Presented by: Anne Holland, Publisher, MarketingSherpa Stefan Tornquist, Research Director, MarketingSherpa
Couldn't make MarketingSherpa's July 26th teleconference on what the latest B-to-B technology marketing stats mean for your company?
Here's a handy recorded version for you including a PDF of the PowerPoint slides. Features 15 useful charts on budgeting, lead generation, email, white paper offers, Blog and buzz marketing, etc...
>> Which tech-related ads IT professionals prefer and say they'll respond well to (and which ads don't move the needle.)
>> Top 5 challenges facing every technology marketer for 2006, plus MarketingSherpa's advice.
>> Web site management benchmarks (only one in five tech marketers say they're handling their sites well.)
>> How 826-surveyed marketers answered the question, "If you had $50,000 more in your budget, what would you spend it on?"
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Sponsor: New! MarketingSherpa's IT Marketing Benchmark Guide 2005 ~~~~~~~~~~~~~~~~~~~
B-to-B software, hardware & services marketing data:
-> Search, email, and PR campaign results -> How 826 IT marketers slice their budgets -> Marketplace buying stats
Compare your marketing results & plans to "the norm": http://www.sherpastore.com/c/a.pl?1148&p.cfm/2150
or call (877) 895-1717 ~~~~~~~~~~~~~~~~~~~~
Good afternoon and welcome to MarketingSherpa’s teleconference: What’s Working in IT Marketing; the latest stats for software, hardware and IT services marketers. This is Anne Holland, the publisher of MarketingSherpa. Joining me today is Stefan Tornquist, our Research Director.
Stefan: Hello everybody.
Anne: We’re on page one of the PDF presentation, which is just, What’s Working in IT Marketing; the latest stats for software, hardware and IT services marketers. If everybody could join us while we move to page two. Stefan, you were in charge of this project. Could you quickly give an outline of the methodology so that everyone listening in knows where we got all this data that we’re going to be presenting today?
Stefan: Sure. Well over, about, the last four months we’ve worked with essentially three kinds of data. There are two kinds of primary date, the first being our own primary research consisting of the MarketingSherpa survey of over 800 marketers, and other primary research that is done in cooperation with research partners. For instance, a good example is the study of how IT professionals view online advertising, that we did with CMT Media in April. Then finally, we get a look under the hood of a lot of incredible secondary research and we really cherry-pick some of the best of that to include and flesh-out the report. All told, I think we ended up at about 300 pages. So there’s a lot there.
Anne: But we’re going to be presenting today sort of the “best of” some really useful stats for everybody. Let’s move on to our first useful stat, which is on page three of the presentation. This is one of the more interesting things. I know that the majority of our readers are very, very much interested in lead generation. That often tends to be something that your job is very much centered around. You’ve got to get those leads in for the sales guys to turn around and land. Stefan, can you talk a little bit about what the big changes between 2004 and 2005 have been for what really is working in lead generation? Were there some major changes?
Stefan: Well the biggest jump was in search engine optimization. I believe last year there was a 64 percent total of people who said it was effective or very effective. This year we’re over 80 percent. So that was the biggest single jump. The biggest drop was in telemarketing. Last year 72 percent of the marketers who used the tactic rated it pretty well, compared to only 52 percent this year. It’s interesting in terms of telemarketing, what we tend to find is sort of a reverse bell curve, where some marketers are very satisfied with the tactic and some are most dissatisfied with the tactic. So that says something both about how telemarketing interacts with their product but also with how they handle it, and a lot of the ways of optimizing telemarketing. A lot of companies have gotten into telemarketing in the last couple of years and I think a lot of those newer marketers to the tactic are those who aren’t rating it very highly.
Anne: One thing I think is interesting is that jump in search engine optimization. I know we’ve been preaching for the past five years that people should be optimizing their site. Last year, I believe, we revealed the data that if you optimize your website, on average, during the six months from the date you upload the new pages that are optimized, from the six months the new web site has kind of launched, on average our readers are getting a 78 percent jump in traffic. And that’s overall traffic. So that’s a lot of traffic from, to some degree, something that – yeah, you do it once and you do maintain it and continue it, but it’s not like paying for clicks. You’re just conducting an optimization campaign, and these are the natural listings, the free listings in Google. So it’s very heartening to see that the marketplace has heard that and is reacting to the fact that, “Hey, this could make a huge difference in terms of lead gen qualified traffic.”
The telemarketing angle, I think, is also interesting. I think what I’m seeing here, especially if I talk to marketers for case studies, is that marketers are not using telemarketing for lead gen as a cold calling, generating the initial lead device. What I’m seeing is that nearly everyone has moved that budget over into what used to be an inside sales position where they’re using the telemarketing to qualify that lead. That is a big, rising industry. It was already pretty big, but now it’s like, how much can you use the phone to pre-qualify that lead before it ever, ever, ever gets to your official sales department. So this is telemarketing outside the sales department.
I do notice here that the webinars and the road shows seem to be red hot still. I know we’ve seen trends in those over the past couple of years. Now Stefan, you did slice out this data by what works for all different tactics. What were the other things that you had sliced out?
Stefan: Well we looked at it in terms of various campaign goals, whether it was branding as an emphasis or customer retention, etc. Then we also looked at things like size of target company. If marketers are focusing on small to medium sized businesses, what tactics did they find effective, etc.
Anne: What were some of the perhaps safer branding campaigns? What was the biggest surprise there?
Stefan: Well, the biggest non-surprise was that public relations rated very highly and in general we’re seeing a tremendous amount of growth. Press releases overall are up 18 percent in all parts of IT. This is interesting, in Europe specifically, the growth in public relations related to technology is up 40 percent. There has been a tremendous focus on the European markets. I think a lot of American markets are taking advantage of the weak dollar and are marketing to Europe, and they’re using press releases to get their names out.
Anne: And of course, that fits in again with the enthusiasm people have for SEO. Because, as we all know, if you can send your release out via any of the Wire services, from BusinessWire to PR NewsWire to PR Web and several others, that your press release will show up in Google News and Yahoo! News and I guess MSN News and AOL News, other places. Then hopefully the target marketplace will see it directly as opposed to waiting for a journalist to pick up a story about you. So PR as an SEO tactic has been growing like crazy in the past year.
Stefan: Exactly. Well I think a lot of marketers are beginning to look at the two sides of public relations, one, of course, the traditional where you’re trying to get in The Wall Street Journal. But the other, the one to one PR, where now with Google and the others picking up press releases, it’s far more likely that your press releases are going to be read by prospects and current customers than they are by journalists.
Anne: That’s very interesting. Right now we’re on page four, which is the second key finding from our survey of 826 IT marketers. By the way, when we say a survey of, that means 826 software, hardware and IT services marketers replied to the survey. We’re not talking about people we sent it out to; we’re saying these are the responses. It’s a nice, big chunk of people with some pretty viable numbers. Stefan, talk to me about the tradeshow lead generation data. What is interesting here?
Stefan: Well as you might expect, the big jump is between the number of qualified leads. In the past we had asked about leads overall and this year we were interesting in donning in on how many good leads are you really getting? While we see that the total number of leads is about the same vertical to broad, because really it’s just a testament to how many people you can get out there and talk to, the jump of about 30 percent takes place in the qualified leads for vertical shows. We’ve also heard quite a bit about budgets moving into the vertical show area. In relation to PR, which we were just discussing, it’s a lot easier to get your news out at a vertical show, which has a somewhat smaller footprint, fewer people inundating the journalists who are attending the show. Even though you don’t get as wide a range of journalists, you have a much higher likelihood of getting to them and getting your press release picked up. The number of press releases is attached to specific large trade shows. We have a chart in there, but I think the average increase in press releases year-over-year is something like 40 percent, and that’s in some of the major, major trade shows.
Anne: All right, so you may not be heard in all the noise.
Anne: The thing that often surprises me is that so many marketers that we talk to tell us when we ask them, “How are you making your tradeshow decision?” They’ll say, “Well, we look at what our competitors are exhibiting.” I think that’s a huge mistake. You’re assuming your competitors are really smart, which they may be, but they may not be that savvy about tradeshows. A lot of people don’t really pay attention to trade shows. It’s not a top, sexy item the way paid search advertising is these days and b-to-b. And it’s sort of routine, “Oh, we went there last year, let’s just automatically go there again,” or, “The CEO says it’s a big, important show so we’ve got to be there.” That’s sort of akin to placing your space ad in a magazine because the CEO is impressed with it, whether it’s the best magazine for you to be there. I think that given the amount of money that trade shows actually cost, is it worth saying, “Hey, let’s take our budget, let’s move it perhaps from a gargantuan show to a smaller show.” In particular, if there are 40 or fewer exhibitors, that’s where you want to be. You kind of want to have a real slice of mind share at the show as opposed to trying to be one of hundreds of booths at a big show, unless you’ve got a gargantuan thing, unless you’re going to have one of those 100x100 booths. In a way, the bigger show may not do you as much good as your CEO hopes it will. The other thing that I think this points out is, if vertical marketing works well for trade shows, that seems to carry across all of the types of lead generation and even branding campaigns you can do for impact. So I think the big trend is going to vertical marketing for your house email newsletter. I think it’s going to be vertical marketing for your direct mail campaign, for your search marketing campaign. Think about it. By vertical market that’s a completely different list of search terms that you’re going to be targeting. Vertical marketing, very hot, very high impact. One last note about tradeshows: if you are hoping that IT consultants are going to recommend you to their client, no matter what size those clients are, you are hoping that resellers and those consultants, critical consultants, will pay attention to you and recommend you – and often they’re hugely influential – you absolutely have to be at a show where the consultants are going to be. We recently did a whole special report on marketing to IT consultants. It’s available at our site, I think it’s like, $10. It’s very cheap. We researched it, we interviewed actual consultants, I think it was almost half a dozen of them saying, “Where do you go, what do you care about, what is really going to matter to you?” They all said they don’t have time for the webinar. They may or may not read the white paper but they will show up at your booth and they’ll enjoy learning about you then.
Let’s move on to page number five of our top five findings. Stefan, this is some of the data on websites. I know last year 83 percent of our respondents said that their website was their most effective lead generation method. This year you asked for a lot more data on that to find out what was working and what wasn’t. Can you talk us through this slide?
Stefan: Sure. This slide looks at website management and we also asked a number of questions about website marketing. So on this slide, we can see that – well if you look at it positively, there’s a huge opportunity displayed by this slide because not many marketers are confident in how well their website management is doing. Only 12 percent strongly agreed with the idea that they use site analytics to tweak their site for better results. Even if you add those in with who somewhat agreed, you’re still at less than half at 41 percent. So each one of these, as we move down, there’s a tremendous opportunity to differentiate yourself from the pack. Some of these tactics, for instance, regular site optimization by an SEO expert, that’s about as important as marketing tactics get these days, especially IT marketers that don’t have a lot to spend in other areas, SEO is highly effective and only 14 percent are regularly taking advantage of expert optimization. As we know with Google changing and all of these search engines regularly changing, their algorithms, having a good site optimization once a year is not enough. The question of tying CRM systems in, only 16 percent think that they’re doing a good job of tying that in. As we find sales cycles lengthening and the research process getting more intensive, as the web has made it so much easier to conduct research, the importance of tying a CRM in is absolutely vital because you’re able to give the sales team so much more information and keep very current on where that lead is in the process, what have they been looking at, etc.
Anne: And I also assume it also helps you keep your job. I mean, the average technology marketer doesn’t have a real long job time. Especially the senior people tend to get canned on a regular business and switch companies. If you can say, “Of the leads I generated in the past year, X percent have revisited the site and are engaged with us,” if you can prove that engagement, that alone, I’m assuming, is going to be very powerful in a management meeting.
Stefan: Of, you’re absolutely right. I mean, one of the great issues of IT marketing over the last 18 months has, of course, been marketing measurement. And what we find for the majority of IT marketers is they don’t the tools in place that would allow them to make some of those arguments for more budget or a raise.
Anne: In particular, I think the other big thing, aside from SEO that we should see, is a real rise next year in investment would be content management systems. If you don’t know what a content management system is, this would be a way via your Internet that you’re able to make changes to your website, pages that affect marketing in particular. You’re able to post press releases, you’re able to post articles from your newsletters, perhaps you’re able to run a blog, post marketing materials, update marketing materials quickly and easily without having to go through the web department and having an HTML techie to do it for you, without standing in line waiting for the IT department to do this for you. If you’re not standing in line, if you’re able to go and change some things yourself or change them so easily without knowing technology – just have a really easy management system to do it with – that’s going to make such a difference, not only for SEO, because you have the great, most wonderful keyword-latent content on your site, but it will also just help the site itself appeal to those hopefully repeat visitors who are coming through during the sales cycle to look for you. So I think the content management system, if you don’t already have one, is worth really looking into, to get rid of that long line at the IT department to make changes.
Why don’t we move on to slide number six? We asked marketers, how is your budget changing? Stefan, what was the big change here? What were some of the things that surprised you or that you really noticed here?
Stefan: Well I think one of the most interesting things was to look at this data in relationship to the percentage of marketers who are using the tactic itself. Across the whole email spectrum, what you find is – especially in terms of third party newsletters and list rentals, etc. – you find some drop in the number using the tactic but an increase in budget. I think what that tells us is that the prices are going up for those elite b-to-b technology-oriented newsletters, and those who are using that effectively are getting great results, and that those who haven’t been seeing those kinds of results are starting to drop out of the game.
Anne: I know I have heard repeatedly from marketers that they’re having to book, in particular, booking email ads. Ads and email newsletters, the technology marketplace, they’re having to book those things as much as 12 months out because this inventory is just getting sold out. I would like to issue a warning; there are publishers out there – obviously not all of them, there are some great publishers – but there are some publishers out there, once they’re sold out – of course, it kills them because, you know, here you are saying, “I want to buy something,” and they’re sold out. They say, “Oh my God, there’s money on the table and time to take it.” They want to improve their business, too. I think what may be happening in some cases is, they’re launching an email newsletter simply because, hey, they can sell the ad space if they’ve got another newsletter, but it may not be a newsletter that the marketplace actually is reading or watching. It’s more launched because I can sell an ad, rather than IT professionals or technology decision makers are remotely interested in this topic or we’re going to pay attention to it. If you are approached by a publisher with a launch newsletter like, “Hey, now suddenly we’ve got some ad space,” you’re going to want to ask a couple of things, one of them being, where did the list come from? Did you just take a current email newsletter list that you already have and kind of just say, “Well, since you’re opted into this you’re also opted into that,” and just start sending people the newsletter? Or did these people actually volunteer and say, “Yes, I want the additional newsletter”? It is common practice in a lot of publishing companies just to launch a new newsletter, take an existing list and just start barreling that new newsletter at them as well. That’s dangerous because you may not get the open rate from people – you know they didn’t ask for it. They’re not expecting it. The other thing is, you do want to ask if the newsletter has been around for even a few weeks. What is your open rate? What is your click rate? Let me see some data. Because it may be very different, again, from their existing newsletters that may have been developed in response to marketplace demand. If it has been developed in response to advertiser demand, is there really an interest or not? There could be, but be careful with that media buy. Last but not least, if the publisher is mailing many newsletters, often to very similar lists – they’ve got some real list overlap – be sure to ask when they’re planning on sending this newsletter. A lot of publishers kind of send all their newsletters for the day at the same time. They don’t think to stagger that mailing. If you’re, for example, a prospect on more than one list and your ad is just on one of them, if they get two newsletters from the same publishing company at the same exact time, chances are, they’re not going to sit down and read both of the newsletters. They’re going to choose one or the other or they’re just going to bail on both of them because it’s too much reading. So ask the publisher how they’re staggering their send times so that any overlapping audience really do get a chance to look at your issue, the issue that your ad runs in.
Stefan, the other thing I’m wondering about, of course, is the in-person road shows. We saw on slide one that people are very hot on these in-person road shows. Are they going up as much as you expected in terms of actual budget?
Stefan: Well not really. I think what happens there is, the thing about in-person road shows is they’re very time consuming and very expensive and very often teams simply can’t spare the personnel and the budget. So I think when you see that huge growth in teleseminars and webinars that that’s kind of a cipher almost for wanting the best of both worlds. You want that one-on-one contact but you can’t afford to go on the road.
Anne: Yes, that’s very interesting. Let’s move on to slide number seven. This is our last question. Stefan, can you explain what this question is? Where did this question come from?
Stefan: Sure. This is actually a question we’ve asked over the last few years. Essentially we’re saying, “How would you spend $50K if you were going to get it from your CEO to experiment?” It might not work, but you’re looking for high results and you’re going to take a chance.
Anne: In other words, if somehow, whatever you tested didn’t work, your CEO isn’t going to fire you.
Stefan: You’re going to keep your job. For instance, back in 2003 when we asked the same thing, marketers’ number one response was search and number two was email.
Anne: And of course, back then search was fairly new in the niche.
Stefan: Exactly. Back then people were still looking for more names and more contacts. Today we see that they’re trying to sort of do more once that contact has been made. They’re trying to figure out how to raise – not so much the top of the funnel, but you know, once I have them how do I better convert them? And our number two response, getting new landing pages up, that speaks to, “I’ve got a lot of people coming. How do I get more of them to do what I want them to do?”
Anne: Well it certainly seems to be happy times ahead for consultants. I know that most of the consultants I’ve been talking to over the past few years are just growing their businesses like crazy. What may have started as, “Oh gee whiz, I was laid off during the recession and I don’t know what to do, so I’m going to be a consultant,” has turned into quite a thriving industry, in particular for the people who have better connections and give great advice. So it’s quite a thriving industry, the business-to-business marketing consulting industry.
Let’s move on to the next section, page eight of our PDF report. Stefan, can you quickly explain – this is some data, some findings, from our CMP tech web study that we did together with them. Can you explain how the study was conducted? What was that all about?
Stefan: Sure. Well what we did was create a test that asked IT professionals – and these were IT folks in the trenches – how do you feel about different themes in online advertising? We had done a lot of work looking at the typical kinds of online ads you see in the tech world, and they seem to fall into not that many buckets, different ways of encouraging a click and different stories that they tell. So we divided those up and some of the major categories are: humor, of course, using promotions to generate leads –
Anne: Promotions being like, win a free iPod or something?
Stefan: Exactly. Win a free iPod or go to Hawaii, etc. We actually did a special section on promotions, but that’s another story. But the business scenario, that’s telling the story and trying to communicate with someone, using that story.
Anne: So it’s sort of like a case study or something?
Stefan: A case study, or something like, “Here’s the situation: It’s midnight and your servers are down. Do you have someone to call?” You know, trying to give somebody a scenario that they can relate with. Industry standing, that’s the classic, you know, “We’ve won every award there is to win in the last 12 months – “
Anne: “We’re the leader!”
Stefan: “We’re the leader,” and you know, almost that there’s as much branding as anything. Finally, white paper offerings, of course, a standard. The one that I probably found the most interesting – one of the themes that you see all across the web was all of the concerns with security, privacy, phishing, viruses, etc., you see a lot of ads that use fear as its main motivation. You know, “Are you going to keep your job? Is your network safe?” that kind of thing.
Anne: Yeah, “The hackers are waiting to get you,” kind of thing.
Stefan: Yeah. And all of them were interesting, but I think by far the most – and this is just one chart of many in which we slice and dice the ways people respond to these ads. By the way, we did show them specific ads as examples –
Anne: These are real life ads.
Stefan: Yeah, real life ads to show them the kinds of things we were going for. In almost every case, fear-based marketing was a negative. By negative I mean that IT pros don’t respond favorably. If you think about that audience, they are very aware of their systems. They know exactly how much of a problem these things are, and overwhelmingly they tell us that they believe the fears are overstated in these ads.
Anne: So it’s the case of marketing trying to make something sound very exciting and, “Oh my gosh,” and these guys are going, “Yeah, I knew that, just tell me how the heck you’re going to – “
Stefan: Exactly. And if you think of the personality type of the network administrator, of the IT professional, they are all about the facts. They’re very savvy in their own world and they’re not going to simply believe that something is the problem because you say it is. Credibility with this audience is absolutely essential, and I think that’s where a lot of the fear-based marketing breaks down.
Anne: I do think it’s interesting that industry standing, a.k.a. “We’re the leader,” to some degree braggadocio, or we know it can help in some degree really is not the big puller, and that of course, gives a lot of hope to marketers who have wonderful products but they’re not from famous name-brand companies. There is some real hope here. You don’t have to be the leader to actually have an ad that someone is really going to end up paying attention to and maybe wind up buying from.
Stefan: Right. I mean of course industry standing ads are largely for branding, and they’re very often coupled with something like white paper offering, and there are only a few companies that can really afford to do straight industry standing ads. The real vertical leaders have the money to do that.
Anne: There’s additional data – we’re not going to go into it now, but there is additional data in the study itself on what they’re going to click on, and then what actually they’re calling about, what they’re most likely to request more information from, as opposed to just look at, and what’s actually going to make a difference in the business decision. So you have all sorts of data there.
Stefan: That’s right. We ask about them collectively and then we have some questions that drill down about each specific tactic. Sure, white papers are compelling, but what is it that makes a white paper compelling, for instance? What is it that makes for a good webinar versus one that you’re not going to stick around from? We do a lot with promotions and –
Anne: Well let’s move on to page nine of the download, which shows one of the drill down points from this. Do you own an iPod?
Stefan: Yes, this is one of the really fun questions that we put in, because anybody on our call undoubtedly has noticed that every promotion out there offers an iPod. So I figured – and this is just me – I think this is an audience that already owns an iPod and I’d be surprised if they were all that compelling at this point. Boy, was I wrong. Only 14 percent report having one and 65 percent say, “No, I don’t but I’d sure like one.” Only 21 percent said that it wasn’t a compelling offer.
Anne: Now you also asked a follow up question asking the people who had one if they wanted an upgraded one. What did they say?
Stefan: 80 percent of them wanted an upgraded one.
Anne: So even if they’ve already got one, they’re more than happy to try to win another.
Stefan: Absolutely. In the report we also go into a number of other different promotional types and products and see how they rate as well.
Anne: OK, cool. So if we are going to use that iPod offer, it’s sort of like –
Stefan: If you want to be a rogue and not offer an iPod, there are some other alternatives.
Anne: That’s good to know. Let’s move on to page 10 in our presentation. This is actually relating to PR and the PR trend, and it’s actually relating to thought leadership as well. A lot of companies – in particular companies that perhaps may be smaller or lesser known – want to be known as a thought leader in their area. So you’re going to perhaps have your CEO go around and meet with analysts on the topic, maybe you’re going to issue white papers and webinars as a thought leader on that topic, or maybe you’re just going to use a hot topic because you hope you’re going to get more people to click to attend a webinar, download that white paper because you’re going to get a higher response rate for a hot topic. Can you explain what the heck this wave chart is, Stefan? What is this?
Stefan: Sure. This is just one part of a fairly extensive set of charts about each of these different topics. This is, I believe, voice-over-IP and it looks at 2004 and 2005 overall coverage, and that’s the beige background, versus the actual media signal – I’m sorry, the media signal is the total reach of the story. So they derive that by looking at all of the publications multiplying that by their total reach and that gives you the media coverage. The media signal is the number of individual articles that cover the topic. And as you can see, the two do follow each other somewhat, but are not joined at the hip.
Anne: But Biz360, by which you mean, they’re basically looking at every single reporter out there. Is it in the U.S. alone or elsewhere that is covering this particular topic and any one of a million different technology topics, and they’re saying, “How much coverage is actually happening?” I believe that they even break it down by reporter name.
Stefan: They absolutely do break it down by publication and by reporter name. Some of those analysts and reporters cover multiple topics and actually report to multiple venues.
Anne: So it tells you who you should pitch your story to if you’re hoping to be known as a thought leader, but it also tells you – and I’m assuming just by watching this wave – it’s very literally like surfing. If you’re going to be a thought leader, you can’t be a “me too” thought leader. It doesn’t do any good if you issue your press release or white paper after everybody else got the cover of Business 2.0 for doing it.
Stefan: That’s absolutely right, because if you catch a trough it’s going to be very difficult to get any uptake. The other aspect of this that I think is going to be increasingly important is its ramifications for search marketing for SEO because the amount of coverage on a specific topic has a direct relationship to the keywords that are being searched at a given time, especially in search engines that are well verticalized.
Anne: So if you see an indication that a wave is growing fairly steeply – and they tend to whip right up there fairly steeply – that means that if you’re doing paid search, your budget for that month may be insane, or you may be actually having to watch it on a day-by-day basis to make sure that either you need to move your cap, your biz cap, or you need to see whether these people are actually converting as well and you need to expand it. I mean, there’s a lot of different strategizing that goes on, I’m assuming, with both paid search and with optimization. You know, “Should we whip up another page in our site that uses these keywords for this period.” Again, you need to get content management tools for that.
Stefan: That’s exactly right. And it can be a double-edged sword. You can take advantage of that wave and you can be potentially hurt by it if the coverage doesn’t relate to converting, you know, folks that convert.
Anne: Right. Suddenly you’re getting a million more clicks but –
Stefan: But it’s not turning into anything. Exactly.
Anne: That’s very interesting. It’s neat to know that this stuff is tracked and you can take advantage of it. Let’s move on to page number 11. Are you getting your share of the Federal IT pie? There is a factoid you have: One out of every seven dollars spent in the U.S. is spent by the Federal Government.
Stefan: That’s correct. And they spend a lot of that on technology.
Anne: So what I’m looking at here is a real change, 2004 over 2005. I’m shocked by how big a difference that is, in terms of how many fewer companies are dominating that marketplace. I mean, is everybody else just sucking with their marketing? What is going on there?
Stefan: The thing about the Federal market is that it is truly unique. We’ve got quite a good section on that this year, featuring some very good interviews and data about marketing to the Federal Government. It really is it’s own beast. As an example, if you don’t have feet on the street in Washington, you can pretty much forget about it. But taking a look at the variation between the two years, there are a few different things going on. One of them, of course, is that a lot of that money is going to a few very high end contractors who are managing various projects overseas.
Anne: In particular, Iraq.
Stefan: In particular, Iraq. There are, of course, in that 69 percent in 2004 and in that 83 percent in 2005, there are thousands of companies that are receiving some of that.
Anne: The subcontractors?
Stefan: They are subcontractors. That’s by far the easiest way to get a piece of the Federal pie. At least to start – and this is what we hear from the experts – is to really get in there as a subcontractor.
Anne: In other words it’s more and more important to really actually be marketing within the vendor market’s slice as opposed to directly to the Federal Government.
Stefan: Absolutely. And of course it depends on what it is that you’re selling, but I’d say in general that’s true. The other trend that has been accelerating is, the Federal Government has a reputation anyway about being very Byzantine with every department leveraging a different system, and everyone really wanting to hold on tight to their way of doing things.
Anne: They’re all on different little platforms all over the building.
Stefan: Exactly. And that’s really been changing, and I think most folks think that that’s been changing because of Homeland Security. But really what we’ve heard was that there has been a cultural change that even pre-dates 9/11. The departments knew that they needed to be able to easily port data back and forth long before that, and it’s a trend that’s continuing. That’s great if you’re the pie form that they decide on. If you’re not, then of course, it becomes more and more difficult to sell to alternate agencies. The number one introduction to part of the Fed Government is of course, another part of the Fed Government. So if you’ve been eliminated from one it’s getting increasingly difficult to make that up in another part.
Anne: OK, I have one last question and then we’ll move on. That question is – I think everyone knows that the government is going to make a decision on price, so if I’m just cheaper, can I crack the nut? Can I get in there by reducing my bid, compared to everyone else?
Stefan: Probably not. The famous quote of Neil Armstrong says, “I’m scared to go to the moon in a spaceship built by the lowest bidder.” That’s largely a thing of the past. The government has gotten much more sophisticated in its bidding process and incorporating elements like guarantees, guarantees of customer service, of liability, how quickly are you going to respond? They’ve really gotten well beyond the lowest bidder formula. Of course, if something is really commoditized – some piece of network hardware, for instance – generally speaking, price is going to be the main differentiator. But speaking in general, it’s no longer the case that the lowest price wins the bid.
Anne: That’s very interesting. Let’s move on to slide 12. This is five dangers and opportunities for 2006. These are actually dangers and opportunities I’ve picked out across our guide, and I thought were the most interesting for everyone listening today. Why do I call it dangers/opportunities? I used to – back when I, myself, was a business-to-business marketer – I used to have a boss who, whenever I said, “Oh, we have a problem,” she’d say, “We don’t have a problem, we have an opportunity.” I thought that was just so silly. I thought, “Oh all right, it’s just verbiage, it’s just marketing. If I have to use this different verbiage to fit into the corporation then fine.” So I’d use it but I didn’t take it seriously. But after a few years it became very valuable. I actually found that if you said instead of, “We have a problem,” “We have an opportunity,” you would begin thinking differently. It actually shifted your paradigm. I hate people who say “paradigm shift” but it really does work. So here are the dangers, but you know what? They are truly opportunities for the marketers who are willing to jump on them. And the nice thing is they’re dangers across the board. Your competitors are facing the exact same dangers. So if you can fix the problem, if you can be the one who sees it as an opportunity, you’re going to win.
The first one, take a look at this one. Stefan, what is this based on? What is going on here?
Stefan: In this survey they looked at website inquiries, how quickly the companies were able to respond and how successful those companies were in reaching the target.
Anne: Now has anyone ever done any research on same day versus same hour, same half hour?
Stefan: Oh absolutely. The automotive industry has done extensive research, among others. They found that looking at it as a whole day is perhaps too much, too big a chunk, because the real differences can take place in as little as 10 minutes. Auto dealers that call you right back within 10 minutes of receiving your email have a far greater success rate than those who wait to call until after dinner, or one of those typical telemarketing times.
Anne: Or you know, say, “Oh it’s a hot lead. It’ll wait another day.”
Stefan: Exactly. You go into the next day regardless of tactic and you see a huge drop. I think the way we expect information has been so affected by the Internet. Even if it’s a phone call you’re expecting, you expect it quickly.
Anne: In the old days with direct mail, direct postal mail, the saying was if the lead came back – and of course, it would come back via mail a lot of the time – you had a week. You had a week to two weeks before that lead went cold. And now it sounds like leads are going cold a lot quicker. Now in terms of what this means to a marketing department is – I want to really advise everybody of this – it does not mean you’re grabbing those leads and you’re marching into those sales meetings and saying, “Guys, you’ve got to follow all these up sooner. Every single contact from our website, man, you absolutely have to hammer these people, you can’t let it fall.” The sales department is going to do nothing but hate you and they’re going to be miserable because, of course, they don’t think this is a lead. They think it’s somebody coming in off a random “Contact Us” form on the website, or maybe responding to a white paper offer. It isn’t a lead at all; it’s perhaps a suggestion of that lead. You still have to qualify that lead to make it worth the sales department’s time to then follow up. So how do you do that? What I’m hearing from marketers from big and small companies – and we already discussed this earlier in this presentation – everybody that I’m talking to is bringing telemarketing/inside sales into the marketing department. You’re doing it yourself and then only the leads that have been super quickly contacted qualified, and the really best of the qualified leads are then being handed to sales. In the meantime, those leads are nice and warm and toasty because you made sure they were hit quickly. They were qualified and then the very best ones, you hand off the ones that are not as qualified, you’re immediately putting into your own nurturing program – you’re not waiting to hear from sales, you know, two weeks later, “Gee, was the call any good or not?” You’re not frustrated by maybe not even hearing anything back from them about a particular lead. You have control. You have control over those leads; you can put them into the nurturing cycle, and only when they’re really ready () sales rep’s attention, are you handing that lead off? It does mean a shift in budget. It does mean taking money and putting it towards that and perhaps really working with the sales department. You’re not infringing on their territory, you’re not taking the leads from them, and you need to reassure them of that, that you’re not hiding anything from them. They can cherry pick the best right away still, but you’re helping them and you’re not deluging them with a million people to call immediately.
Why don’t we move on to slide number 13. Stefan, can you explain this slide?
Stefan: Sure. Of course blogs have been getting an awful lot of press recently. What’s interesting in IT is the blog isn’t as innovative in IT as it is in some other areas, because of course, IT has a long history of using message boards for communication. So while blogs are being used – we see about 10 percent of folks are using them regularly in IT right now – even though it’s a good fit, it hasn’t made quite the splash that it has in some other industries. For instance, food service now has a number of blogs where people are talking about the ins and outs of their industry. That’s not something that they really had before, but of course, IT has had that for many years, being early adopters of different Internet technologies.
Anne: Yes, what some consultants have told me is that your average IT professional doesn’t go, kind of, surfing idly, picking up information. This is not the kind of thing that they do. What they do when they do go surfing is, they’ve got an immediate problem. You know, “This piece of code is broken,” or, “I need to find a solution to this problem.” That’s when they hit – and of course, traditionally they were hitting the message board and different community sites going, “Does anyone have an answer to this question?” Actually, they wouldn’t even hit them first. First they poke their head up over their cubicle and they say, “Hey, does anybody have an answer to this question?” And if everybody says no, then the next thing they do is they go surfing the web for the answer. So instead of kind of hanging out on message boards and communicating and building community and blah, blah, blah, blah, blah. They’re going in there when they have an urgent need, they’re going to find the answer and they’re coming back with their answer and they’re solving their problem. Which means they’re not reading blogs in the way that regular mortals do, in particular, marketers. I think to marketers it’s to some degree, fun. You’re enjoying yourself. And we can see here, journalists are reading them actively as part of their job. This is a job requirement for a journalist, that they’re sifting around constantly trying to spot a trend, trying to spot, perhaps an interesting source. Looking almost with desperation () for a new angle that perhaps isn’t there, because they know that everyone else is already doing the press releases. They’ve got to find something unique or they’re going to lose their job. Their job is to find a scoop or an exclusive. So they are surfing the blog. So my advice is, if you’re considering blog marketing – which a lot of IT marketers and agencies are, because of course, we’re all excited about them – don’t think of it as messaging to the IT professionals themselves. Think of it as messaging – perhaps an IT professional will find it, that’s great. But that’s the secondary marketplace. The primary marketplace may be the journalist who then will write about IT, and ultimately their articles may influence the IT professionals. It’s kind of the reverse of what’s happening with PR where your press releases are going out and the IT professionals are finding them when they’re surfing Google News, and the journalists aren’t paying attention anymore because they don’t want to read a press release everyone else in the world has read. So we’re seeing some reverse here. I think it’s terribly interesting.
Let’s move on to page number 14. Stefan, this is something that you had just alluded to in the Federal marketplace, but this looks like it’s true for all information technology marketplaces.
Stefan: This is across the board, and this is one of my favorite slides in the presentation because what it does is it looks at the reasons that customers leave. It looks at it in the customer’s view versus the company’s view. Doesn’t this just support what we’ve always suspected? You know, the company says, “Oh, they’re leaving because of price. They’re needs change.” These are the things that sales will say when coming back. The customers are saying, “That’s not it. Our overwhelming concern was customer service, and quality following second and price being the third most important function of sticking around.”
Anne: Now one of the reasons I think why companies – software, hardware, services marketers – may be under that misapprehension, not just because – they’re not stupid, it’s just that often the customer to your face is – when your sales guy calls up and says, “Hey, why are you leaving or why can’t we get this renewal?” To your face, the customer is actually lying to you. The customer is saying, “Oh gee, we don’t have the budget anymore.” That’s actually documented that that is the number one easy out, because they know that you’re not going to pursue them. You’re not going to say, “What? Wait a minute!” You’re going to understand the price – “Oh geez, no more money,” it’s the easy out. You won’t have an extended conversation. They’re probably feeling a little guilty. They don’t want to actually admit that you drove them nuts; they just want to get off the phone.
Stefan: That’s exactly right. And you know, that’s true for everybody in that chain of information.
Anne: But anytime a customer says – or even a prospect says – “Gee, I can’t afford you,” assume that a percent of that time that they’re lying. Not viciously, but they’re just lying to get you off the phone. It’s an easy out. Actually price is not always or even often the main reason why they’re saying no. The other thing I’m seeing here is, if you’re prospecting and saying, “We have the world’s greatest customer service and we can prove it,” or even if your customer testimonials on your behalf – if you’re running a customer testimonial – if you can get them to talk about how the customer service rocked, and that’s hwy they’re sticking with you, you might actually land more prospects. This is an incredibly good way at kind of chipping away at the competition. In fact, you probably should be, I’m assuming, a customer of the competition so you know how good their customer service is, and you can actually use this as a weapon to combat them. It’s a true competitive marketing tactic. It’s very, very interesting.
Let’s move on to slide number 15. Sales cycles are getting longer. Now Stefan, this surprises me because of course the economy officially is improving, so what’s with sales cycles getting longer?
Stefan: Well there have been a few different factors that add to that. Of course, in the past couple of years the economy has been one of them but I think it’s, in many cases, been overestimated as the main reason that sales cycles are getting longer. I think the real culprits are, number one, it’s simply getting longer because it’s easier to research earlier in the process. No longer are companies having to get through the whole RSP and design of their product needs. People are just going out there and just finding out what’s going on much earlier in the process. They might have a content management system, for example, that they’re perfectly happy with, but they’re taking a look at what else is out there. Of course, to most of our CRM systems, that looks like a new sale. It is, but it’s way out into the future. So that’s one factor. The other factor is that technology sales are increasingly collaborative. One of the main lessons of the 90s was a lot of new systems being gobbled up as the Internet really came online and all of these great new technologies came out. People discovered that if everybody that was going to use that technology wasn’t part of the process that brought it in-house, brought it into the company, then they weren’t going to use it. They weren’t going to use it as effectively anyway. They weren’t bought in. So that collaborative nature of the purchase process when you’ve got more hands that need to get in there on the process, of course that’s going to lengthen the time.
Anne: And of course, this would mean if you’re going to keep your job as a technology marketer, there’s a couple of different things you’ve got to do, one of them being any way you could invest in any kind of CRM measurement. It’s going to make a difference because you need to be measuring that prospect for a darn long time, and you don’t do that with cookies these days. It’s a week or two; it’s not for a long time. So you need to be measuring what they’re doing, when they’re coming to you, how many white papers they’re downloading, how many webinars they’re attending, how many different people on the committee do you have in the database? You’re really going to need managing your information on that lead so you can then prove, “Hey, our campaign may have been 15 months ago, but our campaign was the one that landing this million dollar sale.” The other thing that I think that this really makes a difference in, is the importance of taking part of your marketing budget away from new lead generation and putting it toward lead nurturing.
Why don’t we move on to the next slide, because this really speaks directly to it. This is email open rates. This year versus last year – Stefan, this is a sharp drop. Can you tell me how you reacted when you first saw this data?
Stefan: Well I was surprised, but the –
Anne: From what I remember, you ran down the hallway saying, “I think my survey is wrong!” You were really worried the data was wrong.
Stefan: I was initially concerned, but having re-checked the data and having found some corroboration out there and some other verticals, I’m no longer so surprised. What we’ve seen is a big drop in open rates, and that’s perhaps most pronounced in IT, but we’ve seen it even in very, very mundane b-to-c categories where people are getting their email via Hotmail and so forth. There are several issues involved here. The reason we’re pretty confident that it’s a case of measurement and not an inherent problem in email marketing, is that clicking conversion rates are quite strong. Click rates haven’t changed noticeably and email conversion rates are actually up on the year.
Anne: But what it does point out is that aside from measurement, there is a deliverability challenge, in particular in the corporate marketplace. We’ve heard from many deliverability vendors that, on average, for business-to-consumer lists, 20 percent – this is absolutely dead on target – 20 percent of the names that your email vendors said were delivered – so they didn’t bounce. They didn’t officially bounce, it wasn’t a bad address, you got no bounce report – still didn’t get through because they were filtered out before they got to the recipient. It might of been by the recipient’s own personal filter, it might have been by their ISP’s filter, it might have been by their corporate filter. And if you’re mailing to people at at-work address, that 20 percent number can rise to 40 percent simply because in corporate America and also in the Federal Government, what happens is that the IT department that is responsible for incoming email has been tasked by the CEO who has says, “I am sick of all this spam. It’s wasting all our time. Get rid of the spam,” and the IT department is out there going hurling every filter they can in front of the email system so that the spam won’t get through. And unfortunately you get the false positive problem where they’re also filtering out perfectly permission-based opt-in wonderful messages that the person had said that they wanted. They’re not getting it. And that’s a real false positive problem for b-to-b lists right now. This is why – I said I’m going to come back to lead nurturing – which is why I am really, really worried when I hear marketers tell me – and this happens weekly – I hear marketers say to me, “We’ve got a great lead nurturing process. We send them stuff every month or we send them stuff every two weeks,” and I say, “Gee, that’s great. How do you send them stuff?” And they’ll say email. I’ll say, “OK, and what else?” And they’ll say email. Well email’s great, but what about those people who are being filtered? If you have a hot prospect and they’re in that 40 percent that don’t get email from you? Well guess what? That prospect is stone cold, and you probably can’t afford to tele-market to them repeatedly over such a long sales cycle to keep on qualifying them. And you may not have the CRM system in place and you’re on your website to at least track what the hell they’re doing. So you do need to reach out via alternate media. You really do need to – I mean, if you’re going to do direct mail, maybe don’t do it for lead generation, maybe do it for lead nurturing. Maybe once a quarter, instead of sending out your email newsletter via email, maybe send out “Best Of” articles in print just to prospects, just to prospects. I’m saying take a portion of your marketing budget, take a portion of all that money you’re putting towards lead generation and slam it into nurturing campaigns that are not “quite as cheap” as email. I think people are still like, “Well email is so cheap, I might as well just use it alone.” If you’re relying on email alone for nurturing, you’re losing those leads. You paid to get that lead. You paid a lot of money, probably. $41-200 just to get that lead, however you got it, and now you’re just throwing it away if you’re relying 100 percent on email. Email is fabulous. Absolutely use email. I’m not saying don’t use email, I’m saying supplement. Supplement whenever possible because it’s going to be critical. The other thing is, some prospects, even when they get your email, aren’t aficionados. They don’t like email. There are people who just don’t respond to email. They don’t tend to be that type, in particular if you’re marketing to techies, especially if you’re marketing HTML messages to techies. They tend not to be interested in that. So you better be marketing and sending out messaging via several different media just to appeal to the different personalities that you’re marketing to. I mean, consider if you’re marketing to a committee, you’ve got a lot of very different personalities there and email may not be the best mode of communication for each one of those personalities, just as it is not the best mode of communication for everyone in your company. I’m sure you have friends or colleagues who, if you email them, they’ll never get back to you, but if you drop them a memo, they will. It’s the same thing with your prospects.
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