Morettini on Management

General Management and Marketing Advice for Software and Tech Companies

Category: Promotion

Pros and Cons of the Freemium Software Business Model

One of the hottest trends in the software business over last several years has been the rise of the “Freemium” business model. For those unfamiliar with the term, a Freemium model is characterized by an entry level version of your software which is totally free to users–forever.

This business model has actually been around in the software industry since the 80’s and was originally referred to as “crippleware” or “lite” entry level versions of software. The term “Freemium” apparently entered the software industry lexicon when used by Jarid Lukin of Alacra in 2006. But enough history. Regardless what you call it, the model on the surface is well suited to the software business due to no (or very low) cost of goods sold.

Whatever term you use, the model is predicated on creating a large “free” user base quickly, usually by using viral marketing methods such as referrals and word of mouth along with other very low cost methods such as SEO. The large free base is then “monetized” by selling advertising to their eyeballs and/or upselling them on premium software features or services. The Freemium model today is widely used in the software biz across a number of form factors including Open Source, SaaS and traditionally licensed software.

What’s most interesting to me about the model is the trendiness of it the last few years since the term Freemium came into use. I see many companies that appear to be adopting it because they feel like so many others are using it — that it must be the right thing to do. But is it the right thing to do in all cases? In my opinion–it is not. Let’s take a closer look.

Freemium Model PROS

  1. Fundamentally viral: he more users you get–the more users you get. Free users will refer other users who could turn out to be paying users.
  2. Allows you to upsell your own (free)customers–upselling a customer that’s already incorporated your tool into his workflow is generally easier than selling a new customer from “scratch”.
  3. Keeps prospects in your target market away from being locked in by the competition.
  4. The barriers to entry to your product line are at the minimum possible (even less friction than free trials and money back guarantees)
  5. Great for startups to say be able to say  ”we have XXXXX gazillion users”.
  6. Enables Free Beta testing of new products with a large number of users.
  7. “Free” traffic and user bases can sometimes be converted to advertising revenue.

Freemium Model CONS

  1. Usually has low conversions rates to paid version, average is about 1%–although this obviously varies widely.
  2. If you do offer customer/technical support to free users, it’s potentially a large expense unsupported by little if any revenue.
  3. If you don’t offer support or only offer poor/reduced support to free users (such as forum-only support), what does that do to your conversion rates to paid users–as well as your overall reputation?
  4. If you do offer reduced or no support to free users, lots of time can be wasted trying to figure out who “qualifies” for what level of support .
  5. 99% will never pay you a dime–are they REALLY customers?
  6. In addition to customer technical support costs, if you’re SaaS-based the cost of data/bandwidth/hosting for free users can be significant.
  7. Requires EXTREME application ease-of-use to work well.
  8. There is some evidence that having a free version reduces your conversion rates on free trials of your paid product.

The main reasons I don’t like Freemium  models, except when circumstances clearly call for it:

  • Having a free version conditions the market that “free” is the appropriate price.
  • A free version can reduce the overall value perception of your product
  • It’s critical to the success of a Freemium model and difficult to get the free/paid feature set split “just right”. If you don’t get this split just right, you either won’t be able to attract enough free users (too little value in Freemium product) or you won’t be able to convert you Freemium users to paid versions (too much value in the Freemium product).
  • “Free” is a mentality that’s hard to overcome in a user; it’s much harder from convert a free user to a paid user than it is from an entry level (cheap) paid user to a premium paid user. An example of this is the difficulty of online newspapers in converting readers to paid models after years of “training” them that their content should be “free”.
  • I’d prefer to use available profits on professional marketing programs rather than starving the marketing budget due to excessive support/hosting costs.

Even taking my biases above into consideration, there is definitely a place for a Freemium business model in some situations:

The Best Circumstances to use a Freemium Model

  • Although the Freemium model has worked in B2B markets, in general I believe it’s better suited to consumer mass markets where viral is possible, price points are already low and free user bases and traffic can be high–making it possible to monetize the traffic via advertising
  • Entering a market with a very strong, embedded competitor.
  • When attacking a market with very limited resources or lacking in marketing skills.
  • With a product has a great “social pull” which lends itself well to viral marketing.
  • Freemium has already become the standard in your market segment, so you’re almost forced to follow suit.
  • As an act of desperation when nothing else has worked.

I’m sure there are others circumstances where a Freemium model makes sense–the list above is what comes to mind quickly.

So that’s what I think about Freemium–many will not agree. What’s been your experience with it?  Leave a comment below with your own thoughts, lessons or best practices.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

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5 Comments by admin on May 11, 2013
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Software Product Marketing: Horizontal vs. Vertical

An important discussion for most software companies–both in the product planning stage and in the downstream active marketing phase–is the manner in which it will be marketed. The decisions to be made in each phase are separate but closely related. This set of discussions need to happen regardless of whether you are marketing a traditionally licensed application, an open source application or a SaaS application.

One of the more important aspects to this is whether the product will be aimed tightly at one or several vertical segments, or marketed more broadly to the widest possible audience. This is the crux of the vertical vs. horizontal decision. Let’s examine a few topics which can be useful in framing this discussion.

How specific is the “language” of your application to a vertical audience?

This is very important because in some product categories the unique business processes of a vertical can be very important, while in other categories there is great commonality in process and language across industries. If you’ve written your application specifically to solve one market segment’s unique problem, it’s probably VERY specific. When this is the case it’s pretty obvious that you’ll start (and possibly end) with a highly vertical marketing effort. Sometimes as thing go along you may find that you’ve solved a problem for market A, but it’s also useful in market segment B and C–although there often needs to be at least some modification. If you’ve solved a more generic problem that applies to many markets, the decision to market the solution horizontally or vertically can be much less clear.

How big is your overall market?

A key consideration when you’re entering a new market with a new product. The larger the market the more likely it is you will need to take a vertical approach get initial traction. In many cases this means verticalizing the product in the product development phase. But even if there isn’t a strong set of vertical needs with respect to product features and “language”, in large markets a vertical promotional approach may be required to build market traction. It is often far easier to build a brand name and market traction in a tight vertical before you move on to the next segment, than by taking a more scatter-shot approach with no vertical focus.

What is the level of competition in the overall market?

This question is related to first question above as strong competition often goes hand in hand with large markets. They are separate issues, however, and should be evaluated individually. If the level of competition is high, regardless of market size, a new entrant is likely to have a better chance of success with a more vertical approach. It there isn’t significant competition in the segment, you may be able to have success with a horizontal approach, which can be a more efficient way to use both product development resources and marketing dollars.

Market maturity: has the overall market verticalized already?

Regardless of the level of competition and the market size if the larger market has already evolved into a number of vertical sub-markets, it may be too late to take a horizontal approach. It is usually very difficult to defeat entrenched verticalized competitors when entering a market with a horizontal application. The exception to this would be a new competitor with a product that provides a quantum leap forward in functionality (usually as a result of a technological paradigm shift).

What level of marketing resources are available to you?

The level of marketing dollars available to you are quite important in formulating your approach to the vertical vs. horizontal question. As one example, let’s say you are entering a market that is large, quite competitive and you won’t have a lot of marketing budget available. In this case, it would be very important to develop the product upfront with the strongest vertical focus possible and market it accordingly. On the other extreme, you might be entering a market of modest overall size that hasn’t verticalized to a great degree to date and you are well funded, enabling a substantial marketing budget relative to the competition. It this case it might be an easy decision to take the ROI-efficient horizontal approach both from a product development and promotional perspective. There are many potential scenarios between these two extremes which unfortunately will lead to less obvious decision-making.

Is your software a “point” or “platform” application?

Most software applications are “point applications”, meaning they have little or no integration with the rest of the software infrastructure. In addition, any possible customization is generally intended to be done by the application vendor themselves or maybe their channel partners.

I define a software application as a “platform” when it utilizes an open API which enables BOTH channel partners and third party software vendors to write add-on applications which extends the platform software’s functionality in two key area:

1)      by adding “vertical” functionality not present in the platform software thereby enabling a complete solution for a specific vertical market.

2)      using the API to integrate the application with other parts of the software infrastructure

In this way a platform software application allows a software vendor to “have it’s cake and eat it too” with respect to the Horizontal vs. Vertical discussion. The platform software itself provides basic functionality which can be sold broadly across many markets, while the open APIs enable the product to be tightly customized for specific verticals as required, by both your channel partners and independent ISVs. The platform application can be a product manager’s dream and is the Holy Grail of software when it comes to efficiently serving as many market segments as possible by leveraging partner investments. But it’s not something that can be forced; there needs to be a natural reason for the platform to exist, or there will be no third parties willing to write the add-on applications so critical to the platform’s success. Without these add-on application a platform will more often than not die a quiet death in the marketplace.

In some cases, such as when you write an application which aimed at a problem specific to a single vertical market, the answer to this “vertical vs. horizontal” question is easy. In many other cases you’ve created a product which is useful across several market segments–but do you have the resources to attack multiple market segments simultaneously? How do you approach this common problem?  Leave a comment below with your take or shoot us an email with your questions.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

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3 Comments by admin on February 16, 2013
filed in Business Models, Corporate Strategy, Distribution Channels, Product Marketing/Management, Promotion, SaaS, Software/Product Development, Startup/Early Stage, VARs, enterprise software
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Does Pay Per Click (PPC) Advertising Still Work?

Modern PPC advertising was pioneered in 1998 by Overture who was later bought by Yahoo. It really hit it’s stride in 2000 when Google introduced the AdWords platform. I’ve been managing PPC campaigns for myself and my clients since 2003.  So while I haven’t been involved since the  very beginning, I consider myself an early adopter of PPC technology.

The Early Days

In the early days PPC was great–using it to your advantage was like putting a knife through butter. Almost independent of individual product or market, it was very effective when I first started managing PPC campaigns. Things stayed that way for several years, even as Google (as the primary PPC platform) made constant changes to their platform. I remember soon after I started using AdWords Google made one particular change to their platform: for keywords you were bidding on that fell below a certain click-thru threshold, AdWords henceforth prevented you from bidding on that keyword-FOREVER! Needless to say, they fairly quickly decided that wasn’t in their best interest and changed things yet again. But mostly it was all good for quite a while–easy to start, easy to use and with an excellent ROI in most cases. One of the reasons it worked so well was that even many sophisticated Internet users didn’t realize that “Sponsored Links” were really Ads, leading to excellent click-thru rates and a steady stream of inexpensive visitors to your website.

PPC Enters the Mainstream

As Pay-Per-Click grew rapidly due to it’s outstanding value proposition, it entered the mainstream as an important marketing method for companies large and small. This of course drove Google to prominence as one of the top tech companies in the world and created a lot of millionaires and billionaires in the process. For a while AdWords worked so well it was like printing money, not only for Google but it’s customers, the users of AdWords. For some small companies PPC not only became a mainstream marketing method but consumed the MAJORITY of their marketing budgets. But as I’ve stated many other times, once a marketing method goes mainstream it begins to falter in effectiveness. There was a long slow decline over a period of years in terms of ROI, but for many years it was still effective–so the golden goose kept growing in size.

It’s more difficult today

As I write this article, however, I believe that we may be at a point of inflection. I’ve found that in many market segments it’s become very hard to extract even a positive ROI, let alone be highly profitable . Unless you’re a large company where PPC expenses are a tiny segment of your marketing budget, or are focused on brand-building (a dubious use of PPC, imo) rather than sales–this will give you serious pause. The quality of visitor traffic has deteriorated, with time spent on site by PPC-generated traffic a fraction of Social Media or other Organically-generated traffic. Cost per click is now very high in for high-traffic keywords. Cost per conversions have risen steadily. I design campaigns using a fairly labor-intensive long-tail approach–but I have a hard time getting a positive ROI in some (but not all) market segments. I’m far from alone in this analysis, as this  New York Times article illustrates. While there are people who spend more time managing PPC campaigns than I, as I stated above I have been at it for a while and am far from a newbie, leaving me pretty comfortable with my viewpoint.

Unfortunately, I believe much of this is due to Google greed. AdWords has never been a transparent bidding system, but a “Black Box” that Google can manipulate as they please. In the past they have shown some understanding that their advertisers need to make money for Google’s own AdWords business to remain viable. But I think that the short-term quarterly profit pressures of being a public company, along with the lack of significant new revenue streams past PPC have come to bear. These factors combined with the inevitable maturing and slowdown in the growth of the Search marketplace have led the company to make changes to their platform and the black box which they may regret in the long run.  Here are a couple of examples:

  1. I’ve always utilized a best practice of rotating Ads evenly, with the belief that I am the best judge of which the best Ad for my purposes.  Google recommends optimizing which Ad to show based upon their automated algorithm, which quickly decides one Ad is best. Google’s interest is in maximizing clicks, which isn’t always in my client’s best interests. But after using this method for years Google eliminated it, forcing advertisers to utilize their automated algorithm and revert to a the highest click thru Ad after 3 months of even rotation. I noticed in checking recently the option to rotate Ads evenly indefinitely has returned–I’m sure it was because of Advertiser complaints.
  2. Another thinly-veiled, short-term money grab is the “fibbing” Google does when it provides “estimates” about what it takes to get your Ad listed on the first page. I’ve found them to be almost uniformly wildly overstated in almost all circumstances, even on very niche keywords where it appears there are no other advertisers bidding!

These are just two examples of many things I’ve seen Google do within the AdWords platform and especially in their bidding “black box” that indicate Google is acting in its own (short-term) self-interest, to the detriment of their advertiser/customers. I believe this will prove to be very short-sighted in the long run.

Combine all this with the increased competition in the PPC marketplace since it has gone mainstream as discussed above and I believe AdWords may have seen it’s best days–an ominous development for Google as a growth company. By squeezing its advertisers, the company is definitely risking killing the golden goose.

I haven’t used the Microsoft PPC platform recently so I can’t say for sure that the experience there is the same, but in the past I’ve found it to be similar.

Where does PPC fit today in the Marketing Mix

I’ve been relatively critical of PPC as a current marketing method in this article–which is a turnaround for me–I’ve always held this method in high esteem. I still believe it fits in some shape or form in most marketing budgets, but I feel the need to temper how big a role it should play. PPC retains some big advantages–there is no better way to very quickly launch a marketing campaign than PPC. You can be promoting new products, testing messaging & value propositions and exploring new market segments almost instantaneously. It’s also very measurable and therefore objective–there’s no need to throw money around with PPC, based on a measure of faith like some other marketing approaches.

But in many market segments, the ROI has degraded severely over time. As a result, it shouldn’t take up a large segment of your marketing budget unless your objective measurements indicate that it justifies such a large investment. I’ve shifted emphasis in online marketing budget recommendations to social media and behavioral/retargeting advertising (standard PPC’s close cousin). Unless you see strong ROI justification in traditional PPC investments, I’d limit my PPC exposure to  two areas:

Long term: long tail keywords that may not generate big dollars but show a reasonable ROI

Short term: new products, new market segments and messaging/value/price testing which have a limited term

That’s a quick summary of how I view Pay Per Click today.   What’s been your own experience with PPC lately? Is it a big part of your promotional budget? Do you also see it declining in performance in your market segment? Give us a heads up on your experience and post a comment below.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

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2 Comments by admin on November 9, 2012
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Selling and Marketing Software Through the VAR Channel: Morettini on Management Video Series

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com
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Is Your Tech Business Marketing or Sales Driven?

Software and hardware business are often segmented by the vertical or horizontal market they’re targeting, their technology platform, small vs. large companies and so on. One of the important ways to segment tech businesses, which isn’t often discussed, is by whether the company is sales-driven or marketing-driven in their customer acquisition strategies.

A balanced approach

Now some reading this article may ask “why wouldn’t you take a balanced approach”? Indeed, I don’t mean to suggest that either sales or marketing should be absent in the customer acquisition efforts of tech companies. There are a few scenarios that could be drawn up to support such a singular approach—but very few for sure. There are also some situations where the customer acquisition circumstances are “in between” in price, complexity, market size, etc. and you end up with a fairly balanced approach between marketing and sales. But in my experience the sales or marketing function will rise to the lead, more often than not.

Key criteria in choosing customer acquisition techniques

There are several considerations that often drive whether marketing or sales will dominate:

  • Product Complexity – This often decides whether or not a product can be truly driven to purchase by marketing or whether significant sales rep intervention will be required to close a deal. It should be noted that when product complexity is high, marketing support in the form of sales tools (examples: case studies, road map presentations by product management) will still be very important in the sales cycle. But this will generally be a sale that is driven by the sales force with marketing in a supporting role.
  • Product Price/ Typical Sale Size – The smaller the product price and typical sales size, the more likely you’ll be able to acquire customers exclusively through marketing, or in conjunction with inside sales that is largely “taking orders”. Conversely, products that cost a lot may require the extra interaction provided by an outside sales force (and the deal size also justifies the cost of the sales force).
  • Market Size – Very large markets with lots of customers are more easily and cost-effectively reached with effective marketing. A tight market with a small number of total prospects (think nuclear power plants) will usually be served almost exclusively by an outside sales force with minimal marketing intervention.
  • Use of Channels – While companies selling heavily through channels often need reps to call on the channel partners, far fewer channel reps are required than if the reps are dedicated to direct selling. Generally the heavier the use of third party channels in the customer acquisition approach, the more heavily the mix will lean toward investment in marketing.

Marketing driven keys to success

  • Adequate marketing funds – If you’re going to be marketing-driven in your customer acquisition approach, you better dedicate enough money to fund marketing programs with superior performance. To do otherwise will cripple your business.
  • An objective, data driven culture – The beauty of a marketing-driven approach is that it can take much subjectivity out the management of optimizing your customer acquisition activities. Especially in this era of highly measurable online marketing, decisions should be made on what the data says—not on the whims of the CEO or some other senior executive.
  • Excellent inside sales in support – Except for very simple, low cost products where marketing can truly drive the sale all the way to completion—these days that often means a software download, SaaS signup or physical product order—it’s still important to have an efficient (but low cost) inside sales operation supporting your marketing machine.

Sales driven keys to success

  • Great sales people – Hiring good people is so very important in every area, but when your relying on an expensive outside sales force to drive revenue—you better hire the best reps you can afford and attract.
  • Success driven comp plan – If your success depends upon them, make sure your sales reps become really happy only when the company is happy as well.
  • Good marketing support in the form of lead generation programs and sales tools – Unless you have a tiny market with obvious, easily identifiable prospects, it’s still very important to have a marketing function which generates leads as well as supplies good sales tools.

The best approach isn’t always chosen

Unfortunately, logic and situation analysis doesn’t always win out when designing a customer acquisition strategy. Usually by the time a company grows to be large, their approach is in line with what’s best for the business. Of course, your chances of growing to be a big company are reduced if you make serious errors in sales and marketing strategy. But in any event, by the time a company is big they are usually utilizing both sales and marketing heavily and in the proper balance.

Startups and early stage companies are another matter. Often the emphasis on either sales or marketing is based on the experience of the founders and senior executives. If they’ve been successful in the past and their new company has a similar focus, maybe it’s fine and their approach works again. But a problem occurs when these executives start up a very different type of company than they’ve had success with in the past. It’s human nature to fall back on what I refer to as your “common business sense”, which is formed by your personal background and past experiences. This is when you can get a misalignment between what a company needs and the approach taken in the sales & marketing mix.

Even worse still is when the customer acquisition approach develops more or less haphazardly. This can happen when the founders of a company really don’t have much functional experience in sales or marketing. This occurs somewhat frequently in software and hardware companies, as many startups are created by technical types. In these cases there may be a fairly unsophisticated approach to both sales and marketing—and whatever works early may end up dominate. For example, a sales rep is hired who has some success, so the model becomes hire a lot more reps and turn them loose without much (or any) support on the marketing side. Or an early direct email campaign or online advertising generates some sales, so money is poured into that method. Unfortunately, these may not be the best approaches strategically for the business in the long run.

That’s what I think about Sales vs. Marketing driven orientations in software and hardware companies. What do you think? Post a comment with your own opinions or stories about what drives customer acquisition in high tech companies.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

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No Comments by admin on July 27, 2012
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Social Media Marketing for B2B Tech Companies

By now, every company has grasped the importance of having a social media presence on the web. Or have they?

In discussions with potential clients and others I am actually amazed how many folks have done little or nothing in the area of social media marketing.

Why do you think this is? Some business executives immediately associate “social media” solely with consumer-oriented activities on social medial sites such as Facebook, Twitter and MySpace. You know the stereotypes that are popularly characterized by the mainstream media: pictures of wild high school parties, viral invitations to flash mobs, and inane posts about what people are having for breakfast.

But there is serious business going on in the Social Media world. The fact is that Social Media marketing has definitely become not just a mainstream activity, but a critical one. No longer are at an advantage if you are heavily using social media in your marketing mix; you are falling behind if you aren’t!

Social Media is obviously very important in B2C software and hardware marketing. Because it is less well understood, I will be focusing on B2B marketing in this article.

Blogs

A Blog is the single most important step into Social Media for a B2B tech marketer. In addition to being a great way to bring traffic directly to your site, it provides the content to use as bait for all of your other social media activities. There are almost too many benefits to list here, but let’s try a few:

  • New and high quality website content which increases SEO (search engines LOVE fresh, high quality content. This assumes a self-hosted Blog–it’s critical for your Blog to be hosted on your domain to maximize SEO benefits)
  • Direct traffic to your website
  • Fast & Easy search engine crawling and indexing due to the large number of Blog ping services, Blog indexes and Blog search engines
  • High quality backlinks from the Blog services mentioned above, as well as from happy readers who link to your Blog
  • Content you can repurpose in a number of ways such as publishing in newsletters and posting on appropriate social media sites
  • Positions your company and key employees as “thought leaders” in your category

This is just a taste of what a Blog can do for you; the uses and benefits are limited mostly by your imagination. It’s a bit of work, no doubt, but has a high return if you dedicate reasonable resources to the effort.

Linkedin

After creating your Blog, this is the second most important social media activity for a Business-to-Business technology marketer. Key employees should create a complete profile (for professional development purposes, if no other reason) and a profile for the company should also be created. But that’s just where the fun starts. Here are some additional important activities to consider:

Join and Use Groups: Other than setting up a complete and effective profile for both you and your company, the most important thing you can do is join groups. You’re allowed up to 50, and if you choose the groups well they can be a very effective segment of your online marketing efforts. Become known and respected by participating in discussions. But most importantly, post links to your Blog content, press releases, newsletters, webinars, etc. If you’ve targeted the right groups, this will create a good deal of qualified traffic to your website and other online vehicles.

Build your Network: This is the place where you want to go fast, but don’t hurry. The more people in your business segment you know, the easier it will be to market your product over a long period of time. The key is to take a long term perspective. You don’t build a network by being pushy or “all about you”. It’s like any other form of networking. Reach out not only to connect, but to actually assist those in your network. In the long run, you’ll have a stronger position and it will benefit your business.

Search for Prospects: People are listed on Linkedin that you wouldn’t find elsewhere. It’s a great place to search for both companies and high level executives that you’d like to connect with. Be very careful in your targeting efforts and try not to be too obviously sale-sy. But if you are respectful and careful, an excellent source of targeted prospects awaits you, that you can contact directly (with a premium account) or connect with through your mutual contacts.

Ask and Answer Questions: This Linkedin feature provides a great, low key way to both show off and improve your knowledge. By answering questions posted by others you can demonstrate your knowledge in a forum without having to appear to be bragging. Don’t be afraid to ask questions either; there are a great many resources out there to fill in the blanks in your current knowledge base.

Twitter

This is a great place to connect with like-minded people. As profiled time and again in the mass media, it’s also a great place to waste time. So unless you find that you can become a productive and efficient Twitter networker, make sure you don’t become addicted to tweeting. Some people love it, some hate it–what’s important is to leverage it optimally for your business. I personally don’t waste a lot of time on Twitter, but there are some folks who have dedicated a lot of time–to great effect for their business. Especially if you have more time than money for marketing, there’s a lot you can do to gain exposure and goodwill for your business here. At a minimum you should post your Blog content, press releases and other important external communications. You should also think about assigning members of key departments (PR, customer service, tech support) to Twitter, giving your users and potential customers an easy, informal way to interact with appropriate parts of your company

YouTube

Yes, Youtube! Everyone loves to go to YouTube to view that video of the 6 month old baby surfing in the bathtub while smoking a cigar (Ok, I made that up, but if you do a search you might just find it on YouTube). But it’s also a great place to post a short intro video about your product or service. You can even put up training videos to show the depth of your knowledge in a particular area, or the depth of your product or service offering. The videos are hosted on YouTube, but you link to them and feature them on your website. These videos will give you a leg up in search engine ranking as Google, et al love video content and provide it with preferential search result positions.

Facebook

Yes, use Facebook as well! Facebook is certainly not a core platform for business to business marketers. But 750 million users (and still growing like a radioactive weed) shouldn’t be ignored. So create a personal profile and company page and post your Blog content and other external communications pieces there. If nothing else, you’ll get some quality backlinks to help your SEO efforts with very little effort. Don’t waste time here, but it makes no sense to completely ignore this platform, either.

Coming Soon — Google +?

This is a real wild card that could have a big impact on the Social Media Marketing landscape. As I write this article it’s too early to tell what Google+’s ultimate impact with be on B2B social media marketing. Most people don’t yet have access. I haven’t used it yet, so I only know what I’ve read. It’s still in pre-release phase (although it seems that most things at Google are!), and the features are still being developed. But so far it appears to be off to a very promising start, with 25M users in only a few weeks of controlled beta release. Reviewers have raved about the elegance of the “Circles” feature, which allegedly makes it very easy to segregate those connected to you into logical groups, a real problem on Facebook. Of course, Google is aimed far past B2B social media with Google Plus, taking aim squarely at Facebook as a mass-market social media network. But I think this new platform also has particularly strong potential for the B2B crowd, with possible integration with tools like Google Adwords, Analytics, Apps, Docs, etc. We’ll have to wait and see where this goes, and I’ll be watching closely.

There’s certainly much more that can be written on this topic. This was just a quick look at what I think about the importance of social media marketing for B2B Software & Tech companies. For example, there are new vertical social media networks popping up every day–there may be one perfectly aligned with your market.  This is a varied and rapidly evolving topic–what are your questions or opinions? If you need help with your marketing mix or other aspects of managing your software or hardware company, please contact me at your convenience. In the meantime, post a comment to share your views on this topic and continue the discussion.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

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2 Comments by admin on August 14, 2011
filed in Business Development, Marcom, Online Marketing, Product Marketing/Management, Promotion, Social media
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Is Outbound Marketing Dead?

The craze in the marketing world these days is “Inbound Marketing”–otherwise know as “content marketing”, “permission marketing”, “new marketing” “modern marketing” and a few other buzz-terms. The definitions may vary slightly, but they’re essentially variations on the same theme:

Potential customers find you, rather than you (the marketer) approaching them.

The current commentary on marketing methods goes like this:

People are insanely busy these days, and constantly inundated with marketing offers of all kinds, causing them to tune them out. Traditional outbound methods such as direct mail/email, advertising, etc. no longer work as a result. The answer is to use inbound marketing methods, defined as to driving traffic to your website via search engines, content (such as blogs and videos) and social media. Since these users have found you, they are by definition more attentive and better qualified targets.

Of course, although this discussion is very hot in the marketing world today, it isn’t really a new topic. It’s an argument about Push vs. Pull marketing, concepts which have been around nearly since the beginning of marketing as a science. At any rate, the preceding paragraph makes a lot of sense, does it not? No denying that getting boatloads of prospects finding you is a good thing.

The problem I see is that like most “trends”, the inbound marketing case is being grossly overstated. There is no doubt that the Internet has enabled pull/inbound methods grow to a degree not previously possible. If you’re a software or tech company marketer, in almost every market/product situation you should be leveraging online inbound methods to the max. But is that all you should be doing?

Of course not. Some companies may be able to fill their pipelines using only inbound methods. But this shouldn’t be an either/or discussion. In almost every situation, both inbound (pull) and outbound (push) should be used. They are not competitive methods; they each serve a different purpose, and are actually very complementary. Let’s take a look why:

Different psychographic profile of prospects

Prospects are not a homogeneous group in any market. They come in all shapes and sizes–early adopters, mainstream buyers, late adopters, etc. As a result, they respond to different stimuli, and have different buying styles. Many want to be totally in control and never have any “invasive” marketing targeted at them. But for every person that is offended by any offer directed at them, there are others who are happy to receive a timely, targeted offer which saves them money–as well as time– in searching out a software or hardware product they need. This is especially true for some very busy folks, and others that absolutely hate the shopping process. Outbound marketing can be a real advantage with these prospect profiles.

Different stage in the buying process

This is a key point which someone relatively new to marketing may not understand. If you have a prospect in the active buying stage, inbound marketing works great. Since they are out searching for your product or service, if you’ve done a good job on inbound marketing activities, there is a good chance they will “find” you. But what about those target prospects that aren’t yet in active buying mode? Should you just be ignoring them? I think not. First of all, you absolutely want to get a leg up on your competition and get your message to them as early as possible. By doing this, you’ll be on their short list of vendors to check out when they are ready to buy. But the right offer can also turn that future prospect into an active buyer–without so much as a look at the competition. What happens to your odds if yours is the only marketing message they see? Outbound marketing is much more effective than inbound in this scenario.

Timing vs. budget

From a marketer’s perspective, outbound and inbound marketing may fulfill different needs. Inbound marketing may provide a solid, day-in-and-day-out flow of leads and revenue. Outbound marketing can provide a more instantaneous bump to your numbers. Think PPC advertising vs. SEO. An inbound marketing technique like SEO is probably the more powerful activity in the long run, but and outbound method like PPC advertising can start creating business almost instantly. This outbound marketing bump can be very useful during slow periods where you’d like to “smooth out” your numbers, when you’re just getting started, during a busy (but competitive) holiday buying season or to give extra emphasis to a new product introduction.

Targeted Offers

Since you have greater control with respect to when a prospect will be exposed to an offer, it’s much easier to provide urgency and that critical timeliness component via outbound marketing. In addition, targeting can also be easier with outbound methods.  Direct outbound marketing, in particular, can be highly targeted if good lists are available.

Push and pull on the same prospect

Lastly and very importantly, this really isn’t an either/or argument–as I stated earlier. When discussing inbound and outbound marketing, we’re really still just talking about push and pull by other names. As any good marketer knows, push and pull work together. The number of total marketing impressions matters–more impressions increase your odds. This is fundamental brand-building. As an example, it’s well documented that PPC ads and organic results on the SERP converts better than either alone. So don’t choose between inbound and outbound marketing–use best practices in both methodologies to optimize your marketing results.

So what do you think? Will all your investments going forward be toward inbound Marketing activities, or is there still room in your budget for outbound methods? I’d love to hear your plans and opinions–post a comment to weigh in on this discussion.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

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4 Comments by admin on May 16, 2011
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Is SEO a Legitimate Marketing Technique?

I have definite ideas on this question. But what got my attention recently was a reference to SEO in a prime time television show (one of the legal dramas) on one of the major US networks. It went something like this:

Lawyer: “What are you concerned about?”

Client: “I’m concerned that the jury will have a negative reaction to my profession; a lot of people don’t like what I do”.

Lawyer: “What is it that you do?”

Client: “I perform search engine optimization.”

When it hits primetime TV, you know the topic has entered the consciousness of the masses. And in this case, not in a good way!

For the uninitiated, SEO is an acronym for “Search Engine Optimization.” Wikipedia defines SEO as “the process of improving the visibility of a website or a web page in search engines via the “natural” or un-paid (“organic” or “algorithmic”) search results”. This is done by various methods, but the two most important aspects are creating relevant content on your website, and gaining links to your site from outside websites.

How can this be so bad? Well, like any other form of marketing it can be taken to extremes. Because it’s so valuable to appear near the top of a search results page in a search engine like Google, some will do practically anything to make that happen. And that’s what causes the problems. Techniques that the Search Engines consider inappropriate are called “Black Hat”; the page results that are listed inappropriately are referred to as “search spam” or “SEO spam”.

All this simply means that when you type in a search phrase into Google, for instance, you are presented with a bunch of websites that aren’t appropriate for what you were looking for. I’m sure you’ve all done a search, and the top sites that pop up have absolutely no value. The results might show a poorly constructed “Directory” aimed at a particular vertical topic, but really isn’t useful except to its owner trying to get Ad clicks. Or a site stuffed with a huge number of articles–none original or written by the site owner, and sometimes even modified by computer program to make it look “original”, but in actuality making it practically unreadable to humans.

Arguments for SEO

  • It’s just a marketing technique like any other, just like Press Relations in the “real” world. Why can’t you use all the tools at your disposal to make sure that your website is visible to your target audience?
  • “White Hat” SEO techniques are above board and available to everyone. What’s wrong with writing appropriate content for your site, and requesting backlinks from other compatible sites on the web? If you do a better job than your competitors, or they don’t choose to use these methods, that’s simply you beating them in the marketplace.
  • White Hat SEO is really just an acceleration of and a focus on the very things that happen naturally for a successful company on the web: Attractive onsite and offsite content, with a large number of links to your site from other sites with a compatible focus.
  • The “Black Hats” will always be around–the only way to avoid being left in the dust by these scoundrels is to use (legitimate) SEO techniques to compete for position in the search results–or they win by default.

Arguments against SEO

  • Any technique designed ONLY to move a website up in the search engine results pages (SERPS) is by definition cheating and not legitimate.
  • SEO is a slippery slope; there really is not sharp dividing line between “white hat” and “black hat” techniques.
  • Search Engines work best without any efforts to circumvent the “natural” results; any manual intervention to change them is a distortion of the real world, and therefore inefficient for the market.
  • Buying or otherwise obtaining links that you wouldn’t get naturally is deceptive, and therefore of no value and even immoral.
  • Content stuffed with keywords simply to rank high–rather than inform–is also of no value and is ruinous to the beautiful Internet.

The irony of this controversy is that inbound marketing techniques like SEO originally held the promise to marketers of largely avoiding the negative stigma associated with more direct methods. Now, it appears that the term “SEO” has gotten a negative connation in the web marketing world, much like all direct email marketing is considered by many to be SPAM. It’s apparently gotten bad enough that the term “SEO” has completely fallen out of favor with some; “Content Marketing” and “Inbound Marketing” are two new code phrases for what really is just SEO in a repackaged form.

My view is that this is a real shame. In the email world, there are legitimate direct email marketers, offering real products and doing their best to target their offerings to interested prospects. These companies shouldn’t be lumped in with Spammers who are nearly breaking our email systems with endless numbers of fake Viagra ads. In the same way, companies using standard SEO methods to ensure their target prospects can find them, shouldn’t be thrown together with the black hats who distort search engine results while trying to make a quick buck. I realize many folks don’t make this distinction. What’s your view? Post a comment to let us know where you come down in this argument.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, LinkedIn, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

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7 Comments by admin on February 15, 2011
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Promoting Software and Hardware Products through the VAR Channel

With the exception of some software and hardware vendors who sell super-expensive products to the largest enterprises, a large percentage tech companies uses the Value Added Reseller (VAR) channel, to one extent or another. So how do you best go about doing this successfully? Create a great product, throw it to the channel, and sit back and collect the money?

If only it were so. Unfortunately, many tech companies new to the channel find out the hard way that you will fail by taking the word “seller” in the VAR label too seriously. For those of use with experience in the VAR channel, you know that it is still incumbent upon the vendor to create end user demand for their product. Yes, you need to market to VARs as well. And you will take whatever “push” you can get from the channel. But you must have an active promotional program aimed at end users for a realistic chance at channel success.

So what are the best marketing approaches to support channel sales activities? If depends, of course, on the specifics of your product, market, price point, etc. But let’s take a quick look at some popular promotion methods used in conjunction with channel sales. I’ll break it down into three basic categories:

End user demand creation

This is first and foremost the most critical activity. It’s an unfortunate fact that most new players in the channel don’t understand this initially. Many have to learn it through a painful hands-on lesson, which sometimes leads to rejecting use of the channel outright, due to spectacular failure. It may be counter-intuitive, but it doesn’t even matter whether you establish end user demand for your products by selling direct or via the channel. The important thing is that with few exceptions there needs to be serious interest in your products at the end user level if you’re to successfully sell through VARs. In fact, it’s almost always necessary to be successful selling directly to end users, before you can hope to have a successful VAR channel for your products. Almost any end user marketing method that fits with your product type and budget can be used to create this demand, but here are some commonly used promotional types:

• SEO (Search engine optimization)
• PPC (Pay per click) advertising
• Press relations
• White paper marketing
• Targeted online banner advertising
• Direct mail, but traditional and email
• Social media marketing (Blogs, Twitter, Linkedin, Facebook, etc.)
• Trade shows

VAR recruitment

In addition to creating end user demand, you’ll also want to market directly to VARs, to get them interested in actively working with you and your products. An important point to remember is that the VAR channel is very large, and generally segmented into many vertical categories. So however you approach them, don’t waste time (yours or theirs!) by contacting VARs who aren’t doing business in your target end user segments. Here’s some common recruitment approaches:

• Direct email through available VAR lists
• Phone campaign using available lists
• Internet research with direct email or phone approach
• Trade Shows (VARs frequent them, and it’s a great opportunity for personal contact)
• Have a highly successful product with strong end user pull (VARs will find you!)

Cooperative marketing with the channel

Lastly, once you’ve created end user demand and recruited enough VARs to have a “program”, you need to establish standard methods of working with your new partners to create and fulfill demand. VAR programs come in all shapes and sizes depending upon the market, and I’ve seen a wide variety of promotional opportunities included in these programs. One of my personal favorite “getting started” methods is to offer to pay for and execute a direct mail campaign (blind to the vendor, if necessary) introducing you and your product family as a new partner of the VAR. Below are some promotional activities that are very commonly included in VAR programs:

• Co-op advertising/promotion with the vendor provides funding for approved VAR-executed promotional programs up to a set percentage (3-6%) of sales of your products
• Free or discounted demo units
• Special pricing for large opportunities
• Co-selling with your in-house sales force
• Deal registration
• Additional discounts for completing product training, certifications or maintaining premium support levels
• Co-branded product literature and other use of the vendor’s logo
• Website and catalog listings of authorized or “preferred” VARs
• Rebates for volume sales (not recommended; fraught with danger)
• Vendor-funded introductory direct mail campaign

That’s my quick primer on successfully promoting your products for sale through the VAR channel. Many of you have your own experience in this area; post a comment or a question to activate our discussion.

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, RSS, or the PJM Consulting Quarterly Newsletter. Contact Phil directly at info@pjmconsult.com

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4 Comments by admin on March 26, 2010
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All atwitter About Twitter Marketing

There’s been a lot said and written about the newest Social Media craze, Twitter.

Particularly in the popular press, there’s also been a lot of misinformation. Sometimes the only way to get the real story is to try it yourself. I thought I’d give it a shot, and throw in my two cents on what Twitter’s really all about with respect to marketing.

I’ve been on Twitter for a few months now. As of today, I’m following around 45 people, and have about 45 following me as well. I think that at this point I’ve got a pretty good idea of what Twitter is and isn’t. So here’s my take:

WHAT TWITTER IS

Most fundamentally, it’s a micro-blogging platform with a limitation of 140 characters per post. Most of you have almost certainly seen a blog online by now. Just like blog postings come in many shapes, sizes and topics, so do “tweets”–the term for an individual message or post on Twitter. “Following” someone on Twitter is akin to subscribing to updates on a blog.

The 140 character limitation is very extreme, and forces even the most verbose writers to be very brief. This can be a good thing. This 140 character limitation also allows Twitter to be available on even platforms with very limited resources, such as cell phones. This wide platform availability extends the potential uses for Twitter, greatly adding to its utility as a one-to-many instant-communication tool. Twitter is actually pretty simple.

WHAT TWITTER ISN’T

It’s not robust–it’s very limited by the 140 characters. So it isn’t suitable for everything–certainly not anything that requires a lot of detail. You really can’t publish anything of note directly on Twitter. It’s not good for:

* Complex or lengthy communications
* Private communications, while possible, are probably best handled via other methods.
* It doesn’t replace a Blog or website

Contrary to what you see in the popular mass media, it’s not some weird cult of people who are inexplicably exchanging tweets on what they’re having for breakfast. It’s also not strictly an avenue for following the day to day minutiae of People Magazine’s list of 100 top celebrities (Aston Kutcher’s 1 million twitter followers notwithstanding) The biggest thing to remember about Twitter is that it’s just a horizontal communications medium–which by itself isn’t much of anything. Twitter is really what people decide to make of it.

WHAT TWITTER IS GOOD FOR

The uses for Twitter are almost as broad as the profile of its millions of users. It’s hard to classify best uses because of this. But in simple terms, I find that the major uses of Twitter falls into a few categories–at least with respect to what interests a marketer:

Personal Communications with friends
In this respect, Twitter is like a simpler, quicker version of Facebook in how it’s being used. This is where you see people broadcasting where they’re having breakfast–those messages are really intended for their circle of close friends.

Personal Branding
An executive or professional using Twitter to increase awareness of his/her capabilities or work.

Business Branding
Similar to personal branding, but used by a business to provide exposure to the capabilities, products or services it offers.

Business Communications
This is the more tactical business use–restaurants broadcasting the specials of the day to their customer base, new product announcements, links to press releases, etc.

HOW BEST TO USE TWITTER

Have a strategy, and stay true to it
If you are using Twitter for business branding, don’t continuously talk about what you’re doing for fun that night. A more personal message occasionally which is of particular interest in fine, but remember your target audience. This is one of the biggest mistakes that a newbie Twitterer makes–they think being on Twitter means broadcasting their daily minutae. But for business conversations–who’s interested in that? It’s common sense. If you’re using Twitter for business/marketng purposes, stay on topic at least most of the time. If you want to use Twitter extensively for multiple purposes, it might be best to create multiple personas.

Use it to listen and learn–not just broadcast
If you pick the right people to follow, Twitter can be an extremely efficient source of information in your chosen topical interests. You have to be careful–you can easily become obsessed, and Twitter can become a real time sink. But if you’re judicious in your use, you can leverage the work of others to find things of interest to you. And by watching how other skilled Twitter users utilize the platform, you can learn how best to use the tool yourself.

Use links
Even though the 140 character limit won’t allow complex messages, links are allowed, and are very powerful in Twitter. Often Tweets are “teasers” or introductions to the linked document. For example, I broadcast the availability of new articles on my Blog by posting a Twitter message

Use keywords
One of the most powerful aspects of Twitter is the ability to easily “re-tweet” a message, or pass it along to your own Twitter network of followers. This makes Twitter a very powerful viral platform in getting the word out on your chosen topic. If you include keywords in your tweet that are relevant to your target audience, the viral aspect can really enhance the breadth of delivery of your marketing message.

That’s a take on Twitter after a few months of use. I’m sure many of you have different experiences with this exciting new platform–post a comment and let’s get the discussion going!

Follow Phil Morettini and Morettini on Management via Twitter, Facebook, RSS, or the PJM Consulting Quarterly Newsletter.

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2 Comments by admin on July 22, 2009
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