close to the effort put into acquiring the customer in the first place. Ask yourself this: In your organization, how much of your budget and staff are devoted to ensuring customers renew? I’ll bet you’ll be surprised at the answer.

Conventional wisdom says it is far less costly to keep a customer than to find a new one. But translating that into action is far more challenging than it sounds (isn’t it always easier said than done?). Some companies do a good (sometimes great) job of bringing a customer up to speed with their products or services (called on-boarding), but then don’t do much of anything else until it’s time to renew. At that point, many companies will alert their customers of upcoming renewals and even assign so-called renewal reps to solicit the renewal.

Which means those companies missed numerous opportunities in between to understand how the customer uses their product and gets value from doing so.

Is it any wonder that as many as one-third of customers walk away every year?

How do we do better?

I propose three areas on which we need to focus to do a better job:

  1. Treating renewals with the same respect we do new customer acquisitions: This will ensure we gain the expected financial and market benefit from our customer relationship.
  2. Gaining a better understanding of how customers value our products and services: This will help us understand why customers renew or don’t — and what do to about it.
  3. Understanding how valuable our customers are to us: This helps us understand how to prioritize investment in our customers and in our renewal efforts.

Parts 2, 3 and 4 of this series will discuss these and how to make them work for you.

Engagement, Events, Innovation, Relationships, Sales

Reacting is not a process, but must be learned #s20c

At the Sales 2.0 conference today, my friend Caitlin Roberson asked me about how looking at the sales process from the customer perspective makes buying easier

 

Another one of the core tenets of Sales 2.0 is that we as sellers should make the buying process as easy as possible for our customer.
But again, we work hard to remove friction from our selling process, we do what we think our customers want and we remove some of the friction. But still we are left with friction and complexity that drives away some of our prospects.
The key to decreasing friction by another order of magnitude is the same thing that marketers are just learning to do in social media marketing, and that companies are learning to do (often with our help) in deepening the value and return on customer relationships. You must:
Look at your process from the buyer’s point of view
In marketing, we call this “listening” and the obstacle that we faced is that listening isn’t (or wasn’t) an activity we could measure on our status reports and so we didn’t do much of it. We’ve learned how to do this and why it’s valuable.
In sales,  it’s called reactivity. Sales reps need to learn how to be reactive to buyer needs and readiness to move along in the buying process. But reacting is hard to put into a process and measure, but we must learn how to do this.
Leading-edge sales organizations are now starting to incorporate reacting into their process, learning to monitor social and other points at which buyers take action and making sure that sales reps deliver appropriate responses at those times. Early data is showing significant increases in likelihood of close when just a few reaction points are included in a sales process.
How are you reacting to your buyer’s expressed needs and readiness to I’ve along the buying process? Tell us in the comments!
conversation, Engagement, Experimentation, Management, Relationships, Sales

Why “Sell how your customer wants to buy” doesn’t really work that way

It’s a Sales 2.0 mantra:

Sell the way your customers want to buy

and it’s one of the oft-repeated phrases at this week’s Sales 2.0 Conference.

It’s also a perfect idea. If you want to be successful in selling figure out the process your customers use to buy the kind of thing you want to sell them, match everything you do to that process, and your whole process will be as frictionless as an air-hockey puck sliding across the table right into the goal.

Making that happen in the messy, friction-filled world of everyday business is far more challenging. What this perfect mantra ends up meaning in most organizations that attempt to put it into practice is that we work to find what we want to think is a typical way our target customers would buy, and we design a process around that.

Then, in so many of our individual sales processes, reps are running to managers for exception approvals, and the process is only  followed at best approximately and at worst in concept only. This happens because the typical buying process to which we design is really an average of our target buyers which is the reality for no individual company, so every buyer requires some kind of exception or adjustment.

So what do we do about this?

Sometimes lost in the ever-growing focus on repeatable and scalable process based on technology is the fact that sales is a relationship business. To be clear, I don’t mean the old stereotype of the slick sales rep who can schmooze anyone into a deal, but rather the truth that in order to achieve that kind of exceptional success we must truly understand both the customer’s processes and the people, including their political dynamics. Then we have the ability to revolve friction as it arises and move deals to close more quickly.

But again, that’s a perfectly ideal thought and not a reality of how to do business. So what do we do in the real world?

Keep the process-focused methods we have. They are necessary and valuable. And you can’t make strong relationships happen without them. But let’s also design processes around how relationships between our companies – and maybe more importantly the people in them – develop.

Do we know just how that happens? Yes we do! There are a special few people I’ve met in my business career who seem to have no clue how to develop relationships with others, but the vast majority of us do, and we generally do it quite well. We do it in so many areas of our lives everyday (I love comparing long-term customer relationships to a marriage!), and most of those relationships are in business. Use that knowledge (intuition, people skills or whatever you want to call it), get it out of your head (and your heart) and into your selling practices.

So sit down with your sales, sales ops and marketing teams and work out how your target customers want to build relationships. Then institutionalize it in your sales and marketing processes.

Then make it work in your support and service processes also so all of your new-found customers don’t leave you next year.

And call us if you need help making this happen.

Then add your thoughts in the comments: how do you build relationship building into you sales process?

Differentiation, Disruption, Marketing, Rant

Differentiation is in the eye of the beholder…your customer

Be honest. If you’re a marketer, you love nothing more than shouting to anyone who will listen (and maybe some who won’t) about why your product or service is so cool, special, interesting….meaning different and unique.

Of course you do – it’s your job.

But while we’re all talking about why our thing is so cool, and what the latest features are, we must remember:

Differentiation is in the eye of our customer, not ourselves.

I want to thank my friend Yvette Cameron for reminding me (leading me to remind you) just how important this perspective shift is. And it’s good to see customers asking this question and defining how their vendors are unique and different, rather than marketers trying to come up with a useful description of the latest new feature.

So, please, when you start shouting about why your offerings are so cool and interesting, ask a few customers first why they think so. They’ll tell you how you benefit them more than your competition (I hope!).

And once you know, go ahead and tell the world.

Share how you discover your unique value in the comments:

 

Disruption, Innovation, Marketing, Products

Apple’s plight: will disruptive innovation make it a winner?

Earlier this week, Apple (once again) became the world’s most valuable company. For those of us who have been fans over the past 10 or 15 years, this may come as no surprise, especially given their loyal customer base and their ability to enter, and often define, entire new markets.

But the rise of Apple has, at many points over the past few years, led me to ask whether their leadership will remain intact for the long term. By long-term, I mean the next 20 or 30 years (I’m pretty confident about the next year or two). Then I came across this article from the Wall Street Journal blogs which asks at least part of the question I’ve been asking, and I thought it was worth explaining.

One of my favorite professors taught me an introduction to business strategy. He opened the course by making the point that business always changes – dramatically – and as the time horizon lengthens, the rate of change increases exponentially. So, to use his method of making the point I looked at the Fortune 500 lists from 1955, 1985 and 2005 (keeping the decades even), and found:

– 210: The number of companies on the list in 1955 which were still there in 1985
– 139: The number of companies on the list in 1985 which were still there in 2005

I think it’s a safe bet to say that in 2015 (just three years from now) the number of companies that were on the list in 2005 that are still there will be smaller still. And yes, I assume the rate of change in business, most importantly the rate of market disruption, will continue to accelerate.

Which leads me to ask: What can keep a company on the list decade after decade?

General Motors was on top of the list in the 1970s, and we know what has happened there. I won’t go into all the factors, but the saturation of the American car market, global competition and consumers holding on to cars longer were certainly factors in GM’s decline.

Exxon Mobil, which has topped the list a number of times over the years, doesn’t face these challenges. The demand for oil is still increasing and prices are (generally) still rising. One wonders what will happen when other unexpected energy alternatives become dominant.

Back to Apple.

One thing Apple has shown over the years that few other companies have shown (at least to the same degree of success) is the ability to create disruptive innovation (for an interesting discussion of Apple’s innovation strategy, take a look at Curt Carlson’s book, Innovation).

Apple has continued to re-invent itself (from computer company, to music company, to mobile device company and so forth) as the needs and desires of technology consumers have changed. And whether through it’s visionary founder or it’s innovation process – most likely a combination – it has often been the company that defined what was possible and showed us how to turn our technology aspirations into reality.

If Apple is to stay at the top of the list, it will – among other things – need to continue and accelerate this innovation capability. There will be challengers. Not just the kind of competition that comes out with “the better alternative to _______ device” but the companies that will define the future needs and aspirations of technology consumers. Apple will have to continue to disrupt our world in order to stay on top.

And if in 2025 we look back on today, and we are amazed at how Apple has been so successful for so long, then we will be able to point to the disruptions they defined. If we are wondering how such a mighty company fell down the list so quickly, we will likely collectively conclude that the passing of Steve Jobs must have been the cause. But in reality it will have been the loss of the ability to continue to define the market disruptions that will happen increasingly frequently.

And no, this is not exclusive to Apple. Any company that makes it to the top of its market faces the same issue. In part, it’s Christensen’s famous innovators dilemma and in part another idea Mr. Christensen introduced. If the job that people are hiring your product to do for them is no longer necessary, then your product is no longer necessary.

And the jobs we need products to do are evolving quickly.

Are you taking the steps you need to in your company to make sure your products will do the job your customers will need done in the future? Tell me how.

Community, Engagement, Marketing, Relationships

Happy New Year! A Thought for 2012: Build Your Relationships

Happy new year! I hope that your celebrations were fun and that your 2012 is not only happy, healthy and prosperous, but also is everything you hope it will be.

I’m back to blogging after a rather long hiatus (at least that’s one of my goals for 2012 – it’ll be obvious to you if I keep that promise). Like all of the things we all hope 2012 will bring, this won’t happen just for new year’s day or a few weeks after. To keep that promise, I will have to keep working at it for the whole year.

Which brings me to the topic of the day: Relationships. This year DS3 will increase our focus on helping our clients build, improve and maximize the value of relationships with their customers, partners, suppliers and other key constituencies.

Just like with personal relationships, I believe that real value for businesses is created through relationships. Relationships hold the key to revenue and business growth, but maybe more importantly, they hold the seeds of market disruption and dominance. The stronger and broader your customer relationships, the better you will be at becoming disruptive in your market, or defending against being disruptive.

Your customer, partner and supplier relationships are a source (sometimes the only source) of competitive advantage. Your competitors will have a hard time taking customers who value your business and the value you provide.

We will be helping companies understand the range of sources – many hidden – of value in these relationships and help identify the typically unseen opportunities that can help your business make disruptive progress in your market.

But just like personal relationships, we all know business relationships take time and effort to build and maintain. And they require that all parties find compatible interest and value. We look forward to helping you understand what creates that common value, and how you can better use your resources to maximize the relationships and opportunities that make the most sense for your business.

So check back here for tips and tricks to help improve your relationships, and a few rants on what some are doing wrong (and how to avoid it).

And if you want to create disruptive opportunities by maximizing the value of your business relationships, contact us.

Start the conversation: how have your customer relationships helped you create disruptive opportunities? Chime in!

Brand, Marketing, Rant, Responsibility, Sustainability

Little Things Really Do Matter

This is admittedly a bit of a rant, but is also an important point when it comes to how you demonstrate your sustainability to your customers and other audiences. (recommended reading on this topic: Little Big Things by Tom Peters).

The background: I buy many of the sustainability-related products for my home from one particular on-line merchant (who is the subject of this rant, and to be clear, not a client). I’m also one of those people who hates to receive anything printed – catalogs, statements, whatever…for sustainability as well as clutter and efficiency reasons (I never miss a chance to point out that they are almost always related)

The event: I picked up my (US) mail today, and in that mail, found a printed catalog from this company. I’ve never received one before, in the several years I’ve done business with this company.

The rant: Why did I receive a catalog from this company? They are a sustainability-products company. They purport to be a very green company. There are lots of images of trees on their website (I wonder if any of those were cut down to print my catalog). Yes, direct mail marketing works well. But I’m an established customer.

The solution: There are people who prefer to receive catalogs in the mail. Others don’t mind. And still others, like me, do mind. I wonder if this particular company might have considered sending an e-mail (in the fashion of a hotel pillow card) after my first order just asking if I’d prefer to receive communications electronically or in print (or even both).  I know I would have both opted for electronic and would have appreciated them asking.

This is a double win for the company – they make me happy with my choice and they improve their reputation in my eyes. Just sending the catalog both annoyed me and damaged their reputation (particularly their green claims). And I wonder if it would have cost them less to produce the e-mail than to produce and mail the catalog?

The conclusion: Yes, this is a very small thing – and not all-that-uncommon. But over the scope of a large number of customers/prospects and in the eyes of the larger community, if you’re really serious about sustainability (or for that matter, managing your reputation at all), little things like this go a long way to both improving your reputation and demonstrating just how strong your commitment is.

So pay attention, even when it seems the question is not very relevant.

And chime in if you have a story like this to share.

Events, Innovation, Items of Interest, Marketing, Sales, Sustainability

Join me at @westcoastgreen ( #wcg10 ); Discounted/Free passes available (updated with links)

I have the privilege of having been invited to speak at West Coast Green this year, the premier conference on green innovation. West Coast Green focused on the built environment, but also discussed the latest innovations in sustainability and the businesses growing up around the clean economy.

I’ll be leading a panel discussion on the afternoon of September 30 which will focus on some of the more challenging issues facing clean-tech and other sustainability-related start-ups and growing companies face. Building on what we’ve learned from clients who adopt solutions from these young companies, I’ll be leading an audience of entrepreneurs in challenging a panel of experts on critical business topics to come up with solutions that will help their companies cross the dreaded “valley of death” and move from start-up to market success.

I’m privileged to have on this panel these leading experts in their fields:

  • Cindy Jennings, VP, Cohn Marketing. With perspective from a wide range of industries, Cindy is a sustainability marketing and communications expert
  • Will Sarni, CEO, Domani. For 30 years, Will has consulted on sustainability issues and is now an advisor to clean-tech start-ups
  • Anneke Seley, CEO, PhoneWorks. In addition to building sales and marketing process for growing companies, Anneke is pushing the envelope as the leader of the Sales 2.0 movement.

DS3 has secured discounts on attendance for our community. If you’re interested in joining us for this exciting session and seeing what else this three-day event has to offer, please register for a full-conference pass (30% discount) or a trade-show-floor-only pass (free).

Please add your voice to the comments if you have thoughts about the top challenges facing start-ups as they work to achieve market success and a growing revenue stream.

I hope I’ll see you there!

Differentiation, Engagement, Experimentation, Marketing, Relationships

Rethinking Customer Loyalty

I’m paraphrasing any number of management gurus here:

If you want to be good enough, focus on shoring up your weaknesses. If you want to be extraordinary, forget your weaknesses and focus on building up your strengths.

The idea was proposed in the context of how to become extraordinary at whatever it is you do, and in the context of how to evaluate your performance at work.

But why do we not apply the same principle to the corporation and what it does for its customers?

Most of us are – or at least we claim to be – obsessed with customer satisfaction and loyalty. We want our customers to love us and to keep coming back.

So we ask, generally in a survey. Every time a customer wants to leave us (you’re lucky if you’re in a renewal or subscription-based business – your customers have to tell you they want to leave) we ask “Why?” and we learn something about what we’ve done wrong (or what our competition has done right).

Some companies go so far as to try to keep a customer from leaving (think telephone carriers and credit card issuers). I’m sure you’ve had the experience of trying to cancel your service and being sent to the “retention department” who then tries, essentially, to bribe you to stay – and take an offer attractive enough to put up with whatever they did that caused you to want to leave in the first place.

What if, instead of working to fix all the reasons customers left us, we worked on doing even more of what made customers stay?

If you already do that, congratulations. You probably have raving fans for customer. If you don’t, then it’s time to get started.

Start by asking your most loyal (not your biggest, your most loyal) customers why they stick around and keep coming back. I’m pretty sure the reasons will look very little like the reasons other customers leave.

Then ask a group of your customers who are not all that loyal,  but seem to stick around (or come back now and then) anyway: Why are they not all that loyal (probably the same reasons others leave) and why do they come back (probably the same reasons your most loyal customers stay).

Now comes the hard work: Focus on getting better at your strengths. Strengths are the reasons your most loyal customers stay.

Figure out what you are doing right in every single aspect of how you relate to your most loyal customers and do more of it. Refine it, improve it and make it the best in the business, bar none.

And forget about your weaknesses. Weaknesses are the reasons those customers hate you and don’t want to do business with you any more.

Yes, you will find that more unhappy customers will come out of the woodwork. They’ll complain, wondering why you don’t seem to want their business any more.

In fact, you don’t. You cannot be all things to all people, so be what you are good at being and stop trying to be what you are not (feel free to insert your own rant about authenticity here). Letting a group of customers (read: paying customers) go can be scary, but the focus and the new customers you gain will be worth it.

Doing this will also help you define what type of customer is good for your business and what type isn’t. It will give you a different (you might find, better) way to segment your market, and you’ll find that the core of your new segment is much more profitable than the old, less appropriate, segments.

And you’ll find that you end up not only with customers who are more loyal, but they’ll all tell their friends (and colleagues) and you’ll probably end up with even more customers who become just as loyal.

And your (new) customers will become your raving fans.