Silicon Valley Frontlines

The Updated "Marketing Spend. Worth It, or Not?" List ...

Back on April 11th I wrote a post "Marketing Spend. Worth It, Or Not?" Today I saw a great post by Scott Olson on VentureBeat - "Five Marketing Time Wasters" that can usefully be added to the list. They are:

• Bloated marketing requirement documents (MRD's). Get out there and listen to the customer. Check!
• Direct mail lead generation. Yes, totally agree on the snail mail front - expensive to develop, out of date mailing lists and materials that end up in the round file right away. Even email marketing - go figure who's really serious when they respond. Check!
• $30 - $40k a year on analyst subscriptions! Yikes - how did I miss this the first time around?? Not only that they are frequently undisguised bribes to get their hacks to sing your praises. Total waste and unethical to boot. Check! Try building real relationships with the top bloggers in the space (though believe it or not many of them want the bribes now too!)
• Branding, advertising and tradeshow sponsorships. An expansion on my earlier thoughts - and good ones. Branding to my mind is something you earn, not something you pay for. Check!
• Detailed sales powerpoint presentations. Key point here is that these are too often one way preaching. As a start-up you need to listen, dialogue and validate. Not preach. Check!

To this I'd add this observation of my own:

• Make sure your initiatives are part of a cohesive plan. If you pursue driving potential buyers to your site but don't optimize the site, your landing pages and then capture basic data when they get there (like email addresses so you can keep reaching out to then in the future) then you have been wasting your money.

So here's my updated list of a bunch of marketing activities and how they stack up for a typical start-up.

Worth it:

• Viral PR. Cultivating key influencers such as bloggers and via new media such as Twitter. 
• Speaking engagements on panels and at events.
• Highly focused and optimized key-word search.
• Compelling, engaging and search-engine optimized websites with calls to action, well thought out landing pages, etc
• Engaging smart, hip, independent PR folks to devise the strategy and make it happen.
• Online case studies, customer references and success stories.
• Lead management solutions such as Marketo or Eloqua.
• Hip, fun, cheap videos such as Flaii's, using employees and associates. 

Not Worth It:

• $12,000 a month (or more) retainer-based PR with traditional agencies. I hate that stuff. You  might as well set fire to $100 bills and enjoy the show.
• Branding
• Large, fancy tradeshow booths, sponsorships and splurges at big events. No chocolate fountains! Still better to have a speaking slot than a booth though!
• Advertising in traditional print media. Its dead or dying, hugely expensive and no-one cares anyway. 
• Lots of traditional print collateral and materials.
• Trash and trinkets - T shirts, lanyards, tschotkes ... urgh!!!
• $30 - $40k a year on analyst subscriptions!
• Direct mail lead generation.
• Detailed sales PowerPoint presentations, bloated marketing requirement documents and other "big company" timewasters.

Marketing Spend. Worth it, or not?

Image via Wikipedia

Having been CFO at a number of tech startups over the years you develop a strong sense of what's worth it and what's not when it comes to the various priorities for investing money in the growth of the business. Of course it varies from company to company, but experience (and common sense) say that, for example, having integrated business systems (lead management, salesforce automation, customer relationship management, finance etc) deployed across the company makes sense, while fragmented, stand-alone or point solutions generally do not. Despite which many companies end up with the latter rather than the former because of lack of leadership and vision in these areas at the outset.

Probably the hardest area to evaluate is one of the most important - the company's marketing spend. Particularly for early-stage businesses the key challenge is to get the word out and become known, become "top-of-mind" in a prospective customer's evaluation of the choices. Without that, the best ideas or technologies don't go anywhere.

The good news these days is that the appearance of social networks, the reach of the internet, the effectiveness of new search and advertizing solutions and many other factors have all combined to provide astonishingly effective - and cheap - alternatives to traditional marketing efforts. Here are some examples of what I think is worth it and what's not on the marketing side for early stage tech companies.

Worth it:

• Viral PR. Cultivating key influencers such as bloggers and via new media such as Twitter. 
• Speaking engagements on panels and at events.
• Highly focused and optimized key-word search advertising.
• Compelling, engaging and search-engine optimized websites
• Engaging smart, hip folks in such as Matt Stewart and JoAnn Peach to devise the strategy and make it happen.
• Online case studies, customer references and success stories.
• Lead managment solutions such as Marketo or Eloqua.
• Hip, fun, cheap videos such as Flaii's, using employees and associates. 

Not Worth It:

• $12,000 a month (or more) retainer-based PR with traditional agencies. I hate that stuff. You  might as well set fire to $100 bills and enjoy the show.
• Large, fancy tradeshow booths and splurges at big events. No chocolate fountains! Still better to have a speaking slot than a booth though!
• Advertising in traditional print media. Its dead or dying, hugely expensive and no-one cares anyway. 
• Lots of traditional print collateral and materials.
• Sponsorships
• Trash and trinkets - T shirts, lanyards, tschotckes ... urgh!!!

Measuring Sales Effectiveness in Startups and Beyond ...

This is a post co-written with Robert David, an experienced Sales executive for whom I have the highest regard. Feel free to contact Robert via LinkedIn or contact me via the email link on my blog home page to discuss this and other sales-related topics.

Not sure who first said, "you can't manage what you don't measure," but in looking at a company's 'sales effectiveness', you'll need to both manage and measure. Applies to a lot of other functions too, of course!

According to Wikipedia, "Sales effectiveness refers to the ability of a company’s sales professionals to “win” at each stage of the customer’s buying process, and ultimately earn the business on the right terms and in the right timeframe." In other words, its a process at which you have to win at each step to ultimately close the deal you want. And as a process, with the tools available today, it lends itself to an array of measurements that can be used to manage it. It's one of the key areas in any startup - the health of the pipeline and the effectiveness of the organization managing it.

Improving sales effectiveness is not just a sales issue - it’s a company-wide issue. It requires deep collaboration between sales and marketing to understand what’s working and not working, and continuous improvement of the knowledge, messages, skills, and strategies that sales people apply as they work sales opportunities. In fact, it extends beyond sales and marketing - particularly in a startup - EVERYONE is in sales and responsible for sales success. Engineering and development is - the product needs to work and solve the customer problem. Customer support is - keeping the customer happy and ready to buy more. Finance, professional services ... all of them!

As a start, here are 3 actions that you can do take immediately to come up with a rough measure of your firm's sales effectiveness:

1. Pipeline movement:

Most high tech organizations have moved away from relatively simplistic Excel-based pipelines to SaaS-based (on-demand) systems like Salesforce or Netsuite with sophisticated analytics and management tools.

Start by looking at your individual sales rep's pipeline, by different sales stage. There are tools to see the 'movement' of deals from the first stages of engagement and qualification through to the final stages of closing the deal.

Create a metric that helps illuminate the positive (or negative) movement in the sales funnel. Rank order your reps and interview your reps that are succeeding in moving their deals along. What is working in terms of their sales development and what can be shared with the rest of your sales team.

On quarter over quarter basis, rate your pipeline movement on a 1 to 10 scale: 1 means 0% deals are not moving forward. 5 means 50% of your deals are moving forward. 10 means 100% of your deals are moving forward.