Marketing people LOVE -- really

Marketing companies talk about appealing to your customers' emotions — hit them where they live. And it's true: as logical and business-focused as people are, buying is inherently emotional.

I’m a skeptic--and so are the customers we help reach. HubSpot, a leading inbound marketing platform, strives to be the technology behind "marketing that people love." I follow their research closely, but test at every turn for relevance to the markets we serve. PLS works with companies that sell to research scientists and engineers in industries like medical device, semiconductor, defense and security -- not exactly "touchy-feely" guys.

So how do B2B technology customers sell on an emotional level? You have to establish credibility and build the business case, but also appeal to their gut and their heart for them to take action. This is a big hurdle: the tendency to do nothing is stronger than ever. Neal Elli of Empire Precision thinks it's genetic: the first apes that were brave enough to come down from the trees got killed. The ones that stayed put lived, and passed on the tendency to stay put.

It takes a lot to compel people to act, or in the case of your customers, to buy. In consumer marketing, you can promise to make people thinner, more desirable, more loveable. In optics, photonics, and instrumentation, we have to hit different emotional chords:

Safety: Your track record of delivery and product performance, your position as market leader, customer testimonials: all these create trust — a belief that you're the safe bet.
Payoff: They'll keep their job.

Heroism: Your product lets them do something they couldn't before. They'll save the company money, conduct break through research, get published.
Payoff: Personal brand and career advancement.

Resonance: Your brand, salesperson, product, and service hold up a complimentary mirror. They see you the way they want to see themselves.
Payoff: Comfort and prestige. It's the reason you buy a Mac, even though it costs 2x the price of the HP. You want to be associated with the Apple brand. This consumerism spills over into decisions you make for the business.

There has to be a business case for the company, but also a personal payoff. What's your product's appeal? Why should they care about your product and not someone else’s?

The positioning process helps you define who your buyer is and the unique value proposition you offer the buyer and his company, but also how you can elicit those emotion-based responses needed to make the sale. It is the foundation for marketing that works.

Diversifying revenue streams

The easiest sale is to your existing customer. But easy money doesn't make for sustainable companies. Market leaders like ITT Exelis and Melles Griot know this: they're restructuring and entering new markets to diversify revenue streams by industry and by customer. Why? Simultaneous dips in defense and semiconductor markets. For many companies, too diversification comes late. Real market traction takes 12-18 months, and can come as a surprise if your mix is out of whack.

Here in Rochester, countless small companies closed due to their reliance on Kodak and Xerox. When I took over this company, one customer accounted for 80% of our revenue. [We speak from experience here.]

I work with companies in the laser market with too big a concentration, looking to grow biotech and consumer goods to decrease dependency on other markets.

What’s the right mix?
My rule of thumb: 20% per customer, 33% per industry.

Your CFO may agree: CPAs audit for revenue streams over 10%, but would voice real concern over 20%, says John Rizzo, Managing Partner of Rizzo Digiacomo, CPAs.

How to diversify
If you're too dependent, but limited in resources to pursue new industries, some suggestions:

• Identify and stick to core competencies. Vertical integration doesn't decrease risk. 
• Decide between geographic, industry or product expansion. "Decide" comes from the Latin for "to kill"--choosing which you will NOT pursue this year is one of the hardest and most necessary keys to success. 
• Create a customer persona in the industry you excel at--look for parallels in product demands, demographics, buying behaviors. You're looking to reach similar customers with demand for similar capabilities, driving your product in a direction that increases your competitive edge in both markets.
• Test demand early and often. One customer, in looking at geographic expansion, started google ads in a country they were considering as a target. They were able to compare impressions and clicks against countries where they had a strong customer base. Talk to dealer sales reps in the new territory or market: what do they hear from their customers? 
• Position your product in the new market: Same product, new customer will mean new "care-abouts."
• Look for leverage in your marketing plan. Change up your activities for better cross-over. Design a single tradeshow booth with changeable signage per market/application, web landing pages per market, etc.

Whatever you do, make sure you look at your customer and industry mix as part of every review of financial health. Take deliberate action to achieve and maintain the mix that's right for your business.

Talking to yourself

At some point in every product launch, you get the sneaking suspicion that you’re talking to yourself. You’re not wrong. It’s a known “brain barrier”—the tendency to hear what you want, and it can stand between you and your company’s growth. In a classic McKinsey report, Hidden Flaws in Strategy, Charles Roxburgh outlines the 8 human biases that drive smart leaders to create flawed strategies.

1. Overconfidence
2. Mental Accounting
3. Status Quo bias
4. Anchoring
5. Sunk Cost effect
6. Herding instinct
7. Misestimating Future Hedonic States
8. False Consensus





















These play out in economics and marketing. In this post, I show how and where we see them stand in the way of sound marketing strategy. Most often, it’s False Consensus that leads us astray—the tendency to talk to yourself, rather than the customer and the market. So how do you combat it with real data?

The bias of false consensus
We hear what we want to, from customers, stakeholders, and prospects, because of our tendencies to:

• Confirm bias—seek out the facts that support our beliefs
• Selective recall
• Biased evaluation—quick acceptance of evidence that supports our belief, and rigorous evaluation and rejection of contradiction
• Groupthink, the pressure to agree in teams

In our work, we see product launches, branding and market positioning stall out or go off track due to false consensus. When you’re excited about a new technology or product, it’s hard to get out of your own head and avoid assumptions about what customers want.

Practical ways to get out of your own head and test your marketing hypothesis
This bias causes expensive product development and marketing missteps. In teams where you’re all excited about the project and its potential, it’s easy to talk to yourself.

So how do you get out of your own head and into that of the customer? There are ways even the smallest company can afford to test their theories:

1. Product previews. Early in product development, PLP Digital Systems previews the software to key customers gathered at an industry conference. Result? Early interest, and focus on the features that matter. Optimax uses a similar model in their annual customer summit. Why guess when you can ask?

2. Developer kits. Instead of presuming how customers will use their technology, the forward-thinking guys at New Scale Technologies supported their customers R&D efforts throughout the sale and support of their piezoelectric motor kit.

3. 1:1 customer interviews. In a 20-minute phone conversation, we'll learn where your customer sees value from your company and your product, business and tech trends in their business that impact what they'll expect from you, and why they buy. To avoid hearing what we want to hear, we always close with "what would you like me to know that I didn't ask?" Do a set of 8-10 interviews in each segment for validity.

4. Dual-purpose marketing and data collection. Digital ads like Google AdWords can give you real-time data on demand by industry, application, or geography. In helping an optics company create a new channel in Europe, we used an ad targeting Spain to test impressions and clicks against similar-sized countries where our customer already had a presence.

Any other test techniques you’ve tried? What surprised you?

Setting strategy your team can execute - every day

Business strategy is like religion. Everyone's got one, and for many it doesn't translate to daily practice.

You read about business strategy, have a favorite book and model, but unless you're seeking funding, chances are that you're operating without a current, actionable business plan, much less a marketing strategy. This leads to:

• Opportunistic growth (changing direction based on the latest trends and opportunities)
• Out-of-balance business mix (too much revenue from one customer or industry, increasing risk)
• Higher operating cost / lower margins (lost productivity and increased busy work, firefighting)

You already know it's important, and have strong beliefs on what it should look like, but may still not have one at hand that's useful to you and your team's daily work. Why not? Its importance and gravity move it down the priority list. Many procrastinate because they think a good business plan requires:

• Time. Companies spend days at expensive off-sites and still do not have an actionable plan. 
• Bulk. Throw-weight doesn't help it get in use. Actually, it can prevent you from taking the next step.
• More bodies. Collaborative ideas and buy-in are needed, but in many companies this translates to cut-and-pasting individual work plans together for a plan that lacks cohesion and forward direction. 

Equal opportunity problem
This is certainly not a small business problem. Large companies undergo months-long planning cycles, tie multi-million-dollar budgets to them, and still do not have a way to translate that into action plans for the important, day-to-day work at hand.

My team at PLS Launch Solutions has worked to create and execute strategic plans with Fortune 50 C-level leaders and with startup entrepreneurs. Here’s what I've learned:

• Leaders set the vision. Great managers tie employees' daily work to their impact on that vision.
• Keep it simple. Whatever your planning process, the speed and simplicity of the one-page-business plan gives you something to communicate with your team, partners, bankers, and other stakeholders.
• Narrow your time horizon. Concentrate on this year, working toward a 3- to 5-year vision. Anything more is science fiction.

Socializing strategy 
A recent McKinsey article discusses the benefits and downfalls of the latest trend in strategy development, crowdsourcing, or broadening the pool of input in determining strategy. While this trend started with a natural, Wikimedia, the technique has been used by global technology companies like 3M and HCL Technologies.

Socializing your business plan gives you a broader perspective and helps break free of thinking inside the box. McKinsey suggests that companies are wise to:

Use it only to round out the toolkit. Crowdsourcing won't help when a radical change in direction is needed, or help executives make tough tradeoffs. At PLS, we use customer surveys and customer interviews to verify a company's position and strategy--not to create it.

Identify how they’ll kill bad ideas. Broad input, inside and outside your company, will certainly give you a volume of ideas. Leaders need to qualify and vet ideas, so that real progress can be made with limited resources. Set decision gates before you start.

Avoid groupthink. A timeless leadership challenge: how to generate productive debate. Some groups in live meetings use poker chips to ask their teams to allocate resources among ideas.

In helping leaders of optics and photonics companies to set marketing strategy, we use a rapid planning model to put a business plan in place, gather customer inputs with surveys and interviews, conduct competitive research, and assess your brand strengths.

These inputs are used to set a company or product's position. This level of strategic development, the product or company positioning, is where we see the best use of broader inputs. A brief, half-day workshop creates the most buy-in and collaboration for the least amount of time away from operations. Higher-level and more drawn-out cross-functional engagements do not significantly improve results.

Setting a company's positioning, or "sweet spot," is the best place for broader collaboration.

However you create a strategic plan, it must be:

• Actionable
• Accountable
• Measurable

If it's not, it's not a plan.

Marketing for Engineers

The most rewarding part of my work is helping CEOs and sales leaders of optics, photonics and engineering companies grow their businesses. Aside from the opportunity to work with our clients’ very cool technologies, our team guides the engineer turned business leader to create a marketing system that helps grow their business. 

Once Burned Twice Shy

Some of the brightest and most talented business leaders in this industry are engineers by training and skeptical by nature. The engineering mindset distrusts marketing’s soft and hard-to-measure nature. One customer called it “fru fru BS” the first time we met. He’s not alone—I often agree. The Mad Men model doesn’t work in Optics and Photonics.

That mistrust can cause paralysis—inaction and missed opportunity. In a consolidating industry, you can quickly become David in the shadow of Goliath.

Approach Marketing Like an Engineer

What happens when you apply the engineering methodology to marketing, though? How do you apply the science and psychology of reaching and engaging the right customer for measureable results?

The engineering process itself when applied to marketing will yield better results:

            1.Analysis: Understand the problem, the goals, and what a successful outcome looks like.

            2.Feasibility: Set a budget, test for reality. Define, size up, and qualify the target audience. For instance, if you want to reach Lab Directors of universities by email marketing to close 10 $30,000 deals, look at the numbers.

Available Lab Directors 350

People expected to open the email 20% 70

People expected to click through to the web 10% 7

People who take action/call 10% .7

Here, the numbers don’t work. You’ll need to increase the prospect pool, or increase the number of ways you reach this audience.   

     3. Prototype: Try it, test it, tweak it. Web, social and digital marketing is iterative and measureable. One of the biggest marketing sins I see is paralysis in the pursuit of perfection. Plan to spend a small percent of your budget early in the prototype stage.

           4. Production: Execute what works. Leaders at this stage, having worked through the strategy and the prototype, believe their marketing program is under control---for instance, they “do email marketing” because they sent a newsletter once. Design the process for consistent outreach that delivers on your key message and matches your brand—how you want your customer to think of you.

           5. Support: Design for the handoff to and feedback cycles from sales and customer service. Social media also makes this easy to monitor how your marketing resonates in your market. Is it working? You’ll know quickly.

Results that Drive Business

Some of the principles of engineering high performing systems also apply to filling a healthy sales pipeline. Here’s a few:

Engineering	Marketing
Experimentation
Design an experiment, knowing how you’ll measure it. Monitor and adjust.	Like all good marketing, set the goal, hypothesis, and intended results. Measure and adjust. Conduct A/B –divide the contact list into two separate emails, and measure which works better by comparing open rates, click-through rates and web traffic. Modest changes in the subject line, wording or design can mean big changes in results.
The Rule of 3
Bad decisions comes from doing one thing, failing, then doing exactly the opposite. Good system design requires brainstorming and developing 3 designs for the most elegant and effective end product.	In any marketing campaign, expect three concepts. This gives you comparisons to ensure you pick an approach that doesn’t just match what you like, but also resonates with your customer, and meets your business objectives.
“Be Like Water”
Christopher Cotton, GM, ASE Optics, says great engineering is like a river to the sea…it doesn’t bulldoze through a barrier, it finds the most natural and straightest path around it.	Effective marketing reaches the customer through the cracks—the right message in the way they need to hear it, when they need it.

Use your engineer’s training to avoid the “fru fru BS” of marketing and approach the business of attracting qualified leads with a systems mindset.