Perhaps, B2B is not really B2C

I have spent a large part of my career working in the B2B space and have always believed deep down to my core, that at the end of the day B2B is not much different from B2C. When I was at Texas Instruments, I would say that we were a B2E company (Business-to-Engineer) not a B2B esp in online/marketing space - as at the end of the day our job was to influence an individual engineer - a human being.

A human being who often was a mother, a sister, a daughter, a father, a son, a brother, a friend - prone to the same emotions as other human beings. As human beings we bring our emotional sides to work even when we are engineers (I often joked: "Engineers are people too, right?").  So why should a B2B company like Texas Instruments not communicate to its target audience who are engineers as human beings - tapping into their emotional side just as is the core strategy of most B2C marketing efforts that tend to be rich in emotional communication.

Since then I have spent time in the retail/distribution space and my thinking has remained the same. Who is the human being that I am trying to communicate with - on the other side of the web page, mobile app, email, search ad - let me understand her and I can be more effective in getting my message across and have a higher chance in influencing her behavior (and driving a conversion).

Today, on my drive to work, however I started to think that that there are some key differences between B2B and B2C. I still think everything stated above is still correct and at the end of the day all communication is human-to-human (H2H) from a marketer/designer/developer to a consumer of that product whether they be a person in a business spending the company's money or an end consumer at home spending their own money.

However, where I think many B2B firms are very different from most B2C companies is in their understanding and adoption of marketing. In most B2B companies, marketing is often an under-rated, under-developed and under-funded discipline - and marketers inside the company are often low in their enterprise power profiles w/ low influence capacity in executive decision making. Consequently, B2B firms tend to have a poor understanding of brand and how to shape that in their markets.

Of course there are exceptions to the above and we can see that as the number of industrial B2B brands in Interbrand's Best Global Brands report has continued to grow from as few as 5 in 1999 to >20 in the last few years. But these exceptions aside, from my experience and by speaking to many in the B2B space my hypothesis feels legitimate.

Why is this?

I suspect largely because of the very traditional sales driven models of most industrial B2B companies that relied on feet on the ground to be their "marketing" vehicles bringing their brand, product and promotion message to individual customers inside enterprise walls. This model likely evolved because prior to digital there really was no effective and efficient way to reach the people inside businesses. Spending lots of money on newspaper, radio or TV would be a highly inefficient way to reach very targeted groups of people working in specific verticals. So the historical model was the most effective and efficient method. Let's get salespeople. Let's get them trained on our products. Let's get them trained on how to sell our products. Let's get them going into target companies, and finding the right person who makes the buying decision. And let them do the "selling" to close deals.

Then digital happened.

Boom! Now there is suddenly a very effective and efficient channel to reach individuals inside businesses. You can target them down to an individual, and create personalized messages to influence their decision making. More importantly most of these B2B buyers have already evolved their behavior to show their preference for self reliance (primarily via the digital channel) through a lot of their buying journey. The verdict on this is clear from many established research companies e.g. Forrester, CEB.

But the challenge for many B2B companies remains that they still don't understand marketing - esp in the digital sense. Often marketing in B2B companies is largely about event management. And brand is often limited to thinking about logos. So at best pretty superficial.

So there I was on my drive to work thinking - perhaps, I had it wrong all this time and B2B is different from B2C.

But in thinking it through as I did here, I still resort back to the idea that B2B still is about communicating and influencing an individual - no different than B2C. And as more and more digitally savvy people join B2B firms, it is their first and foremost responsibility to lead the marketing flag inside the B2B companies. The good news is that many B2B leaders are recognizing that the world has changed and value creation is not just about sales and finance - leading to a B2B shopping spree for digital talent. And if they don't get that marketing and brand lead digital value creation, then they may very well - not be around soon.

Measuring Marketing Effectiveness and ROI (Part 1)

Either William Lever or John Wanamaker once said: "Half the money I spend on advertising is wasted; the trouble is I don't know which half." This idea that we never know what return we get from marketing spend is one that has permeated over the years and is prevalent amongst many business leaders. Sometimes I don't think marketers help themselves by behaving in a way that just further drives this misconception. I have always had the view that everything is measurable - including everything I do as a marketer.

My basic framework for measuring anything is very simple. Everything you do, you do to drive a result. Every action is motivated by the intent to create an outcome. So measuring the effectiveness of your action should be tied to how successfully you created the outcome or the results you were hoping for. Now the tricky part comes in making the connection between your immediate action and the ultimate end result you are seeking to drive. And this is where marketers sometimes drop the ball.

The gap often comes when the end result you are seeking, for example increased sales, can not be tied to the direct action you are initiating, for example an advertising campaign. But that's often the case, even beyond marketing. The trick is to understand the chain of results that can ultimately be correlated to the end result. For example, when I was at Texas Instruments where we didn't sell online, the question was often asked by business leaders as to the value of our marketing campaigns. How could they be assured that the millions we were spending was leading ultimately to sales and especially sales to new customers.

The approach we took was to try and map the customer journey from the point they interacted with our campaigns. We also tried to understand the same journey from the other direction backwards - ie for a customer making a purchase, what other behaviors do they exhibit leading up to the purchase. What we found through this exercise is that obviously these customers spend a lot of time on our website downloading datasheets and application notes, watching videos, participating in our community and requesting samples of chips for their protoypes. In fact through some simple number crunching we discovered that 95% of the customers who purchase something had placed a request for the sample for that product earlier in their design cycle.

Now we were able to turn this around and measure the marketing campaigns in their ability to generate a sample request, and how many of those came from new customers. This became the "ultimate" down-funnel conversion. We evolved from there and mapped out an entire conversion funnel identifying key activities that a customer would perform online (or offline) as they go through their design/purchase process. With this framework theoretically you could even model a specific value to each of these conversions based on their correlation to revenue generation. You could for instance put a $ number against each conversion reflecting its ability to eventually drive revenue for the business. So for example, a downfunnel conversion would have a much higher value than an upper funnel conversion. Of course if these conversions were online then measuring them is a lot easier, but with the right diligence and systems every offline conversion can also be tracked and measured.

In Part 2 of this post, I will outline some concrete examples of how typical marketing activities can be measured based on my experience in ecommerce.

If you can't measure it, you can't manage it. But if you measure everything, you still can't manage it. You need to find the optimal 'goldilocks' point.

I am not sure who quoted that you can't manage what you can't measure, but it definitely is a concept that is deeply embedded in business. And to a large extent I agree with the idea. In fact given my reliance on "data based decision making" rather than relying on opinions - it is important to me that we always measure everything we do - so we can understand if what we are doing is driving the desired result. In fact, in a subsequent post I want to challenge marketers who struggle to understand how every dollar spent on marketing can be measured for a return. That's for another day.

Today I want to focus on not being able to manage something if you can't or don't measure it. In my observations there is a danger here of going overboard - when everything starts to get measured. Every little thing - often because you can - managers start to spend time on irrelevant areas. I think there is an optimal "goldilocks" point to the number of things that you should measure and at that optimal point you drive the highest level of effectiveness to your ability to manage. But beyond that optimal point you quickly hit the 'law of diminishing returns' - where too much data on irrelevant items actually starts to distract you, lead you down useless discussions, and actually reduces your ability to manage effectively.

Too much measuring, leads to too much data, which distracts and confuses managers, leading to reduced management effectiveness.

So whats the solution? In my opinion, start with identifying what you will measure to determine the success of something. Ensure those things are measurable. Measure them and use the data to determine insights - and use those insights to optimize what you are doing. Adjust your approach. Tweak something. This optimization is more valuable than wasting your time digesting data that just takes you off your path to success.

My talk at GasPedal's Word of Mouth Supergenius: Chicago Dec 2009

Just a month before I left TI, I spoke about TI's E2E community in Chicago at GasPedal's Word of Mouth Supergenius conference w/ Telligent's George Dearing. It was quite fun and I especially enjoyed meeting a lot of very smart people :)


How Texas Instruments' E2E Community is Driving Engagement -- presented by George Dearing and Devashish Saxena from GasPedal on Vimeo.

Think Big. Start Small. Move Fast.

At a recent professional gathering, I ended my talk by urging people to "think big, start small, move fast." Interestingly enough I stated that we usually do two of these three really well, and fail miserably at the third. Then I invited people to join me in "starting small". I sincerely believe that is really important.

We want to be open to big ideas. We want to be creative and let that creativity drive us to explore new and unchartered paths. All good.

We also want to execute fast. You have been in those project meetings where the entire time is spent discussing the schedule and trying to hit a date (something that may be a little overrated - but that's another post). The desire and need to move fast is universal across industries and organizations - primarily driven by a goal of creating a first-mover advantage.

However, often we don't start small. And then you have something BIG, and you are trying to move FAST. And this increases risk of failure in multiple areas. Missing planned delivery dates is just the beginning, compromising on scope comes next and most importantly delivering something after a long development cycle completely exposes you to the chance that the market and user needs have already shifted - and that is the biggest risk of them all.

Hence the importance of starting small. Starting small allows you to move fast. Deploy incremental work. Watch real user usage and use that behavioral data to adapt and iterate. Reduces the above risks. Costs less to get first iteration out - something basic, that you can continue to build on.

Try it. Think Big. Start Small. Move Fast.

New Guy/Gal Syndrome

I started a new job about three months ago. And in my first few months at the job, I have heard several comments alluding to the following central theme:

"Ha, you are still new. Let's see if you still feel this way in a few months"
"I felt the same way when I started ... hope that you are able to do more w/ it than I did"
"It's good to see you pushing for some of this stuff - but you are still fairly new"
"Dude, you still got the 'new guy syndrome'!"

Implying that:

The desire to push for positive and wanted shifts in an organization is inversely proportion to the length of time you have worked in that organization. Or that as you get more comfortable and acquire a longer tenure at the organization - your desire to change things goes down, primarily driven from a lack of success (I assume).

And the funny thing is most everyone around you assumes that will be the likely scenario.

What a shame!

My response:

"If having the 'new guy/gal syndrome' is what drives an individual to objectively look at organizational processes and strive to drive more effectiveness and efficiency, than as a leader I hope that this syndrome is contagious and that I can infect everyone else around me with it!"

There. Now you have it. Go, spread it. Go :)

Enterprise 2.0: Changing the way we work

Good video from MIT's Andrew McAfee on the topic of Enterprise 2.0. I don't think there is a template answer to how this would work for any given organization. You have to adapt your approach based on the culture of the enterprise in question. However, in my experience what is tougher is not identifying or rolling out the platform, but changing people's behavior to do meaningful work using these new tools.



I have found that people who are avid users of 2.0 tools in their personal lives are (as you would expect) early adopters of similar tools in an enterprise environment. This is partly due to familiarity, but also because these individuals are more likely to spot how work that is done in a traditional manner in an organization can be done using the E2.0 toolset in a more effective and efficient manner.

I also agree w/ Andrew that you can not force people to behave in a certain manner (well, you can ... but it may not lead to long term adoption). Instead my hypothesis is, you let the early adopters build some small success stories that they get excited about, and let them pull others via their passion. In reality, a hybrid approach of structured/top-down and organic/bottoms-up seems to offer the best chances for success. The balance will be organization dependent.

What have you tried? What worked? What didn't?

Reason # 3429 why I love marketing: American girl doll made in china for US$115. Hmm.

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Reason # 4389: Why I love marketing :)

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Lego store - going the route of apple?

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More Favorite Videos

Much delayed, but here are some more videos that I have shared this year with my organization at our annual summit and during our monthly town halls.

1) Stefan Sagmeister: The power of time off
We started off our annual summit by reminding ourselves that turning off allows us to be more creative when we turn back on. I really like Stefan's idea of taking 5 of our post-retirement years and dispersing them throughout our career. As my dean from business school (Dr. Court Huber) says: "You can't lead, if you can't leave!"



2) Parag Khanna maps the future of countries
Our focus this year was to understand that the audience that we are trying to serve as marketers is a global audience (in fact more outside US than in the US) and thus this video does a nice job of creating a global context.



3) Jonathan Zittrain: The Web as random acts of kindness
Funny and inspiring to think that the world economy is now built on top of an infrastructure that no one entity owns! It is owned and managed by the collective "us" and it's scary to see that there are still companies that don't get the "social" in social marketing.



4) Rory Sutherland: Life lessons from an ad man
With the shifts in media mixes - I find this a funny look at the changing world of advertising.



5) Dan Pink on the surprising science of motivation
Another humorous examination of what motivates people. No surprise, it's often not money!



6) Jill Bolte Taylor's stroke of insight
And to end it all, this beautiful talk from Jill Taylor as she talks about her experience of having a stroke. It's one of my all time favorite TED talks - as Jill (a brain scientist) makes a persuasive case for the spiritual nature of our world.



I feel like I may still be missing a few. I will add them as I remember. At a separate session we watched the following talks from the web 2.0 summit:

1) Web 2.0 Summit 09: Marissa Mayer



2) Web 2.0 Summit 09: Sean Parker, "High Order Bit: The Rise of the Network Company"



3) Web 2.0 Summit 09: Mary Meeker, "High Order Bit: The State of the Capital Markets, Version Six"



4) Web 2.0 Summit 09: Mike Schroepfer, "High Order Bit: The Infrastructure of Facebook"



I hope you enjoy these as much as I did. You can find all the Web 2.0 Summit talks on Youtube.

Bud brings you miller?

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Who's heard of "business traveler" magazine? :) endorsing sony as best noise cancellation headphones.

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Dan Ariely @ Google/TED

I just finished reading Predictably Irrational by Dan Ariely. One more in the emerging and fascinating "behavioral economics" field. Economics aside, what fascinates me are the implications to marketing. This will be the topic at my town hall meeting tomorrow. I will be back to share what ideas popped.

My Interview w/ ZDNet and some personal thoughts on Social Media Marketing strategy

Last week, I spoke to Jennifer Leggio of ZDNet about TI's Social Media Marketing strategy. You can find it here. This is the second such interview I have given now about how we are using social media to connect with our customers and drive engagement. The first one was with a freelance writer and was published on this IDG site.

It's been interesting to talk to people over the last few months about social media strategy. Few observations:

1) I am sometimes surprised when companies are unable to figure out what social media could mean to them and their businesses. Using social media / web 2.0 tools gives companies such a powerful way to engage w/ their customers. To not take advantage of them seems like wasted opportunity to me.

2) Some companies struggle w/ engaging in conversations in such an open environment. In my opinion, any company who is still hiding behind their advertisements will soon realize that conversations about their brand are happening whether they are there or not. Wouldn't you participate so you can listen, learn and potentially shape and influence your potential customer's opinions?

3) Connecting w/ customers in such a direct manner is a refreshing (and often challenging) change for many companies, especially a lot of B2B companies. Although, I do agree that you want to move at the right pace for your organization. The steps you take here fundamentally change how you engage w/ your customers. You want to make sure that you don't take any steps that can potentially backfire. I think the biggest mistake marketers can make is "faking it". Come on!!

In this video, blogger Joseph Jaffe gives his take on the biggest mistakes some companies have made in social media engagement. He identified faking it as the #1 mistake companies can make.

In my opinion, don't put yourself out there unless you are ready and committed to actually drive the conversation w/ your customers in an honest and transparent manner. Having others blog for you, or tweet for you, or email for you - or even worse having generic email responses from marketing or legal departments is a pathetic attempt. You, your company and most importantly your customer will all be better off, if you had just stayed behind the corporate wall.

That being said, I know that getting to consensus in large companies about such radical behavior change is not an easy task. There are many people in different organizations thinking along different tangents. How do you get alignment with such obstacles? How do you ensure that your company does not show up in Jaffe's next video? Good questions - for another post.

4) My approach to social media strategy is the same as my approach to developing strategy in general: always understand your customer needs and behavior and map them back to your business/marketing objectives. Find the overlap, identify specific problems that you want to go solve. And focus on a few specific items as a start. Don't pick too many things at one time. It's better to do one thing well, than to do many things w/ mediocrity.

5) The world has changed. The power in the marketplace is now with customers. They have access to all the information and the tools and technology to connect w/ millions of peers in moments - tapping into their thoughts about brands and products in seconds. Social media tools build upon the foundation of Internet technologies to more effectively connect individuals and harness that power of customers into powerful communities. 

With this intense momentum, staying on the sidelines is a futile and foolish attempt. You will get swept in whether you want it or not, wouldn't it be better to do so on your terms?

The Future Of Social Networks

This deck from Charlene does a nice job of summarizing some top level trends in social networks as w emove forward. I don't even think we will have to go to far in the future to start realizing a lot of these. Many feel like 2009/2010 timeframe. The savvy marketers will understand these trends and incorporate them into their social marketing strategy today.

The Future Of Social Networks

View more presentations or upload your own. (tags: opensocial open)

Paul Otellini at Web 2.0 on the future of the web and its implications

Interesting talk by Intel's CEO - Paul Otellini on the future of the web. You can see some steps in this direction with some of the newer iPhone apps. What also impresses me is the level of attention paid to the future of the web and how it affects enterprises and people by a CEO of a large company. I think that level of high level engagement helps engage the entire company from the top down in figuring out what this could mean for the company in the future and how best to get ahead now.

My favorite videos

I hosted our Global Internet Marketing summit last week here in Dallas. It's basically a session where we get together as an organization and review where we are and talk about where we should be going. In the course of two days I played a few videos which fit in well with some of the themes of the discussion and have been my personal favorites for a while.

Here they are (in the order I think I played them at the Summit):

1) Thank You

2) Information R/evolution

3) Silly job interview

4) Debunking third-world myths w/ the best stats you have never seen

5) Sway

6) Argument clinic

7) Predicting the Next 5000 Days of the Web

8) Do schools kill creativity?

9) How to manage your staff?

10) Ideas that spread, win.

11) Habbits of happiness

12) Building a windmill

Incredible stuff. On another night, I will come back in and give you guys some context to the videos. But they pretty much stand on their own. Watch as often as you'd like - I have always gotten something new and different each time. :)

Pain Point: The Power of Customer Intelligence

An ex-colleague of mine who now works in Vegas told me this story a while ago. I loved it and I just read about it in a book called "Super Crunchers" so I know he wasn't pulling my leg. This story reinforces the power of Customer Intelligence for organizations.

So this particular casino (Harrah's) has found that customers exhibit the behavior as displayed in the chart on left. The likelihood of them returning is not affected by a lot, until they lose a certain amount of money (called the pain point) at which point the probability that they will return takes a dramatic fall. So what would you do if you were Harrah's in order to maximize revenue potential from each customer. Well, ideally you'd like to take the customer as close to his/her theoretical pain point and then have them stop so that the likelihood of their return stays high to ensure future revenue. It's a little like the goose that laid the golden eggs, you don't want to get them all at once, otherwise you don't get much in the future. But how do you drive this customer behavior? Why would a customer lose just the amount of money you want and then stop? How does the casino know what each person's pain point is? I can assure you mine is pretty low - unless I've had a few drinks ;)

You know those reward cards at casinos that people get and are swiping all over the place? Yup, you got it. They are providing real time data to the casino's Customer Intelligence systems. This allows the casino to know by the moment how much money each customer is winning or losing. This tells them where the customer is on the x-axis above. To calculate the other dimension, the casino relies on other demographic, psychographic and past visit data points. All these data points are plugged into a regression formula to calculate each customer's personal and individual pain point.

So for example, if a certain customer who likes to play blackjack is a certain age from a certain part of the country with certain past visit behavior, the regression analysis may predict a $1400 pain point. As this customer approaches his pain point in losses, the casino sends in a "rescue team". These guys pull you away, they get you a free steak meal, comp your room, give you tickets to a show and much more. Guess what? Not only did that customer just lose $1300, but the next morning he's feeling really good about his entire experience. Six months later, you can already hear him: "Man, Vegas was fun! We should go back again!"

Gotcha!! :)

What happens in Vegas, is driven by Customer Intelligence.

And there is no reason why this sort of analysis and revenue maximization should only happen in Vegas. What are the missed opportunities at your company? Think of the data you probably already have that could be used in driving the effectiveness of your sales and marketing programs? Give it some thought, I promise you there are lots of opportunities you have not discovered yet.

Reaction: Google B2B Executive Summit

So I am headed to Mountain View tomorrow for Reaction - a Google B2B Executive Summit. It is a 1-day event on thursday July 31st with a range of speakers in the morning and 6 breakout sessions in the afternoon from which you can chose to attend two. I don't have the invitation handy - but when I do I will outline what the agenda looks like. Following the conference my boss and I will be attending a Google Advisory Board which is a much smaller set of key executives from 4-5 companies interacting w/ key Google management. This one will be particularly interesting to engage in. I am specially interested in hearing what other B2B marketers are thinking about and how they are approaching what are bound to be similar environments and challenges that we face.

Look for an update from the event or soon after.