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November 26, 2009

Who Gets The Credit?

This week we Yanks celebrate the anniversary of a famous dinner that happened a few centuries ago on the eastern shore of the Commonwealth of Massachusetts. But this year there is a bit of trouble brewing between the good people of that eastern shore. Apparently, those that like to celebrate an historic first landing of a certain sailing vessel, named after a vernal bloom, at the location of a famous rock, are all in a tizzy. Their neighbors to the east, who live at the tip of a peninsula named after an over hunted fish, are claiming that the Pilgrims, with their large belt buckle hats, landed in their fine town first.

Now, it is obvious what this is all about, and then again, you have to wonder why. Yes, it could be beneficial for tourism to claim that the Pilgrims officially started things off in your town. But, historians are fairly confident that the first Feast of Thanks happened at the site of what we now know as Plymouth. Nothing is going to change if those turkey celebration wannabees win their argument. If the Mayflower first stopped off in current day Provincetown, refreshed their water tanks and emptied the scuppers, who really cares? We will still end up with a very feeble seaside rock and historical landmark getting all the attention.

This smacks of a similar argument that I often hear between feuding business functions – who gets credit for the lead? I have visited more than one company where the dispute goes something like this. The marketing function performs a lot of effort generating leads and then hands them off to the sales force. Some individuals within the sales team pursue the leads they receive, but they get creative with how they capture these opportunities in their CRM system. According to the paper trail within the technology, they reject the lead from marketing and enter a new opportunity in the system, as if they found the lead themselves.

Unlike the situation going on here in New England regarding the seafarers aboard the Mayflower, it actually does matter where a lead originates. There are two issues at play in this situation.

First, and foremost, it is very important to track what marketing activity generates a lead. More critical is the ability to then connect that lead to the opportunity pursued. If the business is won, we want to then track which types of leads bring more business. Likewise we want to track which types of lead generation activities spawn the best leads. All of this requires that we link all the activities together. When a good lead is pursued and tracked under an opportunity that is not linked to the original lead we don’t have the ability to determine if the money invested in generating that lead is good money spent.

I hear many reasons for why this degenerate lead management activity occurs; mostly the rationale is centered around the thinking that the original lead was bad and the sales person had to do work to actually create an opportunity that was good. I don’t have hard statistics to quote on this, but I suspect this is nonsense.

The second issue to raise is the use of rewards that are in place and how they influence the behavior. I have witnessed many companies that remunerate sales people with a higher commission for deals they find and close versus deals they get handed to them from a marketing lead. On the surface this could make sense, but with a bit of understanding you will see that this too is total nonsense.

The reward causes the bad behavior. If you are investing money in marketing campaigns then you need to do everything you can to ensure those campaigns pay off. Don’t reinforce your sales team to circumvent those marketing investments. And don’t give them an incentive to cheat the system and mask the efforts of your marketing function.

Rather, be thankful for your marketing function. Give them credit when they find a good lead. Let them know when their lead is not good and for what reason. But, don’t break the chain and make it impossible to measure campaign effectiveness. And whatever you do, don’t make your sales folks thankful for the ability to get a lead for free and then turn it into a better deal once they make it their own.

If you visit the Bay State in November, please enjoy all the historical sites, but you may want to make your plans for a Cape Cod visit when the weather is a bit more oriented for a trip to the beach.

Happy Thanksgiving

Ghost Ship

November 20, 2009

Ode To The Business Case

In the fall of 2001 things changed. We had been flying high – there was this thing called The New Economy and it was being driven by this new entity loosely referred to as dotcoms. Then a couple of jumbos were flown into skyscrapers in Manhattan and a whole bunch of things tumbled along with those buildings. Dotcoms resurged on the coattails of the Web 2.0 revolution and we seemed to be headed into another version of The New Economy, but we just didn’t call it that. We were flying high again, until that industry virtually located a block away from those two toppled skyscrapers took its own tumble.

When we were flying high we were able to get a lot of stuff accomplished. We identified business needs and we got the funding. If we could make a good argument for what we wanted to go off and build, we were given the investment capital. Following each of the two aforementioned tumbles, that investment funding got really scarce. If you wanted money you had to build an extremely solid business case.

As a consultant I see a clear correlation between the health of the general economy and the effort put into the development of the business case in order to justify investments. When money is tight, some programs still move forward, but they are the ones with the best chance of producing results. If we take this logic a bit further, we might deduce then that when things are good and money easier to come by, projects that are not as sound will also get funded. This bugs me.

So, I would like to offer up a couple of things. First, when times are good, and we could be heading in that direction again, I think we should push to have the business case become a standard. We don’t need to get lax on this just because funding is easier to come by. Let’s stop bad projects in good times – it hurts us in the long run. When we go for funding in bad times the people with the checkbooks will not be timid in reminding us about those bad investments.

Second, I have a suggestion for approaching the business case effectively, especially now while things are still a bit tight. There are multiple approaches to building a case for getting the funding. I am not talking about the different ways of calculating ROI such as the concept of net present value and other financial terms that I don’t really understand. I am referring to a more fundamental set of approaches. We can take a spreadsheet orientation, a very sterile, financially oriented, cell by cell calculation of where the value derives from regarding the money invested in programs. I don’t really like this approach because I am not an accountant. Also, I don’t like this approach because I think these types of financial modeling don’t appeal to people all that well because they are sterile and hard to fathom. We see a lot of numbers but we have to trust they are derived in a way that is real according to the way the business actually works. You can show me a rocket fuel formula, but it does not make me believe I can fly.

The second approach is the political orientation to business case development. It can take a little longer, involves more people, still relies on tables of calculations, but in the long run there is less math theory and more reality within the calculations.

In the world of CRM we typically make changes to the way work is performed. We deal in the world of emotion and perception. Acceptance of change is as critical as the logic of the change. Millions in investments can be lost because of irrational reaction to the approach taken. The business case needs to take this into account. Those who are going to take on the change, and sign up for the potential gains, need to define what they will be before they are held accountable for achieving them. So, I like to build my business case with the key stakeholders and thought leaders of the targeted business units and not the financial analysts assigned to support them.

First, have them identify very clearly the areas that a program will improve, such as pipeline management, for example. Second, explore what the improvement in the pipeline management process will produce – is it something like faster deal closure or higher probability of conversion? Next, ask your stakeholders to estimate what the improvements could realistically amount to. Is it an extra deal per rep every month; is it an extra deal per week?

Finally, once you have this list of quantified business benefits it is time to march into the finance department and request that they calculate the financial values according to whichever formulas they will accept. If you follow this path, you will satisfy the business and the bean counters and produce a business case the folks will believe and sign up for.

So, my proposal is that we build this into the standard program scoping process. Develop a business case even if you get the funding ahead of time. This will drive stronger sponsorship with your management team and that will always be good for adoption.

Business Roll

November 13, 2009

Patience is a Virture

We are marking the one year anniversary of the Change We Can Believe In. Starting with the 100 day milestone and ever since that time there has been a slow but clear descent into many not believing in The Change. Yes, this growing dissatisfaction is fueled by right-wing fundamentalists and exacerbated by unemployment figures hovering around the double-digit range. But the part that I find troubling is the lack of patience that the nation seems to suffer from. We are so accustomed to instant gratification from everything ranging from fast food to overnight shipping from Amazon that we just can’t give the current administration camping out on Pennsylvania Avenue a chance to get things actually changed.

Sadly, this is the way it works with many CRM programs I encounter as well. For example, we have worked with one client that has insisted on changing its CRM platform three times. Each need for change was blamed on the software. Believe me, there was absolutely nothing wrong with the software. There was, however, a serious problem with patience.

Cane Score

I think there are a couple of important lessons here.

First, if you have been tasked with the job of investigating the prospect of changing out your CRM system, stop! Take a really close look at some telltale factors. Is it really the software that is failing? The statistics would indicate otherwise. I would be willing to place a huge wager that you are more likely hampered by a combination of weak management sponsorship, lackluster adoption, and a poorly designed data structure. You don’t need new software to remedy this. In fact, if you bring in new software you will likely encounter the same issues, just like the example above. Address the issues, don’t make the CRM package the scapegoat.

Second, if you have been tasked with the job of investigating the prospect of introducing a CRM system into an organization that does not truly have one; please consider this one piece of advice. You will have many detractors across the organization, just like we are witnessing across the US of A today. The one way to quiet the crowd is to score early. As you build your program plan, find a way to produce a quick win. The financial stimulus package may or may not turn out to be the quick win for our current package – historians will eventually be the judge of this.

You absolutely cannot afford to have historians evaluate your CRM program success. Find a quick win that everyone will recognize as a quick win, at the time that it happens. Where is the pain? Can you alleviate it quickly, even if only partially? Nothing beats failure and naysayers like success. Plan the earliest possible success you can practically produce.

Patience is not an easy thing to manage. If you can find a quick win you will then be playing its game – feeding the beast. Who cares? If you can overcome impatience by satisfying it, you will win in the long run (and in the short run). Don’t confuse this with the action of inappropriately reinforcing a bad behavior in a child. Go for the success and forget about B.F. Skinner. You will never teach the organization to be patient. So, be impatient yourself and build a success into your plan as soon as you possibly can, even if it adds a bit of extra cost. You may not be able to buy happiness, but you can buy success.

November 06, 2009

Leads? We don't need no stinking leads!

Here we are rapidly approaching the futuristic sounding year 2010. Web 2.0 business developments are starting to become normal operating procedures. We have been doing this CRM thing for a solid 15 years and the use of killer apps to support major business functions have been around for two decades. Even longer, the science of direct marketing has been formally studied now for over half a century. Why is it then that I continue to encounter marketing functions that do not believe they have a reason for generating leads?
Helping to identify prospective customers who might be interested in becoming current customers is the reason for being if you are a marketeer. Why would you actually choose not to perform such a core function of the enterprise?

Actually, there are quite a few reasons that have been offered up as justification for this reluctance. I would like to debunk some of them, as I feel they are rationalizations and excuses and need to be exposed.

The Sales Force Does Not Need Help
There can be a misconception that the sales team has the bases covered. They have the relationships and they know the accounts. They are on top of what the customer needs and are handling communication in a face-to-face approach. There is no need for the marketing function to disrupt this stable situation. This all assumes that you have enough sales resources to always be present when the customer chooses to take an action. I have never found an organization where this was actually the case.

Long sales cycles demand a significant amount of touches and the sales rep cannot possibly be present for every single one. The ability for marketing to share in that burden is critical. Communication coming through supplemental channels ensures that your company stays front of mind. Eventually the customer needs to pull the trigger on the purchase – the last thing you want is for this to happen when the sales rep is in between visits.

Likewise, many accounts demand a long-trail of relationship maintenance. New purchases spring up in a hard to predict pattern. When a new need arises will your sales rep be the first to be there to remind the customer that you have the ability to satisfy? Don’t leave this to chance. Keep a steady stream of communication with the client supplementing the sales call. This comes from a steady flow of targeted marketing programs, not chance.

Marketing Has Other Priorities
What is more important than bringing in new business? Sure, we need to develop product literature and, yes, we need to drive brand equity. But we also need to drive prospective customers to hard working sales reps. Marketing is a support function. It should guide the sales force to push the correct products with the right accounts. But it also needs to help the sales force identify accounts that want those products. Where I come from these are called leads. Let’s do things to get those leads into the hands of the folks that know what to do with them. Toto, we are not in Kansas anymore!

Dorothy and her Posse


Customers Are Finite And We Know Who They Are

This is probably the most common rationalization I hear. Many of the industries I work with have a fairly definitive customer list and they know them all. However, they don’t always know when they change their mind. They don’t always know when a new need arises. They don’t know every interest or every potential interested contact. But, if you have a sufficient reach to the customer using supplemental channels you can raise the probability that customers who know you will turn to you when a need arises. This is not just direct mail we are talking about. This includes a strong web presence and participation in the appropriate social media where your customers reside. This is the realm of lead generation as well. Even with customers with whom we are already intimate. Marketing can play a huge role here, if only we were not overcome with the myth that we already know the customer.

Our Customers Are Too Sophisticated For Promotions
I hear this from my B to B customers all the time. Lead generation is something for consumer marketing but it does not apply here. This is what I know. No matter what industry you are in, your customers read their e-mail every day, all day. Your customers are on the web right now. They are conducting a search about the kind of products and services you provide. They are even looking at your products and sharing their opinions about your products to others (whether they have used them or not). And you truly believe that they would ignore a call to action if you were to offer them something while they are out there looking?

Your customers and prospective customers want to be reached when they are ready to be reached. Do you know when that is exactly? The marketing function has the ability to keep tabs on that kind of thing, if we would let them. Your industry is not exempt. When there is a prospective buyer out there exploring, let’s give them an offer – even if it is only to come over and check us out. You don’t need to give coupons or 2-fers. You need to reach out to them when they are interested in being reached and when those two things come together magic happens, they buy.

I am not asking for an overnight change. Let’s start small. If you don’t currently generate leads for your sales force, identify a small and modest program that could uncover prospects. Build a means for capturing that interest and transporting the interested party to the right place for the next step in the pipeline. A small success will breed more interest. Soon more regions will clamor for the new leads and eventually you will be sitting on a bona fide lead generation engine. But let’s not get carried away. Start with a pilot that you can control to be a success.

Maybe we do need leads after all.