Marketing is now expected to nurture and develop relationships before they become leads …and after they become sales. Buyers resist being sold to until much deeper into the buying process, so marketing remains involved much longer. Even after the sale, Marketing and Sales need to team closely to establish and nurture interest and relationships. This is the environment today.

Companies risk alienating potential customers if they sell too hard, too soon. Abundant information, from online product information to peer reviews, alters the traditional sales funnel in some important and fundamental ways. The traditional sales funnel with its sequential steps and metrics no longer describes the process for many sales. In adapting, companies can choose to go half way or all the way. This is where Marketing’s role really expands.

Impact on Marketing Strategy: Two Paths

Half way is adapting to the new, less-salesy sales funnel. Customers are “nurtured” while they gather information, especially using social media. Customers have the option of remaining engaged after the sale, but companies vary widely in their commitment once  pocket the customer’s money.

Going all the way represents a huge new opportunity, recognizing that building better customer relationships itself is the source of incremental value and introduces an element of service into the customer-company relationship regardless of the offer. Replacing the 100-year-old, transaction-oriented sales funnel with an interaction-centric relationship model initiates ripples of change throughout the entire company, from sales and marketing, to support, finance and development. This is one reason why the SaaS software experience feels so much better.

Once you start focusing on interactions, you’ll experience customers eager–sometimes literally begging you–to help in a plethora of ways from honing marketing messages to setting development priorities. By embracing this type of relationship and building your strategy around fostering and developing these types of interactions, you create not only a higher performing company, but a more resilient one that thrives in good times and bad. Replacing the transaction-oriented approach with an interaction-centric one  changes the game, but marketing needs to lead the charge.

Related articles:

• Re-Inventing Product Management with LOVE

Trevor, the CEO of a mid-sized professional services firm approached me about his marketing and business development. They had a well-oiled machine–they even called it that–but it wasn’t producing like it had in years past, and he was trying to figure out how to ramp up the volume.  I call this the Nigel Tufnel approach of simply dialing everything up. It wasn’t that Trevor’s offerings were lacking. In fact, the rest of his organization and the market were poised for growth.  His firm provided good value and demonstrated expertise in some emerging areas.

What happened was that his marketing strategy had gone stale.

A stale marketing strategy carries a high, but largely underappreciated, cost.  Big wins, high-performing customer relationships and achieving the next level are celebrated, but the contra events are often missed entirely. Lost business, under-performing customer and/or partner relationships, and the inability to get to the next level are but a few of the costs of a stale marketing strategy.  The staleness starts in marketing, but extends to business development, partners and sales until everyone is underperforming.

I’m talking about a deeper view of marketing than out-of-date brochures and advertising that’s lost its zing. Those are things that are easily fixed, and in most organizations can be addressed by a small number of people. Correcting a stale marketing strategy calls for broad organizational understanding and support because it reaches across functional areas, even if it is driven by the VP of Marketing. A good marketing strategy results in an organization fully capable of competing in the current marketplace and poised for the next level of growth and profits.

Detecting staleness
A good rule of thumb is, if you feel you are behind, you almost certainly are, but you might not be deficient in the ways that you think you are. At some point, an awareness takes hold that you are doing the same things that brought you success in the past, but without seeing the same results. This is what Trevor noticed. I see this frequently in service businesses. The typical reaction is to go “back to fundamentals” and work harder. (See also the Nigel Tufnel Approach above).

Truly going back to fundamentals, however, entails revisiting goals and the environment.  Doing this often reveals changes in the market and customer expectations that doom the old approach to declining returns even if the inputs are increased.

Customer relationships are rapidly changing.  Most importantly, customers have access to much more information about you, your offerings and your customers, much of which you can’t control. Increasingly, customers don’t even bring your sales reps in until much later in the sales cycle. Because customers have access to so much more information, the ways marketing adds value is changing and your marketing needs to adapt.  If you believe that marketing should lead sales, you understand the challenge.  If you believe that sales–or any other part of the organization–leads, check out my recent article on the changing role of the CMO.

Getting to the Next Level
I helped Trevor to realize that his marketing needed to shift from case studies describing skills to a variety of content highlighting the results his company delivered to his customers.  More than a vendor, his customers desired a partner who could provide continuous value across many interactions rather than primarily in the final product.

A marketing strategy is a comprehensive plan that must to do a lot of things well.  Go to market, pricing, channel, communications, and social media plans are among the individual elements in a comprehensive marketing plan. In the emerging social enterprise information is shared more broadly and marketing needs to support the actions of everyone who may interact with customers–which could, and should be, almost everyone.

At a strategic level, does your marketing support your organization’s overall strategy while setting a clear course that all parts of the organization can follow? Marketing’s internal customers are not just marketing, or even sales and marketing. In an increasingly connected and social world, every aspect of your organization is “customer facing.”  Marketing strategy needs to reflect this.  Marketing has the opportunity to be a hub for customer and market information, gathering it in and distributing it out to all parts of the organization.

At a tactical level, does your marketing plan balance outreach to new customers, nurturing existing customers and thought leadership? Does it accurately reflect the specific constraints of your situation: budgets, other resource constraints, the people that must execute the plan and the competitive environment.

Getting started
An effective marketing strategy starts with a deep understanding of customers, partners and your market. From there you can build the right programs, create the right content and establish the appropriate pricing to deliver outstanding value to your customers.  Remember, if you think your marketing is stale, it almost certainly is. It’s a good idea to periodically study customer expectations and contrast them with your own.  The resulting gap analysis is a powerful tool for getting disparate parts of your organization onto a common page.

Jonathan Salem Baskin, writing in Ad Age, recommends that CMOs focus on activities driving sales directly rather than just brand.  He’s right, if you are a newly hired CMO, go for the quick win. However, he comes up short in advising how to make the role of CMO more successful.

Why CMOs Fail

As one whose vocation is marketing, it pains me that many marketing organizations underwhelm. Brand and awareness are too often seen as goals rather than mere inputs into driving sales.  Other parts of the company mock marketing as the t-shirt and coffee mug people who waste huge sums of money on advertising, PR and “building the brand.” (Many outside of marketing don’t even know what that means so they fail to comprehend why it is important.)  Marketing gets little respect. You know what—the critics are more right than wrong.

Although there are a lot of highly talented people in marketing, the role of the CMO is a failure. The CMO is not at the big table because other executives—especially the CEO—don’t see marketing as making the impact it should.  The role isn’t working because other than the brand (see note above), the CMO doesn’t own much seen as tied directly to the company’s success—namely sales.

Marketing does do some important things. Good product management is essential for innovation. Product marketing, and even advertising and PR, are often critical components of a winning go to market plan. The rub is that while marketing plays a central role, it often fails to own the overall processes. If a new product fails to meet customer expectations, whose fault is it? In most companies, it is not really clear: maybe engineering failed to build the right product or maybe sales failed on either the front end (insights) or the back end (communicating value). Because the buck never seems to stop at the CMO, other executives don’t view the CMO as an effective, important or influential leader.

Contrast the CMO with the other members of the C-Suite and what they are accountable for:

• CEO: overall responsibility for the company
• CFO: financial resources and planning
• CIO: information technologies and systems
• CTO: product technology
• CSO / VP of Sales: revenue

See a pattern? I love marketing, and I want to help my peers regain the respect they should have, but they have to earn it. If they want to sit at the big table and be part of the C-suite, they are going to have to be on the hook for a critical part of company operations.

What’s Missing?

There is one critical part of the company’s operations that lacks a champion: customers. Maybe you’re thinking that customers are central and everyone needs to be customer-centric. You’re right, but whose job is it to make sure the company is—and remains—customer-focused? Everybody, you say, which is shorthand for nobody.

A Chief Customer Officer (CCO) with overall responsibility for ensuring that the company is customer-focused needs to replace the CMO. Most of the traditional marketing functions will report to the CCO, but with a new focus and urgency that puts the customer at the center of everything the company does. Sales will howl that they own the customer, but it’s not true.

Sales owns the tactical customer relationship, but they are too busy making this quarter’s number to ensure customer involvement in product development that drives innovative new products and services.

Need to Re-Think the Role

I’m not proposing a re-design of the CMO’s roles and responsibilities. I propose that we completely re-think the role to make it successful. This is a disruptive change to marketing as we know it. CFOs are going to love it. Once they know what marketing is supposed to be doing, they’ll develop metrics to measure marketing effectiveness. CEOs will love it because they’ll finally have a team capable of firing on all cylinders. Proof that I’m on the right track is that old school marketing folks are going to hate it. No more hiding behind input metrics (how many trade shows, new ad campaigns launched, etc.) or brand awareness unless these can be shown to drive sales. Every time marketing does something, someone should ask, “How does that help the company become more customer-centric?” The ones that can answer will rocket past the old guard to become the new stars of marketing. Needless to say, many existing CMOs won’t be able to make the change.

Marketing needs to step up and become central to everything the company does. Customer-centric companies know what products to develop and how to sell them.

Marketing should be defining customer requirements to the point where they hold engineering’s feet to the fire to ensure a laser-like focus on what customers need rather than what engineers want to build.

Marketing needs to ensure that the product vision is built around customer needs and be accountable for effectively communicating it to all parts of the company. The CCO must ensure that the company’s brand and position reflects customer-centricity and that the company’s messaging – internal and external – reinforces it. Marketing needs to proactively ensure that sales—and other channels—deliver back the information and insights needed by all parts of the organization to remain competitive into the future.

We will know that the role of CCO is successful in the same way that we know the role of CMO is not: CCOs will gain respect as a central player in a company’s success. Having owned responsibility for the very nectar that feeds the company, the CCO role will replace finance and sales as the prime source of CEOs in the future.

It’s not because my clients don’t care about their customers. So, why do I get better insights than they can get?

You can and should have as many and as open conversations as you can. However, internally you are limited by several factors, including:

• Customers are more willing to talk to an outsider. People will tell me things and be frank in ways that they never would be with you in the room. They know who I work for and know I’ll be reporting back. Most customers value being heard, and a third-party telegraphs they care enough to hire someone.
• Good questioning is a skill. I have a passion for understanding complex systems and interrelationships, and have developed a knack for establishing trust while asking probing questions and guiding conversations. It’s not just the questions, but how they are asked. I also get a lot of practice.
• Biases. It is difficult to overcome the confirmation bias that the world works like it always has.
• I’m pretty good at reading between the lines. For instance, sales people always complain about the price. If it were cheaper, it would be easier to sell. No news there. How they complain about price tells me reams.

I bring the objectiveness of an outsider combined with an experienced eye honed from many years of doing this. The net result is I’m able to draw out thoughts the customer would never say directly to my clients and hear things in what they say that most clients would miss. Further, because I use a similar process with key internal leaders I accumulate additional insights seeing a single situation from multiple perspectives.

Data is interesting, but action is transforming. By contrasting the synthesized insights resulting from internal and external conversations, combined with data on market trends, future plans and the competitive environment, an enlightening gap analysis can drive executive support for change. While my clients could do each of these steps, the depth of insight, the experience that helps one “read between the lines” and the objectiveness I contribute as an outsider, makes it unlikely they could deliver comparable results.

Later, as organizations grow larger and need to manage a complex enterprise these is a shift to where there are many people, each focusing on specific areas.  Their job is their turf, so they protect it, often aggressively.  In this environment, stepping out of organizational lines is more likely to result in a knife in the back than a congratulatory slap.  Not only that, but even if people get along and have good intentions, the organization is much less nimble.  For all the talk about breakdowns in infrastructure, the greatest loss is in how customer relationships suffer and become less of an overall driver.

Countless executives and authors of management books have grappled with how to restore the lost organizational intimacy.  Management structure doesn’t offer an answer (although some are definitely worse than others) because with many managers and executives already spending eight or more hours a day in meetings, there simply isn’t bandwidth or structure to accept and integrate yet more information.

We’ve tried to harness technology.  Data warehouses drown us in even more data.  Video conferencing saves travel time and expense, but is just a better way to do (often inefficient) meetings. Email management can be a significant time suck.  Cell phones and mobile devices, by themselves, make us more available without providing better information.

If we can’t make hierarchies and silos work better, perhaps focusing on re-capturing the intimacy of small organizations can help.

Enter the Social Enterprise

For all the technology and hype, the social enterprise is best viewed as simply an attempt to scale key benefits of small organizations.  The type of organization where people have extensive knowledge about the surrounding context and are able to make faster and better decisions based on a wider variety of relevant information.  Microblogging, project wikis, instant messaging and a variety of mobile apps are all ways to create new, better and timelier information flows that also provide valuable context.  Why wait until next week’s project status if you can get real-time updates?  Why spend an hour or more a day sorting through email threads when you can access an always up-to-date central wiki?

Think about it.  It’s the spirit of Dave Packard’s and Bill Hewlett’s Management By Walking Around philosophy able to scale to organizations that are too big, complex or dispersed to physically walk around.  It’s even better because information can both be pulled (requested) and pushed (offered) in a variety of formats that support context and relevance.

Good business is built on customer relationships

Back to why we care.  While there are numerous benefits to creating a more intimate organization, the biggest and most important is way it impacts customers.  It’s more than just support reps having better information; it’s executives, sales reps and marketing all having access to the crucial context-setting knowledge and insights that enable better and more nimble decision making.

#1 – Clarify the message

Solid, well understood positioning and branding provides clarity of mission both externally and internally. The better employees throughout the company understand your mission and the value you provide to customers, the more they can buy into it. Knowing how one creates value for customers is a great motivator. Employees in finance, operations and engineering all want to know how the overall organization creates value. My rule of thumb is that every employee can clearly explain to family and friends what makes their company better than the alternatives. Note I said “their company.” This holds equally true for #2 below.

#2 – Enable everyone to be a sales rep

Not every organization culturally wants to empower employees in this way, but with clarity of message, you have many more people that can accurately represent your company. The junior staffer isn’t going to get a quota, but you—and they—don’t have to worry about what they might say to a customer if what they say is on message. This is great for morale and internal career tracks, but it also gives you more touch points with you and your customers so it is good business, especially for service firms.

#3 – Focus on building relationships with customers

The traditional approach to selling focuses on transactions. Sales people are drawn to this type of environment, but most other types of employees aren’t. That is partly why they are not sales people. Transactions are about winning, and not everyone is highly competitive. A focus on building relationships emphasizes interactions rather than transactions and generally involves a much wider range of employees on both sides. Having more people who can contribute to your team gives you more depth in the customer relationships you can build. Since this reaches well beyond the sales organization, marketing has a big role to play.

#4 – Communicate internally regarding what you see and hear

This one applies to everyone who interacts with customers (or the channel), but especially product managers. Don’t just tell other groups what you need them to do. Tell them why you need it. I have more examples than I can count of “uncooperative” groups that became supportive simply by being brought into the thought process. You’re not seeking their permission, but by offering information about how their output contributes to creating customer value they see a direct link between their actions (or inactions) and company results. There you go, four ways marketing can do well by doing good for your company.

The past week saw lots of advice about the secrets of Steve Jobs’ success.  Guy Kawasaki concisely distills what he learned from Steve Jobs into 12 lessons.  It’s a good article with lessons worth reflecting upon. But what if you’re not a once-in-a-generation visionary leading a team of crack engineers with billions of dollars at your fingertips?   What if you are smart, but perhaps not smarter than the combined industry-at-large?  What can Steve Jobs teach you?

My thoughts naturally wandered to what we can learn from Steve Jobs that can help my clients—smart, decisive business leaders that don’t have the outlandish resources of Steve Jobs.

First, not every company should aspire to be Apple.  For every Apple, there are hundreds of very successful businesses that aren’t predicated on the visionary leadership of a once-in-a-generation talent like Steve Jobs.  During the Gold Rush, there were fortunes made in the mines and on the rivers, but more fortunes were made selling goods and services.  The latter are more representative of my clients.

I’ve amended and extended several of Guy Kawasaki’s lessons to make them relevant to a broader cross-section of business leaders.

Experts are clueless.  Steve famously didn’t like industry experts.  They didn’t understand where his mind was going, so they added no value.  Most of us would be worse off without analysts, consultants and bankers.  That said, you and only you are responsible for understanding their limitations and biases and remaining (or becoming) a discriminating consumer of information and insights.

The most valuable thing students can learn is how to learn. It’s no different when we grow up. I help my clients recognize gaps and how to drive ever deeper interactions with their customers to build stronger and more profitable enterprises.  That’s a lot of value.

Customers cannot tell you what they need. Market research is famously poor regarding disruptive innovation.  Customers would have told Henry Ford they wanted a better horse.  However, if you are not trying to market a disruptive innovation, you’d be foolish to disregard customer input as long as you recognize customers as creatures of the status quo.  Without customer input, you’ll end up with the products your engineers wish they had. That approach rarely works out over time.

Jump to the next curve.  This is the power of innovation.  Jobs was able to see the Next Big Thing repeatedly.  Trying to “be like Steve” is likely to ruin more businesses than help because unless you possess Jobs’ vision, your bets are less likely to pay off.  What makes you a bozo is being so caught up in the status quo—probably because you are really good at it—that you miss the boat.  The earlier you can sail, the better off you are. Of course, if you have the opportunity to be first, it’s worth a big bet.

Design counts.  This is as true for industrial products as it is for consumer goods.  The trick is knowing which design elements matter most.  Having the right shade of black for industrial machinery probably adds little value, but easier operation or other design elements may be hugely valuable.  Once you know what matters, be relentless.

You can’t go wrong with big graphics and big fonts. So true. Less is more.   Keep in mind it’s easier to launch a product with clean slides than to explain its marketing plan, but there is no excuse not to radically reduce the amount of verbiage on presentation slides.  Your big message is what you want your audience to remember.  Everything else is a distraction until they “get” the core message.  Liberate yourself; not everything this needs to be in PowerPoint.

Real CEOs ship. This one perhaps best exemplifies the genius of Steve Jobs. He was both a perfectionist and someone who was committed to actually shipping product.  A rare combination.  It worked for Jobs because he was crystal clear about goals and standards, and wouldn’t accept the usual compromises on stupid stuff. Ignore or downplay this one at your peril

Guy Kawasaki included five more lessons with which I’m in total agreement:

• Changing your mind is a sign of intelligence. If you encounter new information—or you were wrong—the smart thing to do is to shift your position rather doubling down.
• Value is different from price. It is easy to compete on price; it is much harder to compete on value. Understanding the aims of your customers will help you create value.
• A players hire A+ players. A players hire A players. B players hire C players and C players hire D players.  This drives what Jobs called the “bozo explosion.”
• Real CEOs demo. If you can’t demo your products, perhaps you don’t really understand them.
• Marketing boils down to unique value. The best success comes from a highly differentiated offering that creates high value to users.  Other combinations are either price-driven or not worth pursuing.

Have a vision and boldly pursue it is a valuable lesson everyone can take from Steve Jobs.

A customer reference program can do a little, or a lot.

At a minimum, a customer reference validates key information communicated during the sales process, reducing the risk in the customer’s mind regarding your company’s ability to execute.

A really good reference does much more, creating enthusiasm for your company and higher credibility than anything you can do yourself. At the end of the day, people—even buyers at large companies—are more inclined to buy from people they believe in. If they believe in your sales rep, that’s great. If they believe in your company, that’s an advantage that’s hard to beat.

While contemplating this post, a colleague told me it wasn’t worth writing because “every company has a reference program.” While that may be true on the surface, in my experience the lack of best practices results in meager returns for many. The two most important reasons customer reference programs under perform are: (1) companies don’t understand the full benefits, and (2) they don’t have the right person to manage the program.

You need to get serious

Many customer reference programs operate more like ad hoc programs drumming up references when demanded rather than as strategic and well-defined parts of the sales process.

The result is references that confirm you have actual customers, and perhaps that your product works, but these programs do not foster and encourage the kind of infectious enthusiasm that makes people believe in your company and make them want to do business with you.

If you are a big, well-known company selling a well-established offer, you might be ok. However, if your company, its offer or how you stack up against competitors is not perfectly known to your prospective customers, then strong customer references provide valuable sales leverage.

Surprisingly, your company can have a lot of problems and still have a fabulously successful reference program. I had an enterprise software customer who gave a glowing reference at the same time his system was actually down (and not for the first time). You can read more about why this wasn’t an exotic “corner case” in a forthcoming post.

What you should expect

Here are five benefits you can expect from a well-executed, programmatic customer reference program.

1. Happier, more committed customers. Yes, asking your customers to do more can actually make them happier. Building the relationships that create great references will also create strong alignment between you and your key references.
2. Higher sales close rate. Sure, strong customer references help close more deals. But not just any deals, references help close deals where you’ve already invested heavily, so the return is even higher.
3. Get more out of your best reps. Strong references help all reps close more deals, but a good program will build trust with the sales reps that own the reference accounts. Typically, these are also your best sales people, and good sales reps control access to key people within their accounts to reduce headaches and the need to do damage control. A well-managed reference program builds the trust needed for these reps to relax access. If they aren’t spending their time being gatekeeper at reference accounts, they have more time to sell.
4. Improve your offer. Many customers will suggest product and service improvements if they can find a willing ear. However, when your customers believe in your company and want to share in its success, they’ll go much further and eagerly tell you which marketing messages are working and how to defeat your competitors.
5. Fewer distracting fire drills. When a major customer, especially an important reference, has problems, a resource-consuming fire drill ensues. In my experience, the reference program manager frequently knows about potential problems long before support or professional services. You still have to build the internal lines of trust, but the opportunity to proactively reduce the number and severity of support fire drills is there if you want it.

A good customer reference program is not easy or cheap, but its biggest dividends are concentrated where you need them most—closing deals where you have already invested in the full sales cycle). In addition, the unexpected benefits are meaningful and many.

The need for marketing automation systems is great. They provide an essential framework and tools for scaling marketing execution to address the burgeoning requirements of social media and individualized content. Marketing automation, however, is no magic bullet; it is a force multiplier, so garbage in, garbage out.

How do you ensure success? Most fundamentally, successful implementations of marketing automation require better marketing. These systems are huge consumers of content, so you have to feed the beast. The less homogeneous your market, the greater the breadth of required content you’ll have to generate.

Content is the key—good content that is—because that is how you connect with a variety of audiences. You can’t create content to address a range of individual needs without understanding each of your segments and audiences. You have to understand what they want to hear, but also how they want to hear it, so you’ll have to employ multiple media (web site, direct marketing, blogs, articles, video, social media, etc.). You also have to support several types of messaging, including: firm to buyer, firm to influencer, and peer-to-peer.

No one has automated creation of great content, so crafting content to address the variety of needs requires old-fashioned marketing: knowledge of customer needs, benefits of your product or service, segments, market trends, competitors, and channels. Excellence here is foundational for success with marketing automation.

Once you have content, technology is an enormous help since the vast majority of your content will be digital, and distributing electrons is cheap and easy. Further, most of your content can be quickly repurposed so your content creation provides lots of leverage. A conversation can become a blog post. Blog posts can become the basis for an email newsletter. A presentation can be posted to SlideShare. An article can become a speech.

So, while you need lots of content, it’s not quite as daunting as it may seem—if you are a good marketer. The daunting part is tracking individual targets and delivering the appropriate content via the preferred media. That’s what marketing automation does really well. Marketing automation in the hands of good marketers is a formidable force that is re-shaping how the best companies go to market.

Unfortunately, you can’t simply raise your prices by 1 or 2 or 5 or 10 percent. Or can you? Sometimes you can! Only once in my career have I had a customer tell me, “I don’t care what it costs,” but I’ve had a number of clients where after talking to customers it became clear they had a lot of unused pricing power. In other cases, clients were employing massive discounting (in one case an average of 85% off list price). It doesn’t take an expert in black arts to know that’s broken.

So, what do you do?

Ideally, you get a clean sheet and can do the research necessary to understand the true value of your offer and how customers perceive alternatives. As a consultant, however, I get called into messy situations where the options are more limited. There is still a lot that can be done.

The most common areas where you can make an immediate difference are:

• Price what your customers want to buy. This is a major source of discounting. The product team bundles several options together to create more “value,” and then sales discounts the package because the customer only wants one or two of the components.
• Better segmentation. If everyone is uncomfortable with the pricing, with some thinking it is too high while others think it is too low, you could be using one offer to address both high- and low-end segments. “Splitting the difference” is a poor strategy that prices you out of the low end while leaving money on the table at the high end. There are lots of ways to create multiple offers, but sometimes it takes some creativity. An excellent case study of what can be done is here.
• Understand alternatives. Adobe has lots of competitors, but within the creative professional segment, there are few alternatives. This gives Adobe unusual pricing power. Within some segments, such as vocational education, there are neither competitors nor realistic alternatives as skipping an upgrade puts the school at a competitive disadvantage in attracting students and employers.

There is a lot more you can do to optimize pricing, but for many companies these principles can deliver significant—even substantial—returns that drop straight to the bottom line. In most cases, solutions can be implemented quickly. Not only that, they’ll help you position yourself better with customers so you can grow both volume and ASP.