A to Z of Product Management

Product management can be a complex and often misunderstood discipline in business. In reality Product Management in its broadest sense, touches every part of an organisation that sells products and services, and everyone has their part to play in the product life-cycle to ensure that customers get the best possible experience and your organisation benefits from growth and profitability.

In this A to Z I’ll be covering some key processes, tools and terminology to help you understand the world of Product Management.

A – Ansoff Matrix

Ansoff’s matrix is a useful 2 x 2 grid to help you determine your product and service strategies. Within each segment there is a differing level of risk. The four elements are:

Market penetration – This involves increasing market share within existing market segments. This can be achieved by selling more products/services to established customers or by finding new customers within existing markets.

Product development – This involves developing new products and services for existing markets. Product development involves thinking about how new products can meet customer needs more closely and outperform those of your competitors.

Market development – Finding new markets for existing products. Market research and further segmentation of markets helps to identify new groups of customers.

Diversification – Moving new products into new markets at the same time. It is the most risky strategy. The more an organisation moves away from what it has done in the past the more uncertainties are created. However, if existing activities are threatened, diversification helps to spread risk.

B – Business Case

A key part of product management is development of compelling business cases. Without buy-in from senior management to engage resource, money and time, your product is not likely to become anything other than an idea. You need to convince decision makers in your organisation that your product has a market, that people will buy it, that you can sell it and that the return on investment will be more than if the money, time and resources were used elsewhere. Compelling business cases have the following ingredients:

1. Executive Summary
2. Strategic Fit
3. Marketplace Analysis
4. Product Description
5. Go To Market plan
6. Financial Analysis
7. Operational Impacts
8. Risks, Assumptions, Issues and Dependencies
9. Project Plan

C – Customer Needs Analysis

Before any product is designed, developed and launched, it is crucial that you know what customer needs will be fulfilled by your product.

Understanding customer needs is not necessarily an easy task however. Unfortunately, determining the real needs of a potential customer is not as simple as asking them what they want. Many people are unable to clearly articulate their most pressing and compelling product or service requirements because determining how products could or should be improved is not forefront in their mind.

To learn what your customer really needs, you must watch them and talk with them. You must be sure you understand their concerns and overall business issues. Only by thoroughly understanding the broad environment your customer lives in on a day-to-day basis, as well as their specific and detailed issues and concerns, can you apply the creative efforts necessary to design a compelling solution that will be successful.

An approach starting to become more widespread in industry is to conduct in-depth customer research throughout product development and to treat potential customers as participants in the new product development process.

D – Definition Document

In order to develop the right product, everyone involved has to know what you’re developing.  The initial document that spells this out, or is at least supposed to, is a Proposition Definition document, or one with a similar name.  The intent of such a document is to define the features and functions of the product to be built.  At the early stage of a project, this is generally a fairly high-level definition, specifying in fairly broad terms what the product is and does, the types of customers that will use it and potential market size.  Its intent is to provide sufficient information for the requirements to be taken to the next level of specification.  When not done at all, a project will proceed with no real sense of direction.  When done poorly (which happens all too often), it gives only a vague sense of definition and/or direction, leaving what the product really is open to individual interpretation, which is dangerous when working in larger multifunctional teams.  When done reasonably, this document gives a clear definition to all of what the product is.  When done really well, it not only defines what the product is, but also what it isn’t.  By defining what a product isn’t as well as what it is, it prevents people from heading off-track in directions that were not intended.  All efforts should be made to provide a really excellent product definition document, clearly defining what the product is, and what the product is not.

This proposition definition document sets the foundation upon which the product will be based.  A firm foundation provides a stable platform to build upon; a flimsy foundation leads to a platform that can later collapse.  All key departments – Marketing, Product Management, Sales, engineering (including development, test/quality assurance, usability, performance, technical documentation, etc.), customer support, field engineering, business development, manufacturing, finance, and others should be involved to ensure their unique viewpoints are properly represented.

E – Evaluation Gates

During the product development process there should always be some evaluation gates where stakeholders are involved in evaluating progress and permission to proceed:

1. Idea screening

2. Concept screening

3. Business analysis

4. Product testing

5. Analysing test market result

6. After-launch assessment (Short term)

7. After-launch assessment (Long term)

Using these evaluation gates help product developments conform to strategic intent, stay on track and realise the intended customer, operational and financial benefits.

F – Forecasting

Forecasting sales of your new product is not an exact science, but I’ve highlighted below the methodology I’ve used in my career to build up a view before submitting a business case.

1. Determine the total size of a desired market, which is called the total addressable market
2. Decide what portion of that market the product can penetrate, or the attainable market share
3. Work out the number of units or the volume that the sales team can commit to sell
4. Calculate the number of units that can be produced / delivered
5. Determine realistic pricing for the product and how that pricing will vary over time
6. Translate the sales and demand forecast into a realistic budget for the product

G – Governance & Getting things done!

Aside from the New Product Introduction Process (See ‘N’) which will help in stage gating new products, it is hugely important that the senior management team are behind your product development and it’s priority in the organisation. Without this backing, you will spend a huge amount of time fighting for resource, agreeing priorities and re-agreeing them, and slowing your overall project down.

All product developments should also have a senior management sponsor and ideally a project manager (or at least someone on the team with that role) and regular project board meetings to keep the development on track and to expedite any issues. Ideally your key suppliers should be represented on the board.

Your key stakeholders need to be communicated to regularly with project updates, deviations to plan and escalations in order to keep momentum and deliver your new product on time, to quality and to budget.

H – Help Sales to Help You

Sales people are a great source of feedback during all stages of the product life-cycle. They’ll give you feedback on what customers are asking for, the barriers to them selling a particular product or service and also views on how they would like to be remunerated! Building strong relationships with sales people is always a good idea, but by involving them early in a new product development will get them on board and excited about your product way before you launch it. If they’re good, they’ll start talking to customers early and start building pipeline.

A note of caution: Don’t let your sales people start selling your new product until you are very clear and confident with your launch date! Customers get very annoyed when they’ve committed to buying something and the launch is delayed 6 months or longer.

I – Innovation

Innovation is rarely about solving an entirely new problem. More often it is solving an existing problem in a new way. Neither is innovation the sole domain of a product manager or senior management. Ideas can come from anywhere inside or outside of your organisation. The trick is to spot a good idea when it comes.

Many organisations have mechanisms for capturing, filtering and taking the best ideas to a ‘concept’ stage. Once an idea has been registered as having merit, resources are assigned to investigate the marketplace, the opportunity, the business and customer benefits, the likely costs, timeframes and resources required to develop the product.

J – Just In Time

In the 1970s, when Japanese manufacturing companies were trying to perfect their systems, Taiichi Ohno of Toyota developed a guiding philosophy for manufacturing that minimized waste and improved quality. Called Just In Time (JIT), this philosophy advocates a lean approach to production, and uses many tools to achieve this overall goal.

When items are ready just in time, they aren’t sitting idle and taking up space. This means that they aren’t costing you anything to hold onto them, and they’re not becoming obsolete or deteriorating. However, without the buffer of having items in stock, you must tightly control your manufacturing /logistics processes so that parts are ready when you need them.

When you do (and JIT helps you do this) you can be very responsive to customer orders – after all, you have no stake in “forcing” customers to have one particular product, just because you have a warehouse full of parts that need to be used up. And you have no stake in trying to persuade customers to take an obsolete model just because it’s sitting in stock.

The key benefits of JIT are:

• Low inventory

• Low wastage

• High quality production

• High customer responsiveness

K – Kaizen

Kaizen , or ‘Continuous Improvement’ is a policy of constantly introducing small incremental changes in a business in order to improve quality and/or efficiency. This approach assumes that employees are the best people to identify room for improvement, since they see the processes in action all the time. An organisation that uses this approach therefore has to have a culture that encourages and rewards employees for their contribution to the process.

Kaizen can operate at the level of an individual, or through Kaizen Groups or Quality Circles which are groups specifically brought together to identify potential improvements.

Key features of Kaizen:

• Improvements are based on many, small changes rather than the radical changes that might arise from Research and Development

• As the ideas come from the employees themselves, they are less likely to be radically different, and therefore easier to implement

• Small improvements are less likely to require major capital investment than major process changes

• The ideas come from the talents of the existing workforce, as opposed to using R&D, consultants or equipment – any of which could be very expensive

• All employees should continually be seeking ways to improve their own performance

• It helps encourage workers to take ownership for their work, and can help reinforce team working, thereby improving worker motivation

L – Launch

The launch of a product or service needs a GREAT PLAN:-

G – Go To Market Plan

R – Reference Customers

E – End to End testing

A – Advertising Materials

T – Trained Employees

P – Processes Documented

L – Legal Documentation

A – Approval from Stakeholders

N – No Go / Go Decision

M – Marketing Plan

See previous post on A to Z of Marketing

N – New Product Introduction Process

Key to development, launch, management and retiring of products is the New Product Introduction Process. There are many variations of this process, most centre around the following core steps:

O – Operational Processes

A key part of any product development is the creation of, or enhancement to, operational processes. It is crucial that and End to End process review is carried out for the new product or service and the department owners document, sign-off on and embed any changes to their ways of working.

In addition it is important to understand any changes to departmental KPI’s and headcount before launch and that everyone impacted by the product launch is trained to a sufficient level prior to launch.

Post launch, it is also important to invest some time in ensuring that any teething troubles are ironed out quickly and any tweaks to process are documented and people retrained where appropriate.

P – Proposition

The traditional marketing mix consists of four major elements, the “4-Ps of marketing”. As defined by Philip Kotler et al. (1999):

1. Product: “Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. In includes physical objects, services, persons, places, organisations and ideas.”
2. Price: “The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service.”
3. Promotion: “Activities that communicate the product or service and its merits to target customers and persuade them to buy.”
4. Place: “All the company activities that make the product or service available to target customers.”

All of these elements have their specific place in any company’s marketing strategy.

The 7-Ps of Services Marketing

In the context of services marketing, Booms and Bitner (1981) have therefore suggested an extended “7-Ps” approach that contains the following additional “Ps”:

1. People: All people directly or indirectly involved in the consumption of a service, e.g. employees or customers.
2. Process: Procedure, mechanisms and flow of activities by which services are consumed.
3. Physical Environment: The environment in which the service is delivered. It also includes tangible goods that help to communicate and perform the service.

I would argue that all of these combine to become 1P, namely Proposition:

Q – Qualitative and Quantitative Research

See previous A to Z of Marketing

R – Return on Investment and other measures

Knowing your numbers following the launch of a new product or service is crucial. I have listed some of the more common Key Performance indicators below, but you may have others:

Marketing Performance:

Number of leads generated via channel vs target

Cost per lead vs target

Leads converted to sales vs target

Cost per sale

Sales Performance:

Number of sales per channel

Number of sales cancellations per channel

Number of disconnections / leaving the service

% of pipeline converted to sales

Order Intake vs forecast and target

Operational Performance

Net Promoter Score

Number of Complaints

% of orders complete with SLA

Number of customer service / technical support calls vs forecast

Financial Performance

Monthly revenue vs forecast and budget

Monthly Gross Margin vs forecast and budget

Average Revenue Per User or Customer

Total Operating Costs

Return on Investment

S – SWOT

Before any product goes on the market, it’s advisable to carry out an effective market analysis known by the acronym SWOT – strengths, weaknesses, opportunities and threats.

Questions you should keep at the front of mind as you consider the SWOT for your new product:

• What product/s are we selling?
• What is the process we have in place to sell the product?
• Who are the customers, who are the people interested in our product?
• What ways can we deliver the product to the customers?
• What are the finances needed to create and sell this product?
• Who will oversee all the stages from having an idea, to having enough finance to complete the task?

Using a 2×2 grid and a selection of people from your organisation, really analyse where your Strengths, Weaknesses, Opportunities, and Threats are for your market and in particular for your new product or service.

Prioritise them and ensure that any mitigations / activities are built into your plan. Ensure your strengths are clearly articulated in the proposition and opportunities acted upon.

T – Third Party Relationships

In most product developments, you will need to work with third parties to supply goods or services.

The process begins by selecting the right vendor for the right reasons. The vendor selection process can be a very complicated and emotional undertaking if you don’t know how to approach it from the very start. You will need to analyse your business requirements, search for prospective vendors, lead the team in selecting the winning vendor and successfully negotiate a contract while avoiding contract negotiation mistakes.

The most important success factor of managing 3^rd party relationships is to share information and priorities with your vendors. That does not mean that you throw open the accounting books and give them access to your systems. Appropriate vendor management practices provide only the necessary information at the right time that will allow a vendor to better service your needs. This may include limited forecast information, new product launches, changes in design and expansion or relocation changes, to name a few.

Another important factor in building relationships with third parties is trust. Be as open as you can with them and if at all possible incorporate the third-party in you new product development team.

U – User Acceptance Testing

In an ideal world, all projects would allow adequate time for testing. Project teams would plan exhaustive testing for each piece of system functionality and if they ran out of time then they would drop functionality from a release rather than compromise on quality.

With business systems, it’s virtually impossible to test for every possible eventuality. We must therefore ask ourselves what is the most important functionality that must be tested within the available timeframe. The obvious answer is – the business functions that the system will deliver and on which the project justification is based.

User acceptance testing should be performed by business users to prove that a new system delivers what they are paying for. Business users have the knowledge and understanding of business requirements that IT testers do not have. They are uniquely placed to accept or reject the new system – after all they have to live with the consequences.

I would also argue that customer testing is also useful during stages of some product development so that areas such as usability and ease of purchase process as well as FAQ’s are meaningful and so on.

V – Value Chain Analysis

The term ‘Value Chain’ was used by Michael Porter in his book “Competitive Advantage: Creating and Sustaining Superior Performance” (1985). The value chain analysis describes the activities the organisation performs and links them to the organisations competitive position.

Value chain analysis describes the activities within and around an organisation, and relates them to an analysis of the competitive strength of the organisation. Therefore, it evaluates which value each particular activity adds to the organisation’s products or services. This idea was built upon the insight that an organisation is more than a random compilation of machinery, equipment, people and money. Only if these things are arranged into systems and systematic activates it will become possible to produce something for which customers are willing to pay a price. Porter argues that the ability to perform particular activities and to manage the linkages between these activities is a source of competitive advantage.

In most industries, it is rather unusual that a single company performs all activities from product design, production of components, and final assembly to delivery to the final user by itself. Most often, organisations are elements of a value system or supply chain. Hence, value chain analysis should cover the whole value system in which the organisation operates.

A typical value chain analysis can be performed with the following steps:

• Analysis of own value chain – which costs are related to every single activity
• Analysis of customers value chains – how does our product fit into their value chain
• Identification of potential cost advantages in comparison with competitors
• Identification of potential value added for the customer – how can our product add value to the customers value chain (e.g. lower costs or higher performance) – where does the customer see such potential

W – Warranties, Service Levels, Terms and Conditions and Contracts

Whilst legal support should be always be sought when pulling together product conditions of service, it is essential that as the person leading a product development you have a clear view as to what the key conditions of service should be for your product or service. This area, depending on your industry, can be hugely complex and may end up being a critical path activity in your project plan, so it is key that you initiate this activity as soon as your proposition is fully defined.

X – X Functional Teams

Ok, I cheated. Cross-functional teams are key to the success of product management, probably more so than for any other business activity. Products cannot be developed successfully in isolation.

A highly effective cross-functional team includes representatives from across your organisation. Obviously, some people will be busier than others at certain stages in the process, but it’s important that you enrol the cross-functional team from the outset and keep them in the loop. Examples of represented areas in your organisation or even outside may be:

• Project Management
• Product Developers
• Customer Service
• Technical Support
• Logistics
• Information Technology
• Marketing
• Sales
• Pre-Sales
• Legal
• Finance
• Suppliers
• And you should consider having a customer or two on your team!

They will be the champion for their department, bringing information from their function to the product team. They’ll also serve as a product champion, communicating back to their department on the product development and what impacts there’ll be back in the department.

Y – Yield Management

Yield management is the process of understanding, anticipating and influencing customer behaviour in order to maximise yield or profits from a fixed and/or perishable resource. Examples of industries where this needs to be thought about as part of product management are:

Airlines, Hotels, Rentals, Insurance, IT and Telecoms

The core concept of yield management is to provide the right service to the right customer at the right time for the right price. That concept involves careful definition of service, customer, time, and price.

Z – Zappos’ Values

Unless you’ve been living in a cave, you’ll have heard of Zappos. Zappos.com is an online shoe and apparel shop based in Henderson, Nevada. In July 2009, the company announced it would be acquired by Amazon.com in an all-stock deal worth about $1.2 billion. Since its founding in 1999, Zappos has grown to be the largest online shoe store in the world generating $2.1bn in sales in 2011

Zappos employees live by the following values, ones that the best product managers I’ve come across in my career live by too:

1. Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and A Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships With Communication
7. Build a Positive Team and Family Spirit
8. Do More With Less
9. Be Passionate and Determined
10. Be Humble

I hope you enjoyed this A to Z and would love to hear your Product Management stories and successes.

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A to Z of Marketing

The Chartered Institute of Marketing defines Marketing as “The management process responsible for identifying, anticipating and satisfying customer requirements profitably.”

I think I prefer Seth Godin’s description:

The art of telling a story to a customer that they want to hear, that lets them persuade themselves to buy something. Inherent to that story:

1. You have to have something they want. You must not force it on them.

2. You have to be authentic. Tell the truth.

3. Your story has to be so remarkable that people want to tell your story to others.

Whilst the principles of marketing have remained largely the same for some time, the execution, planning, tools and techniques have significantly evolved over recent years. In this A to Z, I’d like to cover some of the fundamentals of Marketing Strategy as well as touch upon some of the newer terms and techniques used in today’s marketing toolkit.

A – Advertising

Advertising is used to describe the whole creative process of communicating a message. This message can be about the social or commercial benefits or the characteristics of a particular product or service. Advertising has evolved into a vastly complex form of communication, with literally thousands of different ways for a business to get a message to a prospective customer. Examples include broadcast (e.g. TV & Radio), print (e.g. magazines and direct mail), outdoor (e.g. billboards and street furniture) and social media (e.g. facebook and twitter).

The process of advertising (or marketing communications) is used to acquire a customer, to keep the customer, and to satisfy the customer’s need (want or desire) for the particular product or service.

B – Brand

A brand is NOT a logo.

Perhaps brand expert Marty Neumeier said it best:

“A brand is not what you say it is. It’s what they say it is.”

A brand encompasses the sum total of how a business, product, or service is perceived by those who interact with it. For employees, it represents their pride in belonging. For suppliers, it governs how they optimise their operations to better serve us. And for customers, a brand is both their belief in who we are and a badge they wear that communicates something about who they are.

For marketers especially, they are ambassadors for the brand and therefore your marketing strategy must stay loyal to your brand, its values and its vision.

C – Customers

Customers should be at the heart of any Marketing Strategy for any organisation. Their characteristics will vary depending on your marketplace, products and services but you ignore them, their needs and their behaviours at your peril. Having a deep understanding of your customer will be at the heart of success of your Marketing Strategy.

We’ll cover a few areas of customer understanding in this A-Z because it is so important, but two specific piece of advice I would give above all others are:

1. Talk to customers – As many of them as you can, as often as you can, as early as you can. Don’t just trust your marketing strategy and its effectiveness to what Gartner or CFI may say (that insight is useful though!) or what a marketing agency may say alone. Talk to customers or prospects about their business, or their personal circumstances; what their challenges area and what’s important to them.
2. Put on your customer glasses – Look at all your customer touchpoints from your customers’ perspective. How would you like to receive information about a new product or service? How would you like to be billed and when? Would you expect to be able to get in contact with a business 24/7? Would you like to buy online or have someone call you or make a visit? And so on. You’d be surprised at how many businesses do things for their own convenience and not that of their customers!

D – Data

Data will make or break your Marketing Strategy and execution. Do you know who your customers are? Do you know what they buy from you, when, how often and why? Do you know what they’re saying about you and where? How happy are your customers and are they recommending you to friends, colleagues or their contacts? What products or services would they like to buy from you in the future?

I would hope you could answer most of these questions, but many companies struggle. Data collection, quality and analysis should form a key part of any business process and getting a single view of your customers in one place is critical.

E – Everything ‘E

Even if your business is traditionally offline, you should actively consider what your online presence needs to be in the future. You also need to consider how much you have to invest in your online presence, what technologies you will need to use and also whether you have the skills in-house to achieve what your strategy dictates. The good news is that there are plenty of really good technology providers and online marketing agencies that can help you, as well as plenty of online cheap resources that you can tap into.

Keep a look out for future posts on Everything ‘E’

F – Focus Groups

Focus groups can be an important and really useful tool for getting feedback regarding new products, packaging, names or new services before they are made available to the public. Focus groups can provide invaluable information about the potential market acceptance of the product or service.

Focus groups are normally conducted by a trained moderator among a small group of respondents which could be prospective customers, actual customers, a combination of the two as well as cross sections from across your marketplaces. The session is normally conducted in an unstructured and natural way where respondents are free to give views from any aspect.

They are normally recorded and attendees are often paid in some way for attendance.

Top Tips:-

1. Attend the session yourself if you can – purpose-built focus group venues often have secondary rooms where you can view the sessions live. By attending yourself, you not only get the see the session and get feedback immediately, you can tweak questioning and throw in ideas during a break in the session to get more out of them.
2. If you can’t attend, watch the audio / video in full. Sometimes well-meaning agencies / staff will distil feedback that will distort the message coming back from the group. I’ve often found discrepancies in feedback in my experience.
3. Focus groups are often expensive and time-consuming to run, and therefore you may not run many at any one time and therefore the sample size is small. You should be cognisant of this and be careful not jump to conclusions if one or two people like / dislike a particular idea /feature / price point etc.
4. Lastly, DO listen. Even if it was your idea and you ‘know’ it’s a good one, if 80% of your focus group don’t like it….don’t do it! I’ve known some stubborn product managers, business owners and senior managers that didn’t listen, went ahead anyway and reaped the appropriate reward!

G – Guerrilla Marketing

Guerrilla marketing “works because it’s simple to understand, easy to implement and outrageously inexpensive,” says Jay Conrad Levinson, the man who coined the phrase.

Consumers have grown immune to big budget advertising, but marketers that expend a bit of time, effort and creativity can generate effective results with inexpensive, small-scale stunts.

There are some great and some extremely cost-effective as well as expensive examples here

H – Hits, Likes, Shares and Followers

Social Media is increasingly becoming more important for marketing in organisations of all sizes and segments. Whether for brand awareness, tracking customer perceptions, driving sales leads or simply to have more conversations with your customers Social Media is here to stay for a good time to come. The important thing to decide is what are you going to use it for, why and how and with what resource?

Please see the following previous Think Oak posts for more information:

A to Z of Business Social Media

The New SMS – Social Media Strategy

I – Internal Marketing

In medium to large businesses Internal Marketing becomes much more crucial to the success of achieving your marketing and organisational goals. Effectively engaging employees in your Vision, Strategy and Goals can have a significant positive impact on sales and profitability as well as the emotional well-being of your people.

A previous post Communicate or Fail will give you a few pointers.

J – Joined up

Joined-up marketing is all about recognising the different ways people interact with your brand. It’s also about putting in place collateral at each of these touchpoints which work together to deliver the right level of engagement and – of course – sales.

Most marketing campaigns and certainly overall strategies these days are not simply delivered via one marketing channel. A mix of online and offline activity is used to get the most impact for your brand.

There are a couple of pitfalls I’ve come across in my career from a marketing strategy execution perspective that I would urge you to think about as part of your marketing planning:

1. Ensure that all your front line people understand your marketing plan, activity and messaging. Your front line people need to know that the phones are going to start ringing and what offers and products are being promoted PLUS they need to be trained on what to expect from customers in the way of questions.
2. If you have commissioned sales people, either direct, telesales or via another channel, you need to ensure that they are ‘motivated’ to sell that product or service, both financially and that they know how to sell it.

K – KPIs

Any Marketing Strategy must lay out and actively monitor and manage key performance indicators (KPI’s).

Below are some suggested must have metrics to measure whatever your marketing strategy is:

1.      Return on Investment (ROI)

This KPI is the single most important KPI for your marketing team to monitor. It provides an honest assessment of your performance so you know which campaigns are generating revenue.

2.      Incremental Sales

This KPI is closely related to ROI and measures the contribution your marketing efforts make to sales. This KPI emphasises the importance of monitoring the effectiveness of each of your campaigns – top marketers meticulously measure each lead, win, and failure that results from their campaign. To formulate this KPI, you need to establish baseline sales and clearly define which channels your marketing efforts are going to affect.

3.      Cost per Lead

This KPI puts the focus on the effectiveness of your campaign at generating leads for each pound / dollar / euro spent. This helps to keep your marketing activities in perspective. Even if you have a pet project that you are particularly attached to, the numbers will not lie. If a campaign isn’t panning out, you need to be prepared to go back to the drawing board.

4.      Conversion Rates

These types of metrics are important because they provide a benchmark for gauging a campaign’s success through to a sale and help you understand where, if anywhere, you are losing sales. As important as it is to monitor your ability to convert visits to leads, you should also measure what leads turn into wins (and what channel they came through). This will help tell you which channels resonate with people ready to make a purchase.

5.      Online / Social Media Reach and Engagement

Whilst some social media activity is connected to customer service and brand building, you do need to demonstrate value for the effort and resource you are investing into social media. Capture the growth in reach and engagement (likes, comments, retweets, shares, etc) for all channels each month, then get to the bottom line.

# Lead Conversions assisted by each social media channel

# Customer Conversions assisted by each social media channel

# Traffic associated with social media channels

L – Lessons Learned

I’ve found that as part of building any strategy, it’s useful to openly review successes and failures from the past, not only from within your business or your market, but from other industries. What can you take from these that you can learn and build upon for your strategy. This should be an ongoing process throughout the life-cycle of your strategy anyway, but as a minimum should be done as part of your strategic planning process.

M – Marketplace Analysis

As part of any Marketing Strategy and its delivery you need a deep understanding of the following areas:

Market Size – Current and Future

Market Growth Rate

Market Trends – Historic and Future

Market Profitability

Customer Segmentation

Competitor Review

I will be covering these areas in much more detail in future Think Oak! posts.

N – Net Promoter Score

Net Promoter Score (NPS) is used by many of today’s top businesses to monitor and manage customer relationships. It is a useful measure of the likelihood of successful WOM (Word of Mouth / Word of Mouse) of your customer base. I would argue that it is only one measure of customer satisfaction that you should be measuring, as by itself does not give you the breadth of detail you’ll need to address any issues that arise.

NPS is calculated from a single loyalty question, “How likely is it that you would recommend this company to your friend or colleague?” Based on their rating of this question using a 0 to 10 likelihood scale where 0 means “not at all likely” and 10 means “extremely likely,” customers are segmented into three groups:

Detractors (ratings of 0 to 6)

Passives (ratings of 7 and 8)

Promoters (ratings of 9 and 10)

A company can calculate its Net Promoter Score by simply subtracting the proportion of Detractors from the proportion of Promoters.

A successful Net Promoter program includes several factors that work together. Although NPS is useful, the most prevalent cause of failure in Net Promoter programs is the inability of the organisation to go beyond the metric and build out a complete operational model with NPS as its centerpiece. The breakthrough in Net Promoter comes from shifting the entire program from a research model to an operational model and embedding it in the business.

O – Organic Growth

Organic growth means expanding your business and increasing turnover by carrying on doing what you’re doing, rather than through acquisitions (buying other businesses) or through moving into new markets. You might move into a new geographic region or use a new sales channel, but you’re still using your original business model. You don’t force growth with outside investment and the rate of growth is more natural – hence the name organic.

As part of your marketing strategy it’s key to understand how you want to grow your business and which growth strategy you’re pursuing. It’s not easy to do more than one at once, without a great deal of 100% focussed resource working on each.

P – Planning

An output of your marketing strategy will be your marketing plan. If your strategy is the what, where and why, the plan is the how, who and when!

Your marketing plan outlines specific actions that you will take to market your product or service potential customers. These actions work to persuade these potential customers to purchase your products or services.

Your marketing plan does not need to be long and it doesn’t have to cost a lot of money to complete. Marketing plans can be a part of your overall business plan or as a singular document. If you think of it as your “roadmap” that will provide you with detailed directions on how to reach your marketing goals.

Top Tips:

1. Ensure that each element of the plan has a clear budget, targets for leads, sales and other outcomes as well as a clear timeline of what is to happen when.
2. Understand how your marketing plans and their outcomes match your overall marketing budget, and forecasted revenues and sales.
3. Have some plan B’s and C’s – What will you do if you don’t generate enough leads and therefore sales as part of your plan?
4. Depending on your businesses markets, products and services you may have very different sales cycles. You need to have a clear understanding of these in order to work on your plan and your targets.

Q – Qualitative and Quantitative Research

Simplistically, research can be quantitative or qualitative:

• Quantitative research provides statistical information – for example, how many potential customers there are and what their average incomes are
• Qualitative research examines people’s feelings and attitudes towards your brand, product or service, and what motivates them

The traditional boundaries between qualitative and quantitative research are beginning to blur. This is occurring as marketing research moves away from a mass-market orientation into an era of ever more precisely targeted niche markets, particularly business and professional markets.

Increased interest in marketing to small niche markets, particularly among business and professional markets has created new opportunities for survey researchers and businesses to include qualitative components to their quantitative research.

I would argue that a key part of your marketing strategy, should be to capture both types of data as part of your business as usual activity so that you can continually monitor sentiment to your organisation and its services.

R – Relationship Marketing

Relationship marketing is all about developing long-term relationships with customers so that they provide you with ongoing business. An organisation must meet customer satisfaction expectations consistently to retain and develop long-term trust and relationships with customers. Traditional transactional marketing used to focus on attracting customers for one-time sales rather than repeat business. It takes a lot of work to persuade customers to make their first purchase with you, but if you can persuade customers to give you repeat business it will cost you less money and time…and build Word of Mouth and in today’s world of social media, Word of Mouse.

Not all business relationships are created equal however. Some customers generate huge revenues without much work on your part. Others make you feel like you’re squeezing water from a stone, and require enormous nurturing and work to extract even a small amount of value. You will be much more successful when you learn to evaluate different types of business relationships, and then focus effectively on those that offer the highest potential.

S – Sales

Marketing is everything that you do to reach and persuade prospects. The sales process is everything that you do to close the sale and get a signed agreement or contract. Both are necessities to the success of a business. You cannot do without either process. By strategically combining both efforts you will experience a successful amount of business growth. However, by the same token if the efforts are unbalanced it can curtail your growth.

I’m referring particularly here where you have telesales or field sales people in your organisation (or outsourced to a third-party).

Marketing has increasingly become about creating and maintaining conversations with customers. There has been a shift from talking at people, to talking to people. This just so happens to be sales peoples’ area of expertise!

A key part of your marketing strategy should include the answers to some of the following questions:

1. Is there a gap between what’s being marketed and what’s being sold? What is it and why?

2. Are the leads you deliver to the sales team of high enough quality to be converted?

3. What has the Sales team learned after a successful, and unsuccessful campaigns? How can this information better prepare your strategy going forward?

4. What information can marketing provide Sales to better complete a prospective customer profile?

5. Have you created a system to ensure continuous feedback between both sales and marketing?

T – Testing

Unless you have an unlimited budget, and you don’t, a key strand of a successful marketing strategy is testing.

Before you invest 20% of your marketing budget on putting an advert in big national newspapers for one day in the year, you may want to test whether the types of customers you wish to attract will a) see the advert, b) read the advert, c) do anything about it.

By testing your market and customer segments using different creative and media, you will be able to get a better view as to what attracts leads to your organisation and what doesn’t. More importantly you need to find out whether those leads convert to sales. It may be that some content may drive significant volumes of calls into your sales teams, that because of the marketing execution, do not convert to new business. Invest small amounts of your budget into new marketing initiatives to test their effectiveness with your prospects – It’s worth it!

U – USP – Unique Selling Proposition

Before you can begin to sell your product or service to anyone else, you have to know what differentiates your product / service from that of your competitors. This is especially important when your product or service is similar to those around you. Very few businesses are one-of-a-kind. Just look around you: How many clothing retailers, air conditioning installers, marketing agencies or supermarkets are truly unique?

The key to effective selling in this situation is what marketing professionals call a “unique selling proposition” (USP). Unless you can pinpoint what makes your business unique in a world of similar competitors, you cannot target your sales efforts successfully.

One way to start finding your USP is to analyse how other companies use their USPs to their advantage. This requires careful analysis of other companies’ marketing messages. If you analyse what they say they sell, not just their product or service characteristics, you can learn a great deal about how companies distinguish themselves from competitors.

Top Tips:

1. Put your customer spectacles on again! – What do your customers really want?
2. Know what motivates your customers’ behaviour and buying decisions
3. What are the real reasons customers buy your product instead of a competitor’s

V – Value Proposition

Now you know your USP, you need to think about how you put that to your prospects – Your Value Proposition. A value proposition is a short statement that tells your prospect why they should buy from your company. It is focused on outcomes. Your value proposition distils all the complexity of the value you provide into something that your prospective customers can easily grasp and remember. This helps spread word-of-mouth marketing and it differentiates you from the competition.

Regardless of the size of your organisation or the type of industry you are in, you should have a value proposition. To help you, here are some guidelines to follow in creating one. A strong value proposition does the following:

• Creates interest, so that your prospects ask questions and want to learn more.
• Differentiates your offer from your competitors’ offers
• Increases the quantity and quality of your sales leads and makes conversion to a customer much easier
• Wins your business greater market share in your targeted segments
• Aligns your business operations more closely to customer needs
• Focuses on your customers’ perspective

A good value proposition includes demonstrated results that will catch the attention of decision-makers – results like increased revenues, decreased costs, improved operational efficiency and so on.

W – Website

Business websites still beat social marketing as a more successful digital marketing method, according to a recent Gartner survey.

A web-site is still a hugely important part of the marketing mix and marketing strategy for the majority of businesses. You should also consider your web presence for mobile devices also, as recent figures suggest that mobile users are more likely to buy if your site is mobile optimised, and more likely to leave immediately if it’s not.

No matter how popular Facebook gets, or how much traffic Pinterest generates, people still turn to Google (and to a lesser degree, Bing,) to find suppliers. Additionally, if you generate a good proportion of your business locally, you really need to step up your local search engine optimisation.

Keep your content fresh, informative and above all make it easy to find information and to buy – it may seem obvious, but you’d be amazed at even the largest businesses that don’t refresh their content more than twice a year!

Digital marketing is expected to grow significantly in importance over the next couple of years according to Gartner with 75% of respondents said it will be very important one year from now, as opposed to 48% who reported it is very important today. And almost 90% of respondents said it will be very important in two years.

X – X, Y & Z Generations

Each generation has unique expectations, experiences, generational history, lifestyles, values, and demographics that influence their buying behaviours. Accordingly, many companies are reaching out to multi-generational consumers and trying to understand and gain the attention of these diverse buyers. Multi-generational marketing is the practice of appealing to the unique needs and behaviours of individuals within more than one specific generational group, with a generation being a group of individuals born and living about the same time.

Generation X was born during 1965-1977 and are in the 36-48 age range

Generation Y was born during 1977-1994 and are in the 19-36 age range

Generation Z was born after 1994 and are less than 19 years old

Depending on your marketplace, generational considerations should be made as well as demographic or vertical ones!

Y – Yesterday’s News

The headlines have been full of business failures over the last 12-24 months. Some very big companies have collapsed because of their lack of marketing vision, strategy and execution. Do not become one of them because of a lack of thought and planning. Invest heavily in your strategy, listen to your customers and learn quickly from executional failures.

Z – Zoom

By Zoom, I mean injecting pace into your marketing strategy and execution. Pace in marketing is more essential today than at any time. In order to move at the pace of the digital and social era, marketing teams must move at blazing speeds. Technology has created a quantum leap in how fast we receive customer feedback, campaign results, and questions from the CEO. Companies that complete rapid cycles of test, execute, learn, and optimise gain competitive advantage. The definition of success is increasingly speed based and you need to keep up!

Quite a lengthy post, so hope you managed to reach the end and got something useful from it! As ever, I’d love to hear from you and get feedback on the post. Until next time.