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Posted on by Louis Gudema

Last week the unimaginable happened to Nike: the shoe of the most heralded college basketball player, Zion Williamson, split apart; he hurt his knee and had to leave the game.

And it didn’t happen in a minor game. It happened just a few seconds into one of the most anticipated college basketball games of the year: Duke versus North Carolina. Reportedly tickets sold for up to $10,000; President Obama flew in to attend.

Is this going to be a disaster for Nike? Some people think so.

I don’t.

First, it’s a freak accident. Nike sells close to a billion pairs of sneakers a year, yet when have you ever heard of a new Nike sneaker breaking apart like that? They have a reputation for outstanding quality.

One WNBA player suggested it was a matter of Williamson using the wrong shoe: he is too big/heavy for the style shoe he was wearing.

Swin Cash's tweet

And it was a minor injury. It appears that he’ll miss a week or two, but should be fully recovered after that.

Thirty years ago things might have been different. But Nike, and all companies with crises, are benefiting from our very, very rapid, 24/7 news cycles. They know that within a day or two people will be talking about something else. Politicians have learned how to take advantage of it, too: despite a photo of him in either blackface or a KKK uniform being found in his medical school yearbook, the governor of Virginia seems determined to ride out the storm. Three weeks later, he’s still in office.

Nike stock only went down about 1%. Airlines have had highly embarrasing videos of them mistreating passengers posted online but their stock, too, declined for just a few days and their sales took no hit at all.

Nike has one of the most valuable brands in the world, with an estimated value of $32 billion. Even as high profile of an accident as this will likely not affect them – unless it happens again. And again.

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Posted on by Louis Gudema

I recently did work with a company that wanted help on marketing a new product. It was very cool. They had probably spent $1 million to $2 million and a couple years developing it, but they had no idea who would buy it, or even if it was a consumer or industrial product.

They had not talked with any customers before developing the product and when I looked at it, cool as it was, I didn’t think that it was necessarily better at anything than what already existed. In many ways it was inferior.

I suggested a number of ways that inexpensively they could get it in front of different customers with different needs and messaging, but they found out that there really wasn’t a niche for it. There wasn’t, in startup language, product/market fit.

Management should have known better. This wasn’t a startup; the company had been around for years. But by not taking the time to talk to a few dozen potential customers they had wasted a couple million dollars.

On the other hand, in the early ‘90s I helped a large telecomm company study the home video-on-demand market — which at that time was still just a dream. They wanted to know how much more consumers would pay for the convenience of streaming movies at home anytime that they wanted to instead of having to go to a videotape rental store?

The answer was $0.

That was not the answer that they were expecting, or hoping for, but at least now they knew what they could expect to charge. And to this day we can stream movies on demand for just a few dollars.

Talking to customers costs almost nothing and yet invariably returns valuable, unexpected insights. Whenever I’ve done customer interviews for companies the CEO has been amazed at what their customers actually want, compared to what they thought they wanted. And this is true even in service companies where presumably they are close to their customers and have frequent conversations with them.

Have non-sales, listening conversations with customers regularly.

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Posted on by Louis Gudema

In September, 2017, I wrote a lengthy analysis of HubSpot’s customer acquisition costs (CAC), showing that it had more than doubled in just a few years. Since CAC – the average cost of acquiring a new customer – is a key marketing metric, I said that this called into question the whole inbound approach that HubSpot had said they relied so heavily on, and had evangelized almost as much as their marketing software.

The piece got a lot of reads and a fair amount of attention, such as a lengthy analysis from marketing strategist Mark Schaefer. But there was no response from HubSpot.

Until last week.

Last week I saw an article by Ben Jacobson of Marketing Land about HubSpot and inbound marketing in which co-founder and CEO Brian Halligan said, “Inbound marketing at scale works incredibly well.  If you look at our cost to acquire customers over time, it’s largely trending down over time…. We’re our own best case study.”

I responded on Twitter and said, no, HubSpot’s CAC was not trending down: just the opposite. And I had shown the data for that over a year ago. This is the chart showing a skyrocketing CAC from my original post:

Chart showing rising HubSpot CAC

In the original piece I mentioned that the 2011-2014 figures came from HubSpot’s IPO and first annual report SEC filings. I had calculated the 2015 and 2016 with a formula I developed and explained in a footnote because after 2014 they no longer stated their CAC in their annual reports. The numbers for those two additional years didn’t seem surprising to me since they were in line with the trend of the previous four years.

My tweet last week prompted a swift response from HubSpot’s COO, JD Sherman, that I was wrong:

Tweet saying that their CAC is down almost 50% since 2014

So he’s saying that, while industry CAC has continued to rise, for HubSpot the chart for the last eight years actually looks something like this:

And they shared the bad news of the first four years in their annual reports, but stopped publicizing it when the news significantly improved.

That’s news because another writer, Samuel Scott from The Drum, had followed up on my article in February, 2018. He couldn’t get that information from HubSpot, either.

Quote from Samuel Scott article about HubSpot

CEO Brian Halligan then joined the Twitter conversation last week and did comment further. First he said,

Halligan tweet that HubSpot CAC has drifted down since IPO and inbound works at scale

When I responded, he added:

Halligan tweet that they don't report the CAC but describe it privately

HubSpot is a public company. Their financial information is supposed to be shared with everyone. Why such selective communication of such good news?

Anyway, in a sense it doesn’t matter. The title of my original post was “Can HubSpot afford to do inbound marketing anymore? Can you?” It’s the second question that’s far more important.

Note that each time Halligan says that inbound works “at scale”. HubSpot itself has spent tens of millions of dollars – maybe over $100 million — over the past dozen years producing content for inbound. Only very large companies, or VC-backed ones, can afford to do that (certainly not the SMBs that are HubSpot’s primary market). If that’s the scale that it takes these days for inbound to work in most industries, then my original observations on its dwindling effectiveness still hold.

According to third party SEO tools (SpyFu, SEMrush, Ahrefs, Alexa.com) HubSpot every year gets the equivalent of tens of millions of dollars of paid search traffic to their site for free from their thousands of ranked pages, which have tens of thousands of external links to them. They could literally stop spending any money on new content and, since it’s so hard to displace a highly ranked page, they would continue to get millions of dollars of free traffic for a long time. That can be the long-term value of inbound (if that traffic also generates qualified leads).

HubSpot’s investment, and results, from inbound puts them in what I sometimes call “the marketing 1%”. In fact, they’re in the .1%; their site ranks in the top few hundred sites globally. That’s what investing tens of millions of dollars in content can produce over time.

But this won’t happen for many other companies. The three situations in which inbound may produce results today are:

  1. Your company is a traditional leader in your industry, possibly through a long-term content program, and has high domain authority
  2. You’re in a relatively new industry, little content has been produced yet and no one has established a leading content presence (maybe companies in AI were in that position in 2013, they certainly wouldn’t be today).
  3. You have a very large amount of money to spend on your inbound program, either because you’re large enough or are VC funded.

Secondly, as I mentioned in an article for growth stage VC firm OpenView, HubSpot has virtually re-defined inbound out of existence. The original idea of inbound was totally anti-advertising. In the second edition (2014) of their Inbound Marketing book, Halligan and HubSpot co-founder and CTO Dharmesh Shah wrote about their defining of inbound marketing: “Inbound was about pulling people in by sharing relevant information, creating useful content, and generally being helpful.”

And they continued their disdain for traditional, “outbound” marketing: “Now, raise your hand if you love getting cold calls from eager salespeople during dinner. Or spam e-mails with irrelevant offers in your inbox. How about popup ads when you’re trying to read an article on the Internet?”

But HubSpot now sells ad management software. So on its website it now says things like, “A common misconception is that inbound marketing and display advertising are simply incompatible. Increasingly, however, marketers are combining the best techniques from both to maximize their reach and find qualified potential customers.” I don’t know how that misconception arose.

I won’t go through everything in that OpenView article here, but check it out. In it, I go into much more detail on why the inbound marketing strategy launched in 2006 just doesn’t work for most companies today.

The reality is most B2B companies outside of the software industry are still doing very little marketing. I studied hundreds of them and found this adoption of marketing programs.

Table comparing use of marketing by software and non-software companies

Those numbers are from 2014, and when I discovered how little non-software companies were marketing I was somewhere between sobered and depressed. I recently revisited all 351 companies and found that the only significant changes among those non-software companies were (1) 81% of them now have mobile/responsive websites, and (2) 39% are regularly posting to social media. If anything, content programs “at scale” (which for this study I defined as at least six new pieces a month) declined from 18% to 11%.

This was for B2B companies with 50-1000 employees. These were not solopreneurs are very small companies with five or 10 employees. Many of these companies have been around for decades and are the heart of the U.S. economy. The Census Bureau reports that they employ three times as many people as enterprises with over 1,000 employees.

I work with many companies that have previously seriously under-invested in marketing. They aren’t in the marketing 1%, but they probably make up 80-plus percent of the B2B world. My recommendation for these companies is that they defer inbound marketing and use the strategies that I outline in my Bullseye Marketing approach.

Increasingly I am also working with software channel partners, most of which also have been under-investing in marketing. Unlike the software vendors, who are past the Bullseye Marketing stage, these partners could grow much faster and sell through far more software with this strategy.

But if they focus on inbound marketing, they are unlikely to produce few if any results in six months, a year, or even two. And they may well end up saying, “We knew it. Marketing doesn’t work for us.”

That’s what I recommend. But I’ll give Brian Halligan the last word.

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Posted on by Louis Gudema

I knew this. So I wasn’t surprised by the results.

If you post to LinkedIn on Friday afternoon your post won’t get seen by nearly as many people, because most people have dialed back their weekly social media activity by then and are less likely to be on LinkedIn over the weekend, either.

Last Friday afternoon I had coffee with marketer Samantha Stone and we swapped books. We took a selfie and, since this was a real-time activity, I immediately posted it to LinkedIn. By Monday morning it had gotten 26 likes and 5 comments, but was only seen by 382 people. Over 7 percent of the people who saw the post engaged with it – a very high engagement rate – but many people ended up seeing it.

LinkedIn post with photo

Compare that to a post earlier in the week that got 6 likes and 1 comment but was seen by 1,407 people!

I find on LinkedIn that posting around 7 or 8 AM on Tuesday or Wednesday, maybe Thursday, produces the greatest engagement and visibility for a post. But late in the week or on the weekend generally results in far less.

Now, this is going to vary depending on the platform and the demographics of your audience, of course. Posts to Instagram may be seen and engaged with throughout the weekend, and the same for Facebook. Test and see what works for you.

But for professional social media, stick to the middle of the work week.

And for emails, similarly, I’m surprised at people who send their weekly email on Friday afternoon. Generally that’s not going to get a lot of play. Emails to senior people early on Saturday morning, though, often do well because they use the weekend to catch up on non-essential reading.