Tag: Business Strategy

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Gary Vaynerchuk is Wrong: There is a Social Media ROI

At last year’s LeWeb, my colleague and social media superstar Ayelet Noff asked my favorite wine guy Gary Vaynerchuk the question that we were all hearing in 2009, 2010, and finally forced to answer in 2011: What’s the ROI of social media.

Gary answered that that’s the wrong question – and it’s a problem. Gary asked, “What’s the ROI of your mother?” It’s not about data or Facebook friends or Twitter fans, he said.

He also said that ROI should be “relationship with consumer.”

But ROI of social media is far more than relationships. It’s not just about the The Thank You Economy (though brand goodwill is one tangible ROI measurement)

There are a lot of people getting paid for “social media” consulting because they know how to use Facebook but not measuring ROI. This is how we were all doing it in 2009.

 

emarketer roi

In 2012, it’s time for accountability.

At work, I’ve been a passionate advocate for Twitter – not because I love it (I love whatever tool works) but because it has a high click through rate and is an appropriate tool to integrate with other campaigns to achieve one of my key business goals: qualified leads. But I’ll use whatever tool achieves that goal – Twitter or Facebook, a trade show, or a magazine ad. What matters is achieving the strategic goal – using whatever tool is appropriate given my budget and organization. Social media is part of ecommerce. I’ve made clear sales – actual dollars – directly attributable to blog posts.

What’s the ROI of social media? Here are some possibilities:

  • Sales – immediate, tangible revenue
  • Qualified leads, in whatever form – names/email addresses, downloads, form submissions, etc. – that are targeted and qualified, using your qualification definitions.
  • Lowered costs
  • Customer service questions answered

Define your KPIs first and maybe social media can help you achieve this. On the other hand, maybe not – either way you should be comfortable finding the tool to achieve your KPI.

Here are some answers from Groundswell, Forrester Research’s first book on social technologies, on how social TOOLS can be used to accomplish BUSINESS functions:

groundswell_figure_4-1

The ROI is tangible and quantifiable. Here is another example on how social tools can help save money in customer service can be seen here.

OK, I admit, this title was a bit of link-bait and I’m being a bit unfair to Gary – who knows that the ROI in social media is what we aim to achieve.

In a later interview, Gary made the point that most social media marketers are clowns — talking about Facebook likes and Twitter followers, instead of how social media is a channel to achieve business goals.

Gary made the point that you need marketers who know how to use digital tools to achieve business goals and hiring some 22 year old kid who knows how to use Facebook isn’t the right person to be managing your business.

It’s time to start being accountable – 99.5% of social media “marketers” are clowns – encouraged by marketers who are technoilliterates seeking out the 22 year old kid who doesn’t understand business – those of us who have been doing this for a long time, like Gary, Ayelet, and me all know that this a tool to achieve business results.

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Invasion – Choosing Your Target Market (Crossing the Chasm, Part 3)

The following is the third in a series about high tech market strategy based on Geofrey Moore’s Crossing the Chasm.

A big strategist failure that many organizations get into is picking the wrong market. Either, they don’t pick one at all and just see what sticks or else picks a market that is so wide (“everybody with a cell phone,” “mothers over 30,” “all people of a specific religious or ethnic group of a certain age,” “all Java programmers”) that it’s impossible to develop a market penetration strategy.

If your market is everybody, than your market is nobody.

This is particularly true when trying to cross the chasm from early adopters to majority. As we might remember from the Technology Adoption Life Cycle, the majority (even the early majority) need to see that your solution is suitable for their industry and is respected.

But, you’ve just started, and now you already have to win a market? That’s impossible, right? Wrong!

According to Crossing the Chasm, launch a targeted invasion – like the Allies did at Normandy – pick a specific niche that is small enough that you can win but large enough that it can show that you can handle the unique requirements of industry.

According to Moore take a D-Day approach, “Cross the chasm by targeting a very specific niche market where you can dominate from the outset, force your competitors out of that market niche, and than use it as a base for broader operations. Concentrate an overwhelming superior force on a highly focused target.”

This is what Apple did when starting out, winning the graphic design industry.

Moore continues:

Companies just starting out, as well as any marketing program operating with scare resources must operate in a tightly bound market to be competitive. Otherwise their “hot” marketing messages get diffused too early, the chain reaction of word-of-mouth communication dies out, and the sales force is back to selling “cold.” This is a classic chasm symptom, as the enterprise leaves behind the niche represented by the early market. It is usually interpreted as a letdown in the sales force or a cooling off in demand when, in fact, it is simply the consequence of trying to expand into too loosely bounded a market.

Yet many companies don’t follow this strategy because it’s not logical to them … to their peril. According to Moore, “Unfortunately, sound as this practice is, it is counterintuitive to the management of start-up enterprises, and thus, although widely acknowledged in theory, it is rarely put into practice.”

According to Moore, companies are failing because they are going after the short-term sale – and thus causing a long term crash. He writes that companies refuse to adopt a market-driven approach at the expense of a sales-driven approach. But “the consequences of being sales-driven during the chasm period are, to put it simply, fatal.” This is, unfortunately, especially common in bootstrapped startups and startups in Israel, lacking significant initial capitalization.

According to Moore this sales-oriented strategy fails because during the chasm period the goal must be to create a pragmatic customer base that’s reference able and can access other prospects and begin to build a word-of-mouth community. To capture this initial group, our initial group must achieve all of their objectives, including the whole product, to be discussed later. In order to completely satisfy this initial group, all emphasis must be made on providing the complete satisfaction of the initial group – which will then lead to more sales later.

Also, pragmatist companies want to buy from market leaders. By creating market leadership in a niche, you open the door for other companies in other markets and industries to recognize your leadership and give you a chance as well.

According to Moore, “If you do not commit fully to this goal, the odds are overwhelmingly against your ever arriving in the mainstream market.”

 

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Crossing the Chasm–The First Step–The New Strategic Principles (Chasm Strategy: Part 2)

The following is the second in a series of posts about high tech marketing strategy based on Crossing the Chasm.

It’s Strategy Stupid.

CB-Celebration-Still

This should be obvious, but it’s not.

We’re enamored with the next shiny thing to realize that the basic fundamentals are even more important than ever.

Marketing is about markets. Strategy.

Do you remember the four Ps? The core principals of marketing:

  • Product
  • Price
  • Promotion
  • Place

These principles guide all marketing activities, including crossing the chasm from early adopter to mainstream.

In particular, Geoffrey Moore lays out the following path (or, as he might prefer, warplan) to cross the chasm:

Niche: Defining your target market – it’s not everyone. In order to cross the chasm, Moore advocates a “D-Day strategy,” choosing a very specific niche market that can be won. Says Moore:

Companies just starting out, as well as any marketing program operating with scare resources must operate in a tightly bound market to be competitive. Otherwise their “hot” marketing messages get diffused too early, the chain reaction of word-of-mouth communication dies out, and the sales force is back to selling “cold.” This is a classic chasm symptom ….

Identify the market that has a compelling reason to buy your product.

Product – Product has always been a core marketing role, but it’s not as simple as one may think. When one is buying a car, he or she needs a wide range of services: tires, gas stations, accessories like car covers and floor mats, insurance, etc. Not just the car. This is what Moore calls the whole product concept. But, what do you do with a new product that’s discontinuous innovation? According to Moore, “For a given target customer and a given application, create a marketplace in which your product is the only reasonable buying proposition.”

Messaging and Positioning – Define the battle. Define what you are doing and what benefit it provides. Locate the product within a buying category that has some established credibility and position your product as the correct buying choice for this audience. These claims must be credible (no hype – egoism and false claims are not good marketing) and represent a large enough audience in order to be relevant.

Address the values and concerns of the pragmatists (not the visionaries). This is about creating a compelling value-proposition that answers the WHY (BUY) to the WHO (that we’ve already defined). If you’re everything to everybody than you’re really nobody.

It’s not about the features (big processor, nice architecture, cheap price, or supported technologies) but rather about the benefits — what these features provide.

According to Moore, “positioning is the single largest influence in the buying decision.”

Pricing and Place (Channel) – Launch the invasion. According to Moore, “the number-one corporate objective, when crossing the chasm, is to secure a channel into the mainstream market which the pragmatist customer will be comfortable.” Motivate the channel.

Moore than explores several channels, such as retail, direct-sale, OEMs, Internet retail (in this analysis, the book, revised in 2002, is quite outdated), integrators, and more. Analyzing whether the goal is fulfilling existing demand or creating new demand, choosing the appropriate channel depends on your goal.

Cheaper isn’t always better. Pricing strategy is also essential. Are you basing your pricing based on customer needs or your fixed costs? Moore provides guidelines for how to pick a price to fit your positioning. Hint: Cheaper isn’t always better but being priced significantly above your competitors can also be a failure. Price carries a message. You need a price that presents market leadership.

Making the right choices for these issues will get you past the chasm. But how do we do this?

The next several posts will explore the specific strategies and tactics that need to be put in place in order to successfully cross the chasm and delve further into the above strategies and tactics for startup and high-tech business success.

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Are Your Business Goals Realistic?

I’ve touched before on the importance of strategic planning before: decide what you want to do before you decide what services or tactics you want to implement. One of my colleagues, The Cline Group’s Josh Cline (Disclaimer: I’m a past director at TCG and currently sit on the firm’s advisory board), also wrote about this on his company’s blog. Josh wrote:

So, what is the big problem? Companies today are forgetting the traditional holistic approach to marketing strategy. They are forgetting or ignoring basic business and marketing fundamentals like messaging and positioning, branding and overall perceptions. Companies are missing the basic marketing principles, such as mapping the marketing plan to the company’s short-term and long- term goals and its business objectives.

So, you have a goal, now what?

Make sure your goal makes sense and is realistic and achievable!

What makes a goal realistic, though? Some aspects of a realistic goal include:

  • Mapping to your short and long-term objectives: Yes, we know you want to make millions, have immense profits, and reach mass adoption but perhaps you need brand awareness which means that the freemium model will hurt your short-term revenue in order to create long-term adoption and long-term profits.
  • Do your tactics make sense for the goal: If you want business leads, than you need something that has a registration form. A video or media article probably isn’t the best route. It won’t offer leads. But if you’re looking to increase awareness or understanding of your product, those would be great channels to consider. If your goal is to get XXX leads, than is it being implemented in the channel that is going to provide XXX?
  • Understanding the benefits and risks of your communications channel: Having a social media account doesn’t mean you’re going to go “viral“. In fact – there’s no such thing as viral. You’re chances of an instant social boom are low. And if you do get the boom, it’s likely to “bust” pretty quick. Unfortunately, most companies still don’t get digital media channels, whether it’s social media, the web, search, mobile, or email, and so either don’t set any or don’t set the right goals for this channel. This is also true for lots of other channels, as well.
  • Understanding the decision cycle and sales funnel: Are you assuming instant success? Success and traction take time. Your first month might give you fewer leads or awareness (however you measure that) but after six months, the exposure to multiple touchpoints may lead to conversion?
  • Unique to your specific position: While it’s OK to get inspiration from others and the competitive landscape is very important, your firm is unique – it has unique staff and resources and sits in a very individualized competitive landscape. No other company, even in the same country and industry, is exactly like yours.
  • Adhere to industry norms: While no company is unique, unless you are so different, there are many things in which we have baselines for. If open-rates on emails in the construction industry are 28.7%, and you’re in the same industry, you should be aiming as an initial baseline for a similar open rate. Of course, you may end up doing better or worse, but that’s an important baseline. But, if you’re a construction firm and getting a 14.5% open rate, more common in the travel industry, I would be worried. However, if my goal is for a 50% open rate, clearly your goal is simply unrealistic and should be changed.

Realistic goals can certainly include projections for rapid growth, if that’s reasonable for your market. But they shouldn’t assume rapid growth because some other company did it. You’re not them, and if you’re assuming rapid growth based on someone else (“I’m going to be the next big Facebook”) than you already lost network effects and first player advantage.

Are you setting realistic and achievable goals?

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The Need for Integrated Marketing: It’s Not Just Social Media

“If only we went viral” and “If only we had a Facebook page and an Internet guru who knew how to make our RSS feed than we could get on the front page of TechCrunch” is something that is commonly heard.

The promise of social media was, to some, the magic promise of viral marketing.

It’s a false promise.

The fundamentals still matter.

Marketing is not about viral or social media – rather it’s about developing the proper strategy to meet your business goals.

What are you trying to get and what is the pathway to get there?

  • Brand Awareness?
  • Revenue Growth?
  • New Sales?
  • Thought Leadership?
  • Repeat Business?
  • Saved Customers and Recovery of Customers?
  • Introduce A New Program?
  • Donations?

Each goal has a different tactic to meet that goal.
Business Planning Class
Social media is not the answer, it’s a channel. One of my favorite strategic frameworks, Forrester’s POST Analysis, explicitly states that you pick the People (Audience), Objectives, and Strategy before choosing what technology to implement this with.

Before determining the tactic, you need to develop the strategy that maps the strategy and tactics to your goal. This, of course, requires knowledge of integrated marketing: branding/positioning, public relations, marketing, web development, SEO, and more. Yes, with the growing importance of digital platforms, technological literacy is a must for any marketing strategist, but it is not the goal – rather the tool to get it.

Jono Bacon, the Community Manager of Ubuntu, a popular Linux distribution, has a good framework for how to map strategy with tactics in his book The Art of Community:

OBJECTIVE:

GOAL:

SUCCESS CRITERIA:

  • Item
  • Item

IMPLEMENTATION PLAN:

  • Item
  • Item

OWNER:

GOAL:

SUCCESS CRITERIA:

  • Item
  • Item

IMPLEMENTATION PLAN:

  • Item
  • Item

OWNER: