The calorific value of a rat – in marketing

A lion is fully capable of killing a rat and eating it. But it doesn’t waste its time in hunting a rat. This is because the calorific value of the rat is so little that it will spend more energy in hunting for the the rat. So it focusses on killing deer and antelopes.

I got into a deep discussion with my team on this topic today. I have quite an energetic team which does not accept my arguments on face value. They have to be satisfied with data to prove my point. So today’s post gets inspired by them.

You need to choose the markets in which you operate. If the payoff is not enough calories (large enough market which can give us sustained business) or there’s no strategic benefit to target a market, its better to avoid that market.

I would go one step further and want to identify first the most profitable market in what I want to sell. Lets take an example in the B2B space only.

Suppose I have only 2000 customers in my territory who are big and profitable who outsource a managed services contract for their IT infrastructure. Also suppose I know that there will be a turnover of 5% every year whereby these companies will choose a new vendor, which means 100 customers will identify a new vendor. Each customer can get me a sustained profit of say $100000/- per annum , so even if I am able to pick up 20 of these 100 customers (20% of the customers who will decide) I am able to make about $2m in profits per year from these.

Now on the other hand there are also another small 100000 customers who outsource some project implementation in IT. Also suppose I know that at least 10% of these will outsource – which means a 1000 customers will buy some project implementation. So you have a larger number of prospects to whom you can possibly give proposals. Most people would like to address this because there is a higher absolute number and therefore the chance of success seems higher.

So let’s go one step further and assume that here also we will have a success rate of 20% so out of 1000 possible customers you can get 200. This number is 10 times higher than the 20 customers you were looking for the managed services example. Now lets understand the amount of profit that we can generate is $1000. So after executing these 200 orders you will be making $200000/- or ten times less than if you were focussed high value customers.

The amount of effort in executing 200 deals will be much higher than in executing 20 deals and the customer satisfaction issues will also be much lower.

Its the same logic that the lion uses for arbitration and targets the deer rather than the rat for its meal.

Always look at leveraging the highest and best use for your effort wherever – in marketing or otherwise – the lion teaches us the same lesson.

Till next time then.

Carpe Diem!!!

Technology hypes – and fundamentals of marketing

digital, Marketing, media

I have been through multiple technology hypes through the years. About 30 years back when the Unix platform first came out , it was said that Mainframes will be dead soon. They are still going strong.

When the public Cloud became prevalent, there was a talk that people will no longer have their own servers. That’s way away from the truth. People are still buying servers and actually building hybrid clouds.

With the advent of mobile phones, it was predicted that landlines will no longer be needed. Your broadband connection is still via the landline.

In all these cases was that the overall market grew, with multiple technologies running in parallel. The old technologies evolved to keep pace with the new dynamics, but did not lose their inherent characteristics.

All marketers of technology based products or services need to be fleet footed to quickly adapt their offerings to the changing technology landscape .

Even the media choices keep changing – there was a time when there was Yahoo and Altavista and then there wasn’t, there was Orcutt and then there wasn’t. In social media today you have Facebook, Instagram etc. While in search engines you have Google. If your marketing plan is dependent on one specific platform then losing that platform can hurt. But if your marketing is based on strong fundamentals then you can adapt your message to different media.

Print advertising and advertising on television is still going on eventhough everyone only keeps talking about digital marketing. The fundamentals of marketing will stay irrespective of the technological hype which people create from time to time.

Till next time then.

Carpe Diem!!!

What is the JOB that you want your campaign to do – 2

campaign, lead generation, Marketing, media

This topic was not supposed to be split into 2 posts but it so happened that today morning I was watching a YouTube recording of the ILoveMarketing Meetup Group where Dean Jackson was interviewing Paul Colligan on the topic of podcasting. For those who have not read my post yesterday – I was referring to the Clayton Christensen experiment where he talks about the JOB of a McDonald milkshake. I had used that analogy to talk about why this question is important when you are choosing media instead of blindly following others.

He made a statement similar to what I had made when I was discussing with the media company regarding people blindly choosing Instagram because they get followers faster. Paul narrated a story where he asked a prospect about what was the objective of the podcast that he was trying to make and the prospect said “downloads”. So Paul asked him if downloads from China do or if they were to come from Fiverr – would they meet the objective? Clearly the prospect got the message.

Since there’s so much hype about followers / downloads most people think the objective is to create followers or to get downloads. You need to have clarity on what is the JOB you want your campaign to do. Not multiple jobs. Just one job.

If you are going on any platform – not only social media -for business purposes, there has to be a clearly defined JOB that you want the platform to achieve. Then understand if that platform will meet the objective in the most cost effective way. This is important because you don’t have unlimited supply of funds – even if you have, it would be stupid to get an email address at $10, if there was a way to get it at $1.50.

Don’t get muddled in your thinking based on the hype of the media companies. Its their JOB to sell you on the positives of their medium, but its your JOB to determine, what’s best for you.

Till next time then.

Carpe Diem!!!

What’s the JOB that you want your campaign to do

campaign, ideal customer, Marketing, Marketing Stamina, media

A few months back I had written a post on the Clayton Christensen experiment on What’s the job of a McDonald’s milkshake. That’s a very pertinent question for everything that you do in marketing. If you’d like, you can go on YouTube and search for the video, on this experiment.

Every email you make, every campaign you run, every media that you choose should have a very clearly defined job description. If you mess up over here all your decisions will be muddled and you won’t get your results.

I was discussing yesterday with a media company on the relative merits of YouTube, Instagram etc. One thing which came out during the discussion was that people choose Instagram over YouTube for running campaigns because they can generate followers faster.

Which got me thinking. Is the objective of choosing a platform only to increase followers which then led me to the base question again of what’s the job you want your video campaign or any other marketing activity to do.

Blindly creating followers should not be the job. The job in my opinion, if I was the advisor to a company would be to say – create followers of a specific kind with certain characteristics defined, which should eventually get converted leads and subsequently business.

If your campaigns on Instagram can achieve this objective, then its the right medium, if not , you need to figure out a different medium. That comes back to my favorite term, Testing. So even though all your planning suggests a given medium, based on the clearly defined job, only testing should clearly confirm it.

Let the market decide during the test about what is the right thing. Once you get your test results then go the whole hog to get business.

Most social media platforms will have a lot audience including yours. The next stage of your testing should include how you can get your ideal customer at the lowest possible price. The economics will decide your staying power . At the end of the day your marketing stamina will decide the winner in the long run.

Till next time then.

Carpe Diem!!!