Thursday, May 31, 2007

CPG Industry Needs New Engine
To Drive Demand & Awareness

By John Gaffney

It’s interesting to me just how “retro” the consumer packaged goods world has become. P&G has turned the clock back to focusing on product sampling for several personal care products. Pepsi has reverted to the old “Pepsi challenge” in its continuing bid to unseat Coke’s lead in the diet soda space.
Here’s the problem with these “new” directions. They’re old. Forget the fact that they ignore NextGen strategies that provide more specific targeting. They don’t consider a very simple understanding that there’s a world of difference between generating awareness and generating demand. And therein lies the challenge for consumer packaged goods companies. They’re still focused on generating awareness, when the situation calls for generating demand.
One of the more innovative campaigns I’ve seen over the past year came from Sprite, which used community-based engagement loyalty for its highly successful campaign in 2006 called The Refreshing Wall. According to its brief for the OMMA Awards, it aimed the five-month effort at recapturing a sliding share of the teenage market by engaging the demographic with a chance to create their own Sprite logos and their own online graffiti-style artwork. It became the most-trafficked area on MSN, with users engaging more time with The Refreshing Wall than any other MSN channel, including Hotmail. It’s 1 million plus community continues to use the site despite the end of the official media support of the program. Most interestingly, according to Sprite’s own terminology, The Refreshing Wall “established a new currency.” Instead of engagement, Sprite calls it “captivation metrics.”

Some of those metrics include:
· Average time spent in the application 6 minutes per user session;
· Each $1 in investment generated 4 minutes in user engagement;
· Lift in brand equity, as measured by Sprite: 14%.

Here’s what Sprite’s approach does. It reaches out to a new customer segment with a campaign that engages them. That engages leads to demand for new information, new access to experiences and then product demand. Media for CPG companies can, and must morph into a demand gen engine. And it doesn’t need to lose its tried and true awareness building tricks in the process.
For example, The California Milk Processor Board has taken “Got Milk?” into the points and information arena. It’s new 3D “Get The Glass” game allows users to attack “Fort Fridge” to get the earth’s last glass of milk. Along the way users are confronted with trivia questions about the benefits of milk and they suffer what the CMP Board believes to be the downside of milk deprivation (brittle bones etc.). Users earn points toward a chance at a $5,000 prize. More importantly the concept of demanding an experience goes along with demanding the product. “Millsberry” is another example of engaging kids in a brand experience. It is a virtual town created by General Mills in August 2004. It has shops, homes, special events, and a newspaper called the Millsberry Gazette, chat rooms and an arcade. Games and visits to nutritional information websites such as the National Institute of Health earn “Millsbucks.” They in turn can be used to purchase items from Millsberry’s downtown shops as well as allow members to purchase their own home in Millsberry.
Not a lot of customers are going to demand a home in Millsberry. But they might set up a new paradigm for demand of things that go beyond product. For CPG companies that might be a ticket out of commodity hell and a new ticket into a new worlds of marketing.

Tuesday, May 8, 2007

Demanding Views

Home Depot’s Rebuidling
Plan Missing The Mark

By John Gaffney

Seems like everyday you can add another company to the list of crisis managers. Someone gets rung up on customer complaints, bad service, SEC questions, data breaches and overpaying executives. Home Depot has been in something of a defensive posture since Bob Nardelli got his walking papers in January. It was rocked back on its heels a bit more by its shellacking on the MSN blogosphere in late March.
Time to play defense, right? Say you’re sorry? Wrong.
I would argue that the only thing Home Depot should be doing, in fact what any company that has faced a tough rack of problems lately, is use the crisis to be smarter about generating demand. You could say it’s “demand re-gen.” No matter what you call it, rebounding from a crisis doesn’t take away from the fact there’s one thing a business is about. And that’s creating demand through every fiber of its being.
For Home Depot, it’s no different. Here’s how I would put the pieces back together through a demand gen lens:

--Employee Programs: It’s my understanding that HD already has an aggressive employee reward program in place. Anyone who’s been there will tell you the results are spotty. Employees should be rewarded on return visits, incremental revenue and customer feedback. Everything they do when interacting with a customer needs to be based on two demand gen basics:
1) Customers talk to other customers.
2) Employees are the competitive differentiator in the race between HD and Lowe’s.
--Marketing: HD needs to generate demand among its core customers, and those are contractors. Contactors are going to make the big ticket purchases and they’ll tell the weekend warriors that HD is thumbs up or thumbs down. I would reach out through direct mail, email and strategically placed online campaigns to get the word out that HD wants you back if you’re a contractor. Apologizing to the newlyweds that want to buy a new light fixture isn’t going to generate demand.
--Operations: I would want to know how my contact center looks, sounds and feels. I would want to know how those CSRs are trained and compensated. If their current contact center is based on call time and resolution, I’d change it to proactive current customer contact and customer satisfaction. I’m also thinking that HD would generate more demand by making the checkout process more seamless and by making contractor billing systems more demand gen centered. When a contractor gets a bill from HD, it should invite him for workshops, free coffee for him and his crew, or product discounts.
--BtoB Relationships: Sure would help if one of HD’s major suppliers was visibly on its side right now. Maybe some product exclusives or very transparent end caps and signage would help get that done.
Any one of these factors would be a step in the right direction. I think demand gen needs to be a holistic process, not an event. Marketing, operations, employee engagements and BtoB relationships could all move toward the same goal. And maybe by focusing on demand gen a company like Home Depot could understand that the next quarter might be a wash. But the one after that doesn’t have to be.

Wednesday, May 2, 2007

Speeding Up Pipeline
A Growing Priority For B2B

Many organizations adopting demand optimization strategies

By Andrew Gaffney, Editor
If you have noticed a clog in your sales pipeline over the past few years, you are not alone. Identifying qualified buyers has become increasingly difficult for most companies, particularly in technology and other big ticket B2B and B2C sectors, and the problem has been compounded by the fact that deals are taking longer to close.
SiriusDecisions, a Wilton, CT-based research firm focused on sales & marketing benchmarks, has been collecting data from more than 300 B2B marketers, and has found a consistent challenge with demand generation efforts. “We look at everything including spend, budgets, response rates, conversion rates and overall performance,” says John Neeson, Managing Director and Co-Founder of SiriusDecisions.
According to research from SiriusDecisions, the average selling cycle for deals $100,000 and over is 22% longer on average than it was five years, and there are 3.5 more people involved in the decision-making process.

According to research from SiriusDecisions, the average selling cycle for deals $100,000 and over is 22% longer on average than it was five years, and there are 3.5 more people involved in the decision-making process. Based on this increased complexity, marketers are pushing to have more prospects in the pipeline. For example, the traditional metric for many marketers had been to have a ratio of 3 to 1 of prospects to sales quota. However, as the go-to-market model has begun to shift, Neeson says that average has been pushed up to 3.6 to 1.
One clear trend among the companies SiriusDecisions measures is a growing emphasis on feeding and managing the pipeline. “Demand generation is the only category where spending has consistently increased over the past five years. It now accounts for between 40% to 60% of most B2B marketing budgets,” he says. “And companies are clearly relying more on marketing to drive demand generation.”

The focus on lead and demand generation has been heating up steadily for the past five years, but the level of sophistication being applied to the issue has varied widely among different companies. Surprisingly, Neeson says he often finds small to mid-sized companies are often more advanced at managing the process than some of the larger, global organizations.
One common approach among B2B companies has been segmenting their marketing efforts to target prospective customers at different phases of the buying cycle. For example, some leading marketers have developed specific campaigns and follow-up business processes for different target audiences into the following segments:
· Awareness
· Consideration
· Preference
· Close
Each audience segment has its own creative and messaging attached to it, as well as sales collateral and follow-up process.
In addition to segmented marketing, the majority of B2B companies have developed a system for rating the sales leads in its pipelines. The oldest and most elementary method is the A, B, C, D method of prioritizing prospects, although many sales and marketing executives that employ this technique admit there are often no formal guidelines for how an A lead is handled versus a prospect rated a D.
As one VP with a large software supplier described their current system. “We just got back from a major trade show with what I would consider 27 urgent sales leads, but even I’m not clear on what metrics we are using to narrow down and prioritize which of those should have the most urgency and attention.”

Over the past two years, the process has been getting more structured and Neeson says many companies have evolved to what Sirius describes as a “lead architecture,” which often employs formal lead scoring systems, as well as lead nurturing and management systems.
One of the leading solution providers offering these types of products is Eloqua, headquartered in Toronto. Thor Johnson, Eloqua’s SVP Marketing, says the company’s marketing automation solutions have taken the mystery out of demand generation for more than 250 different customers.
“The problem with the pipeline is at the front of the funnel for most companies. Lead generation is a unique process in that it spans 2 very different departments, which can wind up at odds if the process isn’t optimized,” Johnson explains. “For the companies that have aligned their sales and marketing efforts, and have a common definition of what a lead is and where that lead is in the buying process, they usually see a significant improvement in the number of leads closed.”
Eloqua’s customer base runs the gamut of large, publicly-traded companies such as Sybase to smaller venture-backed firms in technology, financial services and business services. “Our clients are automating the process from initial lead generation all the way to revenue generation and are able to attach predictive models to the process. For example, our more advanced clients are able to know that for every $1 they put into demand generation they are going to get $5, $10 or $15 dollars out depending on their sophistication.”
One of the consistent findings from the research and customer feedback gathered by both Eloqua and Sirius is that the effectiveness of different marketing tools varies based on the stage of the lead. For example, Sirius data shows that tools such as white papers and web seminars have been more effective with early to mid-stage leads, while offers such as ROI calculations and free trial downloads have been more effective with late stage prospects.

As Eloqua’s Johnson points out, improving the pipeline for many organizations typically involves better aligning their sales and marketing efforts. Analysts agree that the role for both lines of business has clearly changed in recent years.
Alan Rigg, President of 80/20 Sales Performance, a consulting firm with clients in technology, healthcare and financial services, says a consistent problem across industries is that “there aren’t enough opportunities in the pipeline.” Rigg attributes that trend primarily to the fact that most salespeople either don’t have the time or the training to prospect effectively.
Rigg says that some of the best salespeople he encounters are typically too bogged down with administrative process and procedures to make time to breakthrough with new prospects. “A lot of the top salespeople I meet have a low tolerance for administrative activity and a limited ability to do it well,” he says, pointing to the intricate CRM and sales tracking systems that many companies have implemented in recent years.
Benchmark data from SiriusDecisions supports that opinion, with recent research showing B2B salespeople spend only 18% of their time face-to-face with prospects, while 10% is consumed with admin duties and 18% conducting research.
Rigg points out that many of his clients are supplementing the efforts of their salespeople with more inside or pre-sales staff, as well as increased administrative support in order to free the sales team up to be in front of key clients and prospects. “Most good salespeople tend to be pretty expensive so you don’t want them filling out paperwork and dialing for dollars. It only makes sense to push these tasks to a lower cost resource. The ideal scenario is for your salespeople to focus their time and energy on qualifying opportunities and moving them through the sales cycle at maximum speed.”
The realization that the sales pipeline needs more support has resulted in many companies building a specific team, under the header of field marketing or demand generation to drive and manage sales leads. “The marketing organization of the future will look very different,” says SiriusDecisions’ Neeson. “The CEO will have very distinct dials he or she can go to—including awareness and demand generation—and get an accurate read of how the company is performing in each area.”