The term “return on investment” (ROI) gets bandied about a lot in my business, as in “what’s the ROI of you service?” We all know what that questions is supposed to mean: how much money can I make back from what I pay you? But no matter how many statistics and case studies you throw at the questioner, the real question is: “How little can I actually pay you for your service?”
I’ve started answering that question with another question: What is your content worth? If the customer can answer that question, I can better answer their original question.
Every company, especially engineering-driven companies, says their content has immense “value.” They believe that their customers have an absolute need to hear what they have to say. It is so vital that the customers very existence depends on purchasing a particular product or service. At least, that’s generally how they answer the question. But they can’t put a monetary value on that content. They can assign a monetary value to their product. They can justify the price with studies and statistics and benchmarks. But they have no idea how to valuate their story. So I break it down for them this way:
If the customer won’t pay to read your content, if the media won’t pay to publish your content, and if you wont pay the media to publish your content... then your content has no value. And if I promise a 10X return on your investment in proliferating your content, 10 times 0 is still 0. So the ROI will be 0.
At this point of the conversation, they state that they are making an investment in my services, which is a good point, but that’s where we come back to my original question. So what is the value of your content?
If you go cheap on your investment in content generation, management and distribution, you won’t get much in return. On average - 9 times out of 10 - a technology start-up doesn’t want to spend more than $500 on the development and distribution of a news release (possibly the most worthless piece of content any company can ever make), including the cost of the wire service. Over the years I have determined that even the most incompetent execution of a communications strategy can net a 5X ROI. So by that measure, the $500 investment can net a $2500 ROI.
And that is the value of most content. You have to determine if that is worth your time and effort.
"Reputable businesses would want their advertising and PR to be ‘legal, decent, truthful and honest’ anyway, though it is possible to be caught out if you make claims you can’t back up. Common examples are phrases like ‘the world’s leading…‘ or ‘the top…’. If a complaint is made to the ASA (commonly by a competitor) you could be fined and made to amend the page if you can’t provide a basis for the claim."
The use of empty phrases to boost your corporate ego has long been a bugaboo for real PR professionals, but in the UK, at least, they have legal backing to tell clients, "if you can't prove it, you can't say it."
Think of all the companies that claim they can save customers time, money, design respins, etc. but have no real documentation of the claim. If they do business in the UK, they will no longer be able to copy and past content from competitors. They are actually going to have to do some real market research and benchmarks to make their claims true.
Got an email today from a company shilling an upcoming trade show asking a bunch of leading questions designed to get me to agree to come to the show. The plan didn't work because I didn't answer they way they expected. But in the process, I think I got some grist for us all to grind on today. Here are the questions:
Most productive opportunities are generated by connecting with decision-makers
Executive participants have the majority of the decision-making authority
Face-to-face meetings are the best marketing channel to create opportunities
The deal was if answered those questions with "fact" then I should come to their conference. But I said they were all false. Here's why:
"Most productive opportunities are generated by connecting with decision-makers." Decision makers rely on influencers to make decisions. They don't respond to in-person sales pitches but take what they hear and go back to their influencers to see what they think. If they don't do that, they take information they pick up from the media and discuss it with the influencers. When a majority of the influencers side in the positive, the decision maker ratifies the decision of the combined network. If the decision maker goes to a trade show with that information in mind, and seeks out the vendor while there, a deal can be struck. The vendor may think he is a brilliant sales person because he got to an affirmative decision or, in the least, a meeting, but in fact, the decision to work with the vendor had been made long before the decision maker made contact. Trade shows are where action is taken on decisions, not where decisions are made.
"Executive participants have the majority of the decision-making authority." This is fallacious, too. Executives have the majority of the responsibility for decisions, but most of their decisions are made for them by committees and influencers. If the decision is wrong, the executive that signs the agreement takes the credit or the blame. And you can be sure that those that told him to go in that direction will be rewarded accordingly.
"Face-to-face meetings are the best marketing channel to create opportunities." With the proper preparation that can be true. A vendor at a trade show has to find the customers whose problems he can solve, but just setting up a booth and waiting for the right customer to come along is an exercise in frustration. Most companies I talk to that go to trade shows already know who they are going to talk to. They very rarely find customers just walking up unannounced. What that means is the vendor has done the homework and already prepared the way with the proper influencers who want to get that decision maker to the vendor's booth on that fateful day. The axiom should actually be, "Face-to-face meetings are the best marketing channel to finalize opportunities."
The problem is that 90 percent of companies going to trade shows put 90 percent of the marketing money and efforts into attending a specific trade show. They don't do their homework, they don't spend time trying to identify and connect with influencers and by the time they get to the show they will end up with a bunch of leads that will go nowhere because no one will remember them.
Ask any PR firm in any industry niche when the busiest part of their year is and they will tell you, 4-6 weeks before a major trade show. That's when the phone starts ringing off the hook. When that happens, they either laugh out loud and hang up or they are hungry enough to suck whatever is left out of the client's marketing budget to push out a few news releases and set up some useless press meetings.
Successful marketing is an ongoing process, not a once-a-year effort, unless you are selling Christmas trees.
Last week I started a series on the importance and future of geolocal (also called geosocial) apps and outlined a few of the roadblocks to success including the lack of widespread adoption of the underlying technology (smart phones), holding the interest of the audience, and the lack of community building inherent in the current options. Today I want to look more into that last problem and how some players are overcoming it.
As I said last week, the big benefit of social media is its ability to build communities through the web. But those communities are, for the most part, virtual. If you are in Facebook or any other platform, you have a large group of people in your network that you have never actually met face to face. Yet, you are in contact with them regularly no matter where they are in the world. you know a lot about them and you have several common interests. However, try to do that on a local level with social media and you run into a problem: you can’t without a lot of effort.
I discovered this over the past two years on some pro bono work I’ve been doing for Sustainable Redwood City. I wanted to use social media to grow the organization but discovered that if I didn’t already have a personal relationship with people in my community, I couldn’t actually get them to connect with me or the organization on any SM platform. I had to meet them first before they would accept the connection.
I also could not use social media to discover people in my community or neighborhood because the platforms did not get that granular. In Facebook, for example, I can choose the Silicon Valley network or the San Francisco network, but not the SF Peninsula, San Mateo County, Redwood City or my own neighborhood, Friendly Acres. I was forced to accept a position in a large geographical context. This isn’t as much of a problem if you live in New York City or San Francisco, but it doesn’t help the 2 million+ people in the Bay Area.
What social media lacks is a local approach and even the entry of Twitter and Facebook into this realm is not helping.
Geolocal/social apps are supposed to help solve that problem by making it possible for local business to reach their local community and expand their business. If you are an ice cream shop or a coffee bar, it’s a great idea because you will succeed if you get a lot of regular customers. If you are a dentist of an auto shop, not so much. If you go back to those guys more than once in six months you have a problem. But the real benefit lies with the vendor, not the customer. You need a way for those customers to come together in a community, without violating personal space or privacy.
And that’s the good news because I have discovered some startups that are doing exactly that.
The one with the biggest name is Yelp. They’ve recently added a geolocal aspect to their reviewing service where you can check in to favorite establishments, but again, they are focused only on commercial outreach and only to whole cities, not neighborhoods, so it is a step in the right direction but not exactly what I think people need.
Next up is a tiny little company called Gogoverde, which is hyper focused on neighborhoods and is currently only available in Palo Alto and Redwood City. But they lack the geolocal tech at present. Mostly what they do is get people who already know each other to join a local network and share information and materials.
But the app I’m really excited about is a company called DeHood. I’ve been using the app for a while, sending some of my activity on it to my Twitter and Facebook pages and even went in to talk to the company leadership, Babak Hedayati and Mike Mertz, to find out more, which lead to a consulting contract with them that started a couple of days ago (so there’s your full disclosure)
But I’ve been using the tech for several weeks now simply because it accomplished what I’ve been looking for: a social media application that can build local and REAL community.
And what DeHood does will be the subject of the next post.
So I just got back from a 2 hour meeting with a handful of on-fire entrepreneurs from Europe who want to shake up the establishment and start building relationships, companies and jobs on both sides of the Atlantic. "The 12 Entrepreneurs," as the group calls themselves (12 stars in the EU logo... get it?), come from all over Europe (Austria, France, Spain, Germany, United Kingdom, Romania, Poland, Portugal, Norway, Italy, Czech Republic, Netherlands and Centrope Region (encompassing Austria, Slovakia, Czech Republic and Hungary) and have launched multiple successful companies, but they have grown frustrated with Euro-reticence and Silicon Valley no-it-all-sim (yes I spelled it that way on purpose). They want to get our respective economic engines humming again.
I like these guys so I have volunteered my time to get it started.
The kickoff event will be a small gathering of no more than 50 invitees at the Plug-and-Play Center in Sunnyvale on September 22 starting at 4 p.m. If working with European companies and investors is interesting to you. Let me know and I will see about getting you an invitation. For more info you can find them on Facebook.
Starting this week, my live video show onVpype will be focusing on Investors and Entrepreneurs to talk about the arcane and mystifying process of fund raising for start ups. It has never been a pleasant experience but it has never been nastier and more frustrating-- for both sides-- as it has in the past 5 years. There are signs that it may be easing up, but that might just be the eternal optimist in me. I'm going to find out by venturing into the world of the venture capitalist, live and unedited.
Here's the thing. I am going to be bound by my subjects schedule. I'll give as much notice about the broadcast as I can. It may be a day, ir just a few hours. There will be archives of the interviews on Vpype and eventually on New Tech Press and right here so you can see what has happened. if you want to get into the actual discussion, come with questions for the chat room and we'll try to get to them.
First up in the series looks like it's going to be Piers Cooper, currently with Point Bonita Partners but adding something new... and we will talk about that. Keep alert to Facebook announcements and my Twitter posts.
At the Design Automation Conference a couple of weeks ago, one of the big topics of discussion was the use of "Cloud Computing" and one the up-and-coming player in that field is Xuropa. I did one of my live video interviews with James Colgan, Xuropa's founder an CEO, regarding how that is affecting the bottom line for the industry. The real kicker came at the end of the interview where James talked about the hard evidence of benefit for the concept... and that got truncated when the bandwidth gods shut down the broadcast. So here's what I got and after you watch it, I'll tell you tomorrow what the bottom line was.
Spent a few days away... thinking. Lots of stuff needs to be sorted out and I'm getting there. Much of it has been inspired by Seth Godin's book Tribes, which has been incredibly encouraging personally and I highly recommend it. But another large chunk came out of a story that Craig Ferguson told about buying a rug in Turkey.
He said he found this rug in a shop, liked it and asked how much it was. The shop owner quoted a price and Craig reached for his wallet. The shop owner said, "Let's have a cup of tea first." They sat, drank tea, chatted, and then dickered on the price of the rug. An agreeable price was set and Ferguson walked out with the rug at a price less then was originally quoted. It's the way things are done there.
What was not talked about was the reason it was done. the merchant just didn't want to sell something that had taken so much effort to create to just anyone. He wanted to know who his customer was. If the customer is a jerk, no amount of money is enough.
That is the essence of micromedia marketing.
In mass media marketing. You push out tons of information to tons of people hoping you get a positive reaction from a very small percentage. As long as you get a few "qualified leads" it was worth the effort. Once you have those qualified leads, you bombard them with the message until they give in. You really don't know the customer other than what his budget is and you try to get as much money out of them as you can before moving on to the next lead.
In micromedia marketing, done properly, you are in relationship with your customer. You know what he is going through and you really care about his success. Why, because you've spent time listening to him before you ever bring up the contract. This means your customer base is going to be much smaller, but much more profitable and, in the end, spiritually satisfying. The customer/client is no more. He is now your partner and you are his. Your mutual success is intertwined. And the people you call partners; those you bring in to land the deal, are part of your organization, or what Godin calls the tribe.
This is what I've come to realize in the past year. My model has changed from trying to sign clients and more to engaging with partners. It's probably not for everyone. I had a client describe by service to him as one who "drinks the koolaid." The meaning being that once I commit to a client, I truly believe in the goal. And if I don't believe, I don't commit. This way of doing business means walking away more often then signing new clients. It isn't easy, but it's starting to pay off.
It's time to fess up. All the problems with the Toyota Prius brake and acceleration systems are my fault. Let me explain.
A few years ago I was a PR consultant to VaST Systems who made virtualization technology allowing engineers to simultaneously test and modify hardware and software designs prior to prototyping and manufacture. Shortly before I came on board, EE Times did a teardown of the Prius at the 2007 Embedded Systems Conference and one of the small bits of the discussion was how VaST Systems tools were used to build the engine control systems of the 2006 models. VaST was very proud of this fact and as a result, they turned a lion's share of their concerns to automotive systems development. Toyota was a marquee customer that th mentioned in all their presentations.
Through most of my tenure with the company I regularly but softly recommended that improved safety and reliability should be front and foremost in their presentations, but the reality was that the message was a throw away point. Most of the presentations were focused on time to market, and product quality and making engineers' jobs easier, which is pretty much the same thing that everyone else discusses in the semiconductor/hardware industries. I let it go because, after all, the client is always right, aren't they?
In 2008, however, the automotive market starting hitting the skids and everyone was cost cutting, even high-flying Toyota. Among the cuts were purchases of design tool licenses, including VaST which devastated a lot of the companies in VaST's niche, including CoWare and Synopsys' Virtio. My relationship with VaST was discontinued in April 2008 and I had failed to win my point about the importance of safety and the bottom line. This is my understanding of what transpired after that point.
(NOTE: I know the publicized accelerator problems were mechanical, not electronic in nature, but subsequent recalls have been based on electronic/software issues, especially after Steve Wozniak himself brought the issue forward)
For 2008 and 2009 Toyota made do without the VaST technology as cost cutting became the important issue. Yes it made the engineering easier, but engineers get paid pretty well so they need to work a little harder, don't you think? That would turn out to be the years for the development of the 2009 and 2010 models. Just a few weeks ago, VaST was sold at an undisclosed (and apparently very low price), along with CoWare to Synopsys giving the latter a virtual stranglehold on the entire market.
I say all this and take responsibility for what happened because I want to make a point. Some people want to know why I seem so angry and confrontational about the changes in media and communication paradigms. This situation with the Prius is why.
As professional communicators, we have a responsibility to look beyond the trite marketing messages and ancient sales philosophies that our clients and employers cling to and see to the real potential, both good and bad, of what they are creating. We are the people that create the vision and if we don't have it, people can die.
I'm not being over dramatic here. Take a look at what is playing out on Capitol Hill this week. Look at the pictures of the charred wrecks. Toyota could have avoided this if they had the right tools for the job, and maybe they were short sighted, but the message that was given to them was that we could make their jobs easier and maybe make their products cheaper, but we just don't have the research in hand to prove that last point... so let's just go with it makes an engineer's job easier.
The research that needs to be done to prove the hard bottom-line and human safety of the systems rolling out the door is done by marketing and communications people. If companies don't want to invest in that kind of effort, that's on them, but as professionals in the business we need to make them understand what kind of hell they may be unleashing if they do. And we need to be ready to walk away if they won't listen.
Synopsys now has that responsibility. They have the technology to stop this thing from happening again, and it is the responsibility of the marketing people to find the right message and It isn't time to market and it isn't ROI. I have every confidence in their ability to do exactly what needs to be done. But I reiterate: People's lives depend on it.
What we do is neither inconsequential nor should it be done on the cheap.
I'm taking some days off next week. This has been a marathon week because the world is changing faster than I can type. I'll leave you with an often unremembered quote from Peter Drucker:
"Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."
As I said in part one a few weeks ago, Social media attacks the tradition mass communication paradigm with a natural flow of communication, which is why marketers and journalists often chafe at embracing the practice. What I've seen happening through this paradigm shift (geez, I never thought I'd hear that phrase again) is the rise of the value of talented, trained and experienced communicators within corporations and organizations that are making an effort to figure this stuff out. That probably doesn't include your company, though.
I was describing what is happening in social media to a friend who has no connection with high tech (they do exist, you know). He thought a bit and then said, "Sounds like their going at it like they're killin' chickens." It was a great analogy. When you slaughter chickens (and yes, I have done this) it involves a lot of running about, noise, flyiing feathers and blood. Total chaos. And when you sit down to eat them, you wonder if it was worth the effort.
That well describes how most companies are going after social media. Chaos. It looks like it might be important, but at the end of the day you have to wonder, was it worth the effort.The reason for the buyer's remorse is that most companies are still trying to apply to old paradigm's interpretation of media to the new paradigm's infrastructure. And it doesn't work.
Most corporate communications involves a bunch of people sitting in a room with a white board and trying to figure out "messages" that will convince customers to buy their stuff. David Scott Meerman calls it an MST (making stuff up) meeting. That is translated into news releases, brochures, white papers, press pitches, trade show signage, etc. Then when it doesn't work they call the customer stupid or fire the PR agency.
Social media steps into this mess and says, "Hey, why don't we ask the customer what he thinks." This concept is completely foreign to most marketing people, and anathema to the sales people. Remember, the customer is stupid.
But companies that adopt the attitude of listening to, rather than talking at the customer... they're the ones that go at social media the right way. The bottom line is that those customers understand that social media is more than another communication medium, it is a way of communicating. Until you understand that, your social media effort will resemble an abattoir more than a virtual marketplace.
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