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Posted on by Louis Gudema

Last week I saw a post (from 2012) with a marketing term that I hadn’t encountered before: profit horizon.

The idea (or question) is, What’s your timeframe for getting a profit from this marketing program?

A big brand like Coke or P&G may have profit horizons for some of their branding campaigns of two years or more.

Companies running search ads and other direct response programs may have profit horizons of a few weeks.

The strategies and tactics available to you differ depending on your profit horizon. You wouldn’t use national TV branding commercials if your profit horizon is very near, but you might run 2 AM direct response TV ads.

Although I’d never heard the term, the profit horizon was on my mind when I developed my Bullseye Marketing approach.

In the center of the Bullseye you’re implementing programs that are likely to produce results in just a few weeks or months – and they lay the foundation for success of second and third phase programs.

The second ring has a similarly near profit horizon because it’s based on using intent data to find out which customers are in market now, so you can get your advertising in front of them.

Then in the third ring are the long-term branding and awareness programs that can generate great results in the long-run, but are unlikely to generate hardly any new sales for a year or two.

A critical mistake that many companies that don’t have robust marketing programs make when first launching and ramping up ones is to start with third phrase programs that get a lot of buzz – like social media and content – without realizing how long they take to produce results. When they don’t see any impact after six months or so they are likely to say, “We knew it: marketing doesn’t work for us.”

But it can work if you understand your profit horizon, the Bullseye Marketing approach, and which programs can produce results in the timeframe that you’re targeting.

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Posted on by Louis Gudema

What do these have in common?

  • A supermarket
  • A car dealership
  • An insurance agency
  • A movie theater
  • Upwork, Catalant and other sites for hiring professionals
  • A firm that provides outsourced IT services to companies

These are all examples of companies that act as a channel for another company, connecting them to customers and selling their products and services. P&G doesn’t sell Crest and Bounty directly to consumers, it sells through supermarkets. Most cars (except for Teslas) are sold through dealerships that aren’t owned by the manufacturer. Insurance is sold through agents. Movies are distributed through independently-owned theaters. Professionals worldwide get work through hiring sites. And managed service providers that provide IT services usually re-sell software, too.

The World Trade Organization estimates that 75% of global commerce is done through these indirect channels, rather than through direct sales. (Many companies use a combination of direct and indirect sales; Microsoft sells 95% of its software through partners but does have a salesforce to handle larger enterprise deals. Many insurance companies sell both direct and through agents.)

The software channel is the topic of my new Software Channel Partner Podcast available on Apple Podcasts, Google, Spotify, and wherever fine podcasts are sold. (Yes, the first four episodes all feature interviews with men, but in three of the next four I interview women software channel leaders, so that lineup of guests will look very different when you look at it a month from now.)

A channel strategy can be a great force multiplier for a business. Who could sell the products or services for your company?

Although indirect, channel sales are often less expensive than direct sales, people new to the channel often under-estimate the amount of effort that a successful channel strategy requires. More than once I’ve heard the leader of a small software company say, “Oh, let’s just get some partners to sell it for us.  That’ll make our work a lot easier.”

Aside from arranging for these partner deals, though, and making them lucrative enough to be worth the effort of both the partner company and – critically – their sales people, the vendor has to work hard to stay top of mind, train channel sales reps, arrange for timely compensation, and so on.

In fact, Forrester channel analyst Jay McBain (a guest on my podcast in May) lists 90 different competencies in six categories that a full channel program requires.

So if you don’t have a channel strategy, it may well be worth it to create one. If you do have a channel program, even if you’re not in the software industry you’ll find lots of ideas in my podcast for how to bring best practices to your program.

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Posted on by Louis Gudema

Next Thursday, April 25, the Boston Sales and Marketing Innovators (SAMI) meeting (sorry, it’s sold out)  will host Dave Gerhardt, VP of Marketing at Drift. Drift provides the most sophisticated website chat tool, which has AI capabilities to initially manage conversations at scale and figure out if the person wants to talk to sales, customer support, or has some other issue. In just five years over 150,000 companies have adopted Drift and many have reported significant increases (10-25%) in website leads and sales.

I’ve read the Conversational Marketing book that Dave co-authored with David Cancel, Drift co-founder and CEO. My take is that chat is not really marketing (unless you consider sales part of marketing). What makes chat so successful from a revenue point of view is that it re-inserts sales early in the decision making process, as it used to be. Because of the ability of people to do research on the Internet without interacting with a company, they now often wait far longer to talk to sales. Some estimates say that people are perhaps two-thirds of the way through the buying process before talking to sales. Now chat is enabling sales to get involved with buyers much earlier, while they’re doing their research, as they did in the good old days. But in a different way.

The title of Dave’s talk to SAMI is “15 Conversational Marketing Secrets that Will Give Your Business an Unfair Advantage” (because of the Meetup meeting title character limit we had to change “advantage” to “edge”). Dave and Drift CEO Dave Cancel are really into the brain science of effective copywriting. In that title I could four devices:

  • Starting with a number (or the word “How”) usually produces a better response to an email Subject line, blog post, talk topic, etc.
  • “secrets” suggests exclusivity
  • “your business” makes it about the reader, as opposed to a more generic “a business”
  • “unfair advantage” suggests an exclusive benefit

You can sign up for free Drift Inside tips and watch a half hour video of Dave explaining some copywriting tips here. Nancy Harhut is another terrific speaker on this topic. Here’s a 50-minute talk in which she describes 26 persuasive copywriting tips (no sign up required).

Tiger Woods won The Masters golf tournament, and it’s estimated that the Nike swoosh brand impressions from his clothes alone were worth about $22 million. Nike quickly put out this terrific ad on their current “chasing your crazy dream” theme.

Nike tweet with ad

According to Twitter, almost 20 million people had seen it in within 17 hours.

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Posted on by Louis Gudema

Companies that market more and better grow faster. Deloitte estimates that enterprises dedicate about 11% of their expenses to marketing. That’s how they got big; it’s not like they got big, had all this extra cash lying around, and said, “Let’s waste it on marketing.”

With B2B small- and mid-sized businesses (SMBs), though, the situation is quite different. Most B2B SMBs greatly under-invest in marketing, to their own detriment.

I studied the marketing programs of 351 SMBs with about 50-1000 employees. Using my nine-point digital marketing scorecard, I could tell how many programs such as social media, search engine optimization, content marketing, and marketing automation companies were using.

The results were somewhere between sobering and shocking. I uncovered a major divide between the 85 software companies in the study, which were using a median of 7 of the 9 programs, and the 266 non-software companies (in industries such as professional services, medical devices, and manufacturing) which were using a median of just 2 of the 9 programs. Since digital marketing is central to any modern marketing program, and companies got one point just for having Google Analytics on their website, essentially most of these non-software firms were not marketing.

These are not solopreneurs or very small companies; many of these companies have been around for decades. These companies are the heart of the U.S. economy; the Census Bureau reports that companies with 50-1000 employees employ more than three times as many people as enterprises with 1000+ employees.

And it matters. As I said, companies that market more grow faster. Among those software companies, the ones that were using 8 or 9 of the programs were growing about five times faster than those using 0-3 of the programs. 

Chart showing the faster growth rates of companies using more martech

Other studies in other industries have found similar results. For example, a 2016 study by Velocify of over 1,000 insurance agencies showed that the agencies that spent the most on marketing grew much faster than those that spent little. They all got leads from recommendations, but those companies with robust marketing programs got leads and sales through other channels, too.

My original research was done in 2014. (You can download it here and learn more about the methodology.) Recently I redid my survey with the same 351 companies to see if anything had changed with those non-software companies. . Little had. The median of the non-software companies only rose from 2 to 3. That rise is due almost totally to one thing: new, mobile-friendly (responsive) websites. Most companies redo their websites about every four years or so. In the redesigns since 2014, the web developers made the new sites responsive, whether clients asked for that or not. While in 2014 only one in five of the non-software companies had mobile-friendly websites, today four out of five do. But the use of most of the other marketing programs has changed little; a few actually declined.

Chart showing the difference in the use of nine martech programs from 2014 to 2018

These results also make intuitive sense to me, for what that’s worth. Of course the number of responsive websites would have increased significantly. And social media gets so much buzz that if companies are going to try one thing, they’re going to post for free at least daily (or weekly on LinkedIn, my very low standard). This social media activity, though, isn’t going to do much since not part of an integrated marketing program.

And the least-popular programs in 2014 are even less popular now. After all, PPC clicks are more expensive so if your program was marginal before then it might be unprofitable with higher CPCs. And most content programs don’t produce results: 9 out of 10 pieces of content get no organic search traffic (as in zero), and companies need to optimally post a new blog piece at least 11 times a month to produce significantly more leads. That’s twice the frequency that I required in my study and very few companies were doing even that. Even HubSpot’s CEO now has turned to saying that inbound marketing works “at scale”; for them the scale was the spending of tens of millions of VC dollars.

Why are so few non-software companies marketing?

There are three major reasons why non-software companies market so little:

  1. Marketing is not in their DNA. Most company founders are experienced and skilled in their industry, and they had to become at least competent at sales or their company would not have survived, but they had little or no exposure to marketing along the way. They may see marketing as an expense rather than an investment in growth.
  2. Marketing has become so complex. While thirty years ago there were only a few ways for companies to reach their customers — such as direct mail, print, radio, TV, and events — today there are dozens of marketing channels; some people have put the number of channels at over 100. With thousands of companies selling marketing software in dozens of categories, and thousands of additional vendors and consultants all making competing claims, even experienced marketers can be overwhelmed. Executives with little marketing experience are even less prepared to figure out what to do, or how to manage employees and vendors in marketing.
  3. What works in marketing changes rapidly. What worked in digital marketing 10 years ago, or even five years ago may not work well today. What works today may not work in five years. Companies need to be constantly experimenting, testing, and adjusting their marketing programs based on actual results, not theory. As Jay Acunzo says, it’s all about finding the best approach for you.

The people at software companies are more comfortable with the technology and data and testing that are central to marketing today.

But most non-software SMBs do little or nothing. And they lose out as a result.

Bullseye Marketing: The way forward

In working with companies of all sizes and in many industries, I’ve developed a low-risk approach for them to launch and scale marketing programs. They can use this approach to achieve quick wins and build the internal buy-in needed to scale marketing programs that can drive business results. I call it Bullseye Marketing, and described it in detail in my book of the same name.

Bullseye with three rings

Bullseye Marketing involves three phases, as illustrated in this graphic.

Phase 1: Fully Exploit Your Existing Marketing Assets

Companies that have been around for even just a few years have typically developed considerable marketing assets, but most don’t realize their value and they fail to fully exploit them. Some of these assets include:

  • Their customers and customer knowledge
  • Traffic to their Website
  • Email lists
  • How sales and marketing teams collaborate

By taking better advantage of these and other marketing assets, companies can often improve their results quickly and inexpensively. It costs nothing besides staff times to listen to your customers, or for sales and marketing to work together better, and little to undertake an email marketing program, implement compelling calls to actions or chat on your website, or setup remarketing. Just improving the calls to action and conversion devices on your website can quickly double or triple website leads in a few weeks. Selling more to current accounts is typically 5-25 times less expensive than closing a new account, but many companies focus too much on new customers.

And these center-of-the-Bullseye programs establish a foundation for success in Phases 2 and 3.

Phase 2: Sell to People Who Want to Buy Now

B2B markets are typically much smaller than we think, because – unlike a company that’s selling something that’s used frequently, like food — most companies aren’t in-market for most products and services. Vendors that hyper-focus their new customer efforts on those that are will achieve much greater success at a much lower cost.

  • Search ads tied to certain keyword phrases are likely to target people and companies who are in-market and plan to buy soon.
  • Companies can monitor surges in interest in their content by people and companies – such as visits to their website, downloads, attendance at webinars, and opens and shares of their emails – that can indicate deeper interest and buying intent.
  • Third-party vendors aggregate search data across many industry sites and use it to identify companies that are in-market now, and then sell those names to vendors.

All of these are ways that companies can target customers that intend to buy soon, which is the second ring of the Bullseye.

Phase Three: Cast a Wider Net

In the third phase, companies use programs like social media, content, display ads, and events to build their brand and awareness of their offerings. These programs can take two or three years to produce meaningful results, unless done at a massive and expensive scale, but in the long run the inbound leads that they develop often close at a higher rate than any except for those from current customers.

Unfortunately, programs like social media and content marketing are so identified with marketing that when many companies try to ramp up their marketing they start with them. These programs are unlikely to drive rapid results, though. McKinsey estimates that center-of-the-Bullseye email marketing is 40 times more effective for customer acquisition than Facebook or Twitter. Based on my experience, I agree.

Companies that start with these outer-ring programs are unlikely to see a fast return. After six months or so they may say, “We knew marketing doesn’t work for us” and pull the plug on marketing altogether.

But by utilizing the Bullseye Marketing approach, companies that until now have under-invested in marketing can transform themselves and achieve much faster growth.

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Posted on by Louis Gudema

I’ve launched a new podcast, the Software Channel Partner Podcast. (You can download it on Apple, Google, Spotify, and other podcast apps.)

It’s in support of work that I do with software vendors to enable their channel partners (resellers, implementers, etc.). Some companies, like the subject of my first episode, get 100% of their revenue from “the channel”, and are doing no direct sales. 

And, as a former video producer, it’s really easy to produce a podcast. Even if you’re not a former video producer, it’s easy:

  1. Get a good microphone. Marketing Book Podcast host Douglas Burdett recommends the Logitech H390 USB headset which only costs about $20-25.
  2. Get Calendly. It makes all the scheduling MUCH easier.
  3. Invite guests. 
  4. Craft your own questions or, if they approached you to be a guest, ask them what they’d like to be asked about.
  5. Record it using a web conferencing platform like Zoom, Uberconference (what I’m using, for free), GoToMeeting, Skype (not ideal; creates a video file that you need to convert to an audio file).
  6. Produce an intro with music. You can do this on Upwork or a similar platform for around $100.
  7. Edit out the retakes, long pauses, unnecessary Ums, etc. of each episode using free audio editing software. I use Audacity.
  8. Host your podcast on Buzzsprout, Podbean (what I use), or another service for around $100/year. Through them, it will be distributed to Apple and Google podcasts, and that will get it on many more apps. You’ll need to make a slight bit more effort to link it to Spotify.
  9. Amplify it by mentioning it in your email/newsletter, posting to social media, possibly running paid, highly-targeted LinkedIn ads for a few weeks, etc.

And regularly post new episodes.

You’ll also want a section of your website for the podcast, including a page for each new episode. There you can post the podcast player from your hosting service, as well as show notes for sites, books, etc., that your subject mentions during the interview. And I’m also posting a complete transcript of each interview which is good for accessibility and great for SEO. There are very inexpensive services ($.10/minute) that can produce a transcript from an audio file, but they aren’t perfect and you may need to spend more time checking over that than everything else that I’ve mentioned combined. That’s a good job for an assistant or an intern. Or on Upwork you can hire a person to do it very accurately for $1/minute. 

I am using a regularly plain vanilla name for my podcast, the Software Channel Partner Podcast, for search results reasons, too.

And that’s about it. All of that combined is maybe 2-3 hours/episode, including the background reading you need to do to prepare for the interview.