Posts Tagged ‘lead generation’

The more prospects who choose to register their contact information with you the better. Someone who opts-in to your house list is demonstrating an interest in your message. Some may represent immediate sales opportunities. Others can be inexpensively nurtured over time using email until they purchase, opt-out or are disqualified as a prospect.

To build your house list you need to give your prospects a reason to share their contact information with you. Having a great product or special offer may not be a good enough incentive because many visitors will not be in purchasing mode when they first get to your web page. Most will be in learning mode. Keep that in mind when deciding what incentive to offer.

Here are the most common motivators that entice people to register their contact details on a web site:

    1. To request pricing or other information
    2. To access or download a white paper or article
    3. To see a product demonstration
    4. To attend a webinar (or to view a recording of one)
    5. To attend a telephone seminar (or to hear a recording of one)
    6. To read a research report
    7. To download an e-book
    8. To access a trial product
    9. To subscribe to an e-newsletter
    10. To subscribe to a print magazine
    11. To get special access to VIP benefits
    12. To participate in a forum
    13. To access technical support
    14. To access a peer network such as a user group
    15. To use an online tool or calculator
    16. To get a coupon or discount code
    17. To register for an event such as a trade show or seminar
    18. To receive notifications (e.g. product availability, new listings, etc)
    19. For a customized experience (e.g. to store preference data)
    20. To download an audio file (e.g. a telephone seminar, podcast, music)
    21. To enter a high-value sweepstakes
    22. To join an affiliate program
    23. To join a loyalty program (e.g. airline miles)
    24. To receive a gift
    25. To participate in a survey

Best practices doe choosing the right opt-in motivators

The best incentive for your business will depend on your unique situation. However, in general the following best practice rules apply:

  • Offer credible value-add information related to what the visitor is looking for. Your brochure does not qualify as an incentive to register.
  • The offer should be of value to a prospective customer, not to the general public. Remember you want sales prospects, not just a list of names.
  • Keep the title of your offer relevant to what you sell.
  • The offer should relate to a prospect’s purchase decision process.
  • If possible, provide immediate gratification once the form is completed.
  • Always tell the visitor what is in it for them.
  • Don’t ask for too much information. You can get more information later. At least ask for a full name, company name and an email address.
  • Build trust. Clearly state your privacy policy on the registration page. Tell the visitor what will happen when they register and assure them they can easily opt-out.
  • Keep it simple. The page must look and work simply. Don’t let the programmers over-complicate it.
  • Test different incentives and registration page designs.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

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I’m chairing what may be the first ever marketing-oriented session at the annual Flash Memory Summit in August 2013. A lively panel of experts, editors, and analysts will be discussing product differentiation in a growth market in a session called: Differentiate or Die – Marketing Flash-Based Storage Systems. So, as part of a primer on product positioning, I thought I’d explain the concept of positioning as it relates specifically to Flash-based products.

An earlier post, Competitive Positioning of Flash-Based Products – A Primer for CEOs, CTOs and Marketers, explains that your product’s position is whatever your prospective customer thinks it is, not necessarily what you want it to be. Positioning or repositioning is your attempt to influence that opinion. The post also lists the 5+1 elements of a strong position, and gives an industry relevant example.

This post highlights how customer interests change, and therefore positioning must change, as a market matures over time. Understanding this evolution is important because the market for Flash-based products is moving to a new phase. The early customers have bought their first Flash-based products already.  Those “innovators” and “early adopters” have demonstrated that there is a compelling case for Flash-based products in the enterprise.

Here are some of the use cases that gained traction:

  • Software runs faster with Flash, so fewer servers and licenses need to be purchased to support a growing user base. Users are happier, IT costs and support costs are lower.
  • Very fast IT systems give some organizations a competitive advantage in their market so Flash-based storage is mission critical for high frequency traders, some online retailers and even government agencies (think NSA).
  • Virtual servers lower IT costs, but predictable boot-storms and unpredictable surges in demand for data access can slow the system for all users. Flash-based systems make virtualization work better.
  • Flash-based systems require significantly less space and power than hard drive-based systems, substantially reducing the cost of running a data center.
  • Big Data analytics and structured databases, whether real-time or batch processed, deliver information faster when run on Flash-based systems. A batch process measured in hours can re reduced to minutes or seconds.

These tangible dollars-and-cents applications, along with the falling cost of Flash-based products, bring new customers into the market. However, these follow-on customers have different expectations to their predecessors.

Time Adoption of Innovations, Redrawn from Everett M. Rogers, Diffusion of Innovations, New York Press, 1962

Time Adoption of Innovations, Redrawn from Everett M. Rogers, Diffusion of Innovations, New York Press, 1962

Innovators (Enthusiasts): These buyers are willing to try new ideas at some risk. They can be very knowledgeable. They like to test new ideas and may not need a complete product or solution, just access to the latest technology.

There are very few, very hard to find, buyers in this market and they rarely buy in volume. In most cases, a vendor can win the positioning game at this stage if they are perceived to be a technology leader. For example, first with eMLC Flash, first with an Infiniband interface, etc.

Early Adopters (Visionaries): These buyers adopt new products early, but carefully. They seek breakthrough advantages (e.g. High Frequency Trading on the stock market using solid state disks.) They can be respected opinion leaders. They will invest in creating their own complete solution so they may need lots of support.

There are few such customers, but when you find one, you often find more in the same industry. These customers are looking for products, so with a little bit of sales and marketing, they may find you. However, many start-ups are mislead by this market and their failure to recognize the situation sows the seeds of their demise. For more, please read: Storage start-ups: What CEOs, VPs and VCs should know about the honeymoon period.

In most cases, a vendor can win the positioning game with these visionaries if they are perceived to have the lead with a product feature that’s enables the visionaries to achieve their goals. In this case, that might mean they have the fastest product, or the lowest cost per terabyte product. But it also helps to be perceived as experts in a particular application because customers need help building a solution for their particular situation. Today, that situation often involves databases and virtualization.

For those who did not notice, TMS employed Mike Ault, a recognized Oracle Guru to help customers better deploy their SSDs with Oracle databases. TMS (Texas Memory Systems), a 30+ year veteran of the industry and former client of my firm, Marketingsage, was recently acquired by IBM. TMS was very successful in its positioning for early adopters of solid state disks.

Although these Early Adopters may not buy many units, they can be very influential on the large “Majority” market that will buy in volume.

Early Majority (Pragmatists): These buyers adopt before the average firm, but are rarely leaders. They make deliberate, more considered, decisions and they want references. They have a wait-and-see attitude and like to work with proven solutions and vendors.

This is the market phase that drives the high tech industry. Sales grow rapidly because a large number of new customers enter the market. They are buying a new type of product so new vendors do not have to dislodge an entrenched direct competitor (e.g. it’s not like asking a customer to switch their existing brand of backup software). However, these buyers do not want to experiment and they are more risk-averse than earlier buyers, so well known trusted brands often win against the new lesser known brands.

In most cases, a vendor can win the positioning game with these pragmatists if they are perceived to have the best product that’s safe to purchase.

Late Majority (Conservatives): These buyers are keeping up, but not leading. They prefer simple solutions and look to the established standard. They can be resistant to change and are more risk averse.

In most cases, a vendor can win the positioning game with these conservatives if their product is perceived to be an industry standard, plug-and-play, 100% compatible option with a great warranty that’s on sale from their favorite vendor.

Laggards (Skeptics): These buyers avoid change and very risk averse. They may only purchase when there is no other choice. They buy like the Conservatives do, but only when they are forced to (remember all those UNIX gurus who wanted no part of a GUI?).

Although the real market is not likely to be a nice symmetrical bell curve, and it is hard to know exactly where the market is at, there are indications that we’ve reached the “tipping-point” and the enterprise market is entering the Early Majority phase. In this phase, a large number of new customers enter the market. Of course, as demand grows so does supply and competition.

In July 2013 there were 75+ vendors trying to capitalize on Flash-based products for enterprise customers. This list includes some newborn vendors (not yet shipping) and some undead vendors (they look dead, but still might bite.) In general, I excluded those selling only hard disk drive form-factor SSDs (e.g Seagate) and Flash chips (e.g. Toshiba, Samsung), but I included PCIe SSD vendors if they claimed to have a product for enterprise servers. Here’s the list:

Aberdeen, Amax, Arkologic, Astute Networks, Assurance, Avere Systems, BiTMICRO, BridgeSTOR, Cachebox, Cisco, Condusiv, Coraid, DataDirect Networks (DDN), DataON, DDRdrive, Dell, Dot Hill, Echostreams Innovative Solutions, EMC, Enmotus, Fastor, Foremay, Fusion-io, GreenBytes, Hitachi Data Systems, HP, Huawei Symantec, IBM Systems and Technology Group, IceWEB, Infinio, Imation, Intel, iXsystems, JetStor (AC&NC), JBOD, JDV Solutions, Kaminario, Kove, LSI, Marvell, Micron, NetApp, Nimble Storage, Nimbus Data Systems, OCZ, Oracle, Panzura, PernixData, Pivot3, Proximal Data, Pure Storage, QLogic, Qsan, Radian Memory Systems, Reduxio, Renice Technology, Runcore SSD, SanDisk, Scalable Informatics, SeaChange, Skyera, SolidFire, Soligen, Starboard Storage, sTec, StorageQuest, Super Talent, System Fabric Works, Tegile Systems, Tintri, VeloBit, Violin Memory, Virident Systems, WhipTail, and X-IO.

If we wait, most will be gone by the end of the decade. A handful will be gone because they will have won the positioning game with the global players and been acquired so the bigger firm can compete in this market. Unfortunately, most of today’s vendors will just be casualties who could not differentiate themselves in a way that attracted enough customers, or who could not defend their position from competitors claiming the same benefits at a lower cost.

What is the time-frame for success or failure with Flash-based products sold to enterprise customers?

The answer differs depending on whether you are a major global player or a start-up hoping to be acquired. If the history of the IT industry is a guide, I would say that the global players like EMC, IBM, HP, Dell, and NetApp are just getting started and will play for the next 10+ years.  They already have the sales channels, promotion budgets, and customer base in place. They are trusted brands adding a new line of products to complement all the others.

However, if the start-ups and JBOF (just a bunch of Flash) vendors are not hearing alarm bells, they are not listening. The strategic acquisitions, where the large players buy smaller firms for their technology (not customer base), are in full swing and there can’t be more than a small handful of healthy buy-outs left to go in this round. To survive with iterative technology innovations (rather than major breakthroughs) the smaller firms need to get their sales and marketing right within 12 to 24 months (4 to 8 quarters, if they are lucky) — at the time of writing in July 2013, that means they win or lose somewhere between 2H14 to 1H15. In most cases “losing” results in a change of senior management and a zombie company hoping for a reboot before having to sell the IP assets at a loss.

That’s good news for the firms who have/get their marketing act together now, because in 2 years time they will be on more solid footing with fewer competitors in a large market. In this case, marketing means:

Opening new sales channels. A reseller (incl. OEMs and service providers) is only going to sell one or two brands. With 3 to 6 months to sign, and 3 to 6 months to sell, you can see why the time to act is now. Resellers mitigate end-users’ risk (very important in the Majority market) because they already have a trusted relationship with their end-user customers. They also supply complementary products and expertise so the end-user gets a complete solution. For the vendor, they deliver quick access into new market segments without the high capital costs of doing it themselves.

Build a large prospect list. Email marketing allows you to consistently and frequently promote to named prospects, often prior to their brand-selection decision. It’s relatively low cost and effective. However, it only works when your contacts have subscribed (self-identified and shown an interest in what you have to say). Buying or renting a 3rd-party list won’t do it effectively enough so investment in lead generation is important.

Not everyone who shows an interest in learning (e.g. a subscriber downloading a white paper) is ready or able to buy a system costing tens-of-thousands of dollars (or more) so only a small percentage of your marketing-qualified leads will become sales-qualified in any given quarter. Therefore, you need to (properly) nurture that list. The response rate will be a bell curve from “hot” (buy quickly) to “cold” leads (don’t buy), but 6+ months average would not be unusual. As a result, you need to front-load your lead generation efforts to build that list sooner rather than later.

It takes months and quarters to get a lead gen. machine humming so if you wait to add the talent (employees or agencies, like Marketingsage) or wait for an inexperienced team/agency to experiment with tactics you will likely run out of time — your revenue won’t equal your capital burn rate so you’ll get weaker and weaker with each passing quarter as competitors become the hard-to-dislodge incumbent suppliers to both resellers and end-users.

Build your brand. A typical buyer will only consider 2 or 3 products, not 5 or 60+. If they do not know who you are or what you stand for (i.e. your perceived position as the fastest, best VDI solution, lowest cost, etc.) you will not be considered at all. It’s easy for EMC, HP, Dell, etc. to be recognized and considered, but not so for the other 50+ players. Even if they make it to the small consideration set, the recognized brands are 50% more likely to be selected because familiarity and trust often go hand-in-hand. Branding and positioning are closely related.

Takeaway Points

1. The market is evolving. The new buyers of Flash-based products are more risk-averse. To win the positioning game you need to convince a high volume of potential customers that you have the best product that’s safe to purchase for their particular needs.

In this market, “safe” does not just mean a reliable product. It’s is not just about MLC vs eMLC vs SLC technology or redundant components. A safe purchase is also about proven interoperability (e.g. certifications), ease of integration (e.g. same brand as server), warranties, references (e.g. customer case studies), endorsements (e.g. awards), familiar brands names (e.g. firms they read about in the press, see at events and hear about regularly) and trusted suppliers (e.g. vendors they have experience with).

2. Marketing is more important now. If technology innovation remains iterative (not ground breaking) and quickly matched by competitors, sales channel development and marketing promotions will separate the winners from losers.

3. Time is short. If you are not one of the big global vendors, your time frame for success is very limited (I’m predicting 2H14 to 1H15) for most. In this case, success might mean getting acquired or becoming profitable before the initial capital runs out. Of course, profits come from customers. The early winners have the advantage of revenue, references and incumbency.

About this Series on Positioning and The Flash Memory Summit

Join me and a lively panel of experts, editors, and analysts at what may be the first ever marketing-oriented session for CEOs, CTOs, and marketers at the annual Flash Memory Summit in August 2013. We will be discussing product differentiation in a growth market in a session called: Differentiate or Die – Marketing Flash-Based Storage Systems on Wednesday, August 14, 9:50-10:50 am. This is an Open Session so you can register for free up until 8/11/13.

You can follow this blog by signing up in the left sidebar. You can find related posts like these by clicking the Flash Memory Summit 2013 category:

  1. Flash Memory Summit 2013 Session: Differentiate or Die – Marketing Flash-Based Storage Systems
  2. The Positioning Game: 75+ Vendors Promoting an Enterprise Solution that Uses Flash Memory
  3. Competitive Positioning of Flash-Based Products – A Primer for CEOs, CTOs and Marketers
  4. Positioning and Hype for Flash-based Products – A Primer for CEOs, CTOs and Marketers

You can suggest questions and discussion topics using the comment box below or by sending me, David Lamont, an email at blog [at] marketingsage.net. If you’d like to support this topic and enhance your own social media reputation, please click the “Share This” and “Like This” buttons below. Your support is appreciated.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

You never know what lurks in those piles of paper in the office. Today, I excavated an old Gartner report entitled “Cool Vendors in Data Protection, 2006.” To refresh your memory, this was the heyday of disk-based backup and nothing was cooler than Continuous Data Protection (CDP). Overcome with nostalgia for heated debates about “true CDP” and recovery granularity held in bars at SNIA conferences during that era, I just had to read this old gem.

Seven years after the coronation of the six cool vendors, only one remains. The other five must have made big bucks, right? After all, Gartner knows best and cool surely pays…..

  • Asempra Technologies sold its assets to Bakbone (acquired by Quest, in turn acquired by Dell) for a reported $2M in 2009.
  • Mendocino Software faded away quietly in 2008.
  • Mimosa Systems was acquired by Iron Mountain in a deal valued at $211M in 2010. Since then, it has been passed through to Autonomy and thence to HP.
  • Revivio’s IP was picked up by Symantec in 2006.
  • XOsoft was purchased by CA in 2006 and rumor at the time suggested that the return was good.
  • Asigra remains as the lone standing vendor of the group, having adapted its offering and message to grasp the opportunities presented by Cloud. Closing the circle, CRN thinks Asigra is still cool, naming them one of the 20 Coolest Cloud Storage Vendors for 2013.

Check back in another 7 years!

 About the Author

Agnes Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, security, and enterprise software products. She can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join her network on LinkedIn and to subscribe to this blog (see sidebar).

Like kids squabbling over a bag of candy, disagreement over resource and budget control seems inevitable between sales and marketing. Sure, there are instances where politics, greed, and ambition fuel the tension between these groups, but I think that’s the exception rather than the rule. In my experience, both groups typically share the same goals and aspirations and genuinely want to work together amicably, albeit on their terms.

After many years working with sales and marketing across sectors including storage, data management, and security, I’ve come to the conclusion that, fundamentally, sales and marketing executives are wired differently. In a pre-technology era, I reckon they would have been hunters and farmers respectively. Sales executives tend to be high-energy optimists with a temporal focus on the short-term: this year; this quarter; even this deal. Like hunters, they can hyper-focus on their target, track it, and set up the perfectly-timed kill-shot. They can net a lot of protein and feed the corporate family as long as they have a ready supply of potential prey.

Marketing executives, like farmers, play a long game with planned diversity. They are the analytical planners, the visionaries who work diligently day after day to grow their crops. Good farmers know their soil and seasons, read the weather, prepare the ground, plant the seeds when conditions are right and nurture them daily. They stagger the plantings, thin the seedlings and cultivate them until they are ripe for harvest. They rotate the crops and make the soil richer year after year.

The hunters and the farmers are equally valuable and effective in feeding their community, but their methods and philosophies are fundamentally different. The same is true of sales and marketing in our modern, technologically-enabled corporate world. It’s understandable that sales typically favor events, turnkey sales appointment setting services, and blitz campaigns to drive leads. Marketers are more likely to analyze costs and likely outcomes and favor continuous, evolutionary campaigns that generate leads from multiple sources, based on multiple value propositions, and nurture them throughout a cycle that allows for education, evaluation and the vagaries of budgetary discretion until the qualified leads are ready to be harvested. Communications are consistent and sustainable.

Next time you’re caught in the crossfire between sales and marketing vying for budget dollars and competing demand generation plans, I hope this little analogy will help you value both approaches and clarify the results you need and how to prioritize and support the activities that are most beneficial for your organization. Like the kids with the candy, the outcome ought not be decided based on who screams loudest!

About the Author

Agnes Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, security, and enterprise software products. She can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join her network on LinkedIn and to subscribe to this blog (see sidebar).

Here’s a situation that’s not uncommon when selling enterprise storage or data management products: a firm generates an increasing number of marketing-qualified leads, but the percentage, or even the volume, of sales-qualified leads drops. Obviously, the quality of the leads should be questioned. But what if the lead sources are the same? Why are the new leads not as good as the old leads?

Before you kill your marketing programs you should look at your December data (or any other short month for business). You’ll likely find a very a strong correlation between the time the salespeople spend actually talking with prospects and the number of sales-qualified leads. In other words, if the salespeople are not connecting with prospects, leads will not convert from marketing-qualified to sales-qualified. The number of man-hours dedicated to talking with prospects, and the quality of the initial sales pitch, are far more likely to determine the number of sales-qualified leads than the source of the lead. The holiday season can highlight this often overlooked fact, especially if you don’t track the actual number of sales conversations.

Unfortunately, the sales bottleneck is not always recognized, especially when many marketing programs are running and evolving at the same time. It’s easier to conclude that a marketing campaign is failing, or worse, that marketing as a discipline does not work.

It’s natural to assume that if you increase the number of marketing-qualified leads, the number of sales-qualified leads will increase at the same rate. However, that is only be true if the sales team also increases its bandwidth to process them.

Think about the logistics (optimistic for complex/expensive IT products): A salesperson with time for qualifying leads makes an average of 60 calls per day. With an average of 3 attempts required to reach a prospect, they can talk to 20 prospects per day. With an average of 17 dialing days per month, one dedicated salesperson can talk to 340 prospects. If 5% have an open project, budget and authority the salesperson would convert 17 marketing-qualified leads to sales-qualified leads per month. Put another way, that’s 17 sales-qualified leads per 1020 dials assuming you have a large team of salespeople and can average the data. Obviously, a single salesperson talking to 20 prospects for 15 minutes each would require over 5 hours of talk time and would not be making as many dials.

If the overall bandwidth does not increase, individual salespeople are put under pressure to quickly “work through” the backlog of leads before they go “stale”. Nobody wants to have a large number of “Open”, “New” or “Unopened” leads next to their name in the CRM system. However, the salespeople can only make a limited number of calls in a day so they only try to reach each prospect once or twice before they move on. Best practices call for 5 to 8 call attempts, so while they make many calls, they have fewer timely conversations. As such, they don’t identify as many sales opportunities. Additionally, pressure to clear a backlog may result in less thought going into a customized sales pitch – again depressing the number of sales opportunities.

Even successful sales calls can result in fewer sales-qualified leads when there are more leads than sales bandwidth. Typical enterprise sales are complex. They require research, demos, evaluations, team selling, etc. so once an opportunity becomes “hot” the salesperson has less time to work on new opportunities. Because they have an opportunity in-hand and less time, their criteria to qualify new leads gets more stringent, again reducing the number of sales-qualified leads.

In conclusion, bandwidth is not just an issue for engineers to consider in their storage and data management products, it’s also an issue for the CEO, CMO and VP of Sales to consider when selling those products.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

It’s very unwise to pick just one promotional strategy and exclude all others, but it happens a lot among start-ups in the IT industry. Typically, the underlying problem is money. The firm has a very limited promotional budget so they bet it all on a single promotional strategy.

More often than not, inexperienced marketers at these cash-strapped start-ups purchase a list of prospects to email and call. After all, the list is affordable, email is almost free, and the sales team can start dialing on day one. From that same perspective, online advertising is ruled out because it is obviously expensive, it takes more time, and the number of callable contacts is expected to be relatively low.

However, choosing a purchased list over online advertising is invariably a bad bet.

Let’s look at some numbers:

  • Advertising: The more expensive pay-per-lead adverts average $60 per lead. However, while the cost-per-lead (CPL) is expensive, these contacts are leads insofar as they have requested one of your resources (e.g. a white paper). Such leads result in a “warm” contact list.
  • Purchased Lists: A contact on a list costs more or less $5, depending on the criteria chosen. The cost per contact is relatively low, but they haven’t taken any action to demonstrate even a passing interest in your offering. A purchased list is a “cold” list.
  • The cost of email is almost free. It’s usually not a material factor.

A typical click-through (action) rate for cold list is 0.05%. A click might result in a white paper download, a webinar registration, request for quote, or other action that the sales team considers actionable. However, a click-through rate of 0.05% means you need to send 200,000 emails to generate 100 clicks. Those 100 clicks cost $1-million at $5 per contact (of course the cost is lower when you amortize it over many campaigns, but to make the point we’ll leave it as is.)

A low click-through (action) rate for warm list is 1.5%. It can be much higher. Again, a click might result in a white paper download, a webinar registration, request for quote, or other action that the sales team considers actionable. A click-through rate of 1.5% means you need to send 6,667 emails to generate 100 clicks. Those 100 clicks cost ~$490,000 at $60 per contact (again, the cost is lower when you amortize it over many campaigns.)

The net result: Generating a desirable action from the $60 online advertising leads costs ~50% less than generating the same action from $5 purchased contacts because the response rates are significantly higher for warm lists.

Email clicks are easy to measure, but the lesson can be logically applied to other factors. While the cost of promoting using email may be close to free, the cost of promotion using a sales team is not. Because of the significant productivity difference, cost of a sales team employed to call a cold list will be higher than the cost of a sales team calling a warm list.

You can easily test this for yourself and generate numbers for your own business. Your numbers may be higher or lower, but you will inevitably learn that a warm list is considerably more valuable than a cold one.

This analysis assumes your firm has no ethical issues with emailing people who have not subscribed for your messages. Such unsolicited emails may not be SPAM from the legal sense, but they are usually considered SPAM by the recipients. It’s certainly possible that a portion of the 99.95% of email recipients who do not respond to your unsolicited emails will in fact remember your brand and make a decision to avoid it at all costs. As a result, every campaign has the potential to diminish your brand among the carefully chosen audience you wish to sell to.

How CEOs, CFOs and VCs Might Mitigate the Underlying Budget Problem

I get it. The marketing budget of many early-round start-ups won’t support much online advertising. However, that budget crisis is usually the result of an earlier decision to invest other things. Typically, CEOs at these firms invest 90% of their sales and marketing budget in staff alone. They usually start by adding salespeople, but don’t reserve enough cash for the marketing programs necessary to feed that team.

Soloed VPs can’t address this issue because the parameters of their world have already been set by the CEO and board. The result is a failure by marketing to deliver enough high quality leads to satisfy the needs of a relatively large sales team. However, the sales team also fails because they don’t have those leads. The CEO, CFO and VCs fail because of the lost time (multiplied by the company’s cash burn rate) and the destructive interdepartmental politics spawned by the imbalance between objectives and resources.

A more prudent approach is to recognize the fact that sales and marketing are interdependent, not independent. You must invest proportionally in both. You must also recognize that marketing takes time and money and it often precedes the success of the sales team.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

Summary: A look at the love, launch and lapse phenomenon encountered by many start-ups, what underlies the lapse, and how to mitigate it happening to your firm.

Over the past 20 years I’ve followed the successes and failures of firms in the data storage and data management arena. I’ve noticed a phenomenon that impacts those who sell enterprise software and systems based on new, or potentially disruptive, technology. In today’s market such technology would include systems based on solid state disks (SSD) as well as some cloud enablers, virtualization/VDI solutions and Big Data solutions

The phenomenon is the love, launch, and lapse phases many start-ups experience. In other words, most tech firms experience a honeymoon period that eventually ends. Here’s what happens:

Love at First Sight: The executives and board members are working their Rolodex to sign up beta customers and these initial customers love you. Additionally, analysts and journalists are calling you and you haven’t even come out of stealth mode. If you are out of stealth you may even have been recognized with a “most promising” or “company to watch” award.

Launch Like a Rocket: You hire a PR agency and announce your venture funding and your new product. You get lots of press coverage, especially in the storage media that you read every day. Additionally, your sales team has a bunch of prospective customers. You may even have some noteworthy customers.

Under these circumstances the typical CEO adds salespeople and minimizes the budget for paid promotions like advertising. After all, the prospects in the pipeline were relatively easy to get and PR is driving the funnel. Given everyone’s enthusiasm the plan presented to the board will likely be high on the revenue forecast and low on marketing expenses.

Lamentable Lapse: However, as the quarters pass the vast majority of “hot” prospects turn cold and the press coverage is no longer generating many leads. Other firms now dominate the editorials. The resellers are signed-up, but not selling. There’s little discretionary budget available for promotional campaigns and the few that are tried don’t produce enough results. The marketers are sent on the fruitless quest to find the “magic well” — a single source for high volume, low-cost, purchase-ready leads. The blame game is heating up so office politics between sales and marketing are becoming a drain on productivity. The PR agency is fired. The VP of sales is replaced. The VP of marketing is replaced. Eventually, the CEO is replaced.

What happened?

The analysts and press are always interested in new technology, new products, and new firms. It’s their job to know what is going on in the market. They trade in that knowledge as well as sell their own services to storage vendors. Almost every technology start-up can get their “15 minutes of fame.”

PR agencies know that, so a few storage specialist PR-only firms have built their entire business on the “launch and leverage” model. I prefer to call it the “launch and lapse” model. It’s a great model for PR agencies. News about new technology, products and VC funded companies is in demand so the agency can usually show great initial results to the client (and to the client’s competitors — the PR agency’s new prospects). However, when the launch is done the “heavy lifting” starts. At that point, the PR agency executive that sold the service turns the start-up over to a less influential account manager and moves on to new business (often the client’s competitors.)

Most new publicity (PR or advertising) will release a pent-up demand for information about what’s being promoted. It’s that pent-up demand for certain information that results in an initial surge of leads, followed by diminishing returns. These diminishing returns are easiest to see with some online adverts. The early placements generate more results than later placements (I know, it’s the opposite of print and what the advertising sales rep tells you.) The initial demand is satisfied so when the publication’s audience is not growing at a sufficient rate, the volume of sales leads falls for the same advert. It’s normal!

Of the leads that come in, it’s not uncommon for a technology firm to see a high number of “false positives.” These look like good leads, but don’t close quickly (or at all) so the close rate is very low. False positives result when the hype surrounding a new technology piques peoples’ curiosity. They want to learn about it so they end up downloading the white papers and otherwise flagging themselves as a lead. However, if the new technology has multiple applications (e.g. SSD in consumer and enterprise applications), is complex (e.g. integrates into larger systems and requires buy-in from many people) or is expensive (e.g. beyond the budget authority of the purchase champion) you should expect a long and difficult sales process that can take months, or even years, of nurturing and selling.

What about the happy customers? Beta customers are not the same as real customers, even if they are big names. Many large enterprises are willing to try new technology. The real test is whether they deploy it widely as a result. Additionally, the start-up probably sold the beta product at a big discount (or gave it away) and the tech support people are the best engineers who’ll drop everything to deal with an issue. Lastly, as good as the executives and board may be at at leveraging their executive-level contacts, that sales model is not scalable or repeatable by ordinary salespeople.

STEC stock value after announcing that OEM customers may choose other SSDsUnfortunately, big OEM deals can also result in an eventual lapse. The big OEMs – HP, Dell, IBM, etc. – have annual design cycles for their server and storage products so the components suppliers chosen this year may not be the same as those chosen next year. Big suppliers like Seagate and Western Digital can keep up with the design cycles, but a start-up is typically so overwhelmed with the initial design-in business that they fail to secure the second and subsequent supply contracts. An established vendor that loses a design-in contract will turn to other customers (often through an established distribution channel), but a start-up often goes out of business (or gets acquired at a low valuation). Others, like STEC, may just lose half their stock value.

In fact, it’s often the lucky start-ups that are overwhelmed with fulfilling the demand of a large customer. They are generating revenue and have proven the end-user demand for their innovation. Others sign promising deals with big OEMs (with all kinds of hooks and exclusivity requirements), but the OEM does not sell nearly as many as forecast.

All of these factors assume that a market exists and therefore the sales issues can be overcome. That’s not a given, but I can accept that it is for most data storage products. There is a growing need for capacity, speed, protection and management of data. However, a market is made up of different types of buyers who require different things.

Enterprise SSD is in the Early Adoper Phase

SSD Market 2011

A new market segment is made up of “Innovators.” These buyers are technology enthusiasts willing to try new ideas at some risk. They like to test new things and don’t need complete solutions. They just need access to new technology. These Innovators may buy the product based on its technological capabilities. However, the larger number of “Early Adopters” have different needs.

Early Adopters are looking for a breakthrough advantage in their business and require complete solutions. A solution is not a just box full of Flash or some other technology. Solutions include expertise in the customer’s environment. Therefore, successful firms sell an augmented product that includes more than their raw technology. For example, Texas Memory Systems, a 30+ year old solid state disk supplier, speaks fluent Oracle. They employ an “Oracle Guru” who works with the DBAs that initially identifies the performance problem that’s ultimately solved by the product being sold.

The challenge for the start-up in new market segments is to solve both a technical problem and a business problem. Solving the technical problem can generate a few sales to the Innovators. However, a business problem must be solved to sell to the Early Adopters and many technology start-ups don’t invest enough to market and sell in this environment.

What Really Happened?

The lapse is a result of the executives doing something reasonable. They believed their own eyes and planned accordingly. Unfortunately, they did not recognize that they could be in a honeymoon period so the number of prospects in the pipeline was significantly smaller than it needed to be and the infrastructure to generate leads was lagging.

The initial good news made everyone optimistic when they would have been better served by hoping for the best, but planning for the worst.

Hoping for the best, but planning for the worst

Technology start-ups often establish just one of the 4-Ps necessary for sales success. They establish the product, but do not establish a working promotion, pricing, or channel (place-of-sale) model. In a nutshell, they do not build a working sales and marketing system before the clock runs out. A working system allows you to execute a process and get reasonably predictable results.

Sales leads are at the core of the system. Since people can’t buy what they don’t know about, promotions are used to create market awareness, build brand recognition, and generate sales leads. These promotion-driven sales leads not only have the potential to drive revenue, they are also critical to optimizing your overall marketing. They are the equivalent of an early warning system.

For example, if you know what you are doing and what to expect (as my firm, Marketingsage, does) and it turns out to be difficult and excessively expensive to generate sales leads then you’ve learned something. Your message is not working for the audience you promote to. If the audience includes your customer prospects and your message talks about your product, you may have a positioning issue or need to rethink the offering.

On the other hand, if you are generating leads at a reasonable price it’s fair to conclude that your message is resonating. Therefore if there is a sales issue, you save time and considerable money by investigating product, pricing or channel expectations first. Without a reliable flow of leads, you have to ask if you’ve generated enough awareness for your offering. The only way to answer that question quickly is run many simultaneous promotions. That’s expensive and a big risk for resource- and time-constrained start-ups.

There’s another benefit to building a lead generation system. If you do enough lead generation you’ll end up with a fairly reliable cost-per-lead (CPL) number and a close rate percentage. Those numbers allow you to plan and budget effectively.

For example, if you pay the industry average of $60 CPL and close 0.5% of leads, you can calculate that you need 200 leads per sale and those leads will cost $12,000. If this year’s revenue target is $10-million and the average customer generates $100,000, you need 100 customers. The 20,000 leads you need for 100 customers will cost $1.2-million in promotions. If the sales lead time is 6 months you need all your leads by the end of June. That means the promotions had to ramp up last year. Of course, that’s a little simplistic, but hopefully you get the idea.

Your numbers may be different, but the scenario presented is typical enough. The good news is: When you have data, you can start to drive down the CPL and drive up the close rate to optimize your system. Additionally, happy customers can be expected to purchase more. Therefore, their 3- or 5-year value is often substantially higher than the value of the first year’s sales and the cost of incremental sales is far lower.

There are many ways to generate sales leads (see The Most Effective Sales Lead Generation Methods for Storage and Enterprise Software) – too many to discuss here. However, the difference between a mature lead generation system and ad hoc promotion is typically the inclusion of online advertising.

Done properly, online advertising is effective, cost-effective and relatively predictable. Unlike other promotional methods you can control the placement, timing, message and call-to-action. This control allows you to adjust and optimize in a relatively short period of time. Additionally, it’s scalable!

Bogging, tweeting, cold calling, trade shows, seminars, etc. all require human resources. Consequently, they can be considerably more expensive for the results achieved than just spending a few well placed dollars on advertising.

Bottom Line for CEO’s, VPs and VCs

Recognize that your firm is likely to experience a honeymoon period. Set realistic expectations so you have a chance of success and can justify the necessary up-front investment in lead generating promotions, not just product development.

Realize that the sales cycle for enterprise storage products can be very long. Think 6+ months for today’s enterprise SSD systems and other new technologies in emerging markets. Add months to get promotional campaigns producing. Add quarters if you need to staff-up, build infrastructure as well as get the campaigns producing.

From day-one, build a scalable lead generation and lead nurturing system so you know that you can generate more/less leads as required from various sources.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

My firm, Marketingsage, helps data storage and data management firms market to enterprise customers. One of our lead generation services is trade show support so we see a lot of shows. We also use trade show-timed PR to launch products and to seek quality speaking engagements for our clients. Therefore, we though it might be useful to maintain a list of top trade shows for marketers of enterprise storage and data management products.

The following shows attract the same vendors year after year — a good sign that the show produces results for them. They also attract a reasonable number of like vendors. That’s important because sales lead results are often better when a firm is among a cluster of competitors rather than on its own.

The list is far from comprehensive. There are a host of vertical shows that would be of interest to platform-specific or industry-focused vendors. I’ve just listed the bigger, more well known, shows frequented by enterprise storage and data management firms.

Note: The start dates and locations listed can change from year to year.

4Q USA: October, November, December

  • Interop – Early October, New York, NY. Billed as “the most comprehensive IT conference and expo.”
  • Oracle OpenWorld (OOW) – Early October, San Francisco, CA. Billed as “most cost-effective and efficient way to stay ahead of the technology curve.”
  • Storage Networking World (SNW) Fall – Mid October, Orlando, FL. Billed as ” transforming the information infrastructure.”
  • PASS Summit – Mid October, Seattle, WA. Billed as “the premier conference for SQL Server professionals.”
  • SC Conference – Mid November, Seattle, WA. Billed as “the international conference for high performance computing, networking, storage, and analysis.”

1Q USA: January, February, March

2Q USA: April, May, June

  • FOSE – Early April, Washington, DC. Billed as “the choice for government IT education.”
  • National Association of Broadcasters (NAB) – Mid April, Las Vegas. Billed as as the show “where content comes to life.” Listed as one of the Top Trade Shows (see below) with the highest Net Buying Influence (91%) and highest Total Buying Plans (59%).
  • COLLABORATE – Late April, Las Vegas, NV. Billed as “the technology and application forum for the Oracle community.”

3Q USA: July, August, September

  • VMworld – Late August/Early September, San Francisco, NV. Billed with “Your Cloud. Own it.” Listed as one of the Top Trade Shows (see below) with the highest Net Buying Influence  (91%) and highest Total Buying Plans (55%.)

Top Trade Shows Notes for NAB and VMworld (4/12 update).

Exhibit Surveys Inc. produces an annual Trade Show Trends report and highlights are usually published in the April issue of Exhibitor Magazine. The report compares various industries so it’s limited in its coverage of any one industry, such as IT. The IT-centric events in the 2011 survey included CES (consumer electronics), NAB (broadcast technology), RSA Conference (data security), Supercomputing and VMworld (virtualization). These are all good shows, but hardly representative of all good shows frequented by IT buyers.

The Trade Show Trends report looks at many factors, but the two most useful are the Net Buying Influence and Total Buying Plans statistics.

The Net Buying Influence number indicate the percentage of show attendees who have the power to recommend or make final purchasing decisions. The average Net Buying Influence for High Tech shows was 84% in 2011. That’s 3 points above the overall average of 81%.

The Total Buying Plans number represents the percentage of attendees whom plan to buy within 12 months of a show. High Tech shows rate better than most in this category with an average of 46% in 2011, just below the overall average of 47%.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management, and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

I go to Oracle OpenWorld (OOW) in San Francisco every year because my PR and lead gen. firm, Marketingsage, helps data storage and data management firms market to the large enterprises that use Oracle.  Wednesday Oct. 5 was my day to visit the 2011 expo and this post takes a marketer’s look at the exhibits of some of the most innovative firms who were showing off their high performance storage hardware at the show.

This was the last day of the expo so you might expect it to be somewhat quiet. In my opinion is was far too quiet at any booth that was not front and center in the main hall or giving way a car, iPad, iPhone 5 4S. While that may be bad for exhibitors, it was good me because I got to see most of the high performance storage players. Besides the big guys like Oracle, EMC, HP and Dell, there were more start-up firms this year. Most of them paid big bucks for big booths.

I’ll give the award for biggest-bang-for-the-buck to our friends at GridIron Systems. They did not have a booth. They used a high traffic station in the highly visible Intel booth to show off their TurboCharger caching appliance. This device fit right in with Oracle’s “Big Data” theme because it accelerates (in real-time) the “hot data” that’s in-demand. Users do not have to put their Oracle database, or even the tables, onto expensive solid state disk (SSD) to get SSD performance. That makes the GridIron hardware somewhat special in the value-for-money department. I know all that because Marketingsage just started helping GridIron with its PR 🙂

Start-up, Pure Storage had a big bright booth and lots of people wearing their distinctive shirts. They also scored a visible spot in the Samsung booth. Their solid state disk is special because it uses real-time deduplication and compression to reduce the amount of data that’s actually stored on more expensive SSD. Therefore, they claim the cost of their system (when available) will be lower than purchasing hard disk drive-based systems for the same volume of data.

Fusion-io had the most visually impressive information walls backed by a mini data center. They also had some pro-active salespeople willing to grab passersby. I can respect that. Fusion was touting “a tier on a PCIe card” and they are getting some impressive Flash capacities on relatively small cards. The other vendors went out of their way to point out that this PCIe-based storage is not shareable.

STEC had a front row booth in the corner of the main hall. They had a small theater where they did a good job introducing their rather large Kronos PCIe card. They subsequently gave out t-shirts to those who filled in their sales lead survey. Customers can use a single STEC Flash drive to replace a hard drive in a server or they can array them for rack mounted enterprise environments.

Violin Memory also stumped for a big front row booth. Interestingly they only used half of the booth for meeting attendees. The other half was hidden and off-limits. Violin prefers to call its SAN-attached SSDs “memory arrays” and they see them as primary storage to be used in an “all silicon data center” without hard disk drives. Meanwhile, Quantum was at the back of the same hall proving that tape is still an important part of today’s data centers. I was impressed  by Quantum’s high performance StorNext system. It’s used to quickly ingest and provide shared access to REALLY BIG files, like satellite and geology images, and manages all of the storage complexity of  managing and archiving to hard disk or tape.

Our friends at TMS exhibited their SSDs at OOW years before some of the other SSD firms even existed. They had their usual spot in the middle of the main hall. And as usual, you could be standing next to the booth and not notice it. However, Oracle users seek them out. TMS had a small theater where their genuine Oracle Guru talked to Oracle users and developers about how to accelerate Oracle. TMS does not confuse OOW with SNW (Storage Networking World) and their no frill SSDs are always fast.

I went all the way across the road to see Kaminario in the lower traffic West hall. They had a small 10×10 pop-up booth, but they were getting their share of visitors. They probably deserve the runner-up prize for the biggest-bang-for-the-buck booth among SSD vendors. Kaminaro’s SAN-attached SSD lets customers choose DRAM and/or Fision-io’s Flash memory.

Nimbus Data Systems was at the show as well, but their small booth looked like a parking space. It was 80% sports car, 20% SSD. No, you could not win the car. I was laughingly told by another vendor you could win the privilege of sitting in it for a while.

We would have liked to seen WhipTail, SolidFire, Nimble Storage  and some of the other serious vendors of high performance enterprise storage systems. Alas, they were not at this particular show.

Other SSD Posts

If you like to read about the marketing of SSDs you can join the mail list for this blog (top left sidebar). You’ll get an email when a new post comes on line. Here are some recent SSD related posts:

Storage start-ups: What CEOs, VPs and VCs should know about the honeymoon period

A Strategic Marketing View of Flash Memory Products

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).

How much did exhibitors spend on average in 2010 per face-to-face meeting at their exhibit? $276 according to Exhibit Surveys Inc. data reported in April 2011 by Exhibitor Magazine.

How much did they spend per attendee who entered their exhibit? $189, according to the same source.

The survey covered many different types of events, however those numbers are consistent with averages you might expect at IT centric shows.

There were some “High Tech” specific numbers reported:

  • Traffic density in 2010 was relatively high at 3.1 attendees per square foot of exhibit space. The average was 2.2.
  • The time spent visiting High Tech exhibits was also above average at 9.4 hours and 2.6 days per show.

My PR and lead generation firm, Marketingsage, offers Event Marketing, Trade Show, and Seminar Support Services because such events have always been an important promotional method for marketers of storage products. And although the cost-per-lead (CPL) is higher than for online advertising campaigns the value received is different.

A CEIR study once estimated that 78% of attendees are interested in products and up to 60% are part of a buying team visiting the show. Additionally, CEIR estimated that the average number of calls required to close a trade show lead was 1.6. This compared favorably with an average 3.7 calls to close a field sales lead. That’s why salespeople like trade shows (in their territory).

How do virtual trade shows stack up to the real events for marketers of storage?

In my experience, virtual shows have not stacked up in terms of the quality of the leads. However, the CPL is much lower, especially when you account for travel costs. I found the CPL was more in line with online advertising. But the campaign setup time and effort was significantly greater. I may change my mind on this at some point, but after my initial experience with virtual shows I concluded that there was too much work involved for the marketeers compared to the result gained by the salespeople. Additionally, I felt I could have gotten leads of similar quality with easier to manage advertising campaigns.

About the Author

David X. Lamont is an accomplished marketer of IT products and a partner at Marketingsage, a PR and lead generation firm that specializes in marketing data storage, data management and enterprise software products. He can be reached by email at blog [at] marketingsage.net. Fellow marketers and IT professionals are invited to join his network on LinkedIn and to subscribe to this blog (see sidebar).