• October 1, 2007
  • By Jessica Tsai, Assistant Editor, CRM magazine

Are We There Yet?

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Marketers know the golden rule of their field: Keep the message timely, targeted, and relevant. Straightforward enough -- and yet most businesses are still struggling to streamline and optimize their marketing strategies. The problem is particularly pressing for small and midsize businesses (SMBs). Compared to larger enterprises, SMBs face three core obstacles -- lack of money, time, and resources. As a result, most are under the illusion that the solutions available are far beyond their reach. But the fact is that SMBs have the same ability to compete as the top players. All they have to do is take a step back, look around, and have the courage to brave a little risk. SMBs range in scope from individual entrepreneurs to corporations with up to 999 employees, according to industry research firm AMI-Partners. Many of these rising companies are strapped for more than just money, time, and resources -- there's a lack of awareness, as well: Many don't even realize the technology exists to help them manage their marketing. "SMBs don't really think about automating first," says Laurie McCabe, vice president of SMB insights and business solutions at AMI-Partners. "You're doing a lot of this manually unless you're really sophisticated." SMBs, she adds, eventually reach a tipping point: "They've grown to the extent where they realize they don't have the visibility into what they're doing to do it well anymore." With the rise of on-demand services, marketing solutions have become significantly more accessible both financially and technologically. "None of this is rocket science," says Kraig Swensrud, senior director of marketing products at on-demand business services provider Salesforce.com. "It's just a different way of thinking about how they need to do business in 2007." Nevertheless, experts are finding that most SMBs are still relying on basic programs such as Excel spreadsheets and Microsoft Outlook to manage their customer databases and their email marketing campaigns. Swensrud says it's not even a matter of dollars and cents: Businesses are scribbling essential notes on Post-Its and inputting mission-critical data into siloed Excel sheets -- not because they think these are the best methods for achieving their goals, but simply because these tools are the ones they're most familiar with. While these programs may suffice for a start-up, growing companies unwilling or unable to take the next step will, at best, plateau -- and, at worst, will risk losing existing customers and potential new business. Because they have such limited resources, SMBs cannot afford reckless decisions. They need to know that putting money into something will bring back a positive result. Consequently, they are wary of launching marketing campaigns built on untested technologies for any number of fears: fear of a consumer backlash; fear of being blacklisted on spam lists; fear that their keywords on Google or Yahoo! will either not draw any clicks or have low conversion rates; fear of unintentionally sending the same individual multiple or even conflicting emails; fear of receiving negative feedback from the increasingly influential bloggers. In an attempt to avoid these situations, most SMBs don't realize that the costs they accrue from playing it safe will eventually catch up to them. To effectively and efficiently utilize the solutions currently available, most SMBs need to face the fact that they are at a point in their development that requires a bit of risk. Many of them already embrace that level of "can-do" spirit. "Before I started my business, when someone asked me, 'What if it doesn't work?' I would say, 'Well, that's not a possibility,' " says John Doyle, cofounder of Philadelphia-based chocolatiers John and Kira's Chocolates. This is not to say that entrepreneurs need to be hardheaded, but they have to be confident in what they are offering before they can launch a successful campaign. Map It Out The average company with 25 or fewer employees spends 80 percent of its operating budget on running the business (e.g., delivering on commitments), 15 percent on administrative business and finances -- and only 5 percent on marketing and sales, according to Peter Callaghan, chief sales officer at Maximizer, a vendor of sales and contact management software. That's all wrong, Callaghan says: Companies should instead be spending 30 percent of their resources on marketing and sales. Before businesses start throwing money at any random solution, though, they need to have an idea of what their goals are. "It's critical for SMBs to have a strategy; there's nothing wrong with a basic one," Callaghan says. "If you're trying to build a house and you don't have a blueprint -- what materials are you going to buy?" Businesses should write out a plan detailing how they want to treat their customers and prospects and how they want to reach out to those individuals. Unfortunately, for every gunshy SMB unwilling to take the technological leap, there's an overzealous one under the misapprehension that technology will automatically solve all its problems. Mini Peiris, vice president of product management at NetSuite, warns that technology can help only when a company knows what its specific pain points are. Ideally, SMBs will have prioritized and structured their businesses based on a clear vision of the bigger picture right from the start. Realistically, however, SMBs -- especially those just starting up--are more focused on tactical execution and function by "plugging holes and filling gaps," says McCabe, of AMI-Partners. She suggests that companies lacking the bandwidth to see past immediate obligations should focus on the pain points and solve those with what she refers to as an "incremental but integrated approach." When problem X arises, the most desirable option should specifically address the needs of X while also contributing to a broader solution. As a result, when problem Y arises down the road, companies can hopefully avoid the headaches of trying to integrate a disjointed system. Get in Gear
There's no doubt that the Internet has revolutionized the way businesses present themselves to the 21st-century customer. From building an ad campaign to managing customer contacts, almost every function needed to run a business can be facilitated online. Simple to use, cost-effective, and accessible almost anywhere, the technology available to SMBs enables the best of both worlds: leveraging the resources of their community and using it to extend their reach. Because of the Internet's convenience and the reach it provides, marketers have gradually steered away from investing heavily in traditional forms of advertisement. Direct mail has become "a dying art form," Peiris says: relatively expensive, and essentially a one-way communication. Mail also doesn't readily lend itself to tracking either progress or success. Other physical modes of marketing include networking at trade shows, placing ads in newspapers, and generating word of mouth -- but, again, these are difficult to measure and assess. That brings us to the Web. "Ten years ago it was 'nice' to have a Web site. Now, the Web site is the face of the company whether you're large or small," Swensrud says. Today's advanced searching capabilities satiate customer demands for instant gratification. Individuals, partners, resellers, and suppliers all look to a company's Web site for anything from contact information to product offerings -- and if they can't find your Web site, they're going to Google you, Swensrud says. In short, marketing in the modern world means having an online presence -- even, perhaps especially, for SMBs. Technology has provided SMBs the ability to take advantage of electronic marketing, the most popular method being email marketing. "When people think email communication is easy, I immediately think they're doing it wrong -- and they're probably doing something illegal," says Tom De Bens, ad operations manager at Miami-based marketing specialist Media 8. Like all marketing campaigns, emails first need to be targeted, timely, and relevant; only then can SMBs employ best practices and avoid breaking spam laws and regulations. When the customer pool is unknown, there are services that provide lists with individual contact information. Lists, however, can be hit-or-miss. "It doesn't take long for a list to go stale," Callaghan warns, depending on the source. "I've seen someone buy a list of a thousand names, 10 percent of which were [already] dead." It's very difficult to be certain of a list's quality; Callaghan recommends only buying lists that have been updated within the past six months and that are provided by a highly reputable vendor. And lists demand constant vigilance: After acquiring or building a customer list, companies still have to continually cleanse, manage, integrate, and update it. Emails are also required by law to include a link allowing the customers to decide if and when they want to unsubscribe. Unfortunately, most companies neglect to do this, which is a violation of spamming regulations, Callaghan says. In addition to being illegal, failure to include this feature is a missed opportunity: Including the opt-out helps companies winnow their lists to only those customers who want to hear from them. Straightforward email applications such as Microsoft Outlook are fine for individuals but when it comes to segmenting and mass mailing, companies need a tool that automates these processes. Marketing automation is a multilevel project that SMBs need to tackle if they hope to make the most of their email marketing campaigns. A solid automation solution will, among other functions, monitor customers who were sent an email, track whether the email was opened (and what links were clicked on), and track whether the email contributed to increasing revenue. This visibility lets SMBs gauge their email campaigns on an ongoing basis -- the only way they'll know how and where to improve. SMBs can also turn to pay-per-click advertisements through Google AdWords or Yahoo! Search Marketing (formerly Overture). Marketers can select their own keywords and for a small initial investment their ad will appear based on its relevance to the user's keyword search. "Eighty percent of my [new online] revenue comes from pay-per-click advertisements," says Igal Alon, owner of St. Louis-based Mavrik Jewelry, while the other 20 percent is more or less derived from natural search and search optimization. Search-engine marketing only costs money when the ad is clicked on, which addresses companies' budgetary concerns and hesitancy to commit to long-term advertising contracts. In a holistic marketing effort, that approach carries over, Alon says: When it comes to Mavrik's offline revenue, for example, 80 percent is driven by word of mouth and only 20 percent comes from traditional advertising. But even the clicks you pay for aren't the end of the battle. "Most [SMBs] can go to Google and Yahoo! and make [keyword] purchases, but it's not just about eyeballs you're driving to your Web site, it's also how they convert from visitor to customer," Peiris says. The key is to make keywords as specific to the product as possible to increase the likelihood of attracting a customer who is truly interested. SMBs can be at a disadvantage because they are often competing with larger enterprises that are providing similar services. Consequently, they cannot expect to get hits from general keywords--for example, "brown boots" may pop up alongside search results more often, but "camouflage Army surplus boots" would be more likely to draw actual clicks, and more likely to lead to a conversion. Sanjeev Aggarwal, vice president for SMB infrastructure solutions at AMI-Partners, also notes that, while it's not necessary to be the top result, it is important to show up on the first page of a search. Again, marketing means measuring: Even with search-engine marketing, SMBs need to monitor where customers clicked, what they were searching, which customers then filled out forms on the Web site, and what they bought. By integrating and automating the data, it "not only helps us track our ROI on paid search, but also helps us understand the worth of our natural search activity," says Kirk Crenshaw, vice president of demand generation and services at Demandbase, a San Francisco-based provider of marketing lists and sales leads. The Internet has also stimulated the rise and popularity of bloggers. "Everybody, start a blog," Crenshaw says. "What [blogging] does in terms of natural search ranking is amazing...when you start building that content, five or six months down the road people put in searches that are relevant to your solution and your blog is coming up." The hardest part, Crenshaw adds, is consistently contributing valuable content to the blog. And while it is free press, bloggers should avoid being too sales-oriented, Crenshaw warns. "The relationship to our product is minimal; we mention it every now and then. We try to be very focused and very content-rich." When bloggers do write about their own products or services, they write "focused blogs that help people with tips and tricks and let them know what updates we've made." That level of interaction between bloggers and customers promotes credibility and "increases transparency into your business, but at the same time it increases trust," Crenshaw says. As a result, he reports, blogs contribute "about 30 percent of our leads." Programs such as HitTail tell the Web-site host the exact search phrase that led people to the site. Searches are grouped and categorized to suggest what people are interested in--that knowledge might inspire future blog topics. Aside from the opportunity costs of creating a blog, SMBs are also concerned about negative feedback. Although good reviews could vastly improve your reputation, bad reviews seem to hit harder and last longer. To Crenshaw, however, "any type of feedback is positive." He argues that no one is expected to be perfect: "If a customer has a concern or complaint with the product or service you provide, you now have a direct means to respond to that concern." The Internet has elevated the power of communication; there's no point in trying to block negative feedback, Crenshaw warns. "[That's] doing more harm than good," he says. "If someone has an issue with your services, and are so motivated, they will find a way to tell everyone." And worse: They'll tell everyone that you tried to muzzle them, as well. Merge Ahead Companies can implement any of these marketing strategies, and should try several, but if they can't integrate and automate the various initiatives, they'll be struggling with a disjointed mess. SMBs in particular can't afford to have 10 different solutions (e.g., one for managing contacts, one for emailing, etc.). Simply put, the accumulation costs too much, in money and in technical resources. "For a lot of SMBs, they typically don't have a lot of IT resources. They don't want to be maintaining systems; they just want to run their business," Peiris says. Luckily, there are options available for extremely affordable prices -- and hosted or on-demand software and services are gaining favor among SMBs for marketing and other efforts. "It's a tremendous value to [SMBs] to have a solution that's hosted," Peiris says. That way, she adds, the host or provider "worries about whether the [on-demand software] is going to scale for them [and] whether it's going to be available to them 24/7, and takes care of making sure the application performs well as the business grows." That frees up the limited resources of an SMB to focus on actual business processes -- the business- and customer-centric efforts that can generate revenue. When companies begin to think about CRM, they tend to immediately turn to sales force automation (SFA). While it is beneficial to automate the routine sales activities of a business, SMBs might want to consider an alternative early on: turning to marketing automation instead. The culture of marketing, AMI-Partners' McCabe says, is to "measure what they do, seeing and measuring return on marketing campaigns -- who replied, who converted -- and working with a lot of lists. It's not [like] the very personal interaction sales is used to -- marketing targets by the thousands." SMBs can see great return on investment from a marketing automation initiative compared to one involving SFA -- and it's often much easier to execute. (There's also less of a participation hurdle: Because the benefits of marketing automation tend to be more readily visible, marketing staffers are often more willing to adopt the technology than salespeople are.) "Basically, the bar is getting raised," McCabe says. "If you can't offer the same level of service -- whether it's marketing, sales, or service -- someone else is probably doing it better, so you're losing if you're not doing it well." She recognizes that large companies may have more money and resources to evaluate and implement, but SMBs have the advantage of maintaining a more personal connection to the customer. She adds, "The expectation [the consumer] has now for how people market to us is pretty high, and it will only get higher." Customer management will eventually become impossible for one person to singlehandedly maintain, no matter what the size of the enterprise. Consequently, it's imperative for businesses to look past the day-to-day activities and automate their processes. The situation used to be that the lack of communication between sales, marketing, and customer service would result in a rift between the parties. Integration introduced "complete transparency in the company," Crenshaw says. "Everyone can see the processes and say, 'Okay, we sold $25,000 today, great.' The cool thing that happened was that [CRM] created a nice streamlined process between sales and marketing that never existed before--marketing was proving their worth to sales and sales got the complete insight into what marketing was doing," he adds. From there, sales and marketing can see what worked best and what needs improvement. Floor It SMBs face unique challenges, but they also have substantial advantages over their larger counterparts. They're more flexible, more adaptable, and more responsive -- if they do it right. "Because SMBs are inherently smaller, senior management is naturally closer to decisions involving the marketing offers, promotions, and the communications vehicles their company uses to take their products to market," Callaghan says. Having higher-ups intimately connected to CRM means "management can instantly react to incoming feedback from marketing campaigns, [as well as] sales feedback and feedback received through the customer service department," he adds. An SMB has a "tremendous advantage in growing the size and loyalty of its customers by learning from its customers and proactively addressing their requirements quickly," he says. CRM vendors marketing to SMBs also have to tailor their strategy. They have to make their systems very simplified, integrated, and clear. "It's almost got to leap out at SMBs and whack them on the side of the head," McCabe says. SMBs want the same capabilities offered to larger enterprises but they don't have the time or resources to figure out what works best. "What seems like pocket change [for a large enterprise] may be the entire IT budget for an SMB," McCabe says. So vendors have to price their products at 75 percent to 80 percent of the price tag they show the bigger companies. An SMB need not project itself as if it were a large enterprise, but there are affordable applications that can allow it to compete with one. Also, because so few SMB staffers are formally trained to use the Internet, SMBs should look for highly user-friendly products. "The expectation for Internet-based product/services is that [customers] should be able to figure it out on their own," Swensrud says. But for those who want an added reassurance, most systems offer professional services to aid in implementation and problem-solving. But the responsibility to find the best solution falls primarily in the hands of the business itself. "You need to do a little homework" to pick the CRM application that's the right fit, McCabe says. What worked for one company may turn out to be a disaster for another -- "the best thing is to hold each of [the vendors'] feet to the fire [and have them] prove to your level of satisfaction in terms and conditions, pricing, and everything else that it's going to be the best solution to solve your problem," she says. Experts and business owners agree that the greatest marketing challenge is to gather all the data and be able to take advantage of it in the most cost-effective way. SMBs need to focus on growing their customer base and keeping their customers happy by targeting marketing messages from as relevant a perspective as possible. More than anything else, "your service is your brand," Crenshaw says. "Focus on customer experience. If you do that, you're going to beat out anybody." Contact Editorial Assistant Jessica Tsai at jtsai@destinationCRM.com.
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