Jan 5, 2015 | Branding, Change, Customers, Governance, Innovation, Marketing
Small business is at a crossroads as we move into 2015.
Either they embrace the opportunities and tools presented by the disruption of the “old ways” by digital technology, or they slowly, and in some cases, quickly, become irrelevant, obsolete and broke as customers move elsewhere.
Your choice, as much of the technology can now be relatively easily outsourced, and at a very reasonable cost, certainly less than most would expect. The two major challenges in outsourcing, snake oil salesmen and not knowing what you want and need, are little different to any other category of purchased service.
So, to the trends that will influence your business in 2015 that you need to be at the very least aware of, and in most cases take some sort of pre-emptive action.
- Marketing technology will continue its rise and rise. The thousands of small marketing technology players who are currently emerging will be forcibly integrated, as the big guys buy “Martec” real estate. Adobe, Microsoft, et al will spend money, and the little guys will be swallowed as the gorillas fill the holes in their offerings, and new segments emerge. At the other end of the scale, there will remain plenty of options for smaller businesses to step into the automated marketing space. The current rash of innovations to make life easier for small businesses will continue and as those smaller single purpose tools gain traction, and more are launched to fill the niches that exist to service small businesses.
- Peer to peer marketing will continue to grow at “Moores law” type rates. Jerry Owyangs honeycomb diagram and data tells it all. Almost any service I can think of has the potential too be disrupted in some way by the peer to peer capabilities being delivered by technology.
- Content creation as a process. The next evolution in marketing, the move that I think “content” will start to make from being individual pieces of information produced in an ad hoc manner to being a process that is highly individualised, responsive to the specific context, and informed by the behaviour of the individual recipient scraped from the digital ecosystem. It means that content creation needs to be come an integrated process, more than a “campaign” . The term “content” will become redundant, it is just “marketing”, focussing on the individual customer.
- Marketing will evolve even more strongly as the path to the top corporate job. Functional expertise is becoming less important, what is important is the ability to connect the dots in flattened organisations that work on collaborative projects rather than to a functional tune. This trend is as true for small businesses as it is for major corporations. There will still be challenges as many marketers are really just mothers of clichés, but those relying on the cliché and appearances for credibility are becoming more obvious as the marketing expertise in the boardroom increases, and the availability of analytics quickly uncovers the charlatans. This will make the marketing landscape increasingly competitive on bases other than price.
- Recognition that marketing is the driving force of any successful enterprise will become accepted, even by the “beanies”. Seth Godin has been banging on for years about the end of the industrial/advertising model, the old school of interruption, but many enterprises have continued to deploy the old model, but I sense that the time has come. 2015 will be the year that sees marketing finally takes over.
- Video will become bigger part of marketing, particularly advantaging the small businesses that have the drive to deploy it and the capability to manage the outsourcing of the bits that they either cannot do, or cannot do economically. The old adage of a picture telling a thousand words is coming to life in twitter streams, instagram shares, and all social media platforms. The video trend will be supported by increasing use of graphics in all forms, but particularly data visualisations as a means to communicate meaning from the mountains of data that we can now generate. The density of data on the web is now such that new ways to cut though, communicate and engage need to be found, and I suspect those will all employ visuals in some form, perhaps interactive?
- Pay to go ad free is a trend that will evolve suddenly, to some degree it is an evolution of subscription marketing. Free to date platforms will charge to be ad free, whilst new platforms and models such as the Dollar Shave Club will probably evolve.
- The death of mass and the power of triibes will become more evident. The “cat pictures ” nature of content of social media platforms will reduce as marketers discover smart ways to package and deliver messages that resonate and motivate action. The agility of digitally capable small businesses will open up opportunities for them their bigger rivals will not see, or not be compatible with their existing business models.
- Local, provenance, and “real”. Marketing is about stories, so here is a trend made for marketers, and you do not have too be a multinational, just have a good story, rooted in truth and humanity. ‘Hyper-local” will become a significant force. Marketing aimed at small geographies, such as is possible by estate agents, and “local” produce, such as the increasing success of “Hawkesbury Harvest” in Sydney, and the “Sydney Harvest” value chain initiative.
- Paid social media will evolve more quickly than any of us anticipate, or would be forecast by a simple extrapolation. Twitter will go paid, travelling the route Facebook took to commercialize their vast reach. Some will hate it as it filters their feeds, others will welcome the reduction of the stream coming at them from which they try and drink. Anyway, twitter et al will set out to make money by caitalising on their reach.
- Social will grab more of the market in 2015 than it has had, even though the growth has been huge over the last few years. Small businesses will either embrace social and content marketing, in which case their agility and flexibility will put them in a competitively strong position, or if they fail to do so, they will fall further behind, and become casualties.
- The customer should always be the focal point of any organisation, but often they fail to get a mention. It is becoming more important than ever that you have a “360 degree” view of your customers, as the rapid evolution of social media and data generation and mining is enabling an ever more detailed understanding of the behaviour drivers of consumers. The density of highly targeted marketing, both organic and paid is increasing almost exponentially, so if you do not have this 360 degree view, your marketing will miss the mark.
- Treat with caution all the predictions you read, keep an absolutely open mind, as the only thing we know for sure about them is that they will be wrong, as with this ripper from Bloomberg who predicted the failure of the iphone. However, as with statistical models, quoting George E.P. Box who said “Essentially, all models are wrong, it is just that some are useful” perhaps some of the predictions you find around this time of the year will be useful, by adding perspective and an alternative view to your deliberations for 2015.
As a final thought, if you think your kid may be good at marketing, be sure they learn maths and statistics. “Maths & Stats” will increasingly be the basis of marketing, and the source of highly paid jobs and service business start-ups.
Have a great 2015.
Allen
Dec 22, 2014 | Customers, Governance, Management, Marketing, Small business, Strategy
“marketing” inventory
Taking inventory is one of the most boring things, but necessary things we all need to do. Understanding what you have in stock is fundamental to determining the operational priorities for the future.
Taking physical inventory is familiar to everyone, it is an essential part of staying in business, but how many take an inventory of their marketing assets?
We spend time and money creating things that we hope will deliver leads, or push them through the conversion stages, but how often do we stop and think about optimising the leverage those assets are generating?.
The Christmas break is a great time to get some of this essential stuff done, to examine from the recipients point of view, how well your marketing assets actually work. Following is a list of the typical marketing assets even a small business should have, and often will have without really considering the implications, consequences and costs.
Planning and tracking.
- Do you have a marketing plan that reflects the short to medium term activities needed to deliver on a longer term strategic plan?
- Is there an activity plan for marketing investments that outlines the timing, costs and expected returns from marketing activity in 2015?
- Have you put in place the measures that will enable you to calculate a Return on your marketing investments at each stage of the engagement funnel?
- Are there tracking measures in place that will enable you to improve your returns?
Customers.
- How well do you know your existing customers?
- Who are they?
- What problem are you solving for them?
- Would they be prepared to recommend you to others?
- What is your share of their wallet?
- Why do they use you instead of your competitor?
- Do you know who your priority target customers are?
- Are they defined to the point where you could personalise them?
- Are your communications “personalised” and directed to their specific needs and challenges?
- Do you understand their behaviour
- Do you understand why you lost customers, and have you made the choice not to spend resources to keep, or get them back?
- Are there some ex customers you are happy are ex? And why
Digital assets
- Are your websites and social media platforms linked and cross posting?
- Are your profiles optimised on each platform?
- Are tracking codes in place and optimised on each web page and platform?
- Do you work the key search terms for your segments naturally into the headlines and body copy of posts?
- Are the auto responder emails appropriate for the trigger response?
- Do you say “Thank You” enough?
- Are you capturing data at every opportunity?
- The “ABC of sales” or “Always be closing” school of sales has changed to “always be collecting”.
- Are you using analytics to test, test, and test again to improve your conversion rates?
- Do you track conversion rates at each stage of the sales funnel?
Relationships
- Are you seeking ways to build and leverage relationships with suppliers, and natural partners?
- What is the balance of your sales efforts between nurturing existing relationships to building new ones, and is that balance appropriate?
- How would you rate your relationships with your best customers?
Capability building
- How deep and appropriate is your management “bench” or in its absence, contractors to fill gaps?
- Have you defined the capabilities necessary to sustain growth and profitability, and set about building on the existing, and filling any holes?
Your time.
As the owner of a business, the most valuable asset you have is your time. Problem is usually there is not enough of it, and others do not value it so try to use it to their purposes.
- Do you have the business/life balance right? I know it is a cliché, but that is why it is true.
- Do you explicitly set out to work “on your business” rather than in it? Another cliché, but also true.
- Does the business run without your detailed day to day involvement?
- If not, when will that day come?
Financial management.
I often get puzzled looks when as a marketing consultant I bang on about things financial. However, it does not matter how good your marketing is if the product is crap, or delivered late, or sold at below cost. Financial management is the foundation of any enterprise, as much as marketing is the essential ingredient for success.
- Do you have a cash flow forecast?
- Do you know and actively your costs, fixed and variable?
- Have you calculated your break even?
- Have you a revenue forecast and operational planning in place?
The above is just a start, a “taster” for 2015 which I expect to be a difficult year, so those who are best prepared, will do well, the others… well, they sell flowers at the funeral home.
Thanks for reading, responding and sharing my musings through 2014. I am going to take a break from the keyboard for a short time. Have a safe and merry Christmas, and I will see you in 2015.
Allen
Dec 17, 2014 | Change, Customers, Strategy
“Only the paranoid survive”. Andy Gove
We spend heaps of time setting out to satisfy customers, do what is right for them, to ensure our success, no argument, but is it enough?
To add another dimension to your competitive efforts, ask yourself the simple question “what would really hurt the opposition?”
If the answer is clear, you probably should do it to them before they either do it to you, or address the weakness.
It does not matter if you are BHP or a local business, there is a always a strong Darwinian trait displayed by those who are successful.
In my past, I spend a significant amount of time in the dairy industry, lots of lessons, but amongst them one that demonstrates the essential truth of commercial Darwinism.
My major competitor made an inordinate amount of their total profit from one product in one state, a situation that had evolved over many years, and seemed unassailable. The margins they made on this product would have funded a substantial amount of activity elsewhere that was causing us grief. The board of the dairy co-operative I worked for would not allow me to aggressively attack that profit pool, not being prepared to lose a little bit in order to assist the competitor lose a lot.
They were concerned at retaliatory action, correctly, but the capacity to retaliate would have been limited by the impact on their profits of a successful attack by us, and the fact that our business did not have any equivalent weak point that made us way less vulnerable. My view at the time, and still, was that the real reason they were unprepared to be aggressive was that it was not “gentlemanly” and the dairy industry in those days, which was still evolving from a lot of smaller co-operatives, carried some of the competitive baggage of being a co-operative.
Gentlemen did not do those things!
Competitively stupid decision, and an opportunity lost, but all this had nothing to do with the customer, beyond setting out to disrupt the comfortable relationship they had with my competitors brand in South Australia.
Some years after I left the business, my erstwhile target, having addressed their competitive weaknesses, successfully mounted a successful hostile takeover of the my previous employer, who still acted as though the competitive market place was somewhere that gentlemen met to have afternoon tea.
Sometimes we lose sight of the playing field as we play the game, we talk about competitive advantage, but often just in the context of the customer, and the value they receive, but forget the flip side of competitive advantage, finding a way to belt your competitor over the head.
Legally of course, and within the boundaries of acceptable behaviour, but nevertheless, a belting.
Dec 15, 2014 | Change, Governance, Leadership, Strategy
With thanks to Tom Fishburne. http://tomfishburne.com.s3.amazonaws.com/site/wp-content/uploads/2014/05/140505.pivot_.jpg
Strategy is one of those alters of organisation to which almost everyone offers lip service, and once a year in the planning cycle, receives mass genuflection. That does not mean we believe, just that it is a part of the duty of organisations, and as such, fails to deliver to its potential.
Over the years as a corporate employee and consultant, I have seen strategy implementations fail, sometimes with spectacular results. Usually however, strategy just whimpers in the corner, ignored and derided, but every now and again, I have been privileged to see, and be a part of successful strategic exercises. Below is a list of the most frequent sources of the failures I have seen, the good part of such a list is that taking the opposite gives you a list of what you need to do to succeed.
- Failing to understand that reality is not always what people tell themselves, self talk is too often tangled up with self delusion and adherence to the status quo. Recognising the hard realities as they actually are rather than the way you would like them to be is a remarkably common delusion.
- Believing self serving optimism and hubris are substitutes for achievable goals. It is OK, indeed admirable to work towards the BHAG, but allowing ego, management power based on the position rather than the person, and “group-think” into the room , and it becomes a different beast.
- Not seeing “Capability inflation” for the damming flaw that it is. Virtually everyone sees themselves as better than average at whatever it is they are doing, which simply does not work. Capability like everything else in life is spread across some sort of “normal” curve, in which the only thing that really changes is the height of the average, in relation to the spread of scores.
- Not recognising that competitors do not always react in an orderly and predictable manner, they are not a party too your strategies, and rarely react in wholly predictable ways.
- The factors often seen as “differentiators” are very often just the table stakes to be in the game. Asking management what are the “differentiators”, what characteristics makes any enterprise different, or its products different, and you usually get back a list of things that are just a cost of doing business, just like a watch has to tell accurate time before it is a watch.
- Failure to recognise and adjust for unintended consequences quickly. Usually this occurs because it is not in the plan, and plans are after all prepared by the bosses, performance measures are tied to the plan, and it is a great adornment on the shelf. (my time contracting to the Public Sector sees this blatant ignoring of unintended consequences justified by all sorts of complicated and cliché ridden language developed as an art form)
- Failure to believe. For a senior management to formulate spruik, and go through the motions of articulating and implementing a strategy, then not “living” it themselves means the strategy is doomed to failure. People watch what you do far more than they listen to what you say. Saying you believe is not enough.
- Underestimating the importance of “people“, their attitudes, fears, relationships, egos, and behavioural norms.
- Failing to recognise the elasticity of the status quo. Its durability in the face of logic, common sense and the blinding obvious (to outsiders) is just remarkable.
- Failing to understand and manage the essential paradox of “predictable” and “Innovation” . Customers like predictability, they come to rely in it, but they also expect their suppliers to be at the “cutting edge” to be finding innovative solutions to their problems, and the jobs to be done by their products. Nobody has managed this paradox as well as Apple over the last 20 years. Their products are all predictable easy to use, look great, and perform beautifully, yet they are always at the cutting edge, innovating with everything they do.
- Failing to recognise the sources and likelihood of disruption, and preparing as if it was about to happen. The commercial technical and competitive environment in which a strategy has to succeed is increasingly being disrupted in very hard to predict ways. Strategy is about the basic choices that make up the business model, and those are no longer models that are predictable across decades, they are evolving almost daily. A quick look through Jerry Owyangs presentations, writings and data bases outlining the collaborative economy is all the evidence of the shifts happens that are needed, but just think a few words: Air BnB, Uber, Amazon, iTunes.
- Failing to understand that loyalty cannot be built by money, and material benefits, loyalty is to people, and is very local. it must be earned by displaying and genuinely feeling respect, awareness and interest in individuals. Dunbar’s number plays a huge, largely unrecognised role in organisations. 150 people is about the maximum we can have relationships with on a face to face basis, and the smaller the group, the more intense the potential of the relationships that exist. In this context, loyalty is local, people relate to, work with, and support those who are a part of their local “tribe” against all those outside their tribes. This can often mean other divisions from the same business, or even the other function living down the hall. Believing this local loyalty can be leveraged or changed without real hard work is a common trap for strategists, particularly those entering a strategy that calls for organisation al change, renewal, and in the case of M&A activity.
- Failing to understand that data is inherently ambiguous, and swings between being of some value and intensely dangerous. It all depends on the assumptions that drive the analysis, wrong assumptions render the analysis at best misleading. Is that upswing in sales due to the insightful marketing campaign, or the failure of a competitor to deliver due to problems in the factory? Bet I know most marketing people will say.
- Thinking Strategy and culture are one and the same thing, with perhaps just a few nuances for each. Whilst they must be considered together, they must be managed as separate but mutually reinforcing entities, A degree of inconsistency here will see a strategy fail, as culture is always stronger. Attempts to change culture to align with strategy, rather than recognising the the power and reliance of culture, are doomed to failure, it is simply too elastic to be easily changed. There are really only two ways to change culture. The first is bit by bit, with a leader who demonstrates the behavior required, and is unprepared to accept compromises. The second is to fire almost everybody, if not everybody, and start again.
- Failure to recognise any of the above for what it really is, and calling it something politically more acceptable, thus ignoring the failure, and worse, taking no steps to correct the sources of that failure.
I would be interested in other sources of strategic failure you have witnessed, or been a part of, I am sure there are many I have missed.
Dec 9, 2014 | Customers, Marketing, Small business
Know your customer. www.strategyaudit.com.au
One of the absolute foundations of successful commercial activity is to be able to define your primary “customer” in considerable detail. The more the better.
Years ago I watched as market researcher asked a group to define the brand we were researching as if it was a person walking through the door. The insights gained were enormous, and it is a practise I have used ever since.
However, like most good ideas, they evolve with use.
I now use a quadrant, with the customer in the middle.
- Demographics. This is as far as most go, defining customers by age, sex, financial and social measures, with or without children, homeowners or renters, and so on. Necessary, easy, but very limited analysis.
- External drivers. What are the things in the environment over which the customer does not have control, that impact on their behaviour. Answering this question requires choices to be made, as a 30 year old single woman working full time will behave entirely differently to her married twin sister who is at home looking after a couple of rug-rats, and you must choose which you want to appeal to. The range of variables to be considered is huge, as are the potential responses.
- Internal factors. The sorts of things that people can manage and respond to for themselves, their goals, aspirations, questions they face, and the choices they will be making in their lives. Understanding the psychology and personality of your customers helps you talk to them. No surprise there, because you can talk about they things that value and like to talk about.
- “Who” are they? The fourth quadrant is the behavioural picture you can draw by understanding the nuances and interactions of the first three. Jumping to this quadrant without intensively interrogating the first three will almost inevitably leave holes, but having said that, this quadrant does evolve as you iterate in marketing activity and understand better the behavioural changes that come from differing combinations of messages and service delivery.
I like to be at the point in this process where you can actually visualise the person, and associate them with someone you know well, someone whose behaviour you can anticipate. At that point, the communications you are writing, irrespective of the means of delivery, you can have that person you know well in your mind, and write for them.
The definition of your primary customers should be a constant on marketing agendas. It can easily become complicated by market structures and many other factors, so should be consistently under active consideration. Several of my clients are small businesses who sell to retailers of various types. By necessity, they need to consider both the retailer, who is in fact their customer and to whom the sell, and the consumers, to whom they market as separate.
