Ted Grigg's Reflections about Direct Marketing

At the onset, let me say that I do intend to address what clients look for when working with consultants. But since a lot of writing already exists on this subject, this article deals with what a professional marketing consultant looks when seeking new client relationships.

The client qualities consultants look for probably resemble those characteristics employees seek from their employers.

1. Loyalty

The most important characteristic consultants look for with their clients is loyalty. In other words, consultants expect the reward of loyalty for achieving agreed to benchmarks.

This usually translates into either new assignments or ongoing participation in the growth of successful programs the consultant creates.

There is nothing worse than introducing a client to a major moneymaking opportunity that the consultant delivers at great personal risk (to his reputation) only to watch the client expand the program by cutting out the consultant to save a few dollars (usually with less capable suppliers).

Consultants cannot charge enough up front for the problem solving ideas they create for clients based on consulting expertise and brain power without participating fully in the program's expansion.

No contract will protect consultants from this type of abuse just as employment contracts mean nothing when employers demonstrate lukewarm commitment to their people or written promises.

Charging for time alone guarantees the poorhouse for independent consultants.

That is why freelancers who know what they are doing charge by the project to get somewhat better compensation.

In the absence of adequate up front revenues, most consultants expect to be rewarded by ongoing work they are qualified to perform.

2. Freedom from nickel and dimeing behavior

If a client asks for an estimate, then we create one for them. It is usually a lump sum with a full description of deliverables.

Please do not ask us to break down the estimate in detail. This usually ends up in a bidding war for each step with the client. This is unproductive, does not save the client money, and costs many unbillable hours for the consultant.

For example, give us a cost per sale or a cost per lead allowable along with the detailed results of your previous efforts and we will come back with a plan to beat your previous results.

We can agree on a flat fee plus compensation for increased performance over an extended period of time or go for a strait fee.

Clients ask us not to nickel and dime them with our invoices. All we as consultants ask for is treatment in kind.

3. Do not use us as a bank

We ask the client to pay for services in advance on an agreed to schedule regardless of their high credit ratings. We are not in a position to offer services on credit. And our high quality suppliers also require payment in advance before producing custom products for clients.

We have tried the 30 days net. But companies rarely honor this even though we must pay our suppliers within 30 days or in advance. All companies are tightening up their accounts receivable due to client abuse.

If we agree on 30 days net, then we get paid 60-90 days later. We just don't have to work with clients who don't pay promptly. So our simple solution is to work with clients on a pay-as-you-go basis.

We have only lost one new client in the last 17 years when insisting upon our payment arrangement. This also means that we have never suffered a loss due to non payment of any invoice. We either get paid as we progress and we stop the work when the money runs out.

4. Share your marketing and other work problems with us

We enjoy what we believe is an unusual friendship with our clients over time. They know that we can provide better strategies and recommendations when we understand their internal and external challenges.

And when giving us assignments, our best clients speak with us at the strategic level so we have the big picture.

This approach gets the most reward and energy for the client. Trust goes a long way in stimulating everyone's creative juices.

Conclusion: Our long term clients possess these 4 qualities. But the best clients also refer business to us. This is the best way for consultants to build their practices. Referrals attract clients with these same qualities almost without fail.

What other qualities do you look for in your clients if you are a consultant. What did I miss?

As marketers, we sometimes get over-focused on the message because that is usually our primary area of responsibility. But branding requires the participation of the entire organization to create andfortify the brand.

Forgetting critical areas such as positioning, mission, competitive environment, product differentiation and core values, let us focus for a moment on the implementation of the chosen brand.

The visual I created below shows how marketers tend to view branding. 2vcgkx8nbt

This next visual reflects what I believe we should consider when looking at solidifying or creating the brand. Note that how employees treat the customer before and after the sale weighs far more heavily than advertising in supporting the brand. In fact, with little research, we see new brands emerging primary from this model in the Internet age.

One good example is Zappos.com. They did not create the brand through what they said publicly, but how they treated each customer individually.

Today's customer demands more than beautiful imagery and clever words. They demand performance where the action is. Handling the orders, shipping, supporting warranties and going above and beyond what is expected all while practicing customer respect builds today's brands.

Perhaps you have some examples of this concept in action. Please share it with us.

Just a few years ago, marketers viewed the purchase funnel process as a long term process. Brand building and demand creation could take 2, 10, 20, 30 years or more sometimes relying on the assumption that building the brand would automatically result in sales. But that assumption has taken a beating in recent years. Companies no longer tolerate large investments that do not deliver a proper return within a reasonable time period.

The emphasis on advertising budget accountability has never taken on more importance than it has in today's market.

Cathy Clift wrote a perceptive article entitled "Is The Purchase Funnel Dead? How The Internet’s Rewired Consumer Buying Behavior" which challenges this decades old concept as the Internet changes the marketing environment.

The purchase funnel evolved into various mutations over time. One of the best known purchase funnel theories called "AIDA" simplified the concept by braking it down to "Attention, Interest, Desire and Action".

Ms. Clift states: "The problem is that it doesn’t even come close to mapping the consumer’s approach to a considered purchase decision in the Internet age... The Purchase Funnel takes no account of the way consumers use online research to 1) expand their consideration set and 2) to take advantage of the experience of existing owners and users to help guide their choice. Both points have important implications for the purchase funnel."

She goes on to show detailed, relevant research to support her hypothesis.

Another way to look at it is that a purchase funnel of sorts still persists, but it is much compressed and takes on a greater degree of unpredictability.

Some marketers see this buying process as compressing the AIDA process, such as it is, into taking a few days or weeks rather than decades. In fact, the final buying decision for some purchases may happen simultaneously during the few minutes it takes for the customer to do the Internet research. The brand building process goes from years to build or tear down to a few minutes based on what consumers say about a given product on the Internet.

In other words, the AIDA process may take place within a single Internet session.

For direct marketers, understanding this process is critical because it drives the results analysis. For example, how much credit for the sales goes to traditional media versus the Internet? Expense and sales allocations continue to confound marketers as they wrestle with the evolving nature of the purchase funnel theory.

What are your thoughts concerning channel allocation and the purchase funnel as it stands today?

If you work with or for an agency (either internally or externally),
what barriers to full marketing integration do you see?

In a state of rapid change, agencies are grappling with their roles as
marketing consultants and leaders to their clients.

In "Navigating the Agency Landscape" by Sean Corcoran for Interactive
Professionals published May 21, 2009 by Forrester, agencies are dealing
with a world of added complexities.

For one, consumer media consumption habits have fragmented at an
increasing rate with the advent of online marketing.

In addition, the internal skill silos and stress between competing
agencies have not gone away.

In addition, poor communications by client's and the lack of know-how
from client procurement teams exacerbate the problem.

So the research report from the Forrester authors provide some hard
guidelines to both agencies and their clients for breaking down the
silos that continue to waste energy and diffuse focus.

The first and most important of these is for the client to set clear
business objectives and the desired outcomes they expect from their
agency resource.

In fact, clients should recognize that agencies are equipped to lead
interactive marketing strategies.

Agencies, on the other hand, should not send the senior team out to
pitch the business and assign a junior team after winning the account.

The biggest lesson of all for advertising agencies is to redefine the
marketing mix to match the market realities by including social media
that have become an important part of the marketing opportunity.

As the report says so well:

"The walls keep tumbling down as traditional advertising models for
advertising, PR, and research evolve into customer centered
communication tools that enable listening, talking and interrelating
with customers and prospects on a regular basis."

The Forrester report goes into more recommendations and detail than we
can cover here. Suffice it to say that marketing always involved a
certain element of fast change and ambiguity.

Most people in the business gravitate toward ambiguity and intellectual
tasks that require creativity. But most of us are trained to drive
revenue with clear objectives and strategies. And companies now demand
results with new media that are still evolving and have not developed
mature evaluation criteria.

What other advice would you give to agencies and their clients to
create more balanced marketing programs?

Over the last couple of years, those of us in the direct marketing business have heard some pretty phenomenal stories about the unique pulling power of online BtoB lead generation.

A number of online champions even predict the death of traditional media in this role advocating the use of online marketing as the only medium needed for successful BtoB lead generation.

Some direct marketers take issue with this point of view. They use the Internet, but see it as yet another tool available to BtoB marketers rather than a replacement of traditional media.

Your experience may differ.

So I asked a professional direct marketing consultant who has performed BtoB lead generation for a number of small and large BtoB organizations using every available medium for her perspectives on this issue.

She is passionate about BtoB marketing and has dedicated her entire career to the art and science of marketing accountability. She has worked on both the agency and client sides of the business in New York City, Washington, D.C., Richmond, VA, Atlanta, GA and now Fort Worth, TX. Her goal is to educate clients and anyone who will listen on the value of using direct marketing as a business strategy and not a tactic.

You can access more information about Carla Joye on LinkedIn or call her directly at 817-521-3469.

Let's begin with Carla’s interview.

Question: In the last five years, what have you seen as the most significant change in the direct marketing business?

Answer: The most significant change I have seen in the direct marketing business in the last five years is the almost exclusive use of Web 2.0 tools and the belief by clients and agencies that this is the be all and end all to a successful direct marketing program.

Question: Narrowing down the field to a fast growing direct marketing category, what changes have you seen in the BtoB lead generation area?

Answer: There are three major changes I’ve seen and experienced in the area of B2B lead generation:

1. The use of email mail marketing ONLY as a customer acquisition tool
2. The success of white paper and webinar offers in customer acquisition campaigns
3. The explosion in the interest of using social networking tools for customer acquisition

Question: What do you think about the heightened interest in digital lead generation?

Answer: My experience has been that both agencies and clients see digital lead generation as a low to no cost medium for customer acquisition and therefore want to make it work.

However, where they are short sighted is in making digital lead generation their only means of generating leads. Like any other successful lead generation efforts, digital marketing has a role to play but should be used in concert with other media such as direct mail, telemarketing, email, and so forth.

Marketers are always looking for the one magic bullet medium that will meet all their needs and are playing a fools game because that medium never will exist.

Question: Have you seen or experimented with BtoB lead generation using the Internet as your only medium? If so, what were the results?

Answer: Yes, I have had many clients in the past year who only wanted to use the Internet for lead generation.

The results were dismal!

What we found, was that we needed to use the most responsive list at least four times before we saw any response rates above 1%. However, that’s not the end of the story, the leads were mostly information seekers. So our conversion rates were next to non-existent.

Question: How should businesses approach their lead generation efforts?

Answer: Ted, that’s the $64,000 question! Businesses should approach their lead generation efforts the old-fashion way. Start with a strategy and a list of who you want your customers to be in the next three to five years and then use every available means of communication to market to those chosen few until they appear on your customer list.

What people need to remember is lead generation is the first step to gaining trust and building a relationship with a potential customer.

However, in today’s business world it’s all about the quick sale without regard to the lifetime value of that customer.

Speaking of customer lifetime value, that should be part of the strategy and target audience identification stage which comes first. The more lifetime value a customer has the more marketing $ should be spent on them. In business, the cliché that no two customers are created equal should be the mantra.

Question: Where do such programs tend to fall short in your opinion?

Answer: In my opinion and experience, there are several factors that cause lead generation programs to fall short.

The first and most important factor is the lack of a strategy that ties into corporate business goals. Marketers by nature are not strategists, they are tacticians. They can plan a great program and know they want to generate X number of leads from it but how does that tie into the big picture?

Second, is a shallow understanding of how to build a lead generation database that will be responsive.

And, lastly, looking at lead generation on a campaign by campaign basis (again from a tactical and not strategic perspective) rather than on a customer lifetime value basis.

Question: If you had to pick the top three predictors of BtoB lead generation success, what would they be?

Answer: That one is easy, from experience both on the client and agency sides, the top three predictors of B2B lead generation success are:

1. A strategy that ties the lead generation efforts to actual revenue and corporate business objectives which is more than just the ROI of a program.
2. A database of real prospects. This is where B2B and consumer marketing differ. With B2B marketing, the sales force and probably the CEO have identified their most desired customers. So the guess work is removed. Whereas with consumer marketing, unless you are selling a high ticket item, your customer can be anyone on a targeted mailing list.
3. Make a real offer. If the objective is to get an appointment, then a strong offer has to be made and that offer has to be more than just a white paper or demonstration. It has to have value to the prospect. Offers I have seen that work well include gift cards, product discounts and free additional services.

Question: What advice would you give advertising agencies in supporting their clients with BtoB lead generation?

Answer: This is going to sound cold, but I have seen this so often that it makes me want to scream. Advertising agencies should stop pretending they know how to generate leads by using the latest “fad” mediums such as email only and social networking and hire people who actually have a track record of generating leads using any and all media that are pertinent to the clients revenue goals.

Question: What advice would you give to clients trying to select the best resources to support them in their lead generation efforts?

Answer: Don’t hire an agency!

Hire a strategic B2B consultant to help you plan your entire year of lead generation programs around corporate goals and departmental goals. Then use that same consultant to oversee the tactical development of those programs. That’s the point where an agency or freelance creative talent should be brought into the process. In the long run, an experienced B2B consultant will provide a tremendous value and boost to your ROI.

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Well, there you have it from Carla Joye. She certainly brings some different perspectives to the BtoB lead generation world.

But I suspect that some of you hold different opinions. That's particularly the case when she refers to solo online lead generation.

Do you have data showing better performance in BtoB lead generation using online alone versus online plus traditional media support? Or do you have actual results showing traditional media alone tested against online media alone that shows a different result from Carla's experiences?

If so, please describe your test in sufficient detail to validate your conclusions. This would help educate all of us based on your experience.

Some readers will take issue with my list arguing that it contains
elements of truth. But in my view, these comments generally reflect a
misdirected strategic sense or preconceived ideas about the role of
advertising and direct marketing that are based on poorly founded
assumptions. At their best, some of these statements reflect ignorance and
at their worst, closed mindedness. But you be the judge. Perhaps you could
add to this list or elaborate on those listed.

1. Any marketing experience you have that is over 10 years old is
useless.
2. Any strategy that has an ROI attached to it is no longer a strategy,
but a tactic.
3. Direct marketing operates below the line because it supports
awareness advertising.
4. We tried direct mail (or any other medium named that was used a
couple of times) and it doesn't work.
5. Traditional media is dead because every one now uses and buys
products exclusively as a result of the overwhelming influence of the
Internet.
6. We want a CMO with hands on expertise in online technology, not
someone who has just led such programs.
7. Don't worry about the strategy. Just do it.
8. When we are spending on advertising to build the brand, we don't
worry about trying to calculate ROI because nothing is more important
than our brand.
9. We know that successful BtoB lead generation used to rely heavily on
traditional media like outbound telemarketing. But today, business people
use the Internet. So we have to dump the old, proven approaches for pure,
Internet lead generation.
10. We don't want to put a coupon in our print advertisements because
the design does not fit our brand image.
11. We don't want to make an offer or other call to action because that
gets in the way of our image.
12. That direct mail package is ugly and doesn't retain the look and
feel of all of our advertising.
13. We can handle any volume of leads you generate. So don't worry about
limiting weekly lead flow volumes.
14. We want only tight leads where the prospect is ready to buy today.
Otherwise we just waste our sales people's time.

What other statements tend to get you going?

One of my readers asked four thought provoking questions that I answered
and are worth repeating in this post.

1. What are the forces changing DM?

Better return on dollars spent is the driving force behind DM. And with
this recession, that force becomes even more potent.

So it's not so much the forces that are changing DM as events are
creating the perfect storm for the DM strategy.

2. Will there be new media?

Of course there will be.

The mobile phone is already emerging as a mini computer that is truly
available 24 hours a day. Eventually, shoppers will rely upon a single,
powerful device at home and work to make purchase decisions.

Direct marketing and it's call-to-action characteristic now dominate
this new technological environment and assures the growth of new media.

3. How will the Internet play into the future of direct response
commerce?

Again, it's not so much that the Internet changes direct marketing as
direct marketing leverages the Internet.

The immediacy and interactivity of the Internet delivers the direct
marketer's dream medium.

The Internet enables consumers to use their natural purchasing process
to flourish. By that, I mean that consumers can quickly find out about a
product's reputation from their peers. These shoppers can also find the
best price once they select the product. With the pervasive presence of
the Internet, competitive pricing, ease of purchase and a good
reputation are now givens.

With all of this in place, it is natural to ask for the order. That is
direct response at it's best.

The Internet will become increasingly important to direct marketers and
their companies.

But security and spam issues continue as negative forces that direct
marketers must contend with. Governments will continue to place
increasing pressures to make transactions over the cloud more secure.

Direct marketers will lead the way to compliance with regulations and
will build consumer confidence in email and Internet transactions.

4. How will DM affect the future of cable TV and DRTV as a whole?

DM represents the salvation of broadcast media as it becomes
increasingly dependent on direct marketing to replace the revenues that
continue to decrease in the awareness advertising arena.

What other changes do you think DM brought about in the world of
commerce in the last several years?

Always begin with the Cost Per Sale allowables that meet your financial requirements. Setting the cost per sale too high means the program will fail before it starts.

You must, however, balance the investment with the anticipated revenues to keep the CFO happy and grow your program over the long term.

And setting the Cost Per Sale too low will not allow you to penetrate your target market for maximum revenue potential.

1. Agree to the sales volume requirements and create your budget

You must achieve your sales quota. Once you have agreed to the the allowable cost per sale, you will haveGenerating leads is like panning for gold nuggets -- hard work! the necessary information for creating your total lead generation budget.

Simply divide your total sales quota by your anticipated average sale. This tells you how many sales you need.

To figure your lead generation budget, just take the total number of sales you need to reach your sales quota and multiply that number by your allowable CPS. The resulting total gives you the lead generation budget you have available.

The trick is to create a lead generation program that will achieve your sales onjective for an amount equal to or less than your allowable budget.

2. Make sure the sales team participates in the development strategy and process to assure their buy in

Nothing guarantees failure faster than a reluctant or unsupportive sales force.

Without their buy in, the sales people will complain incessantly about low lead quality and will judge a lead's worth based on the name of the company or industry rather than treating every lead as pure gold.

3. Identify the target markets

Marketing and sales establish the target markets matching the product to the appropriate targeted companies based on location, SIC code, sales volume, number of employees and other factors.

Lead quality begins with the list selection. Separate worthy prospects from the time wasters.

4. Set up the master database

Most available BtoB lists will not meet all of your requirements regardless of the compiler or response file.

Most companies pre-call all prospect names for accuracy and add the names for titles that are either absent or out of date. If you want to meet with the comptroller or human resources, then your raw list will probably not contain such names. This is particularly true of smaller companies with less than 200 employees.

You may also want to enhance your list by appending opted in email addresses before making the calls. Good resources exist that will ask permission to include individual employee email addresses for your particular use prior to appending them to your prospect database.

5. Determine the media strategy

Internet lead generation has become increasingly successful and sophisticated. But for most companies, the Internet alone will not penetrate narrow target markets sufficiently to achieve their sales objectives.

Deep penetration requires a multichannel approach using outbound telemarketing as the core medium supported by email, direct mail, and specialized response landing pages.

6. Calculate the lead flow to allow proper follow up of all leads

In the first couple of weeks, sales people may be able to handle relatively large volumes of leads. But as time goes on, you must allow adequate time for follow up sales calls, proposal preparation, presentations and contract negotiations as sales are made.

Only controllable media such as telemarketing and direct mail can increase and decrease lead volumes to allow for proper follow up of all leads. Internet leads generated by SEO continue to flow building over time making it more difficult to control lead flows. SEM however does offer some flexibility in controlling lead flow.

7. Decide how tight the leads should be to get the lowest cost per lead possible

An interested prospect who fills out a brief questionnaire, for example, represents a more qualified lead than someone who agrees to meet with a salesman for a free iPod. So sales and marketing should negotiate the offer and degree of commitment the team requires of the prospect for an appointment when testing the offer.

8. Create an offer for setting up the type of appointments you need

The best quality leads agree to an appointment based on the promised benefits they could get from your service or offer.

But bear in mind that the purpose of the lead generation process is to create sufficient interest to agree to an appointment and not to sell the product.

Leave enough ammunition for the sales person to close the deal during the appointment.

9. Create testing opportunities

Unless you plan to make this your last lead generation effort, set up all of your projects to learn what works best. Test multiple offers and media strategies always improving your program.

10. Appeal to influencers, gatekeepers and decision makers to set the stage for best response and conversion rates

There is nothing worse than presenting your product to the decision maker only to have the CEO, head of HR or the CFO nix the sale.

So introduce your program to all individuals within the target company simultaneously during your lead generation effort.

Send multiple messages to the decision maker, the CEO and others you know will become involved in buying your product or service.

11. Monitor the success of the program and conclude the project with an analysis to see if the program achieved the objectives

Keep an eye on your lead flow and monitor the follow up activity.

Research shows a definite drop in interest as early as 24 to 48 hours after the prospect has agreed to an appointment. Keep the pressure on all the way to the final sale.

Needless to say, at the conclusion of the program, analyze your effort to identify any weaknesses or areas of opportunity.

Successful lead generation is not a one time effort. But rather a series of incremental improvements as you collect more experience.

Questions

What other steps would you add to make a lead generation more successful? What do you think many companies miss in making their programs more effective?

Over the years, direct marketing professionals have worked with all kinds of clients in every industry. Some clients The start up struggleget the help they need and many more never do. Why is that?

Here are some of the reasons they don't get help.

1. The client believes he already has the best people available in-house to solve his problems. Slowly emerging negative trends in their marketing programs are not uncovered until the damage is done. Such clients tend to hire people who work in a single industry and look just like him. So new ideas and objectivity never survive the culture.

2. Some clients know they need help. But they fear spending more for help because it is less risky to save money than it is to spend money to make money.

3. Others don't believe they have a problem and are afraid to address the problem for fear of loosing face with their bosses. What's more, they may actually have to go out and risk failure on a new approach.

4. A few clients get bogged down in the details and can't seem to stand up for air in the strategy zone. They see activity or movement itself as progress and never make time to address the significant issues.

5. Then there are those who want help, know they need it, but they can't seem to reach the critical mass they need to fund their business growth.

This last point is the one that baffles many of us who live to solve marketing problems.

No matter how you look at it, marketers make money for clients by spending money. And marketers know It really takes money to make more for those businesses we serve.

So how do we help the start ups? I am referring especially to those hundreds of humanitarian nonprofits who linger on from year to year without ever reaching that critical mass.

After 20 years or more serving people for causes with wide appeals, some nonprofit organizations never seem to have the money available for mass direct mail to grow their donor basses from a few hundred to 20,000 or more to really get their programs in high gear.

The agony for any business in the early years is grueling and filled with failure. And nonprofits must build without the benefit of seed money or a second round of financing.

Volunteers help. But the costs for mailing lists, postage, lettershop, printing, paper and so on lie beyond volunteers' ability to help. The organization still needs money to grow.

So how do these nonprofits get big in today's world?

I suspect it takes a charismatic leader, a great cause plus one or more individuals (like Bill Gates) who have very deep pockets. Without this combination, nonprofits have a tough row to hoe.

How would you envision the growth of a nonprofit start up ? As a marketer or fundraiser, what would you advise these organizations to focus on?

When you test direct mail, for example, test the big things rather than tweaks.

“Tweak testing” pervades the risk adverse environments in many industries. This dramatically reduces their chances of competing with those firms that understand the need to compete aggressively with their testing programs.

Why? Because breakthroughs of 25% plus in costs per sale that displace controls do not happen with small changes. Big changes in results require big differences in your package tests.

The testing priorities are clear. The priority sequence is as follows. Typical direct mail test grid

1. The list
2. The offer
3. The format
4. The main selling proposition

So don’t try to structure the test so that you are testing paper stocks, envelope sizes, first class versus 3rd class and so forth. These all impact response to some degree, but by the time you figure it all out everything will have changed. So concentrate on the majors.

Besides, you have limited staff resources for analyzing test results as well as fixed test budgets. Spend your assets on the things that make a significant difference.

When testing offers, don’t try to make the two packages by forcing the same package contents or format. Test packages, not package elements. Every package possesses its own unique character. After all, you are looking for a breakthrough, not an analytical report that has too many variables to make sense out of anyway.

So in direct mail, test packages against each other and not package elements against each other. Your chances of beating your controls are greatly enhanced through this approach.