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CREATING THE |
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Alan/Anthony October-03 |
How to Trim Marketing Budgets in Tough Times
It is amazing how many B2B companies learned basic lessons about customer creation from advertising in industry magazines. Unfortunately, they usually learn it when an advertising campaign, after costing them a bundle, bombs.
The campaign usually starts with great expectations. After all, this magazine is read by thousands of potential customers. Good money goes into creating the ad and buying insertions, as they are called, in multiple issues. Then reality hits. The phones don't ring. Sales do not spike upward. And in the current tough business environment, a lot of money that the company can't spare goes down the drain. In the aftermath, management often decides to cut marketing budgets, since their marketing people obviously can't tell good expenditures from bad. However, cutting your marketing budget in the midst of a downturn is like throwing away your ammunition at the start of the battle.
What went wrong? Our phones ring with this kind of question. B2B executives want to know how to stop wasting money and start developing new business methodically and reliably, month after month, in good times and bad. Here are our top five ways to cut waste in marketing:
1. Stop advertising.
If you're expecting to run an ad and start your phones ringing, you're almost bound to be disappointed. In general, advertising is only cost-effective for mass audiences in the hundreds of thousands or millions. That does not describe many B2B markets, where the number of potential buyers is typically less than five thousand. This wouldnít matter so much if advertising weren't so expensive. But it typically costs thousands of dollars per issue of an industry magazine. Spending this money gets you an opportunity — nothing more — to grab peopleís attention for a few seconds while they are doing something else (like reading an article). Advertising tries to interest them, intrigue them, make them want something, or fear the consequences of not having it. People respond by ignoring it (most of the time) or by paying attention and, possibly, remembering the product/service and the message when theyíre at the point of sale. That's called building the brand, and it's what advertising does best. But to do the job, your ad(s) have to appear in many issues of that magazine, because readers are doing their best to ignore the ads. So you have to spend a lot of money over a long period of time to build your brand. Unless you can cost-justify this approach, you are better to avoid traditional advertising completely.
2. Don't print that expensive brochure.
In an age of email and the Web, weíre constantly amazed by B2B companies that continue to spend tens of thousands on printing color brochures and sales slicks. They are expensive to deliver by hand or mail. They are inflexible: though your business is probably undergoing a high rate of change, a printed piece might as well be carved in stone for all its ability to change with you. So you throw away thousands of obsolete copies. The cost-effective alternative is to produce brochures or sales slicks as Adobe Acrobat files that can be attached to email. When you need hand-outs for a meeting, you can do short-run digital printing. We often recommend that companies do spend money on traditional printing of a pocket folder for this material. If the folder carries no other information but your logo and Web address, it is likely to have a long life no matter what the marketplace does next.
3. Don't send direct mail to total strangers.
Conventional direct mail is a mainstay of consumer marketing. You send mailings to hundreds of thousands of people — at a cost of $0.75 to $1.50 each — and live on the 1-2% response you receive. But scale the audience down to the few thousand buyers of most B2B markets, and the dynamics have to change. Rather than mailing to total strangers, you are better off thinking of direct mail as one of several means by which you extend "word of mouth" to a wider audience. Start by developing your own market lists of qualified suspects — people who have shown interest in your products and services in the past, people met at trade shows, people who have agreed to receive your newsletter, and so on. Add to it occasionally from other sources like industry directories and rented lists, but always make sure to qualify these additions before Target these people for frequent contact: a permission-based email broadcast campaign, direct mail, the aforementioned newsletter. B2B markets tend to be fairly intimate. Everybody knows everybody else, and they trade information on their vendors. Your direct marketing efforts should become part of the communications stream that percolates through your marketplace and influences what customers say to each other about your company. You know you're doing it wrong it you find yourself stapling your business card to a new brochure and mailing it to everybody in your industry's leading directory.
4. Join trade associations.
Most B2B sales — especially high-end, big-ticket sales — are made on the basis of referrals, reputation and references. B2B sales is a profession where human contact and trust are established the "old-fashioned" way: over time. There is no more effective way to build long-term relationships than by joining a trade association or industry group and participating actively in it. Showing up at meetings, speaking and volunteering for committees will allow potential buyers and strategic allies to get to know you one-to-one. We have colleagues who, though they have worked only for small companies in their industry, have developed global reputations and enduring good will by taking on leadership positions in associations. As an effective use of your time in most B2B markets, it handily beats sitting at your desk, firing of emails and placing calls to people you donít know. And it is another way to dip into that communications stream flowing through your marketplace and influencing your success in ways you can't even see.
5. Use your Web site more effectively.
Most B2B companies have a Web site these days. But how many are using it to exploit the Internet's true potential, which is to create customers from anywhere on the planet? Your site can a phenomenal, low-cost tool for creating customers, serving customers, managing agent networks, and building word-of-mouth. But you need to redirect spending from less effective channels into upgrading and maintaining your site. Enough said, since we could write a book on how. (In fact, we have. Look for it soon.)
NEWS BRIEFS
For the second year in a row, Alan/Anthony Senior Partner Robert Bell is serving on the Advisory Board of SATCON, the Satellite Applications Technology Conference and Exhibition. SATCON will be held in New York City, November 3-5 at the Hilton New York. Mr. Bell will lead a half-day workshop on November 3 titled "The Government & Military Customer in the Commercial Satellite Market," and moderate a broadcast and cable industry roundtable on November 5 titled "Are All Bits Created Equal?" The panel will examine the latest trend among the giant media companies: integrating broadcast operations into the IT framework. Complete information and registration is available at www.satconexpo.com.
Senior Partner Louis Zacharilla will moderate a panel session at the Pacific Telecommunications Council 2004 conference in Honolulu. The session, "An Analysis of the Satellite Industryís New Reality," will offer a snapshot of challenges and opportunities as the market emerges from two years of recession. Panelists will include executives of Intelsat, SES Americom and Eutelsat. Information and registration is available at www.ptc.org.
Practice Leader Stephen G. Tom recently completed a valuation project for a teleport owned by one of Greeceís leading mobile operators, and an engagement providing business development advice and counsel to Hawaiiís largest privately-owned teleport. In March 2004, he will lead a panel at Satellite 2004 on "Hybrid Networks, Hybrid Companies," exploring how the latest trend — to integrate space segment, ground segment, fiber networks, systems integration and other services in a single company — is playing out in today's marketplace. Information and registration is available at www.satellite2004.com.
Practice Leader Martin Alter has been assigned to work on securing a $13.5 million debt facility for a client in North America.
For more information on effective B2B sales and marketing, contact Alan/Anthony at Lzacharilla@alananthony.com or call 212-825-1582 ext 12. Complete information on Alan/Anthony's services is available at www.alananthony.com
B2B CUSTOMER CREATION
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