Are you maximizing the ROI of Your Marketing Spend?

Your organization quickly expanded as a result of the people you have hired, most notably the handful of employees who have worked alongside you since the beginning. Naturally, you feel a great deal of loyalty toward these employees. After all, you want to keep the people around that helped you bring the company to where it is today.

In the early stages of any business, you often have to find people who can do a little bit of everything. This is especially true for marketing. If you did not hire a person (or two, for that matter) with at least a base knowledge of how to engage consumers and build brand awareness, you could easily count yourself as one of the nine out of 10 startups that fail.

As your business grows, your marketing needs will inevitably become more and more specialized with each passing year. Every campaign must deliver greater insights, results, and returns. Otherwise, your products or services could easily fall off even the most loyal of your customers’ radars.

This is not to say that you should replace all of your generalists with specialists. When industries shift, as they often do, it will be your generalists – and their innate ability to pinpoint issues and adapt – who will enable your business to come out on top. Their broad knowledge and problem-solving can piece together the big picture for the rest of your organization, helping predict the best next move.

As a marketing leader, you must build an organization that can support a rapidly evolving landscape. You must balance developing in-house talent against partnering with external providers. With each hiring decision point, you should evaluate whether you are striking the delicate balance with your in-house team or if an external agency can fill any gaps in executing your marketing strategy.

Effectively Assess Your Needs

You do not need to have all of the answers — and even if you do, team shakeups can still feel uncomfortable. Often, it can be hard as an entrepreneur to know when to bring in a new perspective. Fortunately, you can turn to a consultant to assess your marketing team, map them against your goals, and provide an unbiased recommendation for what to do and how to get everyone on board. However, you must select an advisor that brings first-hand knowledge in aligning a marketing organization with corporate strategy to get a real return on investment.

While advice will vary from business to business, here are four steps to set yourself up for growth:

  1. Gain a brutal understanding of the competition.
    You may be surprised by how much is learned through a competitive analysis. In addition to positioning, you can uncover where the competition devotes most of its time and budget. This can signal which channels and outlets allow consumers to interact with brands similar to yours.
  2. Look at your customer.
    For example, say your target segment spends limited time on Facebook, Twitter, and other social channels. It would not be a good use of your resources to hire a social media specialist, then — or even an outside agency to work on your social messaging. If the reverse were true, we would encourage you to find a resource to handle these social media tasks.
  3. Address structural gaps.
    Map your staff’s collective skill set against to your future marketing needs. Dive into performance metrics and speak with your team to assess how to best allocate your bench strength. If necessary, you can bring in specialists and leverage your current generalists as strategic coordinators and project managers — the glue that holds everything together.
  4. Start planning.
    After assessing your needs, determine whether the projected workload warrants having a full-time hire or part-time support. Also, make a call on whether you want to develop the expertise on your team or lean on niche partners. It can take months to hire the right people or tap the right partner who can both fill in the gaps and fit within your culture so start moving.

Here is an example: With mobile phone penetration expected to hit nearly 83 percent by 2020, this channel will serve as the primary path to purchase for many customer segments. As you map the opportunity, you have to understand how consumer behavior differs across devices. This presents a golden opportunity to strengthen your team with expertise in mobile marketing. If you lack this expertise, your business likely will not see the same results for this marketing effort as competitors who are prepared. After you find skill gaps on your team, you must answer the following difficult questions: If you were to bring someone in to handle mobile marketing capabilities, would that person have enough work to fill up a 40-hour week? Or, would a better option be to hire a freelancer or agency to execute this task?

If a time comes when you need an unbiased opinion, you can rely on TBGA’s proven track record of improving marketing ROI and implementing time-tested solutions to get the most value out of your marketing spend. Get started, and reach out today for a free consultation.

Categories Leadership, Marketing, Operations, StrategyTags , , ,

Four Tough Pills to Swallow for Growth

You hired a strategic consultant to help make some much-needed changes in your company. Now, it is time to get the ball rolling.

While your head might be ready to make those adjustments, your heart might be throwing a bit of a tantrum. Constructive criticism can be difficult to digest when you feel protective of the teams and systems you have worked so hard to put in place. Even if the recommended changes are completely rational, some might surprise you while others insult you.

But after the initial sting, you will soon realize that being open to criticism makes you a stronger leader. Deep down, you know that you hired a consultant because your business is not reaching its full potential. In order to implement the changes that will encourage your business to grow and thrive, you need to open yourself up, listen, and really take part in tough conversations.

Find the Silver Lining

Let us take a look at some of the toughest pills that a strategic consultant might prescribe you and consider why (and how) you should swallow them with a smile.

  1. “You need to revamp your team.”
    Criticisms about your team can be the hardest ones to accept. You might love the members of your team like family. They have stuck with you through good times and bad and have helped you build your company from the ground up.

    But in many cases, personal attachments to team members can blind leaders from seeing the dysfunctions that are actually holding the company in a rut.

    It is important to look clearly at the skills and experience of your team members. Ask yourself, “Who do I need today to take my company to the next level?” Goodbyes are always hard, but it is better to say them now than after your business has collapsed.

  2. “You need to pivot your product strategy.”
    Many leaders founded their companies based on a great idea. Subsequently, they are so married to this idea that they avoid revising their product strategy when necessary.

    The saddest thing I have witnessed is when founders realize this strategy problem too late. For example, we once had a client come to us with Google-sized aspirations, but the company had been hemorrhaging cash for the past several quarters. Unfortunately, it was far too late to make the crucial changes in the product strategy.

    To avoid this dreadful situation, do not delay. Instead, complete the tough work now to ensure your business model is healthy.

  3. “You need to focus.”
    Many entrepreneurs have so many ideas on the drawing board that they struggle to properly execute any of them. The ideas might be phenomenal, but without focus, they will never graduate from the brainstorming stage into a living product. The office will forever be a maze of half-finished plans and good intentions — and frustrations for everyone.

    If your strategic consultant comes to you with this criticism, do not start backpedaling with excuses. Instead, go against your natural instincts and thank them.

    While being told to focus might make you initially feel constrained and less entrepreneurial, that discomfort will soon ease once you see what a little focus does to your chosen idea. Move forward by pinning down what this focus looks like for your company, and then keep tabs on new ideas and ventures so they do not go astray.

  4. “You need more structure.”
    Sometimes, observing how a company operates is like watching kids play soccer. Everyone is running for the ball, and no one is executing against a clearly defined role. The result is a messy game in which goals are random and someone is bound to get hurt.

    A lack of structure in a company can be just as damaging as a bad idea. When departments are not communicating or collaborating, everyone moves forward without a clear purpose.

    If this is the problem your team faces, there are many ways you can start bringing structure into your operations. From regular conversations between teammates to clear, shared documentation, adding structure helps team members stay accountable by giving them distinctly defined roles, priorities, and goals.

Know in your head — and heart — why you are inviting a strategic consultant into your company, and understand what your goals are for the process. If you really want to push your company to new heights, you need to be willing to embrace and find value in these tough conversations.

Categories Digital, Innovation, Leadership, Operations, StrategyTags , , , , ,

Expanding Into the US? Here Is Your Guide to Thrive

You have reached a momentous decision: to expand your business into the U.S. market. Now is an exciting time to be venturing across the ocean. The U.S. economy shows promising signs, and the GDP growth rate is expected to hold strong at 2 to 3 percent this year.

Besides economic prosperity, the U.S. holds other charms for business owners. Its single prominent language and relatively relaxed data laws mean that expanding into North America can seem like a smooth sail when compared to venturing into Europe or other continents.

But to dive in headfirst without testing the water could be a costly mistake for your business’s bottom line and reputation. After all, the U.S. is a large and complex market, and a one-size-fits-all marketing strategy will soon fall short. You need a guide to help pioneer your business’s American adventure.

How to Transition Wisely Into the US Market

There are some adjustments that entrepreneurs must make to their marketing and growth strategies to ensure they can thrive in the U.S. market. Here are the top three I learned from my years of experience:

  1. Take time to understand the cultural landscape.
    The U.S. has a single prominent language, but it also has approximately 325 million people living on its soil. Each state has its own culture and subcultures. The differences between the groups that live there can be vast. So it is vital to understand this cultural landscape in all its diversity before introducing your product to the market.

    This includes adjusting the tone of marketing materials to an American audience’s sense of humor. There are certain things that might sound OK in Europe but can rub people the wrong way in the U.S. For example, a British customer might love an irreverent jab at his own expense, while an American customer could be offended.

    Even basic words and phrases can cause confusion. For example, a company trying to bring the British dessert sticky toffee pudding to the American market had to explain to many people that the “pudding” was not the cold custard that an American would expect.

    For a more successful approach, invest ample time in reading and researching, and then compile a set of words and phrases that sing the praises of your business without confusion.

  2. Build up a picture through target testing.
    In a market as huge as the U.S., you have to get specific about your buyer persona. This means getting close and personal with some actual Americans.

    Begin by determining where to test your product. You can focus on East Coast cosmopolitan hubs like Boston and New York, families in the Midwest, or health-conscious individuals in California. Whatever the case, test in smaller geographies before going big to make sure your product’s features and benefits are not getting lost in translation.

    If you do not know where you should be testing, that might mean you are not acquainted enough with your buyer persona. This can be resolved by acquiring some guidance to see how your product translates to a U.S. buyer.

  3. Get to know your competition.
    It is always wise to examine your competition when expanding or diversifying into new markets. It is especially important in a crowded and ever-changing market like the U.S. Do your homework before you make the leap by building a profile of your competition. Who are the big players? Who are the emerging challengers? And when compared to those companies, what differentiates your offering?

    When companies fail to assess their competition, the results can be disastrous. For example, a Japanese telecommunications company decided to enter the wireless market in the U.S. It tried to copy and paste the retail and distribution strategy that had worked in Japan onto the U.S. market. If it had looked at where its target customers were purchasing their phone plans, the company would have realized that a pure distribution strategy is not ideal for its growth.

You have your bags packed for a new frontier, but before you set off on this exciting adventure, take some time to translate your business into the best American version you can. In addition, having someone to show you the best path for your product and how to tell its story on this new stage can support this market transition in many ways. For help with your international expansion, do not hesitate to reach out to us for a one-hour consultation.

Categories Branding, StrategyTags , , , ,

How to Prepare Your Business Model for International Expansion

As an entrepreneur, you are in an exciting position. You have successfully grown and are ready to expand in the U.S. The new opportunity is a different environment — and one that should be approached with caution to maximize the chance of success.

Opportunity is intoxicating, and many entrepreneurs find themselves rushing headlong into a situation that they should have approached more thoughtfully. It is true that successfully tackling the U.S. market can quickly scale the revenue side of a business, but the operational side must be ready for the increased demand placed on it by the larger market.

Tweaking Your Business Model

When operations fail to keep pace with demand, businesses that once had great potential will struggle to maintain the market share gained after their reputation is tarnished and their credibility is lost. The good news is that entrepreneurs who are knowledgeable about the weaknesses of their business model will be able to not only increase revenue but also improve their overall business operations by entering the U.S. market.

To ensure the transition goes smoothly, keep these approaches top of mind:

  1. Remain Connected
    One of the hardest parts of running a global business is keeping everyone on the same page. When teams cannot work together properly, friction leads to finger-pointing. Generally, there is some validity to claims made on both sides, but a lack of context keeps people from developing a clearer understanding of the issues.

    Keeping different locations of a business tightly connected can strengthen communication and improve business models. Weekly meetings, especially using video conferencing, will ensure specific departments are not siloed from the overall business. If it makes sense, consider implementing a program in which employees or leadership members rotate into the U.S. office to help connect the team to the new market. This arrangement can provide valuable networking opportunities that help encourage continued growth. Stakeholders based in the U.S. should also travel to corporate headquarters to observe the business in its home country.

  2. Be Aware of Changing Differentiators
    Different geographical areas have varied competitive differentiators. To secure your company’s valuable differentiator, research the U.S. market before taking the leap. If your differentiators in your home country no longer set you apart from other companies in the U.S., you will need to find new differentiation to pursue. It is undoubtedly best to begin this process beforeyou make the move to your new location.

    A multinational corporation in Europe, for instance, may not be allowed to move a customer’s personally identifiable information across borders. As a result, a company with a solution that allows them to analyze data while keeping it in the country where it originated from is equipped to be successful because it has a leg up on the competition. On the other hand, most American companies would be less concerned about transporting customer data if their data and analytic tools are based within the U.S. What was a dominant differentiator in Europe has little to no advantage in the U.S. market, illustrating that the challenges of operating in Europe, Asia, and the U.S. have limited similarities.

  3. Understand Marketplace Success
    It is vital to understand the differences in how businesses approach the American market. It is understandably tempting to rely on the tactics that brought your business success in the first place, but there is no guarantee that this approach will translate to the new location and new customer base.

    In Asia, distribution is everything. Consumers purchase goods from retailers, so breaking into the retail market means a company has made it. On the other hand, in the U.S. market, awareness is the basis for business success. Getting a product onto retail store shelves does not mean that consumers will buy it — they need to know what it is.

One way to better position yourself for success in the U.S. market is to have someone on the ground who can help guide your decision-making based on his or her knowledge of the lay of the land. Getting help with your international expansion before you enter the market is critical because it can ensure a smooth transition and keep the costs associated with international moving operations to a minimum. To learn how we can help, do not hesitate to reach out to us for a consultation. Not only do we provide the strategies you need to ensure your business’s success, but we also help you implement them one step at a time.

Categories Branding, Operations, StrategyTags , , ,

Avoid These Pitfalls to Get the Most Out of Your Marketing Consultant

As a founder, you have spent years working long hours to make your company a reality. You know the ins and outs better than anyone else. While it is tempting to think you can gain amazing insights on your own by reading 800-word articles online, you will eventually need to turn to experts to augment knowledge gaps. Engaging a consultant with thorough knowledge of his or her expertise area can help you achieve results.

However, it can be hard to fully rely on your newly hired consultant. It is natural to feel like it will take at least several months to get him or her up to speed before you can trust any input and advice. However, a lengthy waiting period can prove to be a detrimental mistake.

Avoid these four pitfalls to get the most out of your consultant:

  1. Driving in the Slow Lane
    It is common for clients to spend some time debating recommended strategies. However, there are risks to keeping all available strategies on the table for an extended time. A competitor can beat you to the punch, or you can end up losing valuable time. In some cases, you might completely miss the boat on a marketing opportunity. At some point, though, you will have to trust your consultant’s recommendation.

    In one instance, a client went overboard. In the time it took the client to think over our suggestions, the competition got a ton of media coverage and made waves while our client was left in the dust. Three years later, the competitor enjoyed a phenomenal exit. In the meantime, our client was in the process of pivoting to a new market.

  2. Missing the Boat
    Be ready when an opportunity is knocking. Keep in mind that opportunities are rarely perfect, so take the ones that come along and use them to their full extent. Dismissing an opportunity because it is not perfect can sabotage your big break.

    For example, we had a client prepped for an opportunity to appear in The Wall Street Journal. With the opportunity in hand, the business leaders stalled and decided to pivot the direction of the story to something that they thought would be “something more interesting.” Against our advice, they refused to answer questions they considered uninteresting and demanded a “better” reporter. Following a few interactions with our client, the reporter moved on to a different story. We lost the feature article.

  3. Blind Trust
    You made the decision to hire your consultant so trust him or her. However, blind trust can be just as harmful as a lack of trust. There is nothing wrong with thinking things over, and it is critical to fully understand how to implement the strategy.

    Consultants use their expertise to provide recommendations that best aligns with the goals of your company. Your job is not to question the value of recommended strategies; it is to determine whether they are feasible to undertake with your company’s resources. You know your company best. Ask for data and qualitative backup for their recommendations, and stay in the loop.

  4. Jumping to Conclusions
    In a particularly memorable instance, a client was not hitting its numbers. The company quickly decided to replace its SEO agency. When the client transitioned, traffic began to plummet, and the downward trend only continued as the remaining individuals spent more time on fire drills and finding ways to look busy and valuable.

    Afterward, we were able to use data to illustrate that the failure came from the affiliate program. The client needed to reallocate resources, and it took three months for us to regain the SEO losses. Initially, the company balked at our advice because we had not yet gained an understanding of the intricacies of their marketing programs. What the client failed to realize, though, was how to pinpoint the necessary data to make metrics-based business decisions.

Do not doubt yourself. If you are confident in your hiring decision, then the consultant will have valuable input and advice on day one. The ideal hire should come with an impressive pedigree and demonstrate the ability to spearhead marketing strategies that drive results. With your combined knowledge, you may be pleasantly surprised by what you can achieve together.

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Categories Leadership, StrategyTags , ,

Growth Hacking: The Balance of Art and Science in Marketing

The science of marketing can be intimidating, especially for the many marketing leaders who come from creative backgrounds. Instead of crunching numbers and relying on data, many prefer to focus on their own gut feelings, opinions, and intuition. This is the traditional “art” of marketing, and though it is still important and relevant, it is not the only side of marketing that matters.

If you only embrace the art of marketing, you can still end up with beautiful marketing assets and collateral — but these materials will not necessarily speak to your target audience. For example, TBGA once worked with a client that had been sharing a story that its audience was not interested in hearing. But after we interviewed industry analysts and conducted market research, the resulting data helped the client realize it needed to restructure its narrative. Once it did, the brand doubled its pipeline.

Introducing Growth Hacking

As data collection and tracking methods grow, the marketing world has shifted from a qualitative to a quantitative focus. Marketers are increasingly using data analysis, systematic observation, testing, and measurement to better understand their customers, prospects, and influencers. They are studying broad behavioral patterns and using these actionable insights to create campaigns that improve business outcomes. Here are some strategies that your team should use to get you on the right track:

  1. Using the Scientific Method
    The rise of big data has turned marketing into a science. Similar to the likes of Newton and Einstein, brands are hypothesizing, testing, and refining experiments based on data. They are also beginning to embrace ideas from other scientific disciplines such as psychology, sociology, neuroscience, economics, and computer science. This marketing discipline is what some call growth hacking.
  2. Balance Creativity With Hard Facts
    A key to embracing the science of marketing involves overcoming a psychological quirk called confirmation bias. Many leaders will opt to focus on specific metrics that tell them they are on the right track, ignoring any data that tells them otherwise. The beauty of data, however, is that it is inherently objective and unbiased. Gravitating toward flattering metrics completely defeats the purpose.
  3. Rely on the Right Data
    Today, data analysis should play a vital role in every brand’s creative strategy, and it should also help brands craft their quarterly goals. It should fuel every campaign you create and every milestone you set.

    Some leaders fail to question whether they are using the right data, whether there are other factors to consider that are not represented within the data, and how much weight they should be giving the insights they glean from the data — and this can cause problems, too. If you do not ask the right questions (or if you fail to ask any questions at all), your marketing programs may not provide your desired results, and you will not be able to pinpoint exactly what went wrong.

If the thought of embracing the science of marketing seems daunting, TBGA is here to help smooth out the process. We are a team of data-driven marketers who come from a variety of backgrounds. We have a proven track record of helping brands establish key metrics, test hypotheses, analyze data, ask essential questions, and, at the end of the day, tell a story that moves the needle.

We can help you do the same. Ready to get started? Contact us today for a one-hour consultation!

Categories Innovation, Operations, StrategyTags , ,

The CMO as Your Growth Partner

Ultimately, the people at the helm of your company make or break your organization’s strategic abilities.  If what makes a CEO shine is growth, then your CMO is your partner in crime. Their input will be essential to the broad challenges that you will face: competition, innovation, and core customers. Also, few have a better feel for the end-user/consumer pulse than the marketing executive – their relevant and refined perspective on customer preferences will play a vital role in your company’s growth.

In today’s economy, the CMO is at the crossroads of growth and customer experience. CMOs are increasingly seen as a director of growth and customers, rather than the director of spending and advertising, worldwide. The CMO role has changed from working exclusively on brand communication and messaging to driving impactful growth and cultural change. Marketers not only need to funnel customer intelligence into all parts of the business; they also need to keep up their technological proficiency, utilize big data to create meaningful customer interactions, and deliver value within a consistent brand experience.

While CMOs need to be part of the key decision making, they also need to partner closely with your CFO part of the key leadership.  It’s important that your CMO partners with chief financial officers to help them contribute to top-line growth and position themselves for a seat at the board table.  Together, they can steer the ship responsibly.

A strategic focus on return on investment, coupled with the rise of customer centricity and acquisition allows for CMOs to achieve measurable value within the organization. In fact, the CFO and CMO should be working hand in hand to increase accountability and reduce inefficiency — the CFO’s role is greatly enhanced by today’s savvy marketer as they are often the most resourceful person on your team.

Change the way you work with your CMO. Both CEOs and CFOs stand to gain tremendous insight at the ground level and meet the growing customer expectations. The role of the CFO is also becoming more multifaceted so work closely with your marketing person to help your organization survive and thrive in this increasingly competitive landscape.

How to tell a good CMO from a successful one? The latter has the ability to think long-term, adapt quickly, and pitch in with the team. They are able to shift from focusing on growth to a ‘big picture’ mentality. Thus, your CMO should not only influence decision-making but be able to make the tough calls, embrace uncertainty, and put relevant issues in front of the board to consider. This focus on vision makes a difference. Consider opening a conversation about bringing your CMO to the boardroom and see how they can deliver even more value as your strategic partner in crime.

Want to chat about this topic? I’m speaking at the NASDAQ Entrepreneurial Center in San Francisco on Thursday, June 30th on Marketing through the Funding Lifecycle.

Categories Marketing, Operations, StrategyTags , , , , , ,

Analysis to Help You Stop Wasting Valuable Time

How useful would it be for you to know exactly where your time was best spent? How would it improve your productivity if you could quickly and reliably determine which customers were most lucrative for your business, and which ones were costing far more than they were worth holding on to? Fortunately, the ability to determine exactly that was established more than 100 years ago.

Back at the dawn of the century, an Italian economist realized that he could mathematically calculate the fact that 20% of Italian citizens owned about 80% of the nation’s wealth. This equation proved to be valuable in analyzing far more than just the wealth distribution in Renaissance Revival-era Italy. In fact, the so-called “Pareto Principle” has been (and continues to be) used as an effective method of measuring distributions of wealth, effort, sales productivity, and countless other applications. This is because there is a fundamental truth — what some might call a philosophy — associated with the 80/20 equation discovered by Vilfredo Pareto.

What is the fundamental philosophy of Pareto?

At its core, the philosophy of the Pareto Analysis is based on an understanding of the fact that a relatively small percentage of input is responsible for a significant amount of the output. More specifically, that 80% of output can be attributed to 20% of input. This, of course, works when analyzing wealth distribution (as it was originally used by Pareto), but it also works in a number of other applications as well.

Perhaps the most compelling application — at least in our entrepreneurial and capitalistic society — is the use of the Pareto Analysis when assessing productivity. More specifically, a business can usually attribute about 80% of their profit (or sales volume) to about 20% of customers. On the other hand, about 20% of customers often take up about 80% of available bandwidth.

The Pareto Analysis can be applied to any number of things:

  • Customers – both the time demands and their profitability
  • Daily tasks – where your time is spent productively and unproductively
  • Wealth – where the majority of your wealth is coming from, and where the majority of your expenses are derived
  • Anything else you can think of!

Use Pareto Analysis to become more productive

In order to use Pareto Analysis effectively, you must first be willing to accept a couple of facts: The first is the fact that some of your clients or customers may not be worth your time. The second thing you must be willing to accept is all work is not equal.

  1. Not all clients are worth keeping.
    Many businesses are reluctant to turn down any work that comes their way. Sometimes, the opportunity costs associated with highly-demanding or unprofitable clients may be preventing you from gaining more worthwhile clients. These customers demand a disproportionate amount of your company’s time and can ultimately prevent you from developing new, more profitable business elsewhere. You can use the Pareto Analysis to determine which clients are taking a disproportionate amount of your time (so you can try to phase them out) while also helping identify which clients are producing the vast majority of your revenue (so you can nurture and grow those clients as well).
  2. Some of the work you do isn’t worth the effort.
    The bottom line is that you simply cannot do everything, and you certainly cannot do everything well. As such, you should use the Pareto Analysis to determine which specific aspects of your day are producing the majority of benefit, then work to eliminate or delegate/outsource anything that does not fall into that category.

Try using the Pareto Analysis yourself, and see if you can make your day more productive by eliminating the time consuming, unproductive tasks and focusing on the high-yield tasks.

Categories Operations, StrategyTags , , , ,

Developing Your Pricing Strategy

A comprehensive pricing strategy is critical in capturing and defending market share. By establishing differentiated pricing strategy for your offerings based on customer priorities, a company can sell expand its customer base, increase customer satisfaction and revenues. The most effective strategies for price differentiation include:

Temporal Tiering

Changes in customer demand are not random. Most companies do the majority of their business during a certain section of the day (or week), and this is largely the result of customer scheduling constraints. By offering discounts during times of low-demand, you can cater to price-sensitive customers to improve awareness without degrading the profitability of your current customers won’t be able to take advantage of it. Thus, you’ll gain revenue from new customers without sacrificing revenue from old ones.

Since consumer preferences also vary by time of year, you can offer discounts on a seasonal basis. This is why tax preparation software companies so often offer bargain basement prices to customers who buy their software in February but gradually raise the price as it gets closer to mid-April. Customers who make a point to get their taxes done ahead of time can take advantage of the discount, but most other customers will wait until closer to tax day, ensuring that the companies will still sell plenty of software at full price.  Conversely, offering discounts during periods of high seasonality may be necessary to defend your market share such as back to school season for PCs, software, school supplies and clothing.

Volume Discounts

Another effective discounting strategy is to lower unit prices as the purchase volume increases. Volume discounts can help ensure that your most loyal customers receive a relative decrease in unit price as they increase their spend with you. This will attract consumers who seek long-term savings but won’t affect the habits of transactional customers who only buy your product for immediate use. This is an effective strategy for selling services and non-perishable goods, as there is no disadvantage to buying such goods in bulk and using them over time.

B2B SaaS companies use volume discounts to expand adoption across an organization. You can establish baseline prices for individuals to use your software but then create various “business packages” to appeal to businesses of varying sizes. Businesses that buy it for 3 employees receive a 10% discount, and if they license for 10 employees, they receive an increasing per license discount.

Driving Conversion

Discounts need not only appeal to prospective customers. You can also use them to upsell and cross-sell current customers. Consider a software publisher that provides both word processing and tax accounting products. When customers download or subscribe to its word processing software, the company offers a discount to or a free trial of its tax accounting software during checkout. This may encourage customers to buy its tax software during the off-season, pushing the competition in the tax category aside.

Another trick is to offer customers a simple, or lite, version of a product with a clearly defined upgrade strategy to upsell customers to an advanced set of features. Using the word processing software example above. Using the word processing software example above, rather than offering a discounted version of its tax software, the company can offer a free basic version of its offer such as a 1040EZ filing.  The customer can be sent to an upgrade path once he or she has indicated that additional support is needed.  The company can offer a more advanced version or additional services or support for a small additional fee, convincing the customer to spend more money than he or she had originally intended.

You can increase conversion rates and revenue per transaction through bundling by allowing consumers to buy multiple products together at a lower price than they would have paid if you had sold them separately. Say you sell language learning software, charging $30 for the beginner’s program and $40 for the intermediate program. You can get more customers to buy the intermediate program by offering the two together for only $60.  Amazon uses this strategy effectively when selling items such as books, music, and accessories.

The strategies above are just the tip of the iceberg.  As always, set your hypotheses and test, test, test.  However, as you set your test strategy, keep in mind that it is harder to raise than it is to lower price.

Sources:

    http://www.businessweek.com/smallbiz/tips/archives/2010/03/pricing_strateg_1.html
    https://hbr.org/2013/02/why-good-better-best-prices-are-so-effective
    https://hbr.org/2012/03/living-differentiation
    http://www.forbes.com/sites/hbsworkingknowledge/2014/02/24/six-myths-about-customer-loyalty-programs/
    http://www.forbes.com/2007/10/11/apple-duane-reade-ent-sales-cx_kw_1011whartonpricing.html
    http://hbswk.hbs.edu/item/6814.html
    https://hbr.org/2012/12/the-dark-side-of-cross-selling
    http://www.cleverbridge.com/corporate/3-ways-to-improve-cross-sells-and-up-sells-conversion-rates/
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Four Steps to Achieving Product/Market Fit

Many startups fail because of the dreaded product/market fit. Marc Andreesen claims that product/market fit is the most important factor in a startup’s success or failure. Great products and competitive prices will not help your company capture market share on their own. To build a solid customer base, gauge consumer desires and build your products to fulfill them by focusing on:

  1. Discerning Needs

    It’s important to gauge the desires of your target market. You should read review sites and perform a competitive analysis, but the best insights come directly from consumers, or businesses, depending on whether you are B2C or B2B. Survey past customers to see what they liked and didn’t like and open your website to public reviews. Open surveys and review requests demonstrate transparency, honesty, and trust in your customers’ perceptions. If you don’t have customers, lean on your network or offer your product for free to those who take your survey.

    Remember, many consumers look beyond functionality and price. There are many inputs into the value equation, including strong values, ease of use and design can improve the marketability of your brand and maybe capture a price premium. For example, TOMS “One For One” value proposition drives price premiums and fuels word of mouth marketing. The company that capitalized on the power of good design, Apple focused on slick design and usability to overtake the consumer electronics category.

  2. Beta Testing

    Beta testing can be used to confirm that your product meets your target market’s need, as well as identify the most highly valued features of your product or service. After bugs found during internal (alpha) testing have been addressed, the company offers a select group of customers the opportunity to try the product out. These customers report their experiences to the company, allowing for further improvements before the product is released to general audiences.

    Beyond finding bugs, beta testing is useful for getting customers to share their favorite product features, which may be different than the ones you expected. For example, a language learning software publisher may include a microphone to practice pronunciations as well as a feature that translates whole sentences from the target language. While the company expects consumers to focus on the pronunciation feature, it is prepared to update its messaging hierarchy if beta testers report that they valued the translation feature more than any other feature.

    Lastly, beta testing can create a buzz — good and bad. This is why the product must go through extensive alpha testing prior to the beta testing phase.

  3. Solidifying Your UVPs

    With a few changes in messaging and offerings, your company can become wildly more successful. Once you know what customers want, begin fine-tuning your messaging. Begin building your messaging hierarchy by mapping needs to features to benefits. Next, understand what your competition offers and describe how your business uniquely delivers these to develop your unique value propositions (UVP). Focus on using language that your customers will easily understand and avoid company-centric language.

    Sometimes you will have to bundle more functionality and service levels into your baseline product. All the features that set you apart from the competition add to your value proposition, even if customers do not pay for them. If your business provides better customer service than the rest, make sure your marketing reflects these superior service levels. Customers may not pay for you to talk on the phone with them, but knowing that you’ll quickly and politely answer their phone requests may earn their loyalty and even encourage them to spread the word.

  4. Generating Demand
    Demand generation begins with an effective messaging hierarchy and marketing mix that is focused on the target market. The optimal marketing mix will vary wildly by the target market and the available budget. If possible, test your way into every channel. Once you understand the proper mix based on your target and budget, you will be in a better position to create an integrated marketing plan that optimizes PR, social media, email, search and other forms of advertising.

The above steps are as much art as they are science. I recommend getting advice from people who have experience in achieving product/market fit to help guide you through the (at times frustrating) process. There are no shortcuts. The road is paved with unexpected learnings and well-executed pivots.

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Simple Market Research for Your Business

Whether you are a massive corporation or a fledgling startup, understanding your market is absolutely essential. Without a deep understanding of your industry, your competition will quickly outflank you and leave you wondering where it all went wrong.

Fortunately, there are more resources for conducting business research than ever before — provided you know how to use them. The following is a basic roadmap that can help you analyze your industry and draft a coherent business strategy that you can use to grow your business as fast as possible.

Before investing in any strategy, conduct market research.

Would you play a game like Risk without knowing the rules? A few might decide to do so, but those are the people who often find themselves outmatched by the people who spent the time to understand the mechanics of the game and perhaps even some possible strategies.

Business works the same way, except, of course, for the fact that the stakes tend to be much higher — your career and your money, your investors’ money or both. It makes sense, then, that you should spend some time conducting market research on your particular industry, which you can then use to inform your overall business strategy.

What does market research actually entail?

Often, you can get a fairly clear picture of an industry by reading company blogs and publications to which industry experts frequently contribute. Browse through the news for stories about market strategies that other companies — in other words, your competitors — have utilized. If you have access to industry analysts from firms like Forrester and Gartner, leverage them. At a minimum, answer the following questions:

  1. What competitors are doing and saying?
    Instead of wasting precious time and resources learning from your own mistakes, you can instead learn from the mistakes and successes of others in your industry. Right off the bat, this will help close the gap between you and the more established players in your field.
  2. How the industry itself measures success?
    What does a promising and/or successful company look like? How did it get to where it is? What are the key performance indicators that are used to measure one company’s success against others?
  3. What is the size of the overall market and any specific or related sectors that could come into play?
    Knowing whether and where the industry is growing is important, as well.
  4. What are the regulations on the federal, state and local levels with which you will need to comply?
    Not only that, but in today’s politically volatile environment, it’s just as important to stay abreast of where the political winds are blowing with regard to your industry, so you can be prepared if and when regulatory changes come knocking.
  5. What is the minimum amount of resources required to successfully compete in the market?
    Do you need investors? How will operating costs change as you grow? What expenses will increase with size, and which will benefit from economies of scale?

Once you have analyzed the answers to these questions, your business strategy should start to naturally take shape. Of course, it can be helpful to consult with an expert (or a team of experts) that really knows how to market your business, so your business strategy can be leveraged within your particular industry.

Fortunately, there are plenty of resources on the Internet, as well as marketing experts available for hire, who can help ensure that your business is as successful as it deserves to be.

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Best Marketing KPIs to Track Your Business Success

As marketing has become more advanced and targeted, it has also become increasingly important to understand the specific metrics with which effective marketing is measured. These metrics, more commonly known as KPIs (key performance indicators), are a powerful way to determine which marketing tactics and strategies are most effective. Used properly, they can dramatically improve your marketing tactics.

Digital marketing has quickly become the driving sector in the overall marketing industry. This is largely thanks to the fact that close to half of the world population, or about 3 billion people, now use the Internet on a regular basis. As a result, it should come as no surprise that many of the most important KPIs involve the Internet and digital marketing in one way or another.

While each business will have different KPIs, these are some of the most important marketing ones to pay attention to:

  1. Cost per lead
    Understanding how much it costs to acquire a lead is as important for a startup company as it is for a well-established corporation. If nothing else, understanding what makes the cost per lead increase (or preferably, decrease) can be a powerful marketing tool that improves profit margins. Beyond that, however, understanding what it costs to acquire a lead can be used as the basis for understanding whether or not a marketing campaign is a worthwhile investment or not.
  2. Ratio of leads to qualified leads
    One of the greatest advantages of digital marketing is the ability to highly target leads. In fact, if you are not targeting leads on a particularly granular scale, you are all but certainly wasting marketing resources in an inefficient marketing campaign. One of the best ways to determine whether your marketing campaign is appropriately targeted is by comparing the ratio of total leads to qualified leads, and ultimately the ratio of each of those metrics to an overall conversion rate. A small number of high-quality and highly-targeted leads are significantly better than a massive number of unqualified leads.
  3. Return on investment
    Return on investment, or ROI, is as important in marketing as it is in many other aspects of business. With marketing, ROI is used to determine which marketing tactics and strategies are most effective (as well as which ones are not), and can have a substantial impact on determining which marketing strategies will be used moving forward.  In the subscription world, you’ll pay closer attention to customer acquisition cost, or CAC.
  4. Customer lifetime value
    The lifetime value of a customer is a bedrock metric for any business, and it can help determine the marketing framework as well. Ultimately, understanding that the lifetime value of a customer is particularly high (for example) can help to justify the upfront costs of qualifying leads and then acquiring them. On the flip side, a low lifetime value might mean the marketing campaign needs to be as streamlined and bare-bones as possible. In the subscription world, you should be tracking the churn rate (or retention rate if you want to keep a positive mindset) and the average monthly revenue per customer to calculate LTV.
  5. Net Promoter Score (NPS)
    The Net Promoter Score is based on the theory that customers who are strong proponents of your company are highly valuable. These “loyal enthusiasts” are a powerful source of referral business, and can be a major factor in the long-term viability and health of a company.

    The NPS theory can basically be boiled down to this: customers who rate their overall experience with your company a “9” or “10” out of 10, are likely to be “promoters”, or customers who will dramatically improve a number of KPIs, including cost per lead (thanks to free referrals), lifetime value of a customer (thanks to loyal repeat customers), return on investment (again, thanks to the long-term value of customers), and numerous others.  While it might seem difficult to attain a 9 or 10, the reality is that anything lower (7-8 is considered “passive” and 0 to 6 is considered a “detractor” rating) will not be beneficial to one’s business.

The Net Promoter Score, along with the rest of the KPIs listed above, can and should be used to measure the strength or weakness of your marketing campaign. You can rest assured that your competitors are doing the same.

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