Marketing

Every company loses at least some customers each year. You have to find new customers to make up for the ones you lose. And if you want to grow, you have to find even more.

After you have identified a specific market and learned how to tell your story, the next marketing obstacle you face is to generate enough leads that can turn into new customers.

Dr. Lisa Lang identifies lead generation as the third marketing mistake that she sees her clients make: They do nothing or not enough to generate leads.

Much of what Dr. Lang says about lead generation will sound familiar to you.

• • Hope and a website are not a strategy.

• • Too many companies create websites that are about their company, not about their customer.

• • Although you can generate leads in many ways, it’s impossible to know ahead of time what lead generation methods will work best, so you have to test, test, test.

• • One place to get started is to look at your competitors. If you see them using a lead generation method for several months, it is probably working and so you could try that method also.

• Map your funnel and measure your results at each stage.

After giving this familiar advice on lead generation, Dr. Lang makes a surprising assertion: “The more you spend to get the lead, the less you have to worry about the competition.”

What does Lang mean by this statement?

Her argument goes like this: If you can afford to spend more on a lead, you must be getting a better Throughput (Revenue minus Direct Variable Costs) on each transaction. In other words, your margins are higher. You might be spending $10 on a direct mail piece, but you can afford it. Why? Because you’ve got good margins and you are sending the mail to a specific targeted market with a high response rate. So even though your direct mail costs are much higher than your competition, your margins let you afford it and your response rate lets you justify it. Your competitors with lower margins and a less targeted market can meet neither of these criteria.

Hence Dr. Lang’s assertion: “The more you spend to get the lead, the less you have to worry about the competition.”

When we talk to potential customers we tend to make the conversation all about us. We talk about our company, our products, and our processes. We fail to see that the goal of a conversation with a customer is to make it all about the customer—their company, their problems, and the better outcomes they seek.

Dr. Lisa Lang says that this is the second common marketing mistake that her clients make: We don’t understand what we are selling.

Customers want value from us, value in the form of tangible results that solve problems. Although results happen to be delivered in the form of our products and services, it’s the experience of results that gets the attention of customers and dramatically increases the price they are willing to pay.

Helping the customer to experience tangible results so they willingly pay a higher price is critical because

Price ≠ Cost

Often we make the assumption that the price of our product or service equals the cost to the customer. However, from the customer’s point of view, their cost often far exceeds the price they pay. The additional costs include the complexity the customer faces in the decision to make and implement a change.

Price + Complexity + Risk/Fear = Cost

The cost of complexity includes the cost of confusion and the cost of customer efforts.

Complexity = Confusion + Customer Efforts

Customers pay an additional cost in the form of risk and fear of change. Not all changes are successful, they impose some level of risk on the customer’s organization and those risks have a cost.

In order to sell more successfully, we have to reduce these additional costs—complexity, risk, and fear. We can only lower these customer costs if we more fully understand and communicate the tangible, measurable outcomes we can produce for our customer.   

Dr. Lang explains that we need to thoroughly understand our product and how it is tailored to our customer’s needs. When we communicate our understanding with our customers, they will make new logical connections about their own business. They will see new possibilities for how to run their business and they will become excited that someone could understand their business with such detail and comprehension. When customers make these kinds of logical and emotional connections, they will also see that you have brought down the cost of complexity—costs arising from confusion and customer efforts. Your understanding of the customer needs and the connections that customers make also reduce the risk of the project.

Altogether, your full understanding of what you are selling reduces the customer’s overall costs and makes your price more attractive. When a new possibility emerges, customers realize their total cost is less than the value that you deliver. They are more likely to move forward.

Dr. Lisa Lang has focused her career on applying the Theory of Constraints to marketing. She occasionally gives a seminar on the topic of the five biggest mistakes that people make in marketing. You can find a video of the seminar here and here.

Lang explains that “marketing is connecting with your target market and showing them you have the product or service that solves their problem or delivers better outcomes, explaining it to them where they can be found and helping them to buy it.”

The biggest marketing mistakes that people make are:

1. We don’t select a specific, target market
2. We fail to understand that we are selling solutions to problems, not products with features
3. We do little or nothing to generate leads
4. We use push marketing to audiences that are not ready to receive our message
5. We do little to measure the right things, or worse we measure nothing at all

Of the five, the biggest and the most difficult for us to overcome is the first, not selecting a target market. No one wants to pick a market. We are afraid we’ll miss out on some business elsewhere.

Dr. Lang explains that your target market is “the people you want to sell to along in combination with the products or services you sell.” Your target market is composed of people with specific needs and the specific stuff they can use to solve a problem. Knowing what your market really wants and who they really are is critical to a successful business.

Many sellers are reluctant to narrow their focus to a group of people with very specific needs. They simply don’t want to limit themselves.

To see why it’s so important to focus on a very specific market, Dr. Lang suggests we look at it from the customer’s point of view.

Let’s say you are a health expert. Many people have health issues, and you could probably help a lot of them. But people usually have a specific health issue they want to solve, and they want to find someone who specializes in their issue.

So if you presented yourself as a weight loss expert, well, more people would be interested. If you narrowed your focus further and communicated your ability to help people reduce the size of their belly, even more would resonate with your message. And if you narrowed your focus even further to belly loss for 45-year-old men, you would get the attention of many of these men.

By narrowing your focus, you accomplish three important goals:

1. Even though you are focusing on a smaller market, you will see a response from a higher number of people who resonate with your specific message for a specific problem.
2. You will likely experience very little competition in this narrow market and will be able to own a significant share of the market.
3. The more you serve and understand the needs of this narrow market, the more powerful you will become as the source of solutions for this specific set of problems. When you hand out literature or when people go to your website, you will have described their problem so well, better than they could have.

Once you have decided to focus more carefully on a specific target market, how do you go about accomplishing this goal? If you aren’t sure how to move forward, Dr. Lang offers some questions to ask that will help you make this business decision:

• Where do you make the most revenue for the least amount of your capacity?
• What do your customers complement you on? (What do they know you for?)
• What part of your business do you have the most expertise in?
• What’s the group of people who are most likely to benefit from what you have to offer (and are willing to pay for it)?
• Which target market will be receptive to a truly compelling offer?

Remember, if you narrow your focus to a specific market, you will see a larger number of people respond to your offer, you will experience less competition in your specialty, you will become the recognized authority on the specific problem that your customers want to solve.

Scientific and technical companies give away a lot of information. They write articles, give talks at conferences, and publish books.

Why would these companies, whose primary asset is their know-how and intellectual property, give so much away? It doesn’t make sense to give away what they should be selling to clients. If they transfer knowledge for free, why would clients agree to pay scientific and technical companies for their expertise?

To answer this question, first let’s remind ourselves of the type of customer that scientific and technical companies want to attract.

Technology buyers want more than a transaction, they want a relationship with you

Unlike the customers of large consumer companies, technology customers do not just buy a product. They don’t make their decision primarily on price and product features. They aren’t looking to optimize a single transaction.

The customers of scientific and technical companies are more likely to be looking for a relationship with you. Yes, price and features are important. But even more important when they for a complex product that they don’t fully understand is a relationship. These products and services present real risks to their company. They will depend on the relationship with you to mitigate the risks of complexity and unknowns.

If these customers are looking for a relationship, what does that say about their buying process? It’s a buying process that takes time. It involves multiple people. It requires education about the science or the technology that your company offers.

Now you could dispatch salespeople to provide this education. But that would be expensive. And customers don’t want to talk to salespeople this early in the process anyway. They want to find information online and study it on their own.

How do you initiate and cultivate a relationship with buyers?

First, stop thinking about sales. These buyers aren’t even close to thinking about pulling the trigger on an initial purchase.

Instead of focusing on sales, initiate a relationship with your buyers. Do this by creating a marketing model that is based on continuous, automated communication. By initiating and cultivating a relationship with your buyers, you can focus your efforts on maximizing their lifetime value.

What should you include in the content that you send to buyers in your automated program?

Answer this question by remembering the purpose of the content. You want to move buyers from being unaware of the problem to awareness and desire to find a solution. You also want to move them from unawareness of you to awareness and trust. As buyers move forward in their relationship with you, they become ready to take the next step and enter into a sales conversation.

Much of your writing will be educational and do-it-yourself (DIY) information. That doesn’t mean that you tell them how to do everything. Instead, tell them how to get started.

Imagine that a car mechanic writes a newsletter. She isn’t going to write DIY instructions on how to rebuild engines and transmissions. No, that’s what customers bring their car to her to do. Instead her column will be filled with articles on topics like safe driving, changing a flat tire, new battery technologies, and what to look for when you buy a used car. She shares her expertise on topics that are useful for potential buyers of her services, but she doesn’t overwhelm them.

Your content should also tell a story of some kind. You can write stories of customers and how they’ve been able to address the problems that you know how to solve. Or stories of developing technologies and regulations in your field of work. Or even stories of your company and the challenges you face as you work to serve your customers’ needs.

What will you accomplish when you give away information?

Chris Garrett at Copyblogger explains many of the positive outcomes when you give away information to grow your business. Here are a few of the benefits you achieve with free information. It’s worth reading his article to learn the rest.

Free content can encourage sharing your ideas

In addition to attracting people who might become loyal members of your audience, you also want those people to bring friends.

If your content is locked away, then they can say nice things about you, but their ability to share your content is limited. Therefore, your exposure is limited.

Free content can connect you with peers

It’s not just prospects that you want to connect to.

With your ideas, experience, and knowledge out on the web for anyone to consume, you are going to attract industry, networking, and partner contacts.

Free content can inform the audience of your value

What is the problem that you solve? What can you help them achieve?

It’s going to be tough to get people to pay money before they know what you can do for them!

People often put their problems into search engines looking for answers. You want to make sure your solutions can be found when they go searching.

Free content can position you against competitors

Your free content will not just educate, it will also show your uniqueness.

It will inform people why they should connect with you versus other people, and why your approach or solutions have the advantage.

Relationship Marketing is a worthwhile investment

Whether your company includes just a few people or a few hundred, relationship marketing is a solid investment in the process to produce sales opportunities. Your automated program will initiate a relationship with your buyers. With a relatively small investment, you can educate and motivate buyers to become potential customers. The information you give your buyers will distinguish you from your competitors and create a compelling narrative about your work. And most important, you’ll create a steady supply of sales opportunities to pursue and convert into customers.

Justin Roff-Marsh divides the world into two types of customers, customers who are product-focused and customers who are relationship-focused.

One type of customer ‘buys’ a product. (She focuses primarily on product attributes and price.)

And the other type of customer ‘buys’ a relationship. (She is less focused on the transaction, and more interested in a longer-term relationship.)

Product-focused purchases are more transactional. When you choose between Safeway and Trader Joe’s or Home Depot and Orchard Supply, you are choosing based on features and price.

On the other hand, the choice of an accountant, a lawyer, or an interior designer is more likely to be made on the opportunity to form a trusted relationship. These purchases involve too much uncertainty and risk to make them solely on features and price.

Good news for small companies

This is good news for small companies. Although small companies find it difficult to compete against larger competitors on the basis of features and price, they have a natural advantage when it comes to forming close business relationships. They are able to deliver a level of customer intimacy that larger companies simply cannot do.

Even better, customers are willing to pay a premium for these relationships. For an important product or service that has some risk associated with it, customers want to know that they have a relationship with the seller. They want to know that they can rely the relationship when issues arise.

You may intuit that your business is well-suited to a relationship-centric model but are unsure how to attract and profit from relationship-oriented customers.

Shift from Product-Centric Marketing to Relationship-Centric Marketing

Since traditional marketing programs are product-centric, these programs will not help. The alternative is to build a relationship-centric marketing program. Instead of focusing your energy on selling product, focus it on selling relationships.

The good news is that you don’t have to sell a relationship-oriented customers anything to begin cultivating the relationship.

If you implement an automated communications program you can begin to educate potential customers about your industry and best-practices. This program allows you to have consistent and meaningful contact with your potential customers. They receive value from you, they learn from you, and they increase their trust in you.

If you identify potential customers, it doesn’t matter if they are ready to buy. It doesn’t even matter if they recognize the kinds of problems that you know how to solve. If you can introduce them to your automated communications program, you can begin to educate them and cultivate a relationship with them.

Now remember, relationship-centric marketing programs are not about they sale. They are not about optimizing the value of specific transactions. They are about maximizing the lifetime value of the relationships under your management, both current and potential customers.

And guess what, these programs don’t have to be expensive. Here’s how Roff-Marsh recommends you get started:

1. Build a central database that contains the details about your current customers, potential customers you have identified, and possible centers of influence.
2. Design a program of communications that will establish and nurture relationships with the people in your database. A well-established method is to send an email periodical once or twice a month. Give your articles a do-it-yourself feel. This useful information educates people about what is involved to fix the problem, and indirectly helps them to see the value of hiring an expert (like you) to help them. You will find this approach more effective than constantly writing about your offer and your successes.
3. Acquire new relationships that you can manage and nurture. The best way to acquire new relationships is to ask for an email address at every point of contact.

Once you have a large number of relationships with whom you communicate valuable material on a regular basis, you now have the raw material for sales opportunities. As salespeople need more sales opportunities, you can reach out to these relationships and and initiate your sales process.

The creation of a turnkey sales process marks a significant transition in the management of your business.

It all begins with the recognition that “your ideal customers are those who are in the market for relationships (rather than low-margin commodities).”

Now you can take your focus off transactions and apply it to building and nurturing relationships with a growing army of customers who are prepared to pay a premium to work exclusively with you.

HubSpot’s founders invented and popularized the idea of inbound marketing. They wanted to contrast their marketing methods to the disadvantages of outbound marketing.

Outbound sellers work by reaching out to potential buyers. They contact buyers with advertising, direct mail, email, and phone calls. They even go door-to-door to find buyers.

With outbound marketing, sellers control the time and place of the interaction. But buyers view unexpected contact from sellers as an interruption in their life. Most of these people are not potential buyers; they will never become a customer. They resent the seller. This resentment leads to low conversion rates on outbound marketing. Low conversion rates are a waste of time and energy. They create a negative perception in the market.

Inbound Marketing Is Better Aligned with the Buyer’s Journey

Inbound marketing and selling is better aligned with the interests and the pace of the buyer. Buyers search for something on Google and see the seller’s entry on the Google response page. They click on the entry and absorb the material on the seller’s site.

The advantage for sellers of inbound marketing is that buyers initiate the contact. Buyers are better qualified and conversion rates are higher.

The disadvantage is that it takes a lot of work to create the content and the visibility for buyers to find and digest the information from the seller.

Inbound and Outbound Marketing Are Perceived to Be in Opposition

These two approaches to marketing and sales are often discussed as if they are in opposition to one another. Proponents of inbound marketing assert that they are aligned with buyers, that they avoid interrupting their buyers, and that they are focused on educating their buyers.

Traditional outbound marketers cite their ability to control the timing of their contacts. Especially in B2B markets and other considered purchases, they often know who their buyers are and they want to be able to reach out and cultivate a relationship with these buyers.

Here’s How to Resolve the Contradiction

How to resolve these apparent contradictions and disagreements?

Look to the buyer. Ask what will create value for the buyer at each stage in the buyer’s journey.

In the earlier stages, attract buyers to you with inbound marketing. Make yourself easy to find in the search engines and provide useful information about your industry, best practices, and trends. Invite buyers to continue to learn from you with tools, short education courses, and email subscriptions.

As buyers move along on their journey and become educated about the problems you know how to solve, invite them to learn more about your products and how they work.

For buyers who signal interest, reach out with outbound invitations to learn more about you.

Once your buyers become customers, continue to use both inbound and outbound methods to assist customers as they adopt and implement your product. Make tutorials and advice easy to find and easy to use. If a customer exceeds a threshold that indicates a problem, reach out to them and offer to help.

When HubSpot introduced the concept of inbound marketing a few years ago, it provided a useful counterpoint to the disadvantages of outbound marketing. But for B2B sellers, the idea of inbound versus outbound is a false dilemma. Both are valuable when they are used in ways that create value for the buyer and help buyers move forward on their journey.