Top 13 Marketing Budget Wastes—and How to Avoid Them

This article was recently published in MarketingProfs.com.

Once again, it is that time of year... when marketing departments are busily preparing next year's budget. As we all know, chances are you won't be able to get everything you're asking for. But, believe it or not, this may actually be a good thing.

Take it as an opportunity to re-evaluate what you have been doing and how you have been investing your marketing dollars. There is always a way to do more with less.

To help you get started, here are some common marketing budget drainers to avoid.

Marketing Waste No. 1: Spending money to reach the wrong people

The biggest waste in marketing is spending money on activities that reach the wrong audience. This is especially an issue for B2B companies that have a limited target market (how many Global 2000 companies are there?). Advertising and large tradeshows tend to be the biggest budget items, yet much of the audience is often off target. You will get much higher return for your marketing dollars by going directly to the companies and individuals that can purchase your product.

Building a database of your target market prospects is not an overnight proposition, but it will be the best marketing investment you've ever made. See more about it in "Reverse-Engineer Your Marketing."

Marketing Waste No. 2: Generating leads that Sales doesn't want

The second-largest waste is generating leads that Sales will never follow up on. It is way too common to hear Marketing complain that Sales doesn't follow up on its leads, while Sales complains that Marketing leads are a waste of time. Both have to agree on what constitutes a good lead, and both sides have to be accountable for their share of the equation: Marketing for generating "good" leads, Sales for following up on them.

It's the CEO's job to make sure that Marketing and Sales are in synch, and lead follow-up is where the rubber meets the road.

Marketing Waste No. 3: Failing to follow up on leads

Invest in lead-development personnel. Some call them Inside Sales, others call them Telemarketing, but both fail to describe the role that will give you the most for your money. The lead-development function is the guardian of the agreement between Marketing and Sales. Its role is to make sure that every good lead generated by Marketing is passed to Sales, and save Sales from wasting time chasing leads that are not a good fit for the company.

Marketing Waste No. 4: Killing the conversation

Provide Sales with follow-up tools and templates. Even when Sales is willing to follow up on the leads it gets, the conversation often dies once the lead is handed over to the salesperson. The easiest thing for salespersons to do is copy an old email or use the same opening sentence they always use when calling on a prospect. This is like starting all over with a new pickup line rather than continuing the conversation that has already begun.

So don't leave it to chance: If you're putting together a campaign, make sure you provide Sales with the follow-up scripts and email templates they can use when the leads start coming their way.

Marketing Waste No. 5: Overemphasizing new leads

While Sales might dismiss some leads as "old," those are actually the best leads you can give them. Software buyers require multiple touches before they are ready to engage in a serious sales conversation, so your best chance to make a sale is to someone who has already been in touch with your company.

If you continue pursuing only new leads, you will soon find yourself out of companies to go after, and even sooner out of budget.

Marketing Waste No. 6: Targeting new leads with late-stage offers

While lead nurturing is crucial, you still need to acquire new leads that have not heard from your company yet. Since you have to buy access to these leads (in the form of list rental, newsletter sponsorships, tradeshow booth, etc.), lead acquisition is expensive.

Good lead-acquisition activities are those that appeal to a broad audience of early-stage prospects, such as whitepapers and webinars that are focused on industry issues, not on your product.

Marketing Waste No. 7: Direct mail and rental lists

Email promotions to your permission-based list will usually generate response rates that are 5-10 times higher than email to rental lists and 10-15 times higher than direct mail, at a fraction of the cost. As a result, cost per response from your email list can be over a hundred times lower than for any other method. In addition, turnaround time for email promotions is shorter, which means you can communicate in a more timely fashion.

A good permission-based email list is your company's biggest marketing asset and your best lead-nurturing vehicle. At the same time, if your email is not permission-based, you run the risk of breaking the law and alienating your audience.

Marketing Waste No. 8: Failing to use your permission-based list

You don't want to inundate your prospects with too much communication, but most software companies fail to communicate enough. Newsletters and blogs are great vehicles to keep the communication flowing.

Your customers are eager for knowledge; so, as long as you keep your content relevant to your audience and tone down the sales pitch, most of them will welcome your emails. For those who don't, offer ways to opt out of specific items so they don't have to remove themselves entirely from your list.

Marketing Waste No. 9: Failing to get the most out of your email marketing

A well-designed message (not necessarily a pretty one) can increase response to your emails by up to 50%! That's a huge difference in the return on your marketing dollars.

There is no magic formula for a good email message. To make sure your message is well designed, you have to test every element of the message—from the subject line to the placement of the links and the call to action.

Marketing Waste No. 10: In-person seminars

Webinars are much more effective than in-person seminars. They cost less—and you can draw a national and even an international audience to a single event. The typical seminar will draw 25-50 people, but it is not uncommon for a webinar to draw hundreds.

A webinar can also be easily recorded for future use as an on-demand presentation, extending the lifespan of the event months or even years beyond the initial take and generating up to twice the responses of the live broadcast.

Marketing Waste No. 11: Losing people on your Web site

All roads lead to your Web site. Any serious prospect will be looking at your Web site multiple times throughout the interaction with your company—before, during, and after the purchase decision.

The first thing you need to make sure is that your Web site content is of interest to your prospects. The second thing is to have calls to action that will get your Web site visitors to engage—view a webinar, download a whitepaper, fill out a survey.

Last, you need to make sure that you can track these interactions. With this information in hand, you can fine-tune your follow up to match your prospects' interests and avoid wasting valuable marketing and sales resources.

Marketing Waste No. 12: Failing to double (and triple) dip

Creating new content is often the bottleneck to new marketing initiatives. Once you have created some good content that will engage your customers, don't let it go to waste. Your prospects process information in different ways, so you can take the same content and repurpose it in multiple ways.

For example, turn your webinar into an article, post it in your newsletter and blog, pitch it as a PR placement, or offer it as a podcast.

Marketing Waste No. 13: Not knowing what you get for your money

Every marketing activity should be attached to a measurable goal. If it's not, you probably shouldn't be doing it. A measurable goal could be number of leads, number of new contacts, number of meetings, opportunities, deals, and all the way to revenue dollars. See more about it in "How to Measure Your Marketing" and "Measuring Marketing ROI—How Low Can You Go?"

The key to marketing optimization is continually weeding out the budget drainers while seeking new ways to deliver greater market impact at lower cost. If you're looking to do more with less, you must be willing to embrace change. As the saying goes, "You cannot continue doing the same things and expect different results."

Three Approaches to Your 2006 Marketing Plan

With the start of the New Year, marketing executives are busy crafting new plans. The easy way out is to copy last year’s plan, move some dates around, and call it a day. However, this approach will not work if you operate in a dynamic environment, as most software companies do.

Here are three approaches you can use to come up with new and improved marketing initiatives for your 2006 plan:

1. Analyze and Repeat Success

A clear-cut strategy for generating more leads is to do more of what you have already been doing. This does not necessarily mean that you have to spend more money. By analyzing the results of your past activities, you can focus on those that worked best and fine tune your marketing mix moving forward.

There are three things to keep in mind for this strategy to be successful:

• Define your metrics to reflect your marketing goals. Whether your main objective is to generate more leads, achieve the lowest cost per qualified response, or something else altogether, use the corresponding metrics to measure the success of your past marketing activities and the return on your investment.
  
• Focus on measurable activities. The more measurable activities you have in your marketing mix, the better you can optimize your results based on your previous track record. E-mail and web-based marketing vehicles provide you with almost immediate feedback, allowing you to alter the message, design, or concept to maximize the results of every campaign.
  
• Use measurable tools. Make sure your e-mail tools, website infrastructure, and campaign management systems provide easy-to-use tracking of click-through and response rates that are granular enough to decipher the most beneficial sources for success, such as a specific list or message.

For more information on measurements and marketing metrics, you may be interested in reading Marketing by the Numbers and How Low Can You Go.


2. Find a Shortcut

If the first strategy for leveraging past success utilizes quantitative metrics, a second strategy applies a more qualitative approach. The idea is to find out what makes your customers tick and emphasize the factors that made them buy from you in the past in order to increase your success moving forward.

The first step is to establish a profile of those who became your customers in the past year or two: Do they come from a certain industry or segment? Are the companies of a certain size? Who were you competing against? Most importantly, what were the reasons they chose your solution over the competition?

Once you uncover some common threads, you can incorporate them into your marketing mix. Use the reasons people chose your solution to fine tune your messages. If your message resonates better with specific vertical markets, focus on these verticals. If you have more success against a certain competitor, go after their customers and expose their weaknesses.

Your customers will be happy to share this information with you, but listening to your customers requires a proactive approach. Strangely enough, while many companies claim to be "customer-driven", very few use this strategy-- all the more reason why you should!


3. Become a Knowledge Beacon

Many industries still lack efficient media for knowledge exchange. This vacuum is your opportunity to become the facilitator of such a community – a place to share knowledge with industry peers. In doing so, you position your company as the “go to” place for industry knowledge. This is probably the most effective form of branding you can do.

Here are three examples of knowledge-based communication vehicles that you can employ, even with the limited resources of a small company:

Best Practices Survey
Putting together a benchmark survey allows you to provide the industry with useful, relevant, and current information. At the same time, it gives you insight into market needs, industry challenges, current practices, and future plans. As a valuable byproduct, it can also generate new leads, which can be easily qualified by their responses to certain survey questions.

A web-based survey requires little effort and cost, and it can be used in multiple ways. You can use it in e-mail campaigns, banner advertising, and at tradeshows. See an example of such a survey, the results, and the subsequent publicity.

Newsletter
Publishing an industry-focused newsletter is an easy way to start gathering an audience for your knowledge-based communication. A company that started a newsletter two years ago has since seen its subscription list grow 200%. The newsletter has also helped the company position itself as an industry thought-leader. Stories published in the newsletter have generated interest from industry publications and led to ten articles published in the past year—all with no PR agency, no PR budget, and little to no advertising.

Blog
Blogs provide a new channel for customer interaction. They allow executives and other employees to communicate directly with customers without the confines of PR formalities (although I am not sure how long this freedom will prevail). You can turn your blog from a monolog into a dialogue by inviting comments and responses from your customers. Companies such as Microsoft and Sun have hundreds of such blogs, but even smaller companies are starting to experiment. Ex Libris, for example, started a blog by getting employees involved as a grassroots movement, with the hope that it will eventually take off to engage its customer community.

For your knowledge-based marketing to be successful, it has to be credible, so keep your sales pitch out. If the effort to create the content seems daunting, it doesn’t have to be. There are many creative ways to reuse existing content and generate new material with a reasonable amount of effort.

For example, you can take a web seminar and turn it into an article to be published on your website, newsletter, or in an industry publication. Since your customers have different preferences of how they like to process information, reformatting and repackaging the material may generate new interest. One company that tested this concept sent an e-mail campaign to their house list, announcing a collection of recent webinar recordings. Since no new content was created, it took little time and virtually no cost. By merely remarketing their existing content, the campaign generated 45 “free” new leads.



These three strategies are not mutually exclusive, and I am also sure they are not the only strategies you can apply. Post a comment or drop me an e-mail and let me know what you’re doing in 2006.

David and Goliath: The Enterprise Software Version

Annraí O'Toole, Chief Executive Officer of the small Cape Clear Software is taking on IBM in a battle for the future of SOA.

O’Toole is joining the ranks of other CEO’s of software startups anticipating the demise of Big Blue and other industry giants. Another example that comes to mind is Salesforce.com’s outspoken Marc Benioff, who has taken on the established enterprise software regime with his “end of software” rally cry (check out Benioff’s latest response to Bill Gates’s memo on Internet Software Services and the Microsoft Live announcement).

So far, Benioff has been able to marshal the success to back his rhetoric, but for every successful modern-day David like Benioff, there are hundreds of software CEO’s that lost their battles against industry Goliaths, burning through many millions of VC dollars in the process.

What makes one successful and others fail? Had I known the answer, I would probably be as rich as Benioff, so I am still hoping you can help me figure it out… One thing that separates Benioff from many others is that Salesforce.com presented a real paradigm shift in the way software is used.

Perhaps even more importantly, Salesforce.com made it easy for users to test out this new paradigm. While Benioff presented a grand vision for his “no software” approach, Salesforce.com started out with a small and simple SFA application. It kept expanding the solution in small increments with quarterly updates of the software. This was a brilliant way of taking advantage of the Software-as-Service model to add new functionality in an incremental, non-intrusive, and easy-to-digest fashion.

I am a firm believer that ease-of-adoption and ease-of-use could either propel your software to greatness or spell its doom. You may point to SAP as an example of successful yet tough-to-use product, but let’s not forget that SAP made its big market push as a replacement to IBM and other legacy systems, which were even more difficult to use, implement, and maintain.

The push for small, simple, and modular software grows as computing becomes more and more distributed, decentralized, participatory, and collaborative.

I don’t know enough about SOA to tell whether Cape Clear provides such a solution, but if you asked me to bet on the success of a newcomer taking on the reigning gorilla, these are the questions I would ask:

First, I would ask, is it a real paradigm shift or just a slightly better product that does the same thing as IBM? Second, and not less important, is the solution easy to try and adopt?

If it’s not a real breakthrough, you’re going to run into the “why bother” roadblock; if it’s not easy to try, you will hit the “who has the time” roadblock. There are additional roadblocks that must be conquered on the path to beating Goliath, but if you cannot get past the first two, I would suggest you find yourself a weaker target to take on.

Good luck!

Service: the Free Prize Inside

There is a good article in Harvard’s Working Knowledge, describing how companies such as Progressive Insurance, Commerce Bank, and Intuit use customer service as a competitive differentiator. These companies made service the “free prize inside” their product. I like it!

Early Stage Marketing

I love startups. There is nothing more exciting than this early stage when so little is defined yet everything seems possible. So whenever a startup approaches me to help them with marketing, I get really excited. Unfortunately, I don’t get to enjoy it for long. Having been in these situations many times over, it doesn’t take long before reality sets in.

“We need you to help us generate leads,” says the founder. “We have a great idea, the ROI is less than 3 months. We just need to let the world know about it.” I agree the idea is great. I am not so sure about the ROI. “Tell me who is using the product,” I ask. “We are talking to some companies about using it,” says the founder. “We are going to close the first pilot by the end of this month.”

I am still excited, but by now, my responsible self takes over. There is so much to do, and generating leads is NOT one of them. But how do you tell it to a proud father (that is founder, I mean…)? How do you tell one that the company is not ready for this type of marketing yet?

I usually end up telling the founder that they should wait until they have a few success stories to prove they are for real. When you have these stories, marketing can be effective. You can generate leads. You can spend money and get a return. Until then, save your marketing dollars.

It doesn’t mean you do nothing. You need to get these first customers somehow, and you need them quickly before you run out of money. What you need is a leverage point. Something that will get a buyer to trust you can deliver an unproven solution.

Maybe it’s someone you know. Maybe it’s someone your VC knows. First and foremost, though, your solution has to solve a clear and well-defined problem, and your offer has to be compelling and carry low risk. This is, for example, how Impress Software was able to land six major corporations to be in the pilot group when they were developing a new product. It didn’t hurt that they had the support of SAP. That’s a leverage point.

In the meantime, you can also learn more about your market, build your target market database, and establish a thought-leadership position in the industry. One company that has done a remarkable job at cultivating a thought-leadership position in an early market is WebLayers.

While the company was still in stealth mode and working with its pilot customers, WebLayers founder Motti Vaknin started the Service Oriented Architecture (SOA) Forum, an exclusive Fortune 500 roundtable of enterprise architects who are mandated with the challenging mission of creating a Service Oriented Architecture (SOA) in their enterprises. Forum members include senior architects and IT executives from companies such as AIG, Bank of America, DaimlerChrysler, eBay, Intel, JP Morgan, Northrop Grumman, P&G, and many other leading corporations.

Vaknin is very careful not to abuse the forum as a sales channel for WebLayers. At the same time, the forum provides him with access to top-level, relevant industry contacts. It’s a way for WebLayers to learn about industry needs. It also positions WebLayers, the small startup, as a thought-leader in SOA. All this is done with very little financial investment (although the attention of Vaknin is required, but well worth it). Could you ask for anything more at this stage?!

Do you have any other ideas for early stage marketing? Let me know how you go about it!