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Tag: budget

  • Can Small Companies Act Like A Big Business And Win?

    Can Small Companies Act Like A Big Business And Win?

     Size matters, right? In some things, that’s certainly true. In the start-up phase of a business, its more like “Scale Matters,” as the mantra driving pixel-based and other start-ups is “Does it scale, and how well?” This avoids the trap of essentially creating a job for the founder, instead of a business primed for success and growth. If the founder is a limiting factor, because he can only be in so many places at once, that’s a problem with scale. It’s a structural issue, one that needs to be addressed at the earliest stages, so the business can pivot around it and grow.

    Agility is the biggest single advantage small business has over their larger industry-mates, and to give that up with layers of bureaucracy, rigid policies, staunch and robust process guidelines with little room for innovation seems counterintuitive. However, there is one area where acting like a bigger company can pay much bigger dividends – Marketing.

    Most small companies suffer from a couple of similar ills when it comes to marketing themselves:

    • Small companies typically focus on sales rather than marketing anyway, laboring under the misapprehension that if they can just sell enough widgets, software licenses, land enough accounts, find enough clients, the marketing will take care of itself. As a consequence, most underspend, in some cases drastically, on outreach marketing activities. Oddly, these are the exact type of investments and activities that will position them for the growth they so strongly desire. Most founders are so fearful of waste, or of appearing to make a mistake, that they play everything close to the vest, making only incremental advances, taking the safe route and only repeating the actions they “think” worked the previous year. This leads to small, defensive thinking and limits growth like a vice squeezing the business until it’s frozen in place.
    • Spending on the “wrong” things. The old saw still holds that ”half of our advertising works, we’re just not sure which half.” In today’s data-rich, public-sharing society, there’s almost no excuse for not knowing which half of any activity drives revenue, some types of activities are just harder to connect directly to sales growth than others. With that said, businesses who have never advertised or done any real organized, planned outreach activity almost universally find a significant uptick in sales revenue when they decide to start. But that glow is short-lived, as they try different things on an ad hoc basis without a plan, and spend themselves out of all the revenue gains they made at the beginning.

    Now What?

    What to do? Modern marketing is about agile, “spend, fail, learn, repeat” cycles. You’re not going to hit the target on every activity the first time out, and there’s a learning curve for every business, regardless of how many consultants or agencies you engage. You’re going to fail at some point, better to accept it, get used to it, use it in a positive way and get past it. One now-famous CMO of a large consumer products company had a philosophy about how to “do” agile with a variety of marketing ideas – if you throw ten ideas at the wall, and 6 of them stick, you’ve broken even and paid for the bad ones. If you hit 7 or more, you’re up for the year. Take the education from the 4 failures and commit those resources to the other six, and double down. This creates a culture of upwardly-spiraling innovation, one that rewards success while negating the suppression and stigma of failure. Failing fast and cheap works in your favor over making big bets on untested ideas and misplacing resources at a loss.

    Where small business can think like a bigger business is in their attitude toward spending on marketing activity. Small-minded miserliness is self-defeating. Do a quick cost-benefit analysis, allow founders to have the courage of their own convictions, and take a calculated risk on some outreach activity that’s informed by solid, hard-won research.

     

    4-Step Process To Improvement

    • Get to know who your customer really is, spend the time and money on research.
    • Find the company’s “why” early on and use it like a weapon against your competitors.
    • Differentiate the small business from their market-mates, and exploit the difference
    • Designate a real, realistic portion of your sales revenue for marketing activity.

    Once you reach that spending level, you’re done for the year, limiting your losses by putting a stop order on funding ideas that haven’t borne fruit. Now you have a system for testing ideas, limiting downside of investing in ideas that don’t generate revenue, and have a back-stop for using the education to apply toward the ideas that do work and drive revenue upward. This kind of test, fail, learn, repeat cycle is innovation-friendly, and can spawn all sorts of new ideas, new products, new angles, new customer segments, all of which lead to the type of rapid growth start-ups are known for.

    You’ll be surprised at the benefits that the courage to innovate can generate in the long- and short-term, and the gains that can be had by simply thinking and acting bigger than you are as a company. Size does matter, most importantly, in the realm of perception.

  • Make Your Marketing Dollars Work As Hard As You Do

    Make Your Marketing Dollars Work As Hard As You Do

    Marketers are typically asked to justify their expenditures, to craft a nearly inviolate budget often as much as two years ahead of time, and to stick to it to control spending. Rarely are they asked if those expenditures are the most cost-efficient solutions, or if allocating more resources to a particular item might improve its resulting gains over above the spend, by scale or efficiency. Corporations with a culture of control focus more on the outflow than the value of the resulting inflow when discussing marketing expenditure. Based on years of experience with both winners and losers in the corporate and non-profit world, I can honestly say that this might be a losing approach to marketing.

    Corporate leaders often assume that marketing is ALWAYS doing the most cost-effective thing to achieve results, based on a cost-conscious culture and the nature of marketing as an accountable function. Spend “X”, and you can usually count on “Y” coming back. But what if you doubled “X” and “Y” quadrupled or quintupled? Would they have approved the additional expense at the beginning of the year, prior to the effort? Probably not. In some cases, more time is spent trying to justify expenditure than on creating the method and message of the expense. To me, that’s crazy!

    Fortunately, in today’s expanded culture of innovation, a business climate rife with entrepreneur-ism and start-up fever, fast-cycle test-fail-repeat operations are becoming more prominent, and with that comes an easing of the penny-pinching, along with a realization that “if we try ten things and six work, we’re ahead of the game” for marketing departments lead by enlightened senior executives.

    Finding such an enlightened marketing leader requires some work, but the effort is almost universally worth it based upon the game-changing results that can be had as a result of their efforts when supported by senior leadership. They are often cloaked in other experiences, other disciplines, and usually don’t fit the linear career paths that the HR Department is trained to look for. Such outliers can really move the needle, and are worth the effort to find. But that’s not the whole story.

    A quick analysis of your marketing expenditure will show you where the money is going, and each item should provide some indication as to what it’s returning for that spend, either in dollars, or results of some kind. If it doesn’t, some sort of metric needs to be “baked in” to that activity so that you can make it accountable. Once that’s in place in the budget, sort and rank the items by results, not by cost, and see if the order changes from the cost-based ranking. Comparing those two lists seems simple, but it can be an eye-opener when seeking an edge, by finding inefficiencies and reallocating resources to drive growth and revenue generation. Like the stock market or Las Vegas, you double down on the winners and bag the losers quickly, to mitigate risk and drive growth of return.

    The other advantage to this type of approach is that you avoid the “cheap trap” of not thinking large enough, based on a lack of faith in the results. Thinking bigger has a really strong track record of success, doing everything as cheap as possible doesn’t, because many great ideas, initiatives, campaigns and other activities die from capitol starvation before they ever get a chance to come to fruition. If the initial tests are even reasonably favorable, feeding that idea has a 2000% chance of succeeding over the one that breaks even and stays small. Good testing programs and solid research mitigate that risk even further, and will highlight even greater opportunities as results come in and new ideas surface based on their successes. It’s a good day when the winners spawn more winners.

    Good ideas, good research, patience and faith combine to drive success in marketing. As a famous marketer for a large consumer products company once was rumored to utter, “every dime I spend on events and marketing comes back to our company dressed up like a quarter.” When you scale up, double-down on winners, and feed the best ideas, that quarter quickly becomes a dollar.

  • 5 Ways To Waste Your Firm’s Marketing Budget On Research

    5 Ways To Waste Your Firm’s Marketing Budget On Research

    Alexandra’s hit it on the head with this one. Precisely what we’ve been telling our clients for years.

    Top 5 Ways to Waste Your Professional Services Firm’s Money on Research

    By Alexandra Marigodova

    More and more firms are discovering the extraordinary power of strategic marketing research. In fact, Hinge’s own research shows the firms that conduct systematic research on their current and potential clients grow from 3 to 10 times faster and are up to 2X more profitable.

     

    Faster growth and more profits – that’s the power of research. But in order to work, it needs to be done right!  This blog post lists some of the most common, budget-murdering mistakes that are easy to avoid.

    1. Use Research Designed for Consumer Products

    The truth is, marketing research started in the consumer sector in the 1920s. Client research built on consumer product research is truly the “mullet” of professional services research. It’s out of style, it doesn’t quite fit, and it makes us cringe here at Hinge.

    Think about it. Trying to figure out how to sell accounting services using methods designed to market baby formula just isn’t the best strategy. Purchasing a product at the supermarket involves less risk and different decision makers. This is one sure way to waste your firm’s hard-earned money.

    Instead: Use research designed for professional services. One thing for sure, professional services buyers don’t purchase on impulse. To design the right research, you first need to “pilot test.” Ask open-ended questions, then turn them into categories. First explore, and only then narrow down.

    1. Ask Little Questions

    By nature, people are greedy. Many try to pack very granular, nitpicky questions to get the most bang for the buck. Our mind tells us to add, when we should be subtracting. Asking little questions is one of the easiest ways to introduce bias and get meaningless results.

    Instead: Focusing on the big questions will yield the most results. Think of it as removing layers rather than adding more to get to the real truth – what’s most important for your firm. Think more along the lines of how your clients would describe the real value that your firm delivers, rather than how they feel about a specific service.

    1. Use Quantitative OR Qualitative Questions

    More often than not, we come across research studies that ask “what” without asking “why.” This is especially common for times when quantitative data tells us what we want to hear. Imagine you got this finding: “80% of our clients are very loyal to the firm.” And… full stop. We don’t need to know more, right? Wrong. You just missed an opportunity to find out what makes you so unique that the clients want to stay with you.

    Instead: Use BOTH quantitative and qualitative questions. “What” should always be followed by “why.” Understand the reasons behind the numbers and listen to what your respondents are trying to tell you.

    1. Poison the Pot with Judgment Words and Phrases

    What’s wrong with the question below?

    “On a scale of 0 to 10, how important are the awesome services that firm X provides to you?”

    I spoiled the question on purpose, so it’s an extreme example. As you can tell, it explicitly tells the respondent that the services are, in fact, awesome. We can’t both ask for an opinion and give our own. Freedom of expression to all of our respondents!

    In all seriousness, surveys often use descriptive adjectives and add unnecessary leading information. Dictate the results of your research and lose money.

    Instead: Use neutral language and phrases to let the respondent make the call. The questions themselves can impact the objectivity with which people respond to them. Be mindful of word choices and put extreme care into the wording of your questions.

    1. Talk to the Wrong People

    Another way to pour money down the drain is to ask a whole bunch of wrong people. Even with the right set of questions, the wrong set of people will not give you meaningful results.

    There are really two predominant ways to mess up your sample – trying to ask each and every person or only talking to clients you have the best relationships with.

    Instead: Use smaller, highly targeted sample groups. Ask yourself, “What does the client I want to do business with look like?” and “Who are my most desired prospects?” Interview them.  Ask your internals, too. It’s important to see how well your employees know their clients.

    The growing investment into research in professional services also exponentially increases the amount of blunders. But don’t worry! Now you know how to avoid the common mistakes. No need to risk your money. It’s time to get actionable results from research to grow your firm and become more profitable. For a more comprehensive overview of best practices, download our free Professional Services Guide to Research.