Tennant Consulting

David Skok: Customer Acquisition Costs

Check out this excellent post by David Skok from Matrix Partners on how to factor customer acquisition costs into your business plan.  David recommends the lifetime value of your customer be 3x your customer acquisition costs, and all customer acquisition costs be recovered in the first 12 months, or else you will require excessive capital to grow the business.

David also offers an excellent spreadsheet showing the incremental costs of having humans assist in the sales process -- which creates interesting implications for everyone out there currently working in sales -- and offers several Sales 2.0 techniques to lower customer acquisition costs.

Highly recommended for entrepreneurs developing business plans, and anyone involved in starting a company, or in sales or marketing.

Salesforce.com: Marketing in the Google Era

Yesterday, I listened to a Salesforce.com seminar, "Marketing in the Google Era", presented by Kraig Swensrud of Salesforce.com's marketing team.  They were good enough to make a recorded version of his presentation available for you to view here (email registration required).

Kraig gave an overview of 7 techniques of effective marketing in the Google era.  I agreed with all of what Kraig presented - companies are still coming to grips with how the world of marketing has changed, and I agree all the suggestions provided are good ideas to consider:

• Invest in Web properties
• Invest in search marketing
• Make your message relevant
• Create landing pages for every program
• Measure everything in real time
• Use the Web for PR
• Engage your community.

What I liked about the presentation was Kraig gave a good overview of all these concepts - some of which are pretty complex.  He also did a good job of describing blogging and RSS - and some of the best graphics I've seen illustrating those concepts.  The presentation was also rich in examples and other online services you could use - in a very short period of time.

8 out of 10 times, Kraig's online concepts will come into play in some form, but the relative level of investment people put into these online initiatives versus other investments will vary widely depending on your business.

While there's little room for improvement, I felt like the presentation was a bit marketing-centric, and online-centric.  Kraig was implying companies should invest in search, blogging, online communities.  I agree these activities make sense for Salesforce.com - but they may or may not make sense for other depending on your industry, business, budget and resources, and prospective or existing customer interactions.  It also didn't help the marketer understand how important it is to link these programs to how your customers actually buy, your competition, and if you have a human salesforce, how to support them more effectively.

For example, someone buying, say, rice has a very different set of needs than someone buying a CRM system, or someone hiring a lawyer.  I would recommend starting with the customer - and what they need to be successful throughout their purchase and use of the company's products or services, and what the sales force needs to be successful.  The consumer rice buyer may not be going to look for "rice" online - but they might want healthy recipes, or ideas on how to make rice more interesting. 

A lawyer needs to show they are knowledgable, experienced, and able to add value in excess of their fees - so speaking or writing a book on their area of specialty may be a more appropriate marketing investment. 

A CRM company - especially if they have an online offering - should absolutely do the things Kraig describes.  And Salesforce is probably at the forefront of those - albeit with messaging that's too company-centric for my tastes, and at a very high sales and marketing spend relative to R&D.

All things considered, though, my feedback is minor relative to the presentation's strengths.  I recommend highly that you check it out!

Strategic Marketing Consultant San Francisco Bay Area Seeks More Hours in Day

I guess in 10 years, we'll have replaced our job titles with the search terms we'd most like to be found by.  Given how much driving I've been doing in the car lately, I wish mine was, Strategic Marketing Consultant - Orinda, CA -- or even Strategic Marketing Consultant - East Bay.   There are some great software companies in Orinda - like Intraware, and Maxis, makers of Sim City started in Orinda.  Down the road in Walnut Creek, CA, Dave Duffield founded PeopleSoft in 1987 and in 2005 Dave and Aneel Bhusri founded their newest startup, Workday.

I've not been posting a lot to the blog lately, thanks to some exciting new client projects.  What few writing cycles I've had have gone to my online newsletter, Tennant Consulting Times.

This month's issue of Tennant Consulting Times talks about sales models -- and the many mistakes entrepreneurs make in putting together the go-to-market section of their business plan.  I also took to the road to interview Joe Blank and Paul Gariboldi from Virsalent, a company offering a sales force-for-hire that may be relevant for many high-tech startups as an alternative to bringing on a VP Sales and entire team.  Joe and Paul offer 10 common mistakes entreprenuers make - and I highly recommend you tap into their experience if you're starting your own company, launching a product in an existing company, or are in a sales or marketing role.

To subscribe, just enter your name and email on my home page, www.tennantconsulting.com.  I only use the information for the newsletter, which currently comes once a month.  You'll get  a confirmation email back, click a link and - presto! - you'll  immediately receive this month's issue.

I've used the most conservative email list building approach - double-opt-in - which results in a smaller email list, but a more enthusiastic audience because they're all people who explicity choose to hear from me.  That means better delivery rates long term.  I believe one can be successful marketing to people without SPAMMING them, and I plan to use my newsletter as a one small business data point to prove it. 

In the Tennant Consulting Times newsletter, I'm committed to printing free articles from me and interviews of smart people I know to add value to my clients.  Don't worry, it won't be hogwash about me which you could care less about, or pitching you my services.

Planning on 2006 being your best year ever?

Seems like everyone I'm working with is finalizing their 2006 plans for the year - and it's remarkable how often the same topics come up.  And during the holidays, I dove deep into my own business and developed goals for next year.

One of my goals this year is to write the process I went through down for myself -- so I did.  Thought it would be a couple pages, but it turned out to be a 16-page workbook.  "What the heck, I wonder if other people go through a process like this?" I thought.  I put an action plan template at the end, and it's ready and waiting for you as a bonus for signing up for my newsletter.  If you want to look at your 2006 planning process through my glasses, send a blank email here:

tc-newsletter@aweber.com

Do you use a different process to set your goals?  What works for you?  I'm curious to know how you approach this topic.

Will sales and marketing ever get along?

Today I met with a regional VP of Sales for an enterprise software company, who shall remain nameless in this case so as to keep the innocent, well, innocent. His company has a classic conflict between sales and marketing - the marketing department was underfunded, didn't have enough resources. There are a handful of product areas within the company, with separate sales organizations, many the result of acquisitions. So there are multiple solutions for marketing to support.

Sales is frustrated because they aren't getting quality leads or marketing materials. Marketing is understaffed and unable to produce lead generation programs for four separate groups. Sales has lost faith in marketing, and the marketing group is quickly losing credibility.

Time for a relationship rescue. Taking a page from the alliances playbook, the sales and marketing relationship is no different than any other business relationship - just happens to be internal. And focused on the company's lifeblood. Unless the CEO has a sales and marketing background, properly diagnosing the issues can be a challenge. In some companies, you hear of this rift going on for years. And the whole company suffers. What to do?

Step 1) Joint Vision. Work first on a joint vision - how do these groups need to work together - 1-, 3-, 5- years out? What are we building together? What activities would each group perform? Focus on what does work, how each wants it to work. Also give each side a chance to name the issues, express their frustrations and be heard. Can the two groups agree on a joint vision?

Step 2) Goals. Can the two parties agree on specific time-bounded goals - e.g., for the next quarter, next 6 months, etc.? What metrics most clearly quantify the goals - qualified leads, conversion ratios, completed campaigns, closed business, new deals entering the sales pipeline? Agree to the timeframe and the metrics.

Step 3) Plan. During this time, the leadership from sales and marketing should develop the plan to hit the goals. Travel to visit some key customers and prospects together to validate the messaging and value proposition - not pure sales visits, but asking for input on the messaging and get the market's input on the issues to be resolved. Conduct some won/loss analysis as well - internally or using an independent party. All these feed into the plan. Next, marketing and sales would get the initiatives on the table and prioritize them--next quarter's lead generation program, completion of sales tools, new product launch, ROI models, white papers, etc. Until credibility is built, focus on a handful of priorities and commit to them - as the process gets better, more and more can be added with each cycle.

Step 4) Execute. Both groups execute on the plan, and keep each other posted on the results.

Step 5) Feedback. At the end of the cycle, both parties self-assess compared to what they committed to in the plan, and get feedback from the other party. Marketing and sales should also compare their resource levels to their competitors'. Some management groups don't buy into marketing, and other do. Are they outgunning or being outgunned relative to their competition? How did the overall process go?

Step 6) Repeat. For the next period - hopefully incorporating lessons learned, and developing larger plans with greater results.

What would Dr. Phil say?