Does the social web primarily benefit service companies?
Dec 1st
One of my favorite thought leaders and {grow} community members is John Bottom, a director at the Base One marketing agency in London. John and I have had an on-going dialogue about the evolution of socal media and one of his recent comments caught my attention:
The people benefiting most from Twitter right now are obviously in the information businesses. We are all marketers here and we are sharing views and ideas because that’s what we ultimately sell. If you’re selling something more physical, you need to first create the information-surround market (or at least understand the information-surround market) before you can start to get benefit from Twitter and other social media platforms.
What I mean is that, if you sell power tools, you rely on people talking about power tools online before Twitter starts to have relevance to you – and these people are taking longer to embrace Twitter than the rest of us, because our benefits are more immediate. That doesn’t mean it won’t come, but it makes it harder for us to convince them at those marketing meetings.
In this simple statement John sums up one of the biggest obstacles facing B2B marketers.
As I look at the social media landscape, at least for small and medium businesses, he appears to be correct … at least based in my own experience. I think there are a couple of important business implications from this simple observation:
1) About 75% of Fortune 100 companies are actively involved in social media. Some of them (Boeing, GE) are industrial B2B’s. Small businesses can learn from them to see how their brand-builidng online strategies might parallel their own.
2) This emphasizes the importance of considering social media as just one part of an overall marketing strategy.
3) It also implies the importance of doing a customer audit as part of that strategy development. Are your customers online? If so, where? If not, why not? Don’t spend money in this area if the customers aren’t there.
4) One key to a successful marketing strategy is finding meaningful points of differentiation. This does not necessarily have to be in the product or service itself. It can be in HOW the goods are marketed and sold. So if competitors are not using the social web as a marketing channel and your customers are there, this can be a wonderful opportunity.
Of course this is all predicated on an assumption that B2B customers will eventually pick up on social media. I’m wondering what the timeframe will be … I have to tell you I still see a lot of blank stares at meetings with industrial clients! What do you think about this? Will we see a day when a larger diversity of products will benefit from the social web?
The case for social media marketing and "Extreme B2B"
Sep 14th
At one point in my career, I had one of the largest (if not THE largest!) sales positions in the world. I had just one customer and they bought more than US$1.5 billion of goods and services from my company every year. That’s what I call Extreme B2B. Long sales cycle. High stakes. Extraordinary power in the hands of the buyer.
Is there a place for social media marketing even in “Extreme B2B?” Before applying any tactic like social media — in any situation — you first need to consider the strategy. In my position, there were four strategies I employed to keep and grow this mega-customer:
Apply high-touch throughout the organization. With a customer that large, you can imagine that operations were dispersed throughout the world. So my contacts were broad … and they were also deep – from the CEO to the machine operator on the floor, from Purchasing to R&D. There were dozens of people who influenced the purchasing decision and I had to earn trust with all of them! It was also a challenge connecting all the communication synapses between the two companies: executive, manufacturing, R&D, etc.
Raise switching costs through service innovations. Not only did I want to grow my business at this customer, I wanted to do it at the most profitable plant locations. To achieve this, I wanted to provide some extraordinary service that would make it painful for the plant to switch to a competitor. For example, at our most profitable customer location, we designed a special truck that could haul away their waste material after delivering a shipment of finished product, saving them waste hauling fees. Those trucks made us a lot of money!
Improve profitability through incremental cost savings. With an account that large, the purchasing power is extreme and that keeps margins low. It was always a challenge to find small ways to save money, especially if it also provided a win for the customer. With revenues that large, even an improvement of a fraction of a cent per unit could have a dramatic impact on profitability.
Listen better, act faster. Listening to my customer was serious business. We actually conducted formal “listen to the customer” visits using trained facilitators. Information from these visits, conducted throughout the world, was carefully compiled, thoroughly analyzed and used to create our marketing and R&D plans.
In summary, my strategy was: Be accessible, innovate through service, lower costs, and listen effectively. Hmmm … doesn’t that sound like a PERFECT business case for social media applications? Even in a case of extreme B2B there are likely applications for these new tools, right?
Yes … and no. I’m sure you can think of many great social web applications to support these strategies, but that doesn’t mean that B2B companies will necessarily act on them. Why not?
Even with a strong business case, there may be very good reasons why a B2B company should reject social media marketing (gasp!). More on that in the next post!
Fanatic-focused marketing
Sep 8th
a) If you don’t know if this trend is applicable to you (hint: it probably is), it’s important to find out! Tap into your existing data to discover core users and trends. If you’re not a data person, I know two people who can do this type of analysis quickly and affordably. Drop me a note or call me and let me know if you need a reference.
b) Word of mouth is 4X more effective than personal selling and 7X more effective than most types of traditional advertising. If your fanatics are driving sales better than any marketing effort you could dream of, what are you doing to make it easy for them? Wouldn’t fanatic-focused marketing be the most effective ad dollars you can spend?
c) Surround your 4 percent with the tools to help them recruit others to your brand. Ideas – special deals, gifts, logo-clothes, programs available for them to pass on to friends.
d) These people want to give back to your brand. How do you engage them, encourage them, and listen to them in a special and personalized way? Ideas: Invite them to special one-on-one sessions with company employees and executives; develop personal portal websites where they can submit ideas, stories, photos; feature them in your ads and promotions.
e) If you are building your brand with a limited budget, don’t focus your marketing dollars on the masses. Start small with your core fanatics.
f) Now that you have identified and nurtured your core 4 percent, how do you replicate them? Do a simple profiling exercise. Click here for a previous article that will give you ideas on how to do this quickly.
g) Here’s the most important point of all – LISTEN to them. These people are your leading indicators of customer satisfaction and a potentially powerful source of innovation who WANT to help you! Dig deep. Spend time with these people! Show them the love!
Illustration: Cheryy8_15
Your social media ROI shock treatment
Jul 21st
Today, let’s do a very simple calculation to determine how much cash your social media strategy should be generating to justify its existence. I think this might just blow your mind.
I’ll have to make some broad assumptions because every company is different, but you can insert your own numbers and do the math for your own organization.
Let’s assume you are a medium-sized company, and have one person working full-time on social media marketing. We’ll assign that person a salary of $60,000.
In a typical company, health, 401(k) and other benefit costs equal another 50% of the base salary, or in this case, an additional $30,000.
We’ll assign another 20% of base salary for overhead such as office space, shared services support and technology. That’s $12,000. We’re on a tight budget so we will forbid our new employee to do any travel, training, or company entertaining. And forget about bonuses this year. No whining, either!
So, our full-up cost for one social media professional is $102,000.
Let’s assume your company has a moderate profit margin of 15%. So, to break even and just cover the incremental costs of your new social media initiative, this professional would have to produce quantifiable new sales of $680,000. In other words, you would have to make that amount of money to have an ROI of 0.0% on a year’s worth of social media expense and effort.
That’s a lot of money for a lot of nothing, isn’t it? There are two reasons why I needed to shock you into social media de-tox.
First, I wanted to bring home the point that social media is not “free.” Even a modest effort at a small company takes a lot of time, which must be funded through the sweat of your manufacturing and sales efforts.
The second reason is this: For now, some companies may be willing to experiment with social media, but at some point the big boss is going to sharpen her pencil. If you can’t accurately and logically measure what you do, your marketing initiative will be in peril, as it should be.
The other day, I heard an “A-List” blogger tell his audience, “If your company is not expecting you to account for your efforts with financial measures, well, that’s just great — do whatever you want!”
And for a short period of time, you might get away with it. But to gain credibility as a company leader in a B2B environment, you must hold your activities accountable to the same standards as an engineer trying to get funds approved for a new production facility. You should be able to demonstrate a business case and that business case must be built on hard dollars … eventually.
In the mean time, the softer side of metrics may be the only thing available. Tomorrow we’ll start taking a look at the importance of “non-financial indicators” that can influence brand equity.
This is part 2 in a series addressing social media marketing measurement issues.
Part 2: Social media ROI shock treatment
Part 3: Irresponsible social media measurement research
Part 4: Social media impact on brand equity
Part 5: The most important question to ask in social media marketing
Part 6: A double standard for social media marketing?
Part 7: Yes, it IS about the money!
Part 8: Creating a measurement plan
Part 9: Measurement is like a bartender
Welcome to {grow}
You’re in marketing for one reason: Grow.
Grow your company, reputation, customers, impact, profits. Grow yourself. This is a community that will help. It will stretch your mind, connect you to fascinating people, and provide some fun along the way. I am so glad you’re here.
-Mark SchaeferFollow Mark
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