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Archive for April, 2013

How to put a price tag on strategy

value of marketing strategy

A seven-step proposal will help you highlight the value of your creative strategy.

For starters, don’t make it a discussion about your hourly rate.

In a tough economy, marketing agencies, consultants and freelancers face a daily battle against having their talent and intellectual capital commoditized. I saw this happen early in my career.

In the 1990s I worked for a B2B direct marketing agency that did very well. We had several long term accounts with Fortune 100 companies. We did many ongoing customer relationship programs for them that generated profitable sales over periods of 5-10 years.

We also had a few kinks in the business model that made me uncomfortable.

At that time it was still fairly common for an agency to land full-service business. We were fortunate enough to be one of them. Over time, we got too comfortable with the margins from printing, mailing and fulfillment services while selling creative and strategy services near cost.

Related: The triage marketing death trap

On top of that, the sales model for new business gave away strategy. We would present a complete marketing program, with all the research, analysis and creative rationale at the proposal stage. Many times I would walk away from those presentations thinking, “We’ve given them the whole strategy. They could take the plan, thank us, and then do it themselves.”

When economic hardship hit our biggest client, this came back to haunt us.

In response, they implemented a centralized procurement policy to cut costs. They unbundled all of the printing, mailing and fulfillment services from our programs, pulling them in-house. The body blows didn’t stop there.

Since we had been giving away the strategy work, it showed no value on their ledgers. Eventually we devolved from a full-service agency to a creative vendor. Party over.

I remembered that lesson years later when I became an independent consultant. I resolved to never give away the strategy or creative ideas in a marketing proposal. Instead, I use a proposal format that sells the plan and value I bring. It’s much more than a one-page cost estimate, though. Check out this slide deck to see what I mean.

7 steps to proving your value to prospective clients

Including these seven components in your marketing proposal helps to steer the discussion to how you will help solve a business problem rather than how much you cost. It follows a logical flow that more often than not gets the client to say, “Yes, let’s work together.”

Here’s how it flows:

marketing proposal flow chart

1. THE OVERVIEW

The overview is a high level summary that tells the client (I’m using the assumptive close, here) you understand their business challenges. And it states the problem you will be solving together.

2. THE OBJECTIVES

Sometimes I refer to these as “starter objectives” to get the conversation started. The goal is to get written agreement on specific outcomes and how they will be measured. For more on writing smart objectives see this post. Everything that follows is based on the objectives, so getting agreement on them is most critical.

Related: When execution beats strategy

3. SCOPE OF WORK

This part details the specific work you will be doing, and when appropriate, what is not included.

4. WORK PROCESS

Here is where you explain the steps you will take to complete the work and identify all the parties and responsibilities required to make them happen.

5. COST ESTIMATES

Now it makes sense to show the estimated costs. They are based on work process, which is based on the scope of work, which is based on the objectives. This gives a value basis and strategic rationale to the costs. Discussions about the budget can be focused on scope rather than your hourly rate.

6. WORKING AGREEMENT

The purpose of the working agreement is to establish the legal aspects of working together before they become an issue midway into the project. It covers cost estimates, ownership of work, confidentiality, payment for services and other elements of doing business together. Addressing this up front shows you are a professional.

7. BIO/ABOUT US

This is the place to end on a positive note. Don’t make it fluffy boilerplate propaganda. Direct your narrative to the skills, knowledge and experience you have specific to the industry and the assignment.

Getting to ‘YES’

The important thing to remember is the proposal is not the marketing plan. It is a discussion tool to set and manage the expectations for the project. And it is a tool to help you establish the value of the strategy and work you bring. It is your best bet for getting to ‘yes.’

Tell me what you think.

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To blog is human

to blog is human

Sometimes you have to unlearn the writing rules to find a more human blogging voice.

It’s been over a year since I wrote my first blog post and I’m just starting to get to the humanity of it.

I started with the goal of blogging as an extension of my job search. Creating a narrative that shows my marketing chops. That shoots steroids into my resume. That builds my online presence and personal brand. You know, all that marketing jazz.

Turns out, to get good at blogging I had to unlearn some of that marketing jazz.

A blog seemed the ideal platform for me. Much of my career has been devoted to direct marketing copywriting, brand strategy and business publishing. I’ve been an editor for many business newsletters, so why not wade into the blogosphere?

I learned blogging is different.

I had to set aside some of the journalistic tendencies of detached reporting and put more of myself into posts. I had to let go of the “brand guideline” approach to controlling the message and polishing each message to a fine sheen.

Related: Before you write your next post, remember just one thing

The polished, technically well-crafted posts were still missing something essential: a human connection with the reader. They were missing a unique perspective, a personal story and emotional oomph. So I looked for ways to add that to new posts. In reading other blogs, I asked myself some questions:

How were exceptional bloggers accomplishing this?

Do they have unique skills apart from other writers?

How can I figure this out more quickly?

born to blogBorn to blog

The answers came in the mail when I received my copy of Born to Blog, the new book by two of my favorite bloggers Stanford Smith and Mark Schaefer. They have written the essential handbook for personal and business blogging.

It covers the basics of setting up a blog, content planning, attracting readers and monetization. Most exciting for me are the sections that help you focus on your purpose and find your unique voice.

Related: What every blogger can learn from Frank Sinatra

One of the things I love about the book is its examples of blogging success by everyday people who share their personal stories. The stories range from battling weight loss, surviving cancer, reaching fitness goals and sharing their hobbies. They touch readers on a human level, and in the process build a community of followers.

These stories lead into a practical examination of successful blogging traits and essential skills that everyone has and can develop. At least half of the book goes deep into the “inner game” of blogging with action steps to develop the tenacity, focus, flexibility, consistency and courage to succeed.

The authors help you understand the reason why before the how to of blogging. Their stated purpose of the book is to explore “how blogging is changing people and businesses from the inside out.”

It doesn’t stop there.

Discovering your blogging skills

Another insightful section of the book identifies the core skills shared by successful bloggers. It is exciting because they are not unique talents, but skills everybody has to some degree. Through their research the authors discovered:

Blogging isn’t an elite marketing strategy. It’s a natural form of communication with skills preprogrammed into us all. You practice these skills every day. You just need to know how to summon them and put them to work.

What are those fundamental skills? In a nutshell:

  • Dreaming – Do you dream of making a difference?
  • Storytelling – Can you tell a story?
  • Persuading – Do you have passions and opinions?
  • Teaching – Can you answer readers’ questions?
  • Curating – Can you critique or categorize a subject?

If you can answer yes, you can blog. The good news is there are ways to summon these skills and the book shows you how. Chapter nine provides a simple evaluation tool to help you identify your strengths so you can focus on your dominant blogging skills.

Born to Blog is a perfect example of the maxim “good things come in small packages.” In 165 pages it gets to the guts and glory of blogging. Whether you are a blogger or part of a social media marketing team, it will help you connect with your audience on a human level. I wish I’d had it when I started a year ago.

[Disclosure: I have met Mark and guest-posted on his blog.]

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The triage marketing death trap

marketing strategy trap

The road to extinction is paved with shortsighted thinking that neglects your customers.

One of the greatest marketing challenges for businesses large and small is to balance short-term tactics with a long range strategy. If you’re not mindful, you can get permanently stuck on shortsighted priorities.

I call this triage marketing.

It’s like triage in the television program M*A*S*H. Many a calm moment was cut short by the sound of approaching helicopters and Radar O’Reilly announcing, “In coming.”

What followed was managed chaos.

Outside the operating room was a doctor in triage, whose role was to examine the wounded to determine which needed immediate surgery. The rest were patched up temporarily and helped later. It was the epitome of a short-term strategy.

The marketing equivalent is to focus on quick hits: generating immediate leads for the sales team, running a promotion to spike direct orders, or other scattered activities. The trap is sprung when short-term strategy becomes the constant mode of operation.

Marketers walk a fine line here. To win at content marketing and online customer responsiveness requires real-time execution or you miss opportunities. Who wouldn’t want to be the next viral marketing or newsjacking success story?

Related: The case for getting a journalist on your content marketing team

However, in the heat of battling day-to-day priorities, it is easy to lose sight of the important long range vision for growing the business. In many cases short-term thinking is ingrained in the corporate culture.

A triage culture

I first observed this as a front line marketer in a large company years ago. There were two aspects of the culture that perpetuated a short-term mindset and shortsighted behaviors.

The first was the budgeting process and learning to game the system.

See if this sounds familiar. Your marketing budget was set in January, after a month long planning process. In April, senior management and the finance wizards would make the first of quarterly adjustments. This meant they were looking for unspent money to take back. This evolved from quarterly to monthly exercises.

triage marketingHow did marketers adapt? You spend or lock in everything you could in Q1. If you phased your budget to customer purchase preferences – in this case, they spent most of their budgets in the last quarter – you lose large parts of your marketing budget. It fostered a mindset that said ‘Responsible planning be damned; use it or lose it.’

A second, equally powerful culture driver was the compensation plan.

Like most companies, bonuses were paid out for reaching ever more aggressive revenue targets. The targets were based largely on new sales revenue. Since compensation drives behavior, this resulted in activity focused on acquiring new customers and new product sales.

I’m not opposed to bonus incentives or driving growth. Not at all. In my time, I made the company tens of millions of dollars and earned some great bonus checks. I also witnessed some chaotic, shortsighted and nonstrategic behaviors in the race for revenue.

Related: Don’t think about innovation like a CEO

One example was the pricing policy behind some of the year-end automatic shipments to subscription customers. All products were sold on subscription with the agreement that updates would be automatically shipped and billed. Want to guess where this is going?

Pricing for updates were set by the finance wizards based on the revenue needed to make revenue goals. That meant some customers where charged an exorbitant amount for very little value. In the process of meeting the short-term goal, we incurred high cancellation rates. This alienated customers and set us back for the upcoming year.

customer relationship marketingRemember me? I’m your customer

It’s too easy to forget the customer when in triage marketing mode. In the short-term, there is no incentive to invest in customer relationships critical to sustained business growth. You give short shrift to:

CUSTOMER RETENTION
Triage marketing focuses on acquisition over retention. One study at St. Joseph’s University in Philadelphia found that retention pays dividends. If your business has a 70 percent customer retention rate, every revenue dollar today will be worth $4 in ten years. And an 80 percent retention rate will increase today’s revenue dollar to $6 in ten years.

CUSTOMER LOYALTY
Triage marketing focuses on promotions over customer loyalty. Promotions sell a product trial, but not ongoing brand loyalty. They may even attract the wrong customers, who never become loyal. It costs six-to-ten times as much to acquire a new customer as it does to keep an existing one. Conversely, a Harvard Business School study found that an increase of five percent in customer loyalty can increase overall profitability from 25-80 percent.

CUSTOMER LIFETIME VALUE
Triage marketing allows little time to create deep relationships with your best customers. Relationships continue to grow, encounters do not. For example, an automobile dealer once calculated that a lifetime of cars sold to one customer would be worth $322,000. The 80/20 principle, where 80 percent of your business comes from 20 percent of your market (i.e. your loyal customers), literally takes a lifetime.

In the past 10 years, there has been a fundamental shift in the balance of power in the marketplace from seller to buyer. Customers have greater access to reliable information on the Internet. Social networks give them unprecedented power to talk about your product and service. They don’t care about your short-term objectives.

Marketing strategies based on short-term thinking won’t win you customers or sustain your business in the long run. Back in 1973, Peter Drucker said the purpose of business is to create a customer. If you’re in triage, you need to get back to the basics. Your survival depends on it.

What are you doing to combat the perils of short-term thinking in your organization?

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