Posts Tagged ‘marketing strategy’

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I am delighted to be 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 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.

Product differentiation is a strategically important topic for businesses that develop products using using flash memory. It’s important because there are many ways to position such products, competition is fierce, and the process of positioning (or repositioning) is difficult, costly, and time-consuming. To succeed, these flash-based products must appeal to as many customers as possible. They must also appeal to the press, analysts, and investors.

Are these constituencies looking for the same things? Are they still responding to technology underpinnings such as SLC or MLC, or benchmarks such as latency and IOPS?  Do they focus on features such as on-the-fly de-dupe, reliability and price, or are they more responsive to benefits such as TCO and ROI? Or, are they looking to solve problems with Big Data, cloud, databases, and virtualization?  And in the end, do any of these details matter more than the brand name on the box?

Great Panel of Opinionated Experts

So who can help us answer these questions? It would be great to ask all the buyers directly, but we don’t have that luxury. Besides the logistical challenges, each buyer represents just one viewpoint in a large and diverse marketplace. However, the press and analysts have their fingers on the pulse of the broader market. They communicate with the broader market and they’ve been on the receiving end of almost every vendor pitch. Additionally, the buyers look to these people to help them form their opinions on the best SSDs for their situation. So, we’ve invited some of the most knowledgeable people in the SSD industry to share their opinions on what matters. They include some of the smartest, most experienced editors, analysts and VCs in the industry:

Panel Photos

Rich Castagna, Editorial Director, Storage Media at TechTarget. Rich oversees content for Storage Magazine, SearchSolidStateStorage.com, SearchStorage.com, SearchVirtualStorage.com, SearchCloudStorage.com, SearchDataBackup.com, SearchSMBStorage.com, SearchDisasterRecovery.com, SearchStorage.co.UK, SearchStorageChannel.com and Storage Decisions seminars and conferences. Rich has been involved with high-tech journalism for more than 20 years; previously, he was executive editor of ZDNet Tech Update and Cnet Enterprise; editor in chief of Windows Systems magazine; senior editor for Windows magazine, and senior editor and technical editor for PC Sources. Rich has written more than 600 computer technology articles.

Mark Peters, Senior Analyst at Enterprise Strategy Group. Mark is an ESG senior analyst focused on storage systems. His particular areas of emphasis are block storage; virtualized storage; all types of solid-state storage; and the challenges of power, cooling, and space efficiency in data centers. Mark has more than 25 years of data storage industry experience and has held senior management roles in sales, marketing, product management, business development, and customer intimacy in the U.S. and internationally.

Chris Preimesberger, Editor-in-Chief of Features & Analysis, eWEEK. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager’s Journal and DevX.com and was managing editor of Software Development magazine. Chris has won more than a dozen regional and national awards for his work.

Gaurav Tewari, Director at SAP Ventures. Gaurav is a venture capitalist focused on growth and later-stage investments within Software/SaaS, Internet, Digital Media, Mobile, and Technology-Enabled Services. Prior to joining SAP Ventures he was with Highland Capital Partners and led or was instrumental in their investments in Violin Memory, Criteo, Marin Software (MRIN), , Affine Systems, Beyond the Rack, Cafemom, Coremetrics (IBM), Navic Networks (MSFT), Rent the Runway, StyleFeeder (TWX), and Yipit.  Previously, he was a Corporate Strategy executive at Microsoft, and a management consultant with McKinsey & Company, where he led strategic initiatives for Fortune 500 companies.

Frank Berry, Senior Analyst with IT Brand Pulse, a trusted source of product testing, IT Pro research and industry analysis about data center infrastructure. Prior to founding IT Brand Pulse, Frank was vice president of product marketing for QLogic, and vice president of worldwide marketing for Quantum.

David Lamont, Partner, Marketingsage. I am a marketing professional and strategist with over 25 years of storage experience, including 10 years marketing solid state products. I’ve helped large storage vendors including IBM and Seagate as well as innovative storage and Flash vendors such as Texas Memory Systems, Tegile and GridIron Systems. I share insights on Flash, storage and marketing topics on this blog and on the Words To The Wise section of Marketingsage website. I am a founding partner at Marketingsage, an agency that helps storage marketers with content development, publicity and lead generation.

About this Series on Positioning and The Flash Memory Summit

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. The Positioning Game: 75+ Vendors Promoting an Enterprise Solution that Uses Flash Memory
  2. Competitive Positioning of Flash-Based Products – A Primer for CEOs, CTOs and Marketers
  3. Market Changes Impacting Flash-based Products – A Positioning Primer for CEOs, CTOs and Marketers
  4. Positioning and Hype for Flash-based Products – A Primer for CEOs, CTOs and Marketers

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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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Summary: Marketing VPs and CEOs at data storage and data management firms can use these 5 techniques to generate more sales for the same budget by thinking strategically about how they allocate money.

I think it fair to say that most executives take a tactical, rather than a strategic, approach to the marketing budget. For the most part they take last year’s budget and adjust it up or down or they base it on a percentage of revenue. Then they apply the relatively small changes to their existing expenditures. Accordingly, firms set in motion a marketing program that may not provide them with any competitive advantage. And for most, that’s OK. It is good enough not to be at a competitive disadvantage.

However, it’s possible to gain a competitive advantage at budget time. By that, I mean a small sales-centric firm can “punch above its weight” and generate more sales for the same budget by thinking strategically about how it allocates money.

Strategic budgeting also makes it possible to overcome many of the B2B marketing challenges:

MarketingSherpa Marketing Research Chart:

A worthy goal is to maximize the funds that are applied to lead generation and lead management. What’s a lead? It’s not a web page visit, a click, or a rented list. A lead, according to Marketingsage’s definition is “a sales opportunity-related request with actionable contact information recorded by [you].” These actionable requests are reliably generated by paid promotions such as online advertising, trade shows and email campaigns, especially when supported by product-centric PR and highly selective participation in social media.

Another goal, for business with a resale or distribution channel, might be to increase the funds available for sales incentives directly tied to revenue. For example, paying market development funds to resellers only when they meet a set revenue objective.

Regardless of the promotion or incentive, strategic budgeting usually comes down to applying money to programs and campaigns that have a direct, or highly influential, impact on sales. So if your budget is not increasing, you are really making a decision to take funding from something or someone so you can apply the money to something or someone else that may have a greater impact on sales.

That’s why strategic budgeting is tough. Almost all marketing program and campaign will have their merits and supporters. However, the fact that it tough to do is also the reason why it’s possible for some to out perform peers with the same budget.

With that said, I’ll highlight my top 5 techniques for strategic budgeting.

Calculate What your Promotional Budget Should Be

When you have a revenue target, a lead-to-sale close rate, an average cost per lead and an average customer value you can estimate how many leads you’ll need and the required budget.

For example, if you pay the industry average of $60 for an information request type lead (e.g. white papers download), and your lead-to-sale close rate is 0.5%. 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.

Of course, a happy customer can be expected to purchase more and the cost of incremental sales to existing customers will be far lower.

When you do this for the first time you may fund the numbers quite sobering. That’s not a bad thing because the strategic marketer will use this calculation to push back on unrealistic expectations and goals or to justify the appropriate budget for the targets set.

Adopt an Opportunity Cost Perspective

The average cost for an information request type lead (e.g. a white paper download) in the data storage industry is ~$60. As such, you’ll find it helpful to think of each $10,000 that is not spent on lead generation as 166 lost leads.  You can translate that into foregone revenue when you calculate your own close rate and expected average value of a customer – $83,000 using the above example (more if customers have a recurring value).

Thinking in terms of lost leads is very helpful when making judgment calls. For example, should you spend $60,000 to upgrade the trade show booth? Yes, if you think it will deliver a return greater than ~1000 leads – $500,000 in new revenue using the above example.

The same question can be applied to the purchase of marketing analytics tools, paid analyst relationships, promotional giveaways, internal sales meetings, custom creative, etc. If you are the CEO, you can apply this opportunity cost perspective when allocating budget to other departments, rather than to marketing.

Invest Early

If it takes an average of 3 months to convert a sales lead to a customer your fourth quarter promotions are driving next year’s revenue, not this year’s. Therefore a strategic marketer will invest almost everything early in the year to drive sales. Early sales success can be used to justify, and fund, the additional budget required to sustain the momentum later in the year.

Although the data storage and data management industry is not as seasonal as bathing suits and snow blowers, it does have some peaks and troughs that should be taken account. For example, summer months tend to be slower and government and educational customers purchase in cycles. Strategically it may make sense to execute the bulk of your lead generating promotions in the first 5 months of the year.

The word “execute” is important here because it takes 4 to 8 weeks to prepare most promotions – longer for trade shows. Add months and quarters if you need to hire staff, plan and/or build consensus.

Think Talent

Executing lead generating promotions on time with sufficient budget is paramount to success. Your ability to do this will depend on having the right skills at the right time. Therefore, strategic marketers think about talent before they decide whether to hire employees, agencies and/or contractors.

Your choices here are critical simply because talent is likely to be your largest single expense. Typically talent expenses, including payroll, annual analyst contracts, and agencies can consume 60% to 90% of a marketing budget so productivity gains can make a huge difference if savings can be directed into sales programs and lead generating campaigns.

Whether you can redirect savings from increased productivity depends on whether your talent expenses are fixed or discretionary. Payroll is essentially a fixed costs so sales-centric productivity is key. If an employee costing $150,000 per year is spending just 20% of their time on irrelevant tasks, you are effectively forfeiting $30,000 worth of leads. Using the above example, that’s 500 leads that could drive $250,000 in revenue.

On the other hand, outsourced talent is typically discretionary so you can use the services for what you want, when you want, for as long as you want. There usually very little, if any, “busy work.”

Therefore, the strategic marketer minimizes fixed expenses by keeping the number of employees to an absolute minimum and ensuring that the vast majority of everyone’s time is spent on activities that can impact sales. Many deliberately under-staff for 3 reasons:

  • Employees, and everyone who demands their time, are forced to prioritize.
  • To get everything done, tasks will need to be outsourced. Therefore the value and cost of the task will more visible and it will get more consideration (see note on the Opportunity Cost Perspective).
  • Discretionary budget can be more easily reallocated to sales programs.

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Of course every situation is different, but based on decades of experience I’ll offer this rule of thumb:

≤60% of the talent portion of the budget should be allocated to employee payroll, bonuses and benefits and tools (including the VP of Marketing). The most productive teams have experienced product marketers with deep knowledge of the products and industry.

Their job is to manage the day-to-day tasks that cannot or should not be managed by outside agencies. These include liaising with customers, vendors, technology partners, resale partners, salespeople and engineers. This interaction allows them to:

  • Define the strategy, budgets, and timing.
  • Define the product and company positioning.
  • Tee-up press announcements and the outsourced development of sales tools (case studies, brochures, video, etc.)
  • Make decisions about product pricing, sales programs and promotional investments (lead quality, the acceptable cost per lead, tactical placements, events, etc.)

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≥40% of the talent portion of the budget should be allocated to outsourced services such as PR, creative services, media buying, event management and strategic counsel – tasks that are performed better by people with broad media relationships, independent perspectives, and specialist skills. For most firms these tasks do not fill a 40 hour week and specialist skills, contacts and tools make it difficult to hire an effective do-it-all employee. Additionally, many of these tasks need to be executed simultaneously during certain periods of the year requiring bandwidth that just not available from a highly productive internal team.

A highly productive small tech firm marketing a B2B product like storage or data management software can compete using an experienced product-centric VP of marketing, a senior marketing manager, and one full service agency (like my PR and lead generation firm, Marketingsage 🙂

Such an organization would typically:

  • Run 20-25 simultaneous adverting campaigns, including creative, landing pages and lead capture.
  • Generate 10-12 press announcements per year and brief press/analysts each time.
  • Run quarterly reseller inventive programs.
  • Attend 6 or so domestic trade shows.
  • Run 8 to 12 prospect lead nurturing email campaigns.
  • Manage the process for 4 or so interoperability certifications.
  • Author and layout 4 or so white papers.
  • Author and layout 6 or so case studies.
  • Produce 20 minutes worth of videos.
  • Maintain the web site.
  • Maintain a corporate blog.
  • Selectively participate in sales-centric social media discussions.

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Fast, Good, Cheap

You’ve heard the saying: You can have it fast, good or cheap. Pick any 2. For a marketer at a small firm in the storage and data management sector the priority is clear:  Fast and good (enough). Cheap is not the strategic option, even for a cost conscious marketer. Here’s why:

Time is your enemy. The market is highly competitive so a better or less expensive product will emerge soon – maybe before you see an ROI on your current development efforts. This could leave you at a competitive disadvantage with unsold inventory, depressed margins and higher promotional costs.  Additionally, if your firm does not yet have a positive cash flow, time is burning up your available capital. Ask the CFO what’s preferable: spending an extra 20% on an agency that can execute now; or burning 3 months of expenses for the whole company while you go through a hiring or orientation process.

Obviously fast and bad will not win you customers. However, don’t let perfect become the enemy of good enough. Good enough is faster and less expensive than perfect. You’re in the B2B IT market, not the fashion market, so let your competitors waste time and money on custom art, billboards, golf sponsorships, and chotskies while you deliver what prospects want – timely information that helps them choose your product over the alternatives!

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).

Lead, Follow, or Get Out of the Way?

Posted: October 24, 2012 by Agnes Lamont in Opinion
Tags:

I was browsing various news releases earlier today and something struck me. With so many leaders, pioneers, and global market leaders generating the news, what’s everyone else doing? Where are all the followers, the challengers, and the niche players?

For the sake of employees and investors in all of these self-declared leading companies, I sincerely hope that the claims of leadership are for press purposes only and do not represent their competitive strategies. Implementing a leadership strategy essentially puts a target on a company. In order to be successful, leaders have to invest considerable effort and resources in order to stay ahead of the other players in the market. I respectfully submit that’s a bit easier if you’re EMC or Coca Cola, than if you’ve just banked your Series A or B funding.

It behooves management to consider that adopting a leadership strategy is not for everyone, all the time. Indeed, being a challenger, follower, or a clever niche market player is likely to be a more successful strategy in growing both bottom line results and market share. Winning is better than leading.

Strategic Counsel is one of the services Marketingsage offers to clients: http://www.marketingsage.com/aboutsage-marketing-strategy.html

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).

I was listening to David Linden talk about his book, Compass Of Pleasure, on NPR. He’s a neuroscience expert who maps out the brain’s relationship with pleasure and addiction.

Mr. Linden pointed out that 80% of people who ever try cigarettes become nicotine addicts and 30% of people who inject heroin in their arms will become heroin addicts. Since heroin delivers a more intense pleasure than the nicotine in cigarettes most people would expect the addiction rates to be reversed. Why the disparity?

Addiction is a form of learning so repetition is a key factor. While a cigarette smoker experiences less pleasure per instance than a heroin user, that smoker experiences the pleasure more frequently. Ten puffs per cigarette multiplied by 20 times for someone who smokes a pack a day. While even the most addicted use heroin 3 time per day and most addicts would use it less often.

Repetition of a reliable small pleasure is more addicting than a single, unreliable, infrequent large pleasure. Mr Linden reinforced his point with an example familiar to most dog owners. A dog trainer gets better results by reinforcing the desired behavior frequently with small treats than infrequently with large treats.

The Marketer’s Experience

Since most marketers have limited budget we often have to decide between a one-time  “big splash” event and less noticeable, but more frequent “drip” events. The decisions may be between a single full-page advert and a series of smaller adverts or it may be between a large trade show booth with lots of giveaways and a series of smaller booths with no giveaways. Experienced marketers know that consistent repetition will result in more people remembering their brand. They also know that a recognized brand is twice as likely to be selected over an unrecognized brand.

I believe there are exceptions where a “big splash” has so much impact that a message or brand is forever remembered. Apple Computer’s 1984 advert during the Superbowl may be an example of that. However, while “big splash” successes are often highlighted by marketing publications in reality they are exceedingly rare and typically B2C oriented, rather than B2B oriented. The products that sell as a result of a one time “big splash” are typically easy to understand and easy to purchase (sorry, enterprise IT rarely qualifies). Apple’s 1984 advert succeeded at creating brand recognition. At the time, this brand recognition did not translate into a major marketplace success. In the 1980’s the Mac was a B2B product and it was not easy to purchase due to price, availability, compatibility, available software, etc. I know –  I was selling Macs in the late ’80s!

Unfortunately, “big splash” marketing is often driven more by an executives unspoken objective of self-glorification than the business sales objectives. Of course, these events will be hailed as great successes by the executive (regardless of cost).

Lessons for sales-centric marketers:

  • You must deliver frequent, consistent messages to the same people in your target audience. A useful rule of thumb is 21 messages per prospect. Achieving that frequency in a short period of time is tough so speed usually requires the simultaneous use of multiple media.
  • Your messages have to satisfy the prospect’s “WIIFM” (what’s in it for me). Think “how-to” (educational) white papers, tips, benefits (not just features), etc. The more personal the WIIFM, the better. That’s why so many business events are held in Las Vegas and other vacation spots like Florida and California.
  • Your message must be seen and relevant at the time the prospect decides to act. This is especially important when selling products that are purchased infrequently. If a decision to purchase is made once every 3 years there may be 35 months, 155 weeks and 1094 days when your message is not relevant enough to have an impact. This bolsters the case for frequency, but also for “trigger” based marketing that allows you to communicate when the prospect takes some action to indicate an interest.

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 marketing in 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).