Author Archives: bob_sms

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Unfair Digital Marketing Advantage

The goal of all marketing is to create unfair advantage. In digital marketing, advantage comes from being in the right place, at the right time, with the right message. Unfair advantage comes from a defensible custom process that creates advantage in place, time or message.  An unfair advantage cannot be copied, bought, or replicated and like all secrets, it ages poorly. An unfair advantage cannot come from commercial tools because your competitor can buy the same product, take the same training, and your advantage disappears. An unfair advantage cannot be discovered in an article, study, or white paper because your competitor has access to the same knowledge. An unfair advantage is fleeting because once discovered by your competitor it vanishes. An unfair advantage has a limited lifespan and businesses must continue to invest in “What’s Next” to create, or maintain the next unfair advantage.

About Me

Over the last 46 years I have been a soldier, programmer, and digital marketing executive. My professional career started with 7 years in the US Army, which taught me leadership, tactics, and strategy. Followed by school and 16 years in custom software development. I was rapidly promoted from Programmer, to Systems Analyst, to Project Manager, to Executive Management, ultimately becoming the CEO. This was followed by 23 years as Digital Marketing Agency CEO in a business that morphed primary focus from SEO to PPC. I have always been attracted to the impossible problem of marketing and my teams were always staffed with smart and independent thinkers. I live by the rule of never working with someone who is not better than myself at what they do. I believe that team diversity brings strength and perspective to the team. With my recent retirement as CEO, I have moved to the role of Senior Data Scientist and I now have the freedom to work on the projects I love with people I deeply respect. My new life mission is to create experiments to discover patterns and relationships in marketing data that can be leveraged into unfair advantage for our clients.   

Finding Clients with Strategic Synergy

To accomplish this, my first task is to find clients with whom we have a strategic synergy. To be a reasonable fit the client must be reasonably sized (minimum monthly ad spend of $25K) with a professional marketing management team in place that understands and appreciates the complexity and business opportunity value in programmatic digital marketing. Of the active clients that I managed as CEO of SMS we have had probably a dozen clients that fit this profile. Indeed, they are the top 1% of their industry and intend to continue that position.

Profiling one of our large clients, they manage over $100k a month in PPC for 30+ locations providing a home service that includes repair, service, and installation for both residential and commercial customers. As a professionally managed business they are active in all channels of marketing including digital and conventional advertising and PR.  The manager is brilliant and understands the business to a level that nobody outside their industry will ever reach. He understands the complexity and tradeoffs involved in marketing and is willing to test new concepts under a fail-early strategy.  I have met with this manager every week for the last 8 years so I know that his account has no fundamental problems left but he also knows that the improvement opportunity is huge.  If we could accomplish the impossible of perfect timing, placement, and message the improvement would be 96%. With an annual budget of $1.6 million this approaches a business value of almost $50 million in business opportunity. Perfect marketing is a lofty goal but it is not realistic, however there is always room for improvement. If we can improve this account, moving the success rate from a typical 2% to 4%, the business value of that is $1.6 million! We just need to improve the system by 2%.

Why this must be a custom solution

If it’s not custom then it cannot be protected and the advantage will be lost as the market adopts the new best practice. There is an industry full of developers creating commercial products to the largest possible audience. This is how they create leverage and how they monetize the technology. Look at product like WordStream, Marin Software, Kenshoo, Optmyzr, and all their cousins. These are great products, but they are general use designed to fit the largest possible audience. They create advantage only until your competitor buys the same product or a better one. Custom solutions are perfectly fitted to the specific business with no compromise in the process. Tool developers are rarely experts in the industry, they write code for. Custom solutions take time and money to create and this creates a barrier to the competition as does protecting it as a trade secret.

The Digital Marketing Trifecta – Place, Time, and Message

Aligning three elements is an advertising utopia and perfection is impossible. However, improvement is certainly possible. When you examine the simple math of aligning three variables it does not take a lot of change in a variable to improve the response. Of these three variables, the big one is time because it is within time that the demand is created. The place and message need to be on target but detecting or improving the odds of the time is where most of the opportunity exists.  Time is largely created by a knowledge of the business and the events that drive it. I believe that unfair advantage will come from bringing outside data into the AdWords strategy.

The AI Path to the Solution

We believe that progress in this this will come from the AI/Machine Learning/Deep Learning field. Using the tools that are rapidly developing in this space we should be able to build models to evaluate data feeds from advertising networks, websites, and other sources to make better decisions. Considering that failure rates in advertising are often 98% there is plenty of room for massive improvement.

If you are interested in being a partner in this journey in Marketing AI please call Bob Dumouchel at 800.272.0887 or email bob@smsrd.com

 


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New SMS Staff: Marvin Byrd

Marvin

Marvin provides hardware, software, and security engineering services at SMS. The systems side of our business has been working on PPC automation and AdTech Networks like our AuLaCart project and Marvin brings a new depth of geek to our staff. Marvin will also be providing security engineering in both hardware and software to clients.

Marvin graduated from Cal Poly in 2009 as an electronic engineer and has experience in hardware, software, and system security. He worked a couple of year for the DOD out in a desert that he cannot talk about and most recently as a Security Auditor in the private sector. He is a partner in our AuLaCart project and has been our secret to overcoming the engineering challenges of that project. Marvin is a scary smart engineer and is a pleasure to work with.

Marvin will be working with clients to make sure that their networks are secure from Hackers. As we all know system security is a huge concern for all businesses and the attacks can come from hardware, software, or social engineering. Marvin understands each of these threats and knows how to make reasonable recommendations that managers and executives can understand and respond to.

Marvin is an engineer that can move easily from hardware, to software, to security. Marvin also provides engineering consultation on hardware devices and firmware. A few of his current projects are a medical device for a company in the bay area and a WiFi board for RC vehicles.

I first met Marvin in 2004 when he was the team leader for the Arroyo Grande High School Robotics Team and we have kept in touch since then. When the opportunity to work with Marvin presented itself we were very excited to add him to our team.

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Why I do crazy things

start up weekend team

Over the weekend of January 15-17th I participated in the Startup Weekend at Cal Poly. As crazy as it sounds this was my sixth Startup Weekend! A Startup Weekend is a global 54-hour long competition to create new businesses. According to the organizing group, 12% of the teams at a Startup Weekend will continue to pursue their idea after the Weekend is over and locally we have dozens of new businesses that include a Startup Weekend in their story. In this event 107 really smart and motivated individuals came together to pitch ideas, form teams, build plans, and present them to the world.

As the CEO of a successful, 20-year-old, digital marketing business an obvious question might be why would I burn an entire weekend to work on a new business? There are actually several reasons that this is important to my business. These events contain many of the people that will go into our communities and launch businesses; as a marketing company I have to be prepared to serve them and help them go to market. The bottom line is that it is tough to partner with people you do not understand.

First are the ideas

Innovation is a critical part of running any business and the longer the business has been around the more challenging innovation becomes. The Startup Weekends are nothing if not innovating. By being at the event I got to listen to the ideas of 100+ smart people pitching 60+ ideas. If your business needs to think about what’s next, this certainly provides a wealth of information to consider. I have been in hundreds of brainstorming meetings within businesses and I have never seen so many ideas generated in such a short period of time. The second phase of the ‘idea generation’ process is a crowd selection process that allows each person to choose their top 3 business ideas with no bias. Once this is done the top 12 ideas move forward to the next phase.

Next are the Teams

After pitches and crowd selections comes the team formations; 107 people rapidly divide and evolve into 12 teams in about 10 minutes. Some may think that this would result in a number of dysfunctional teams but amazingly it does not! This is because those who are attracted to this event all want to innovate and change the world which requires a certain type of person.In addition, the crowd was balanced by the event registration which controlled the mix of business, design, and engineering talent in the room. The end results were 12 teams, each with a reasonable balance to them. In our team we had 3 business persona’s and 2 developers with a goal of reinventing the retail checkout experience.

Next are the Plans

With the teams in place the hard work begins and here we experience the typical business evolution. We started with one concept but ran into problems that nobody had thought of before. In response, we pivoted and changed the idea again and again. This happened three times over the second day but, unlike in a normal business, there was no friction simply because everyone had expected to have to pivot the idea in the first place. Just imagine, a frictionless change process in a business! That truly is what happens and it is because of the expectations and the types of people attracted to the event. Almost every team went through one or more pivots before the team gelled around a refined idea that had 100% buy-in from the entire team. When you have this harmony amazing things can happen.

Next Tell all your friends about your Goals

The final step of a Startup Weekend is the presentation and judging. In our event we had 12 teams doing business presentations after 3 days and every team was successful with no on-stage disasters. From here many of the groups decide to continue with their idea and they have already introduced their idea to the world.

So Why Do I Do Crazy Things Like Startup Weekends?

  1. It expands my network into the next generation of businesses
  2. It makes me think about innovations from new perspectives
  3. It lets me see trends as they emerge from the minds of innovators
  4. It gives me a chance to put my ideas in front of 100+ smart people and judge their reaction
  5. Some of these might be clients in the future
  6. Even if the business never launches the people in the will likely launch something else
  7. It’s fun to hang out with smart people and discuss challenging ideas

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Top Secret – eyes only

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Aulacart

What AuLaCart will look like

In a small non-descript office with one-way mirrored windows in a small town on the central coast of California an elite team of geeks and creatives have been working in secret on the next big Ad Tech Network. Our patent was filed on 12/28/2015 and now we can come out of the shadows and talk about what has been pushing our creative and technical limits for the last year.

AuLaCart – Mobile Kiosk for Supermarket Carts

AuLaCart is an interactive in-store merchandising and consumer information system with the capabilities to deliver competitive advertising based on a shopper’s physical location within the store. The system serves the supermarket shopping experience with benefits for the consumer, supermarket management, and food product vendors. The device is attached to the shopping cart and communicates with databases at the local, store, and global levels. The device is a PC extended by robotic sensors for tracking device location within the store. Revenue is created by selling point-of-sale advertising to food product vendors. Users interact with the system by moving the cart within the store. For those consumers that engage deeper with the system there is a rich inventory of touch screen function including recipes, nutritional data, and store mapping & directories; just to name a few. The system is designed to globally scale using AWS for data services. AuLaCart is patent pending technology with the filing completed under the supervision of one of the best IP Lawyers in the country.

Building the Partnership

Building a business starts with building the team and to do this we put together an equity partnership with three partners and funding from a local angel investor group. Our team includes the CEO of another Digital Marketing Agency, a Project Manager from a Fortune 50 company with the skills to implement a national scale project, and an exceptionally smart engineer with the skills to solve the hardware and software challenges. Add to that SMS’s internal skills in design and programmatic ad systems and this really is an exceptional team.

Patent Filing

The patent filing process was one of the most frustrating parts of the last year probably because it was learning a whole new world. The entire basis of language is different because in marketing we talk about how the customer benefits from the product or service, while in the patent world it’s about how it works, not what value it creates. Our lawyer tells us that we are about half way through this process so there is more to learn. It was an interesting life experience as the inventor on a patent and it was one of the most challenging search projects.

The Business Plan
Great Ideas need Grand Plans and we have been through an extensive process to build ours. Our partner group has decades of experience in business planning and our local SBDC gave us the opportunity to test our plan with an independent review. This compared our business to other VC funded businesses in California. Many will tell you that the team is the most important success factor and our management team scored with a 90.8% compared to funded companies. When we look at the five year plan we are in the unicorn range.

What’s Next?

Our business is all about “What’s Next” and this partnership is no exception to that. Our next step is to find funding for the pilot phase and then execute that plan. This will prove the technology, business model, and the team we have to make this happen. When we are successful with that we have 37k supermarkets to install – remember our national scope project manager? Well this is why she’s here. We are out to reinvent the supermarket shopping experience on a national level.


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What’s Next?

Swami gazing into a crystal ball

Swami gazing into a crystal ball

I love this question and as the CEO of Systems & Marketing Solutions I try to make it a major part of our company culture. We define the marketing cycle of our clients as a constant cycle of “What Just Happened?” and “What’s Next?” Let’s take a look at what is likely to impact our what’s next thinking in the future.

Don’t sell to me!

Old practices die slowly but this generation of buyers clearly do not want to be sold anything. This generation believes that it is the most marketed to generation in history and this is probably true. The audiences in the market are becoming more and more reactive to marketing messages with filters that remove most of what comes their way. What does this mean? If you want to market a product in the future you will need to change to an educational model. You will be driven by the following statement:

“People do business with those they trust; they trust those that help them understand.’

This means that your marketing mission becomes one of educating the market on the value your business creates and communicating that with people who care about what you do. This is a long drawn out process of continual conversation with the market enabling sales to happen when a demand pops up. Now it is still possible, in some cases, to create demand but that is mostly in the domain of large businesses with big budgets. Smaller businesses will be more like a cork in the ocean in that they follow the currents, not create them. Smart business plans for small businesses will utilize social media in a conversational manner, speaking not only to the audience but with them in addition to some basic well targeted digital advertising to specified audiences.

Marketing Ecosystems will change the way we think about Marketing

Smart businesses already think about marketing as an ecosystem with process flows as opposed to projects. This means that forward thinkers will look at the entire system and make marketing investments based on a strategy rather than the tactical thinking that is so prevalent in today’s direct marketing model. When businesses start to understand the entire marketing cycle and the independencies it will change the way they invest in their business.

It’s a Mobile World

There is no doubt that the market has become highly influenced by the mobile consumer. This has changed many things, especially the way we approach content, web and user experience design. While many advocate the use of responsive design that reuses web content across multiple devices, I believe this is a mistake. We must cater to desktop and mobile interactions differently. Not doing so is the design and technology sectors trying to avoid the hard work of redesigning content and user experience simply because, in many cases, they do not understand the problem. Make no mistake, responsive design is a great technology and it should be utilized in every website today but it will not serve us well in the long term. Why? Mobile devices change the way individuals interact with information and even how they choose to consume information. For example, when I look up a company on my mobile device I usually want to contact or go to that business. This means I’m likely looking for the phone number or address. On the other hand, when I search on my desktop I am commonly doing in-depth research and I want all the details. Although I love my phone, I hate reading details on my mobile device.

Wearables

Google Glasses, the Apple Watch, Fitbit, and all their cousins are the beginning of “The Internet of Things” that will connect us as a society; this will have a profound impact on marketing. These devices will know our patterns and allow providers to better serve us. On the other hand they could be a complete invasion of our privacy that we will hate. The differences between these two outcomes will be how we position our businesses to serve the market. If we start out trying to sell something to the person rather than focusing on how to serve them the results could be devastating. In the last few decades we have seen the impact of the Internet as it has woven itself into our lives and wearables hold the potential of another revolution of the same scope.

Websites as a Conversation

The majority of websites today are designed as a speech or a presentation; they simply display information. Soon, websites will morph to be more of a conversational experience radically changing the way that sites are designed and how the population will interact with them. In a conversational model we have a hello – dialog – and a good bye. The challenge will be the dialog/the evolution of the conversation and the AI tools needed to manage this. Websites in the future will need to adapt to be a presentation when we just want reference materials and a conversation when we are trying to make a decision. If you think the challenge of mobile design was tough you have not seen anything yet. Conversations require a model of thinking that adapts to clues from the other party in the conversation. While simple enough to understand in a one-on-one model doing this at scale will be incredibly complex and will likely create a new field of engineering.

If you think differently

Anytime you address the What’s next question it is fair for fair minded individuals to disagree. Please do not hesitate to share your thoughts and comments, I would love to hear how others tackle this very important question.


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We are hiring: Digital Marketing Agency Sales Rep

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We are seeking a person to represent us in the Los Angles market. We will expect you to learn enough about Google AdWords that you can serve as the conduit between our analysists and the small business customer. We are willing to train the right individual that has the fundamental personal interaction and management skills required to build strong business relationships with Clients. If you want an entry level opportunity into the world of Digital Marketing and you are a smart outgoing personable individual then you should talk to us.

Our sales process is a low pressure approach that is best started part-time growing into full-time as your skills and territory improve. We start by opening a conversation with the client typically by getting permission to send them free email information about digital marketing for small businesses. This is followed by a regular email newsletter to educate the client about the value of online marketing in their business strategy. Next we open up more phone or in-person communication on a regular schedule to build a positive relationship. The sales transaction happens when the customer has a need and they see us as part of the solution.

As a sales rep within a territory you will need to reach out and network with the business community so you need to be comfortable with that. This includes attending business events and belonging to the key groups within your community.

As you build your territory you will be part of the continuing communications with the client to keep them informed of the results from their marketing investment. On a monthly basis our analysts review the data and report to the client what just happened and what’s next to advance their online marketing.  Part of your role in this will be to deliver and communicate this to the client.

We are a 20 year old Digital Marketing agency with hundreds of clients and tens of millions of ad spend under management in Google AdWords alone. We provide clients with a full range of Online Marketing services but 100% of our clients have us manage their AdWords and that is where our services almost always start. Beyond AdWords that we provide Social Media Management, Search Engine Optimization, Crowdfunding, Website Design, Analytics, Graphic Design, Video editing, Photography, Content creation, and other digital marketing services.

To apply send your resume to bob@smsrd.com along with three times (8am – 3pm) in the next week for an online interview. You need online access with a video camera for the online interview. If you do not have this check with your local library because most of them have this available.

Compensation commission only with credit for on-going revenue. In this way you can build recurring revenue with no cap on your income. Our target income for a successful Sales Rep is $70k – $100k. We expect it will take 2-3 years for a rep to reach that level.

In the LA territory we have 200+ qualified leads with emails that have been on our email list for months to years. We believe that a person in the LA market will be able to do much more than we can do remotely.

Learn more about us at www.smsdesignlab.com and www.smsrd.com


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White House Petition – Service Dogs as a Therapy Option for Disabled Service-Connected Combat Veterans suffering from PTSD

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smiley-dogWe respectfully petition the President and Commander in Chief on behalf of the Disabled Combat Veterans suffering from PTSD related to their service to our country.
Congress and the Executive Branch Acted:

“The Service Dogs for Veterans Act, cosponsored by Senator Johnny Isakson of Georgia, directs the Secretary of Veterans Affairs (VA) to establish a pilot program working in partnership with non-profit service dog agencies to pair service dogs with veterans with physical and mental injuries and disabilities, including Post-Traumatic Stress Disorder (PTSD). Senator Franken’s bill was included as an amendment to the National Defense and Authorization Act that passed the Senate on July 23, 2009, and was subsequently signed into law by the President.”

Reference: https://www.franken.senate.gov/?p=issue&id=84

The Veterans Administration has fought this therapy and here is their argument:

https://www.federalregister.gov/articles/2012/09/05/2012-21784/service-dogs

Our Argument:

This law only provided $2 million in funding, which is completely inadequate. Even at that level the VA resisted the pilot test and buried the program. When Congress acts and the President signs a bill an agency like the VA should simply say “Yes Sir” and do what they are told. This is a case of an agency that has gone rouge causing harm to the treatment of our veterans. Granted they have done this with bureaucratic expertise but it is time for them to step up to their mission and serve the therapy needs of the service connected combat veterans.
Our argument is that dogs are better than drugs.

Service Dogs that are specially trained to assist veterans with PTSD have wide spread support from many experts but the VA does not agree. The VA appears to be a minority of one with a position that this is a poor therapy strategy. They are using all their skills as bureaucrats to wrap this in red tape and stop this therapy while at the same time embracing drugs. There are within the nation organizations that are willing to step up and provide trained dogs but we have to provide support for the expenses they incur. Our recommendation is to set a fair market value in the range of $20,000 – $40,000 based on cost to train the dog plus a reasonable profit margin and then index this to the cost of living. Assuming a reasonable life span of the dog this benefit should be limited to one dog. We would argue that the cost of the dog could be recovered from the lower drug cost by shifting the therapy from drugs to dogs.

Within the Service Dog Training industry there are practices that include the use of prison labor for part of the dog training and an incentive should exist for this. Early studies show that it improves prisoner rehabilitation and lowers the cost of raising the service dog. Organizations that utilize this method or other methods that create other social value should be paid more for their dogs.

To insure the quality of the dogs in the program the VA should have an inspection and certification process for trainers and/or training organizations. Because the VA has been resistant to this therapy, for a reason we do not understand, a provisional certification for the year should be issued to any organization with a mission to train service dogs. The VA will then have one year to inspect the organization and issue or deny a for cause permanent certification. An organization with a provisional certification shall only be allowed to sell 5 dogs per year into the system.
We fully understand the need to maintain control and fair administration and realize that demand for Service Dogs will exceed supply. We propose that the VA maintain a priority list just like the medical profession does for organ donations. The priority should be based on the urgency of need (Doctors recommendation) disability rating of the veteran, valor of service (Medals in DD214), and income (lower income higher priority).

What we request

We request that the President direct the Veterans Administration to provide this option to veterans suffering from PTSD as determined by mental therapy experts with an appeal process that uses Doctors from outside the VA direct control or compensation.

We request that the program be fully funded based on the needs of our Veterans suffering from PTSD related to combat service on behalf of our nation. This should not be a pilot program but a fully funded therapy provided to veterans where therapy is a reasonable course of treatment.

How you can help

For the short term we have a crowdfunding project for a non-profit that trains service dogs and then donates them to our Veterans.

White-House-Logo

 

In the long term you can lend your voice to our petition to the White House to direct the VA to do their job and find a way to provide this treatment option to our Disabled Service Connected Veterans suffering from PTSD.

 


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Business Personas Types

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Marketing-Strategy-TeamMany people want marketing to be simple but the reality is that marketing is where; people, systems, and language collide. The process is messy making content planning complicated with issues that are not right or wrong but simply different. In this article we propose that we have Worker Bees, Technicians, Managers, Connectors, and Entrepreneurs. Each of these personas looks, acts, and reacts differently to marketing messages and what turns one on may turn another off. In this article we are going to explore the people part of the challenge and to keep the scope somewhat manageable we are going to discuss the business to business market. These concepts apply to the consumer market as well but the number of segments is much larger.
In prior articles we talked stages of the audiences with discussion of Suspects, Prospects, Customers, Clients, and Evangelists. Within each of these audiences we have personas that have to be the center of our content creation strategy.

Worker Bees
Worker Bees are about following the rules and filling in the blanks. They are people within the organization that execute the plans and follow the direction of leadership and they are often the first contact in a sales cycle. Because of their role in the organization they follow rules and look for easy to implement guidelines but they are almost never the decision maker however they often control who gets on the short list. So while their decision ability is close to zero they can influence the procurement process. They are often overly concerned with things like price and that tends to be one of the first things they look for. A first contact that is looking for the cost in the first question is often a worker bee. A typical answer to the price first question is to ask “What is the problem we are trying to solve?” I will often equate this to a common or shared purchase decision like buying a car. A worker bee would call a dealer and ask “How much is a car?” Since this question is broad, the dealer would respond with a very wide range of prices and ask for more details. The thing to remember here is that this is not the decision maker but they may control if you get on the list that the decision maker will consider.

Technicians
Technicians are about the work and their perspective is driven by the quality of the product creation. They are often the business founder and hold the leadership role in the early stages of the business development. They are motivated by improvements in production, new tools & gadgets, and other things that they see as improving the product or service provided. They are about making products and production bigger, better, faster, and cheaper.

Managers
Managers are about consistency and they value dependability and repeatability. They are the reason that large business are great at consistent delivery and they tend to be driven by facts that can be validated. If you ever walk into the office of a manager you will see it immediately. Everything has a place and everything is in its place. The files are organized and probably color coded. They have a system for everything and they bring organization to the business.

Connectors
Connectors are about relationships they are often the rainmakers that bring transactions into the business through referrals. They are commonly found in the marketing, sales, and executive staff. Because they value relationships they are often very brand loyal and they create referrals as a reciprocal act because that is how they think. They are typically very easy to discover within the group because they are the first to greet you and find ways to personally connect with you. Connectors in most cases will influence the purchase decision but they rarely make the decision. Connectors belong to lots of networking groups and they are engaged with the community of the business.

Entrepreneurs
Entrepreneurs are about innovation, creativity, vision, and brand advocacy. They know where they are going and how they want to get there but they need a help from Technicians and Managers make the magic happen. They often serve as the communication bridge the Technicians and Managers. They do not exist in all organizations and the larger the business the less likely there will be an entrepreneur because they require lots of freedom to operate.

Why We Care?
With all of this discussion the big question here is why do we care? Then answer is because each of these types is motivated to a decision based on a different set of values. If you want to sell to the Entrepreneur you need to talk about the future and the next version because they will be bored by what is already in market because they want new and exciting. The Manager on the other hand wants dependability and sees new as risky and not inside the system after all change brings chaos to their orderly world. The Technician is excited by new tools and methods but like the Manager they want to see proof that they are going to make their work better, faster, and cheaper. During this value communication process the Worker Bees will bring coffee to the conference room, fill out forms, and return RFP’s with additional questions that no decision maker will ever see.

Disclosure
This is an opinion article based on my experiences over far too many years working with lots of organizations. My experience is that if you break messaging down and find ways to communicate value to these personas great things can happen. We would love to have you share your perspective on this article.


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Suspect-to-Evangelist-Pyramid

The Marketing Ecosystem

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“A referral happens when the evangelist’s friend has a need that the evangelist believes that your product or service will service their friend’s need.”

This article might not be for you!

If your business model leans more towards the transactional side, clients and evangelists are not in your model and all your resources should be focused on the prospect to customer action. If your business model is transactional, this article does not fit your business. Transactional businesses normally have a product or service that is only sold once. Things like debt relief or diet pills lean toward this model.

A good marketing ecosystem moves people or businesses through various stages of relationship with the business. People flow in both directions based on the on-going experience they have with the business. The job of a marketer is to move the most people in a positive direction in the flow. While often represented as a pyramid, the shape of the data is actually more like the form above. It has a steep angle as it moves up the statuses with a bubble at the end in the most mature companies. Time is like gravity in this process as the status tends to drop if the relationship is not constantly refreshed.

Many business executives will tell you that most of their business comes from referrals. The challenge is that the executive is only looking at one point along the path and typically that is when the order is registered and the prospect becomes a customer. If you follow this farther back, you will find that all business ultimately came from prospects or suspects.

Please note that nowhere in that statement is there anything about the vendor (that’s you) in the process. That’s because while you have to earn the referral, you do not cause the event. It is the need of the friend that starts the process. There are things you can do to influence that but it is very difficult to create need.

It’s about moving people through the communication system

Each stage in the process can be thought of as a segment classification with a barrier to the next class. That barrier is the customer experience and that is within your control. So let’s take this problem apart and discuss the barrier between each classification.

Suspects – People that might do business with you

The first class, and by far the largest, are the suspects. These are people that we suspect could do business with us but so far that’s it. Many times, the problem with this class is the size and the related expense of communicating with that class. The first thing a business has to consider is do they have the budget they need to talk to this class. If they do, the primary barrier to being a prospect is awareness of the product or service. This is especially difficult when you are dealing with a new innovation where people are not aware of the problem or the product. With a well-defined product or service, creating awareness is largely an educational process to a very large group of people. As awareness becomes interest, the person morphs from a suspect to a prospect. So this barrier is the combination of awareness and interest.

Prospects – People who have some indication they might do business with you

Prospects are created by data that indicates that the person is more likely to be a good fit for your product or service.  Creating prospects using data is quick and easy but moving them from prospects to customers is not. This is because as a marketer, you need to transform the qualification of interest into desire and ultimately action. This is where most businesses spend the majority of their marketing resources and their measurement of choice is the ever popular first sale.

Leads aka Sales Pipeline – People that have proactively indicated an interest in your product or service

A prospect or suspect that has proactively reached out to the business is a lead for the time period that it is being followed up on by the sales team. The proactive outreach normally takes the form of a sales lead form completion, phone call inquiry, or other valued event. If the lead goes cold, then the person returns to be a prospect with special history.

The subsystem of leads is often called the “Sales Pipeline” but our position is that the pipeline runs from suspect to evangelist.  Thinking only of this one section of the system results in a myopic view of the process. Since this status starts with expression of interest and ends with a sale, it is an area of focus for many plans but it is no more or less important than the management of the other stages.

Customers – People that have done business with you within one business cycle

Customers happen when a suspect or prospect purchases a product or service. Sounds simple enough but trust me when I tell you it only looks simple.  A customer is not a lifetime status and the customer can easily drop back to being a prospect if they fail to reorder when expected. This is also the time when many organizations stop marketing and that is a huge mistake. The other big mistake made with this classification is thinking of customer as a permanent status. While you can establish any rule you want for the classification, the typical customer status should only hold until the next expected purchase and this is driven by the normal sales cycle of the product or service. If you are not aging the customers out of this status, then you will not see what is truly happening in the business.

Clients – Customers who will continue to do business with you even if you do something wrong

Clients are someone who will continue to do business with you even when you are not the low cost provider. They will also forgive you when you do something stupid because they trust you. Moving a customer to a client requires that you build trust and loyalty.  Normally this transformation happens over time and can be difficult to observe. Most businesses that measure this do so a few times a year.

Evangelists aka Brand Advocates – Customers, Clients, or trusted advisers that recommend your business when their friend has a need

Evangelists are the very lofty goal of the ecosystem but they are exceptionally difficult to create because it requires a client with a specific set of social skills and experiences. I subscribe to the concept of the social connector as described in the book, Tipping Point by Malcolm Gladwell. In every social network, there are people that value the process of connecting others and it is this trait that turns a client into an evangelist. To some degree, there are clues in social media as to who these people might be but there are also lots of posers. The data you want to look at is their connection level and the activity of those connections. Evangelists are a temporary status and can change from product to product. This means that an Evangelist for product A may be a silent client for product B. Mavens (trusted expert) can also become Evangelists if the need of the person is a very specific product. These evangelists are driven by their desire to pass technical information.

It is important to note that not all evangelists are customers or clients. It is entirely possible to create an evangelist that is a trusted adviser to the prospect. Common examples of this are CPA’s or Attorneys that often recommend items to their clients when they see a need. In some cases, campaigns with the goal of communicating to potential evangelist segments make good business sense.

Negative Flow

Referrals can be positive or negative based on the experience they are communicating.  Negative flow can happen when you create an evangelist with a negative experience and they distribute that. Many studies show that the typical negative experience will get distributed to 12 people, while a positive experience will reach one. This is not what you want to hear but referrals do work both ways. If the person involved is an evangelist, great care should be taken.

Time is Like Gravity

Time pulls the person to lower levels within the classification. An example of this is a customer that does not repurchase and drops back to prospect status.  The reason this is important to understand is that while we might want to earn a level and stay there, that is not how it works.

Paying for Referrals

One common idea about referrals is to pay for more of them. This idea almost never works but it often looks like it does. The reason it can look like it works is that when the referral happens and an incentive is available, it is often claimed. It is likely that an incentive to some customers will result in an action but you have to ask yourself how powerful the referral will be if it was motivated by money. Are you in fact paying for what will happen naturally? I would contend that in many cases, paying for referrals does not create a referral but they do create a marketplace for them.

Moving People through the System

From To How
Suspect Prospect Active: Create awareness that serves a want or need
Passive: Find data that indicates a product want or need fit
Prospect Customer Create desire to service a want or need
Customer Client Create a trust relationship
Client Evangelist Have a trust relationship with social connector and get lucky enough that they become aware of a friend’s want or need that is served by your product or service
Customer Client Evangelist Prospect More than one business cycle without a business interaction.

In the marketing plan for the business, each of these areas needs a campaign to serve these movements.

Glossary:

The Market: Everyone
Suspects: Someone who could do business with you
Prospects: Someone who has demonstrated some interest in your product/service
Customers: Someone who has purchased your product or service
Clients: A customer that will continue to do business even if you do something wrong
Evangelist: A person that tells others about you. Can be a customer, client, or other trusted adviser. This is also known as a Brand Advocate in some circles.
Mavens: a trusted expert in a particular field, who seeks to pass knowledge on to others
Social Connectors: people in a community who know large numbers of people and who are in the habit of making introductions


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