In a sick sort of way, I embrace economic downturns. When the economy and our businesses are humming along, many of us have the tendency to get a little complacent. We all work hard in good times and in bad, but in better economic climates we do have the luxury of spending time on more lofty notions and we often spread our time, energies and resources too thin.
Challenging times force us to focus our energies and resources in very targeted manners. My professional experience has shown that if we keep our cool and if we are strategic, we will come out at the end stronger and leaps and bounds ahead of where we were prior to the downturn.
The reality is that in times of uncertainty, people become nervous and scared. When we are nervous we have the tendency to do really dumb things—we shut down (I will put my head in the sand and wait for the storm to blow over), we become erratic (something will work if I try enough different things) or we become too cautious (my job will be safe if I just don’t mess anything up).
Now, we are all intelligent people. For most organizations, a period that is being dubbed as “the gravest economic crisis since the Great Depression” is probably not the time to go to management requesting funds for unfocused, grandiose ideas. However, this is most definitely the time to think long and hard about what we want our organizations to look like in six months when the economy is in recovery. In six months or so when the sun is projected to begin shining on the economy again, do we want our organizations and our strategies to be gutted, or for our customers and competitors to see us as weak and without resolve?
Or, do we want to confidently stride out into the sunlight after having spent difficult months working closely with key partners, after having strategically kept our sales pipelines moving and after having given thoughtful consideration to our organizations’ futures?
The following are six thoughts for managing sales and marketing efforts in this challenging economic environment.
Thankfully, most of us have our basic physiological needs met. We are breathing, we have food and water, and maybe we are even getting some sleep. So, let’s move up to safety. Do most of us feel safe right now? Many of us probably do not and our customers don’t either. The times are very uncertain. So, our sales and marketing messaging should focus on making our customers and prospects feel that working with us is the safe choice. Maybe you are the leader in the market for your products or services—leaders are a safe choice. Make sure that your customer and prospects know that you are a leader.
Maybe you organization is smaller and more nimble than that of the market leaders. You offer the ability to assure your customers and prospects that you will work very hard to make certain that their needs are specifically met—also a safe choice.
3.
4. To quote Warren Buffet, “Be fearful when others are greedy and be greedy when others are fearful.” In times like these, people are fearful. Your competitors become scared and make bad decisions. Although this is not the time to spend money like a drunken sailor (unless you are the government or are “too big to fail”), move forward bravely and thoughtfully. If you take this approach it will take your competitors months to catch up, if they ever do, when the economic environment improves.
Interestingly, according an Inc. magazine article, recessions are often the best times to start a business—“Starting a business in a recession is like vacationing in the off season.” Some of today’s leading businesses—Microsoft, FedEx, CNN, GE, HP—were founded in periods of recession. If HP, founded during the Great Depression or GE, founded in the wake of The Panic of 1873, survived, thrived and grew into the juggernauts that they are today, is it reasonable to say that this might be a good time for us to think about pulling the trigger on a new product or service idea?
5. When times are good many value statements in our sales and marketing messages focus on helping customers to grow their businesses. During challenging times, our messaging needs to focus on minimizing risk, saving money, providing measurable and concrete results. This does not mean that we should automatically lower our pricing, but it does mean that we need to focus on utilizing our products and services to help our customers feel secure , to reach measurable goals and to help them to stretch their resources. Do your products/services save labor costs, help to better manage assets, save time, decrease waste, save energy? If so, this is a great time for this messaging.
6. Rethink trade show and conference activities. My trade show and conference organizer friends are going to kill me. However, it has been said that marketing budgets are always the first to be slashed. I don’t think that this is true anymore. From my observations, travel budgets are now the first to be slashed. The first measure many companies now take in uncertain economic climates is to implement travel restrictions. This means trade show and conference attendance will be lighter especially in the first half of 2009.
This could mean that we should not decrease trade show exhibition and conference sponsorship participation, but rather take advantage of lighter traffic and have more involved conversations with the customers who are in attendance. On the other hand, maybe it means we should reel in our presence at trade shows and conferences and spend energies and resources communicating with our office-bound customers and colleagues. Perhaps online opportunities or other elements of the marketing mix might be more effective in reaching these customers and prospects.
Hopefully, this post sparked an idea or two. We will all get through these challenging times. I am just thankful to be working in an industry that, at its heart, is fairly recession proof. At least we are not selling products and services to housing developers—talk about indigestion. Yet another bright point, as members of an industry that treats indigestion…opportunities abound.
As we all begin to think about, prepare and plan for 2009, I thought that it made sense to take an “informational temperature” of the pharmaceutical industry—what are the top priorities, concerns and opportunities as we position ourselves for a new year.
This was not a formal, statistically projectable study. Rather, it was based on my firm belief that if you ask any handful of smart, qualified people a question, you will get an awfully good idea of what is really happening out there. I have found that my LinkedIn network is a very conducive tool for conducting these dialogs, so if you are interested in participating in mini dialogs every few weeks and in seeing what your peers and industry counterparts have to say, feel free to pop me a LinkedIn invitation. I believe you will find the following insights interesting, however, because this questioning was not conducted within the context of a formal research study, there are likely industry functions that are underrepresented.
Without further ado, the following are the Top 10 priorities, opportunities and concerns for the manufacturing, operational and development areas of the pharmaceutical industry in 2009 (the list is presented in David Letterman style descending order).
#10
Availability of patient populations to support the growing number of clinical trials, coupled with regulatory pressures forcing companies to undertake more clinical trials.
#9
The cost of capital is anticipated to rise in 2009 warranting a close look at how to improve operational efficiencies.
#8
Navigating increasing cost pressures on western manufacturers due to increased Indian and Chinese manufacturing input. Competitive impacts from fast growing international regions such as
#7
Managing and preventing (as much as possible) Intellectual Property rights violations in markets like
#6
The uncertainty of the current regulatory environment is a factor on the industry’s mind. In addition, responding effectively to increased regulatory demands is a priority.
#5
Working to develop serialization/pedigree programs and technologies to improve supply chain security.
#4
Determining how to fill the pipeline with innovative new products within an industry environment that is sometimes more focused on M&A activity and other financial moves rather than supporting true innovation.
Adopting Quality by Design (QbD) principles to assure a more risk-based approach to pharmaceutical development and manufacturing.
#2
Adopting LEAN planning/production principles, increasing efficiencies in manufacturing/production
#1
(This is a BIGGY—nearly universally at the top of the list of all who participated in this dialog—no surprise to anyone given the events of 2008)
Maintaining quality, cGMP compliance and supply chain integrity amongst all supply chain participants particularly when working with partners in developing regions such as
“It is my personal opinion that an adequate strategic vision of the outsourcing dynamics is going to be one of the major challenges for the next future; nowadays the balance between owned manufacturing facilities versus the TPM facilities is rapidly going to the latter, increasing the need of continuous support to the cGMP standards compliance management of the externalized network; this could be a demanding exercise, requiring focused resources able to well judge the business demand versus the compliance expectations, streamlining the effort required to maintain the highest level of control without drifting the related costs.”
-Compliance/External Audits Director, Leading Pharmaceutical Company
I try to write my posts in a manner that is directly relevant to our lives as business-to-business sales and marketing professionals. You are going to have to stick with me for a few moments on this one, but I do believe that this message is worth some thought.
The three life maintenance activities I hate the most are buying a car, any sort of home mortgage activity and buying a mattress. Within the last three months I have undertaken two of these three dreaded activities—I bought a new car and today I bought a new mattress. I despise these activities to such an extent that I often procrastinate and create a situation that really should be avoided—I really need to make a purchase decision quickly. Why do I hate these purchases so much?
As a generalization, car and mattress/furniture sales people and mortgage brokers sell in an old fashioned, high-pressure manner that creates tremendous tension between buyer and seller. There is often an element of dishonesty and fast talking that puts the onus on the customer to identify the reality of the situation. I will take this moment to apologize to the truly good and talented sales professionals in these fields.
By my walking into the mattress store this afternoon, the store sales staff probably could assume that I either needed or wanted a new mattress. Maybe some people spend their Saturday afternoons just checking out new mattress offerings as a casual hobby, but I certainly do not. I had a source of pain, literally, due to the worn out mattress I currently own. There are numerous places the mattress sales person could have started in order to begin winning my trust and affection.
Are you suffering back pain as a result of your current mattress? Do you have any back, spinal or hip injuries that I should be aware of as I work to help you to select the best mattress for you? Do you believe that you are sleeping restlessly due to an unsuitable mattress? Is price or quality more important to you? Are you looking to make a purchase in the near future, or have you just begun shopping?
Rather than working to understand my needs, the mattress salesman launched into a rapid fire dissertation of the features of their various mattresses. Many of the features, frankly, were not value points to me—it was just noise. I wanted a comfortable mattress, at a fair price (not necessarily the lowest price), that would be durable and easy to keep clean and would be appropriate given the couple of hip and back issues my husband has.
How many of us market and sell too much like the mattress industry? Most of us are seasoned marketing and/or sales professionals. We truly care about our customers and work to target customers that would really benefit from the products and services we have to offer. This being said, we all have numbers we are working to hit or objectives we are working to reach. The best amongst us, if we are honest with ourselves, occasionally fall prey to the mattress salesman mentality in our sales and marketing techniques.
Are we rattling off a list of features that are impressive to us and forget which customer pain points we can help address? Do we translate our snappy technology into “this is what it means for you” value statements? Do we get impatient and become tempted to pull out an old-school high pressure sales or marketing tactic? Do we understand that when a customer walks into “our store” that they probably have an issue that they think we might be able to help them with? Of course, most of us don’t have actual stores, but potential customers do “walk into our stores” by engaging in our marketing efforts, accepting a meeting with a sales person or walking into our trade show booth.
To add even more complexity to our task, buyers sometimes don’t know the specifics of what they need or how much it should cost. We have to educate them and help to identify their needs. When I walked into the mattress store this afternoon, I had not purchased a new mattress in more than 15 years. I had little idea how much I would need to spend to acquire an acceptable mattress. I had no knowledge of the wonders of a combined latex and memory foam bedding product. All I knew was that my current mattress is worn out and my back aches too many mornings when I wake up.
Sales and marketing are challenging professions. We win by our customers winning at every point along the sales and marketing path. I have always believed that if we do the right things, if we really care about our customers, if we work to keep focused on “them,” the money will follow. This has been the case in my career at least.
Successful B2B marketing and sales is a combination of art, science and sound business practices as the ability to sell any product or service requires that the seller influence a buyer’s behaviors and perceptions. If buying is a behavior and effective selling requires influencing behavior, does it make sense to create a new marketing metric—Value of Behavior (VOB)?*
I believe that a Value of Behavior metric could be used in many cases for effective analysis of specific marketing activities and marketing vehicles.
Let’s take a closer look at this concept. We know that the buying/sales process follows a path—awareness, preference, evaluation, resolution and retention. Sometimes we get lucky and a particular sale or customer acquisition effort moves forward very quickly. However, a typical B2B sales cycle spans several months, sometimes years.
There are steps or stages within the sales cycle. If we could assign a value to customer/prospect behavior, particularly early stage buying cycle behavior, a meaningful metric could be created.
All prospects, leads and opportunities are not created equally. Leads and interest from prospects that fall within a given target customer profile are more valuable than leads or interest outside of that profile. Interest from the economic buyer is more valuable than interest from those further down on the totem pole and in some cases more valuable than interest from higher ups.
I stated in my “Marketing ROI or Cost per Desired Behavior?” post that interest from a company already in your sales pipeline is arguably more valuable than a brand new prospect. We know that it takes numerous sales and marketing touch points to convert and retain a customer, so a white paper download, website visit or phone call from those customers already in the pipeline is incredibly valuable—evidence that you are effectively moving through the buying cycle.
If we assigned a numerical value to customer behaviors or perceptions, or customer group behaviors/perceptions generated by a specific marketing program element, I think we have something. Maybe increasing awareness of your company and/or products within a target customer group is worth five points. Maybe a white paper download from someone other than an economic buyer is worth two points. Maybe a trade show booth visit is worth four and a half points. I think that you get the idea. An effective metric would need to be more complex than this, be able to be tracked and requires less than wholly scientific judgment calls by a qualified person, but I do think that the idea has merit.
One of the problems, amongst several, with many Marketing ROI calculations is the desire to apply mechanical style measurements to complex and involved human behavior. Another problem in many, if not most organizations, is the lack of ability to track message layering and escalating interest behaviors.
For a Value of Behavior metric to work there has to be some delineation between marketing and sales function impact. This comment is contradictory to nearly everything you will ever hear uttered from my being, as I believe B2B marketing and sales have to work in very close concert.
However, in the early stages of the buying/sales cycle the marketing department’s messaging is typically the lead influence of a prospect’s behaviors and perceptions. As a prospect moves along the sales/buying process, the lead influence flips (or should flip) to the sale person(s) responsible for the account. The marketing department is critical throughout the entire sales cycle, but as a deal or customer relationship moves further down the path the voice of the sales department is much louder and marketing messages move, a bit, into the background.
If a Value of Behavior metric is implemented, it might be identified that prospective customers are moving through the initial stages of the buying cycle very nicely. The marketing department developed great positioning messages, selected effective marketing partners, generated interest within the market and qualified leads are in the pipeline. These early stage successes do not mean that opportunities will result in sales. Maybe there are problems with individual sales people, maybe there are problems with an entire sales structure, or maybe there are problems with the performance of the products themselves.
Marketing and sales departments should be integrated and work in tandem. However, via effective Value of Behavior analysis, marketing partners, marketing mediums and isolated marketing activities could be evaluated and larger problems within organizations could be spotted.
From my experience, marketing departments, marketing/advertising agencies and marketing vehicles are often the fall guys when efforts are not as successful as projected. Sometimes marketing departments, marketing agencies and/or marketing vehicles are ineffective to be sure, but sometimes other holes need to be plugged.
**If the term Value of Behavior is adopted by the marketing community, Rose Southard, Putman Media’s IT Director, deserves the royalties. Or, maybe she and I could split the bounty.
ROI Marketing is unquestionably a strong movement within the market community. I embrace, even enthusiastically applaud, the concept. For a lot of years many companies lavishly threw marketing dollars around based, to a great extent, on emotional criteria and gut feelings.
Successful business management requires making decisions and allocating resources to maximize profits. By its very definition, maximizing ROI requires taking a hard look at the ratio of money gained or lost compared to the dollars invested.
Calculating ROI for overall marketing dollars spent over a period of time is a complex, but a somewhat manageable proposition if all the necessary data is incorporated into the calculations (and if the data is captured correctly and accurately).
Marketing ROI is really pretty easy to calculate if you sell low ring/low risk products, particularly if the company in question is fairly small and noncomplex. Say, for example, that you owned an online bookstore with annual sales of $1 million. If you spent $200,000 on various marketing programs and increased your sales to $2 million as a result of spending those dollars, you could say with a strong degree of certainty that you achieved a favorable ROI on your marketing investment. Given this extremely straight forward business model you could also pretty easily calculate ROI for many of the individual components of your marketing program.
However, I contend that calculating marketing ROI for most B2B marketers is a great deal more complex than our online bookstore example. Many if not most, B2B sales and marketing efforts are complex, take a good amount of time and require many different touch points to achieve success. I am sure that my friends and clients selling multi-million dollar capital equipment solutions would love for their sales process to be as simple as a couple of mouse clicks and a credit card payment. It just doesn't work this way.
Most B2B sales cycles are long and require marketing messages and sales activities to be strategically layered to achieve success. For this reason, I cringe every time I hear a B2B marketer talking about the ROI they achieved for a banner ad program on an industry web site or an ad they placed in magazine.
Let's look at digital media, as much of the marketing ROI discussion I am privy to resolves around digital rather than print media. Although the argument for the effectiveness of print media is a strong one, digital media affords us the opportunity to measure some things that are much more difficult to measure for a print advertising program. However, what are we really measuring--not ROI in most cases. Everyday I hear pharmaceutical industry suppliers say things like--"We spent $1,500 on website X and got 42 clicks on our ad. The program delivered a very strong ROI."
Unless banking regulations have change drastically without my knowledge, you can't take 42 clicks to the bank.
What is really being said is that we spent $1,500. Via an effective media environment and strong ad creative, we motivated 42 people to want to learn more about our products and solutions. Spending $1,500 and motivating 42 people to want to learn more about what you have to offer is great, but it is not a measurement of ROI. Perhaps we could call this Cost per Desired Behavior. We want someone to click on our ad to learn more--how much did it cost us per customer to achieve that desired behavior. In the $1,500 for 42 clicks example it cost $35.71 per desired behavior.
Is this Cost per Desired Behavior high or low? It depends on the market, on your potential customer base and on the dollar value of a typical customer. If you are selling a $1 million solution and there are really only 5,000 decision makers in the world for your product, $35.71 Cost per Behavior is probably quite good. If you are selling $0.50 widgets that are not consumed very quickly by your customer base, the same Cost per Behavior might be extremely high.
