High Performance: Why Marketing Needs to Change

No one wants to hear that the approach they’ve been trusting for years is wrong. No one wants to make changes just because there’s a new way that might be better. But, if the world has changed around you (and who thinks it hasn’t), there’s a good reason to at least examine the things you are doing to see if they are working as well as they can. The challenge is that, as we discovered in our recent survey, very few people are measuring enough of their results to be able to tell what’s going on. If you’re one of those people who really doesn’t measure enough, then at least let us tell you what we see—because we measure EVERYTHING for our clients, and we get to see all the data from thousands of projects reaching millions of people around the world.

What do companies need today? The same thing they always did—sales. They need to connect to prospects, get them to understand the value of their products and services, convert them to customers, and then optimize the relationship into valued customers. A few years ago, this need was masked by desire for marketshare, for buzz, for investor confidence, for position, for brand. But, other than a few Ponzi scams, the need for an approach that yields a reliable, scalable, predictable flow of leads and sales has always driven the marketing and sales organizations.

It’s broken

What’s different now is that the old ways don’t work anymore. Customers and prospects don’t live in a narrow-bandwidth world where your marketing messages are the only information they receive about products. Instead, they soak in information delivered by global competitors, pundits, disgruntled employees, angry and satisfied customers, fans, forums, articles, newsletters, blogs, IM conversations and who knows what in an enormous array of venues.

Messages and information are not planned and mapped anymore—now they accrete like a coral reef, and no one even begins to understand the structure.

Traditional approaches not only don’t work, but they also are not trusted. Everywhere you look there are companies questioning why they should spend a great deal of money on marketing that they “know” is wasted effort. Not long ago, executives had confidence in the value of branding and awareness efforts. On the rare occasions when they descended to the tactical level of lead generation, they believed in response rates—that any direct marketing program or other lead generation effort that churned out a lot of response was doing fine.

Now, skepticism replaces confidence

A quick visit to the neighborhood magazine store tells part of the story—pick up any of the formerly advertising-bloated magazines and you’ll find saddle-stitched pamphlets. While you’re there, note that there are five magazines for every interest. Even interests you can’t fathom. Almost every one of them has a Web site. Almost every Web site has at least one eNewsletter, a couple of blogs, and a forum. There are many venues to reach virtually any person with any interest. How will you know which one is best for your target, your product, and your sales force?

Even in direct marketing—long the bastion of the pragmatic marketer—practitioners are listening more when the sales force says, “These leads stink…” They understand there is little value in generating leads that the sales force won’t use. Advertising is now one voice among millions. We’re not saying that branding efforts and gaining market share through awareness are no longer feasible, but it’s not as effective as it used to be. There are many reasons for the change:

• Every product is sold in a remarkably competitive environment of oversupply and limited differentiation. Even trivial things. How many kinds of USB hubs do you suppose there are? And complex things. How many kinds of “cell” phones and associated technologies? How many large format flat-screen TVs? With rare exception, no one owns a market for long.
• The customer is in charge for many reasons, including the one above. They don’t care about your 128 years in business, the investment you made in quality control, or the pride you take in crafting your widgets. They are looking for solutions to their specific problems.
• There are many, many peer-level brands—every product category supports dozens, hundreds or even thousands of them.
• General buyer skepticism is high—and the skeptical consumer assumes they are paying a functionally useless premium for brands.

The most important reason for this change is the simple fact that consumers are much more intelligent about products and solutions. And by intelligence I don’t mean that their IQ has changed, but their access to information and the various ways they acquire it has—radically. It is now easy to get information that was previously privileged and difficult to obtain—to be able to compare features and capabilities, explore alternatives, compare price, and even to find out how satisfied other purchasers were with any given product. This information can easily overcome brand preference.

Here’s a simple fact that should bring this point home—a few years ago, people didn’t believe us when we said that more than 90% of people considering an expensive purchase research the products on the Web. Now people think we’re being obtuse when we bring it up. “Everyone knows that—so what.” We’re almost immune to statistics about the rapid penetration of the Web into our lives, but if you’re involved with marketing or selling products, this thought needs to penetrate your ennui: Five years ago no one researched purchases on the Web, now everyone does.

You’ve completely lost control. When access to privileged information was difficult, and most of the information people gained about products was through the manufacturer and their advertising, marketing exerted substantial control over how people thought about products. That world no longer exists.

You’ve got to get out in front of the wave, find the people who will buy your product, engage them in a marketing conversation that they value, and engage them in a sales conversation when they are ready.

How your competitors are killing you

Another highly significant change is that your competitors are using more advanced forms of marketing. Companies using only conventional branding, awareness, and traditional lead acquisition approaches to marketing are hugely disadvantaged.

• If your competitor is using triggered acquisition techniques, their lead generation response rates can be two to five times better than the best you can do. Some of our recent campaigns using data-integrated marketing approaches delivered response rates nine times higher than traditional approaches. That’s not a one-shot effect, it’s consistent. That means a competitor using both of these tools could literally take your best performing direct mail campaign and get 18 to 45 times higher response than you.
• If they can market and sell to your prospects one-to-one, they can overcome your superior brand.
• If they are using lead maturation technologies, they are leveraging their sales force by a factor of ten or more, setting the playing field and establishing preference for deals that the sales force hasn’t even looked at yet.
• If they engage resellers and other external sales forces with leads from these kind of campaigns using an efficient lead management system, then they are getting the lion’s share of their attention because they reliably deliver sales and revenue (instead of spiffs and co-op money for low-impact catalogs) to the reseller and their salespeople. They are taking back their co-op and MDF funds and using them to effectively sell product through distributors.
• If a competitor is doing any or all of those things to you, the only indication you may have is that the effectiveness of your marketing will decline. These are stealthy processes, so you will probably not know why. You will lose sales. And, they will be the important and significant sales—prime targets.

Conclusion

Let’s summarize: The old ways don’t work anymore. Your competitors might enjoy an 18x advantage in lead generation, they can overcome your superior brand, leverage 10x their sales force, dominate the reseller channel, and you won’t be able to tell what they are doing.

Do you suppose such a competitor might pose a problem for your company?