If you’re like me, life hacks are always welcome when you’re strapped for time. Here are a few quick ways to ensure you are making the most of your settings on LinkedIn so that the next career-changing conversation comes to you. For example, tweaking your notifications can trigger conversation starters with key connections. And, deciding if your email address is visible to your connections can give them another way to reach out to you. LinkedIn is a place where you can focus on the...

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The Marketing budget accounts for more than 10% of revenue in many companies today. As a result, CMOs are often under tremendous pressure to demonstrate their contribution and impact to the business. One proof point is the findings in our MPM Benchmark study Cook Up Your Best Marketing Performance, where 64% of the participants indicated that “the pressure for Marketing to measure its value, impact and contribution is on the rise.”

Clearly Marketing continues to struggle with performance measurement the prerequisite for accountability. This combination of increased pressure and negative C-Suite perception is bringing about the day of reckoning for Marketing. The recent Proof Analytics study reported that 96% of the C-Suite among Fortune 1000 companies believe that “their Marketing & PR Teams as “unwilling or unable” to prove ROI. As a result, many CMOs lack the suport of the C-Suite as revealed in the HBR article The Trouble with CMOS which declared that, “80% of CEOs don’t trust or are unimpressed with their CMOs. It’s no wonder that companies are increasingly turning to Finance and/or Procurement to lead the Marketing accountability and measurement effort.

The struggle with accountability often serves as a symptom of poor alignment. Kimberly Whitler and Neil Morgan posited that “alignment of responsibilities is the critical area where mistakes are made.” Our research and that of others find that CMOs and Marketing organizations that achieve alignment are better able to crack the code on accountability. As a result they are in a better position to avoid receiving budget cuts or their marching papers.

How Three Alignment Steps Improve Your Accountability Success

Darren Bridges, president at Safe Systems, reflected what we hear from many of our customers in the C-Suite, when he said, “Success requires that marketing is aligned to the business and that we can accurately measure Marketing’s impact.” To see a real-life example of an organization refining its alignment to improve accountability, read our case study on his company: Aligning Marketing to Business Results.

The case study explores how Safe Systems went from being activity driven – primarily due to lack of alignment – to having clearly defined business targets and a set of quantifiable business outcomes on which to build a more strategic, measurable customer-centric Marketing plan. You’ll learn how they morphed from having a dashboard that didn’t fully communicate Marketing’s contribution or support decision-making to having a set of metrics for the dashboard that more clearly communicates Marketing’s impact to the C-Suite.

These three alignment steps were crucial to the accountability transformation.

1. Alignment to the Business. At the end of the day, Marketing’s fundamental mission is to be a champion and drive growth by finding, keeping, and growing the right set of profitable customers. Growth is the driving force for any business and a critical aspect of every strategic planning discussion, yet only 22% of the job descriptions Morgan and Whitler studied mentioned how CMOs would be measured or held accountable. Marketing leaders need to form clear strategies for measuring Marketing’s impact and contribution to growth. This requires thinking beyond buckets of revenue and drilling into data on customers and segments. Marketing also needs to facilitate consensus with, and buy-in from, the C-Suite on the measurement strategies.
2. Alignment to the Customer. As a business owner, there are some things I need to buy, such as liability insurance, and some things on which I need to be sold, such as sponsoring an event. It is Marketing’s job to understand the:
   • buyers (and buyers’ needs)
   • buyers’ journey to purchase (and renewal)
   • products (are they bought or sold)
   • buyers’ buying criteria (and how to match solutions to these)
   • buyers’ supplier preferences (and how to become the preferred supplier)

This is the nuts-and-bolts, non-sexy work of Marketing that often requires data and research. It is from this work that Marketing defines the key stops along the customer lifecycle – from contact to connection to conversation to consideration. Armed with this information, Marketing determines the appropriate positioning, effective messaging strategy, programs, tactics and associated channels, and activities and can establish the performance targets and relevant metrics.

3. Alignment to Strategy. When Marketing is aligned it can serve as a strategic asset to the organization and enable the organization to make strategic decisions. In our MPM Benchmark Studies, no Marketing organization earned higher than a 7 out of 10 on their ability to provide data that is relevant to business decisions. A business should make data, analytics, process, and MarTech investments within the context of what the business needs to grow.

The recent explosion of digital technology has changed how we experience the world. When was the last time you listened to a CD? Caught a taxi? We’re willing to bet you stream your music and use Uber or Lyft. The marketing world has shifted to digital too.

That shift has put new stressors and challenges on today’s CMOs. Challenges like digital transformation, new business accountabilities, and the need to pivot company culture towards customer centricity. The Strategic Marketing Operations Function has evolved to meet these challenges, helping CMOs become agents for change in their firms.

Let’s talk specifically about the challenges facing CMOs today:

• Digital transformation
• Business accountability
• Customer centricity

Challenge #1: Digital Transformation

Digital transformation is a huge challenge in the CMO’s world today. Today’s executives estimate that, at best, their companies are 25% of the way towards realizing the end-state vision for their digital programs. And 33% of organizations see digital transformation as a huge challenge.

Over half (52%) of senior executives cite a lack of familiarity with technology to be a barrier to digital transformation. And marketers are not confident in their digital ability. Only 48% say they feel highly proficient in digital marketing.

At the same time, the majority of companies (87%) think that digital transformation is a competitive opportunity. And 27% of senior executives think digital transformation is now a matter of survival.

Digital transformation requires technology, so how much do we have to choose from?

Clearly, choosing the right tech is a challenge all by itself.

Challenge #2: Business Accountability

The second challenge is business accountability. According to CMOStudy.org, 80% of CMOs feel pressure to deliver ROI, revenue and growth, but only a third report financial results.

For the CMO, financial accountability is essential to drive a true “C” spot at the table. With financial metrics accountability, the position of the CMO becomes boardroom relevant. This switches the focus from marketing being a “nice to have if we can afford it” to a true driver and supporter of the company’s revenue growth strategy that is a “must have” to succeed.

Challenge #3: Customer Experience

The third challenge is customer experience and customer centricity. According to Jerry Gregoire, former CIO of Dell, “The customer experience is the next competitive battleground. It’s where business is going to be won or lost.” Gardner predicts that by 2018, more than 50% of organizations will redirect their investments to customer experience innovations.

Bringing It All Together: The Strategic Marketing Operations Function

A regular marketing ops group is not prepared to face these challenges. A strategic marketing ops orientation is required.

Marketing operations is a capability. If someone leaves the organization, the capability does not. It is driven by strategy and operationalized through people, process, data and technology. It delivers a business result.

A regular marketing operations charter focuses on improving the efficiency and effectiveness of marketing through people, process, technology and data to help marketing achieve operational goals.

A strategic marketing operations charter still focuses on improving the efficiency and effectiveness of marketing through people, process, technology and data, so that marketing can enable digital transformation, drive business accountability and help lead customer centricity.

In our recent webinar, we conducted a poll of our participants. We asked them which of the following CMO initiatives were supported by their marketing operations function. These were the responses:

The Marketing Operations Maturity Model is a powerful tool you can use to benchmark your progress towards strategic marketing operations maturity.

Learn more about the strategic marketing operations function by downloading our recent webinar, hosted by Debbie Qaqish, on the strategic marketing operations function and how it can be leveraged by CMOs today.

The Strong Towns movement offers a radically different prescription for our cities and towns than the ones that have often dominated policy-makers’ thinking. Where they look for silver bullets, we look for humble, low-risk experiments. Where they look for audacious visions of what ought to be, we look to cultivate places that can evolve and retain their value in the face of an uncertain future.

One question we get asked a lot is simple: why incrementalism? Why this obsession with small, tactical actions? The problems that face us are both staggering in scale and ubiquitous in spread. Shouldn’t we be focused on aggressive, top-down action—state and national policy—that could have an impact on these issues everywhere?

The answer to this question is complex, and you can ask us more about our strategic vision at one of our two live ask-us-anything Q&A sessions this week: we have an open Slackchat tomorrow at 12 pm CST, and a members-only webcast Friday at 12 pm CST.

But this post gives one piece of that answer. One reason we are committed to bottom-up change, and to initiatives that start out small and are scalable, is because that’s where the bang for our collective buck is. That’s where the real return on investment is.

Our neighborhoods, towns, and cities are absolutely full of little things that have been neglected, and that have grown into opportunities. We’re talking about places where we can realize not only a modest return on a large investment, but a huge—500%, 1000%, 5000%—return on a modest investment. This is the kind of change a group of committed citizens can make without any government help, which we know can sometimes take a while. And once that change has been made real, we can keep it going by iterating: looking for the next small step, or scaling up what worked well and discarding what didn’t. Over and over and over a thousand times.

This is how strong citizens build strong towns.

Want to support our message of bottom-up, nimble, grassroots action that responds to real needs? Become a member of the Strong Towns movement today.

Join the Movement

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What Would You Do With $1000?

A while ago, we posed a question on Twitter: “What would you do for your town with $1,000?” Strong Towns member Joseph Molnar thought, “I literally did that.” Here’s the story of the initiative he launched, ReForest South Bend.

Joseph became a homeowner in 2016 in South Bend, Indiana. A month later, a tornado took out seven trees on his block, including the street tree in front of his own new house. Joseph immediately noticed that it changed the feel of his street—dramatically, and for the worse.

It wasn’t just more hot sunshine in the summer. The loss of the trees also affected traffic. The street trees had acted as a visual barrier—what engineers call a traffic calming device. They had narrowed the perceived width of the street, and blocked portions of drivers’ field of view, causing them to slow down and drive more cautiously. With the trees gone, Joseph saw a lot more fast and reckless driving, on a street where children lived and played.

Looking into why this was the case, he stumbled upon some of our articles, including this ever-popular one by our long-time contributor Sarah Kobos: The Magic of Tree-Lined Streets. 

New street trees destined for Joseph’s neighborhood in South Bend, Indiana

Joseph lives in a traditional neighborhood developed in the 1920s and 1930s. It’s near downtown South Bend, and every block is closely packed with single-family homes. Joseph works for the city, so he was aware of efforts on the city’s part to bring back its traditional urban fabric through steps like reverting one-way streets (which function like high-speed drag strips) to allow for two-way traffic, restoring on-street parking (a safety buffer between pedestrians and drivers downtown), and undoing other mid-century mistakes. But the city, he saw, couldn’t be everywhere at once—and Joseph couldn’t wait.

Because in his neighborhood, people were speeding—up to 40 or 50 miles per hour. “I have a little girl, and another one on the way,” thought Joseph. “People are going to be playing in the street. We need to do something.”

The neighborhood trees had been planted when the houses were built, and nearly a century later, many were dying of old age and disease—not just because of the 2016 tornado. Joseph decided to launch an effort to reforest the neighborhood and start to restore the shady paradise that the original designers had intended. Those developers had put a tree in front of every single house: 750 houses, 750 trees. “This is what people did in the past, and they did it for a reason, right?” thought Joseph.

Joseph reached out to the local chapter of the Awesome Foundation, an organization that describes its mission as “advancing the interest of awesome in the universe, $1000 at a time.” Each chapter gives micro-grants—always $1000, no more—to a wide range of projects its local trustees deem worth supporting.

Thomas Wicker and Joseph Molnar distributing trees for ReForest South Bend

Joseph got his grant, and it allowed him to buy 47 trees and distribute them between two neighborhoods. The original plan was to buy 100 to 150 smaller seedlings, but a conversation with a forester convinced Joseph to do fewer trees and buy bigger ones, about 8 feet tall. This, along with focusing the planting on just a couple streets to concentrate the impact, made for an immediate, visible difference: a proof of the concept that street trees can radically transform a place for the better.

“This was me and a truck,” says Joseph. He gave away the trees for free—all the homeowner had to do was plant and care for their new deciduous friend. Some people wanted to put their tree in a front yard or backyard, and dropped out of the program when they found out it had to be along the street edge. But to Joseph, putting the trees along the street was the whole point. This project was not just about the environmental impacts of trees, but about the ways trees contribute to good urban design and slow traffic.

Not that the environmental benefits aren’t substantial too. South Bend has suffered two major floods in recent years, one of which forced it to briefly shut down its water treatment plant. New street trees will help the next time a major weather event like that happens: studies show they can dramatically reduce stormwater runoff.

For Joseph Molnar, the biggest lesson from this project is that you don’t need much to make a difference. A $1000 grant, one guy and a truck were able to deliver an economic return for the town that will be many times the initial investment.

And it’s never just about one effort in isolation. Good ideas and initiative are contagious. A couple people who did not participate in Joseph’s program have already contacted Joseph saying that they planted trees on their own.

Making your place stronger is contagious. Once everybody sees how it works, that snowball starts rolling downhill. Kudos to Joseph and our other members doing the little things in their own towns—and no matter what you’re doing to make your place stronger, we hope you join them.

Join the Movement

(Cover photo courtesy of U.S. Forest Service via Flickr)

Despite the apparent trade-off between privacy and efficiency, authorities across the globe are intent on becoming known for achieving smart city status and for the right reasons. Politicians are seeing the real benefits and cost savings that smart city initiatives can provide, and as citizens we need to get used to the idea of our towns collecting and making use of more and more data to reshape the world around us for the greater good.

As the number of connected sensors, machines and devices rapidly grows in crowded cities, the data generated will provide the ubiquitous big data that we often hear about. But we are only just beginning to realize the value in a network that increasingly consists of everyday objects. Everything from buildings, energy, traffic flow, education, healthcare and even elevators contains information that represents both the daily grind and natural flow of every city.

This increasing volume of data that is generated every second of every day should and will be put to great use in the months and years ahead. Now that we have fully embraced the concept of smart devices with our phones, and we are beginning to experience it in our cars and homes, it’s only natural that we now look to make our cities much smarter too.

Although we are slowly obtaining a greater understanding of the data that surrounds us, the good news is that positive results are already happening. Authorities are faced with a double-edged sword in which almost every choice comes with a compromise. For example, video surveillance in high crime areas has proven to reduce crime rates from 5% to 20%, but as a society, are we willing to reduce crime by introducing cameras watching our every move? This is the kind of trade-off we will have to face if we want to dramatically lower crime rates.

The traffic in every major city across the world is probably our biggest concern, given we have all experienced gridlock. Once again, technology comes to the rescue. Traffic signal optimization has shown to reduce travel times by up to 20%. And let’s not forget the joy of trying to find a place to park. The average person spends 18 minutes per day trying to find a place to park. Smart parking systems can reduce up to 30% of congestion without authorities even needing to build new lanes and roads.

There is already a wealth of statistics available now that major technology research in cities has revealed the scope of the cost savings. For example, 40% of municipal energy costs comes from street lighting. Intelligent lighting can reduce energy costs by up to 20%. Lansing, Michigan, put in smart street lighting and was able to reduce costs by 70%, a big win for the mayor who championed the initiative.

As a word of caution, it appears that we are still very naive when it comes to security and our responsibility in this digital age. With so much of our lives and infrastructure getting connected, we all need to step up our game and appreciate the implications of ignoring security warnings.

For example, a recent report revealed how vulnerable our hospitals are to cyber-attacks and hackers. Maybe it’s our self-awareness that is in need of a 21st-century upgrade. In years past, 18 USB sticks were dropped purposely on multiple floors of a hospital. Within 24 hours, one of them had been plugged into a nurse’s station, infecting the network with malware, which gave the hackers access to the entire network.

With the majority of public-serving institutions at risk from hackers intent on causing chaos and disruption, it’s more important than ever to re-evaluate your level of security and threat prevention. Threats can appear in many different forms, such as ransomware that will lock all files and demand payment to unlock your data. The only positive aspect of ransomware is that it informs the user instantly of an infection.

However, there is also much stealthier malicious software that can be secretly stealing data or compromising systems completely under the radar of the establishment. Eliminating these risks by upgrading old systems is key, but so is educating users about understanding the vulnerabilities in the workplace and how to prevent them.

The creation of closed systems with hardware-embedded security will make it easier to predict and prevent cybercrime. Crime will continue to be a risk, but new advanced intelligent systems can help predict an attack and prevent it before it happens.

These security challenges should not damage the level of excitement and energy around the future possibilities. In this digital transition, we are merely taking another brave step forward, and there is no doubting how cash-strapped local and state agencies can become more efficient by better using data and implementing new technology.

Many large companies are involved in making cities smart, including Cisco, IBM, and Siemens. Cisco will happily advise governments that a smart city can save energy by 20%, reduce water consumption by 50%, crime by 20%, traffic by 30%, and so on. These facts, backed up by data, will be tough for those in control of budgets to resist.

Businesses, local and state agencies, committees, etc., will always be cost and data driven. Our evolving digital economy will ensure that smart cities, IoT, and local services will all become a natural part of our lives. Yes, there will be security and even privacy challenges, but this is a hard trend that will happen, so the time to start solving predictable problems is before they happen.

Many of our fears of a technology-fueled dystopian future are based on fictional literature and Hollywood movies. But we seldom stop to think that our future reality could be quite different from 1984 or the rise of machines that the Terminator franchise warned us about.

Real life is not always as interesting as art. The implementation of computerized sensors for nearly everything we know and love to drive down costs and improve efficiency could be as exciting as it gets. Is it such a bad thing?

Eliminating waste, intelligent traffic management and vast improvements to public transport during peak periods are mouthwatering prospects on their own. The belated arrival of e-government services, allowing faster access at a lower operating expense for taxpayers, should also be enough to convince even the biggest cynics.

I don’t believe this is an either-or situation. Technology should be able to improve every aspect of our lives in our homes, cities and world. We now interact with each other more than ever before, not less—contrary to popular opinion. The rise of the global community is enabling a greater understanding that shapes our world view and challenges age-old stereotypes.

As citizens of a global community, we expect our smartphones to provide us answers to any questions as they pop into our heads. We have developed an insatiable thirst for real-time information. Reliability and simplicity are expected to be standard, meaning this is how cities will soon be judged by both their inhabitants and visitors.

We now connect and interact in many different ways, which illustrates how technology is bringing us closer together. The real spirit and character that live inside every city across the world do not need to be sacrificed and will continue to thrive as long as we work to keep the best of our past and present, as we build a better future together.

Concentrating on resisting change or fearing the unknown is counterproductive. I have advised major businesses and governments for decades that the best way to improve planning is by learning to separate hard trends, the trends that will happen, from soft trends, the trends that might happen, and use this knowledge to shape the best future possible.

Originally published here.

Simon Deakin explains in this audio podcast that Britain’s low-wage, low productivity economy is the result of 40 years of neoliberal economic policies.  While some on the Left think that Brexit will allow a reset of British economic policy, this view is implausible. Even a benign or ‘soft’ Brexit will cause a shock to Britain’s trading relations that will have long-lasting consequences. If there is a hard, no-deal Brexit, the effect will be akin to ‘shock therapy’ of the kind inflicted by neoliberal policy makers on the former Soviet Union in the early 1990s.

The likelihood is that there will be a deal before next March, so avoiding the worst-case scenario.  But, at that point, the UK will enter into a ‘transitional period’ which could last several years, since there is very little prospect of a quick resolution to negotiations on a UK-EU trade deal.

He explains: “I think it is extremely unlikely that we will have arrived at a free trade deal with the EU by the end of December 2020 because it isn’t enough time to resolve some very complex matters and the EU won’t just roll over, that is now obvious, to whatever the UK is proposing. The EU is going to drive a very hard bargain and this is especially the case if the EU believes that the goal of the Brexiters is to undercut the rules and regulations of the single market. The purpose of Brexit for many of its adherents is, it is obvious, an undercutting of labour and environmental standards.  And the EU is not going to give us a generous Canada-plus-plus free trade agreement, if it believes the whole point of this is for us to undercut them.”

Trading places

Deakin continues by elaborating on the link between regulation and trade.  “The critical thing with Brexit is to think about trade and regulation as being two sides of the same coin. When we talk about international trade we are really asking, which regulatory regime do we want to sign up to? Inside the single market there is high degree of harmonisation and convergence of rules, or what is sometimes called alignment. Regulatory alignment is the condition of frictionless trade in the European single market. It is a uniquely deep international trading arrangement because of the high degree of regulatory compliance that goes with EU membership. We can’t achieve regulatory autonomy post-Brexit without giving up frictionless trade. So UK policy makers have to think about the consequences of moving away from the single market. The first impact will be felt in those industries which rely upon regulatory alignment in order to function. For the car industry, and large manufacturers like Airbus, European supply chains will be very negatively affected by regulatory divergence.  That is why it is not surprising to hear that the car companies are going to put their production on hold if there is a prospect of a hard Brexit. They have said that they will pause their production lines for a while to see how their new supply chain arrangements can work. That will have a very serious impact on jobs.”

The EU will be unwilling to sign a “deep and enduring” free trade deal with the UK: “We will get a minimal free trade deal with the EU if we say we are aiming for regulatory autonomy.  Although the government has said it is going to maintain labour and environmental laws post Brexit, these are political declarations not binding legal rules. At the moment we can’t undercut single market standards but the whole point of Brexit is to change this. Political words in this context matter less than hard legal reality.”

Deakin says during the transition the UK can begin negotiations with third countries but these potential deals will be clouded by continuing uncertainty over the UK’s relationship with the EU trading bloc and so are unlikely to make much progress.  Because the effect of leaving the EU will be to terminate trade deals which the UK currently has with over 50 third countries, Brexit will disrupt the UK’s trading relationships well beyond Europe.

No jobs bonanza

He predicts that restrictions on migration from the EU after the transition period ends will not result in more jobs for British workers. The British government is likely to extend bespoke arrangements to allow firms in sectors such as agriculture, hospitality and construction to employ foreign workers outside the scope of British labour laws.  In some sectors, employers faced with rising wage costs are likely to respond by investing in labour-saving technologies, but that while this will improve productivity, it will not lead to net job creation.

“The idea that after Brexit jobs that would previously have been taken by mainland European citizens will suddenly become available to British workers doesn’t follow as they will probably be lost to labour-saving technology and bespoke migrant labour arrangements.”

Deakin also argues that if the UK decides to become a low regulation, low tax regime, undercutting the EU after Brexit, the chance to realign its economic model will be lost.

He says: “This is the debate that needs to come out into the open because it is the issue that is really driving Brexit. The Brexiters argue from a libertarian, deregulatory position.  They want a small state and the removal of social protections. We need to think about what are the pros and cons of shifting our regulatory model away from the mainland European model to something that would be very, very, different; a world in which our current food standards, our health and safety standards and our standards on workers’ rights simply do not apply anymore and we are constantly using our new found so-called freedom to undercut our European neighbours.”

He adds: “I do not see a future for this country which is a good future in undercutting social and environmental standards. We can more productively use our natural and human resources through better, not less, regulation. High environmental and social standards are conducive to efficient use of capital and labour and are needed for innovation.”

Deakin says that the deregulation that Brexit would bring about would leave the country “poorer and more exposed to risk”.

Project Fear no more

He also explains why economic forecasts of the negative effects of Brexit, far from being part of ‘Project Fear’, have underestimated the full shock it will inflict.

“There are so many things in an economy that critically matter but which can’t be easily measured and regulation is one of them. There are so many moving parts, labour, capital and product markets interact, it is very difficult to model these convincingly.  Models tell us something, but their predictive value is limited.  It may be more meaningful to look to history to understand the impact of Brexit in terms of the disorganisation of the economy which it will bring about.  We need to think about historical precedents for a complete dis-embedding of a country’s institutional framework.  A hard Brexit could be something like shock therapy in the former socialist countries; hopefully not as bad as that but dis-embedding our trading relationships with the EU and third countries at the same time as removing many of the rules governing the economy would still be catastrophic. This would be the effect of a hard Brexit.”

The right response to the Brexit debate, he suggests, is to use the opportunity it presents not just to reset British economic policy but to take the argument for a fairer and more sustainable economy to European and global levels.

He argues: “We need to make the case for a different EU. If we think that the EU has become too neo-liberal and too deregulatory, that is correct: this is the irony of the Brexit debate. If we think that the economy needs to change, we should be making the case for this in Brussels and not just in Westminster. Whatever we decide over Brexit will inevitably be affected by the European and global context.  We need to make the case for change not just in Britain and the EU but in the WTO”.

“I would turn the argument of the Brexiters on its head. Brexit is the goal of those who support further deregulation. They are losing the argument on its merits so for them, Brexit is the last chance. If we want a new model, we should reject Brexit, but that will not be enough.  We need to make the case for a new regulatory settlement which will address the true causes of the malaise affecting Britain: inequality and the erosion of our productive economy.  And at a global level we need to make the argument for policies aimed at achieving social and environmental sustainability.’

 

On 16 November 2018 the SRI and the CBR, the Centre for Business Research, University of Cambridge, are holding a conference in Cambridge on Brexit with the aim of encouraging interdisciplinary discussion amongst academics and further research on the implications of the UK leaving the EU for public policy.

This is the third of a series of podcasts which the Public Policy SRI has commissioned with key speakers involved in the Cambridge event. Professor Simon Deakin was in discussion with CBR Policy Associate Boni Sones OBE.

Social Europe

I can imagine the raised eyebrows, the questioning expressions, and the thought, “What the hell is he talking about now?  What kind of esoteric journey is he dragging us on?”

Some might glibly say, “Well to solve a problem….”  Which is correct, kind of….

But most sales people seldom think about the purpose of buying.  A customer wants to buy, sales people immediately leap to selling, knowing the purpose of selling is to get an order.*

At best, we focus on helping the customer buy, but seldom pause to think about the purpose of buying.

Buying doesn’t exist in a standalone context.  Buying, in itself, doesn’t solve a problem.  Buying always exists in a larger context of something the customer is trying to achieve.  Yet, as sales people, at best we isolate our “helping” the customer to their buying activities and our consequent selling activities.

But what if we started trying to probe a little deeper to understand the purpose of buying?

Why are they buying?  Perhaps to solve a problem/address an opportunity.

Why do they want to solve the problem?  Perhaps because it is preventing them from doing things that are important to them.

Why are those things important to them?  What are the consequences of not doing those things?

Why have they chosen to achieve those things in the way they are, with this particular problem/project?  Are there alternative approaches they considered in solving the problem but have chosen not to do?  Why did they choose not to do those?  And the answer to this has absolutely nothing to do with your competition, but may be the source of your real competition.

Buying never exists in isolation, but is always just a part of what the customer is trying to do and the result of a number of choices they make (or should have made) to get to the part that involves buying.

But we limit ourselves and our ability to engage the customer in meaningful ways by just focusing on buying.  Or in the worst, focusing on selling.

What would happen, if we started understanding the customer’s purpose of buying?  How might we and the customer be more successful?  How might that increase the value we can provide?

 

* This post was provoked by Charlie Green’s great post, The Purpose Of Sales.

 

Large companies, small businesses, and sole proprietorships incur expenses when purchasing equipment, office furniture, or even a coffee machine for the break room. Since these business assets are often used on a daily basis, they tend to wear down over time.

If you're an entrepreneur, you'll have to account for your business' assets according to the generally accepted accounting principles (GAAP). There are a few ways to calculate depreciation, but straight line depreciation is the simplest method used by accounting professionals.

Depreciation is recorded on the income and balance statements and it's a key component in understanding your business' profitability. Let's take a deeper look into what it takes to calculate an asset's depreciation using the straight line method.

What Is Depreciation?

Depreciation is a reduction of a fixed asset's value over the time the asset is used. The value decreases due to wear and tear from its use. And with the straight line depreciation method, the asset's value is reduced by the same amount each year until the end of its useful life.

Examples of fixed assets that can be depreciated are machinery, equipment, furniture, and buildings. Land isn't depreciated because it doesn't lose value, instead, it often gains value over time.

Each depreciation expense is reported on the income statement for the accounting period, and most businesses report on a 12 month accounting period. The cumulative depreciation is recorded on the balance sheet, and it displays the total depreciation amount from the date the asset was acquired to the date on the balance sheet.

Below are a few terms that play a role in straight line depreciation:

• Asset cost: The asset cost is the total price of the asset including shipping, delivery, fees, etc.
• Useful life: This is the estimated lifespan of an asset, and an asset is depreciated over the course of its useful life. This value is measured in years.
• Salvage value: Salvage value is an asset's value at the end of its useful life.

When an asset reaches the end of its useful life or is fully depreciated, it doesn't necessarily mean the asset can't be used. The business can continue to use the asset if it's still functional, and no longer has to report an expense.

How to Determine an Asset's Useful Life

If an asset's useful life is greater than a year, it can be depreciated. And the IRS created a table for standard useful lifespans businesses often use. Here are a few of the estimated useful lifespans:

Five Years

• Cars and trucks
• Computers
• Office machinery (e.g., copy machines, calculators)

Seven Years

• Office furniture (e.g., desks, file cabinets)
• Agricultural equipment and machines

These estimates were developed to reflect the amount of time a business will benefit from the asset. And they don't necessarily mean the asset will last for the entire estimated useful lifespan.

How to Calculate Salvage Value

The salvage value is an estimate of how much an asset is worth at the end of its useful life. You'll want to consider two things when calculating the salvage value:

1. How long you plan to use the asset
2. How much the asset is used

If a business intends to use a relatively inexpensive asset for a long time, like a desk or a laptop, then it's common for the salvage value to be zero. And if the business plans to sell the asset before the end of its useful lifespan, the salvage value is likely higher because there's still time in the asset's useful life.

Once you've determined the asset cost, salvage value, and useful life of your asset, it's time to plug these numbers into the straight line depreciation formula. Here's what the formula looks like when it's written out:

Annual depreciation expense = (Asset cost - Salvage value) / Estimated useful life (# of years)

And below is an example of straight line depreciation in practice.

Straight Line Depreciation Example

Let's say a coffee shop purchased a new espresso machine. The asset cost is $5,000 and it has an estimated salvage value of $2,000, plus a five-year useful life. Here's how the coffee shop would calculate the depreciation expense for its espresso machine:

Annual depreciation expense = ($5,000 - $2,000) / 5

Annual depreciation expense = $600

For each accounting period, or year, the coffee shop would depreciate the espresso machine by $600. As the asset approaches the end of its useful life, it will eventually depreciate to its salvage value once the end of its useful life is reached.

Straight line depreciation allows you to use an asset and spread the cost across the time you use it. Instead of one, potentially large expense in a single accounting period, the impact on net income for each period will be smaller. After calculating the depreciation expense, you'll know how much of the asset's total cost should be expensed each period.

The straight line depreciation method ensures assets are accurately accounted for in a business' financial statements. If you're looking for resources to help with your finances, check out these small business accounting software and free accounting software options.

The proposed strategy relies on manipulating with high precision an unimaginably huge number of variables

Does the perfect B2B marketing technology stack exist?

According to the State of Marketing Technology 2018 report, 69% of respondents believe “the perfect marketing stack does not exist yet.” And if you’re waiting for it to happen, don’t hold your breath. The “perfect stack” will never exist. There is no one-size-fits-all when it comes to B2B marketing technology. Each organization must build a solution that fits the specific needs its business.

It’s not a matter of the biggest stack with all the bells and whistles; it’s a matter of building the best architecture to align with your strategy and meet your marketing goals.

Savvy B2B marketers understand that customizing a smart technology infrastructure takes careful planning. Of the marketers surveyed for the State of Marketing Technology 2018 report, 73% say they “have either created or plan to create a formal methodology for accessing their stacks.”

To build a best-of-breed solution, start by establishing a solid baseline. Understanding your organization’s needs and processes should be the foundation of your MarTech strategy.

How to Build the Best B2B Marketing Technology Stack for Your Business

Your ultimate B2B marketing technology stack supports and enhances your organization’s processes. It’s the backbone of operational efficiency and provides clear support to reach your objectives. With an understanding of the tech portfolio, needs and challenges, organizations can begin to research solutions.

While specific software and tools can vary dramatically, there are several MarTech categories to consider:

1. Crucial software for any B2B marketing organization. From our view, there are four types of tools that fall into this category: CRM, marketing automation, website CMS and demand orchestration software.
2. Tools that facilitate engagement at specific stages in your buyers’ journal
3. Technologies that are used by your internal teams for process and efficiency
4. Broad capabilities important to most organizations

For a deeper understanding of how we view these categories, check out the 2nd Edition of the Marketing Tech Blueprint Workbook. It contains a framework you can apply to help your organization make sense of your current stack and guide future tech investments.

Step #1: Understand Strategic Goals

Software is a tool, not a band-aid. Before building your stack, it’s essential to assess your organization’s needs and strategic objectives.

Reckless tech investment on new software and solutions rarely ends well. Scott Vaughan, CMO of Integrate, participated in a MarTech evaluation which discovered just 11 out of 80 software investments were being used by employees. A strategy-led mindset is key to avoid wasted tech investments.

Scott encourages organizations to view their tech portfolios with an investor’s mindset, instead of just acting like a buyer. He writes:

“It’s not about acquiring more or the latest technology that determines our success; it’s about becoming a smart investor who can effectively manage a portfolio of marketing technology assets and liabilities that you can put to work.”

Building a MarTech stack that delivers ROI requires marketers to align their tech strategy with their organizational goals.

5 Examples of Strategic MarTech Objectives

1. Increase revenue: Meet specific revenue growth targets and marketing-attributed pipeline benchmarks.
2. Promote customer value: Increase brand value in the mind of the customer.
3. Increase cross-sells and upsells: Adopt a full-lifecycle approach to marketing to create more revenue from existing customers.
4. Enhance the customer experience: Improve customer satisfaction, including customer engagement, retention, referrals and advocacy.
5. Improve operational efficiency: Reduce time investment and wasted budget.

By approaching MarTech investment and assessment with clear business cases, internal investors have a rubric to measure the value of potential solutions.

Step #2: Assess the Existing MarTech Portfolio

Before you can build a kick-ass MarTech stack, you need a thorough understanding of where you stand today. This should generally be a collaborative effort between marketing, sales and other stakeholders.

Comprehensively assessing your current state goes beyond compiling a list of the technology you use today. It requires asking questions about integrations and the value of existing software investments such as:

• Which technologies are used by which marketing team members?
• Which are used beyond marketing by sales, customer success and others within the organization?
• Is each technology internal or external facing?
• How does it align with your buyer’s journey?
• Which systems are integrated?
• Is the software mission-critical, or complementary to a mission-critical technology?
• Does the technology automate a manual process?

These are just some of the questions to ask as you take stock of your current investments. The 2018 B2B Game Changers recommend some additional questions in the Real Revenue Marketing Strategies to Advance Your Game eBook. You can grab a copy of it here.

Step #3: Define Processes and Identify Needs

Mapping your existing technology portfolio to your current processes is one way to identify opportunities for improvement.

Mapping B2B Marketing Processes

Start by documenting all the actions required to generate demand. This likely includes: planning events, executing paid campaigns, content creation and lead generation. But it doesn’t stop at the activities you use to capture prospect data.

It also includes all the steps involved with getting that data into your systems. For instance, if you’re running lead generation campaigns on LinkedIn, how often does your team log into LinkedIn to download lead reports? Do they take any measures to ensure those leads are valid? How do you map them to individuals accounts or opportunities?

Then think through your mid-funnel activities like nurturing and lead routing. And be sure to document your processes for analysis and optimization.

Connecting MarTech to Process

Once you have a complete list of processes, you can begin aligning your technology to identify areas of redundancy and opportunities for improvement. For each identified process, answer the following:

• What software or technologies are used to support the process?
• Which integrations support automated data flow in and out of this process?
• Which individual or team owns the process?

Identifying Gaps in MarTech and Process

A marketing tech blueprint is a visual map of your marketing technology that can help you see the big picture of your tech stack. It gives stakeholders a common view to understand how your tools and processes work together. Here’s an example of Integrate’s MarTech blueprint.

3 Questions to Evaluate MarTech Needs

1. Which processes are manual instead of automated?
2. Where are the roadblocks, including time-consuming processes, areas where the program is struggling to scale or consistent delays?
3. What could perform better, such as software which frustrates employees?

3 Types of Essential MarTech

Regardless of an organization’s size or maturity, there are three types of software that are absolutely critical. At a bare minimum, any MarTech stack must include a marketing automation platform (MAP), customer relationship management (CRM) solution, and a website content management system (CMS). As marketing orgs work to get revenue focused, there’s an additional that’s rapidly becoming an essential component of a holistic tech stack that’s built to drive revenue at scale – Demand Orchestration Software.

1. Marketing Automation Platforms

A MAP supports efficiency in B2B organizations by automating marketing tasks such as inbound marketing, email marketing, social media, etc. Providers in this category include Marketo, Oracle Eloqua, HubSpot, Pardot and dozens of others.

2. Customer Relationship Management Solutions

CRM is a comprehensive database for customer engagement and account management. While some MAPs, like HubSpot include a CRM, more robust solutions include Salesforce and Microsoft Dynamics.

3. Content Management Systems

A CMS provides the foundation for multiple collaborators to create and publish digital content and, in some cases, may also provide support for website marketing activities. Some CMS options include Drupal, WordPress and HubSpot.

10 Other Types of Commonly Adopted MarTech

Obviously, with over 6,000 tools available in the marketing technology landscape, the options span far beyond these four core tech categories. To help marketers make sense of the noise, we recently polled the Top 43 Revenue Marketing Game Changers to understand beyond the essentials, what tools fall on their must-have list.

While the individual tools varied, there were some common themes you should consider if you’re building a revenue-focused organization.

1. Attribution

Attribution software delivers advanced analytics capabilities that enable marketing to see which touch points are effective in creating new customers. There are numerous attribution models. Some companies measure first touch, while others look at last touch. The organizations that are most effective measure multi-touch attribution examining the various combinations of interactions that it takes to move a customer from discovery to closed-won business. Three solutions to consider in this category are Bizible, LeanData and BrightFunnel.

2. Account-Based Marketing

Account-Based Marketing (ABM) software supports the execution and success of ABM strategies by enabling marketers to identify target accounts, run targeted campaigns, engage account-specific buying committees and measure funnel performance at the account-level. Solutions that are built for ABM include Engagio, DemandBase, Triblio and Integrate.

3. Demand Orchestration Software

Demand orchestration software automates top-funnel marketing activities, connects top-funnel data directly to MAPs and pulls lower-funnel data directly from MAPs and CRMs so marketers can be smarter about their top-funnel marketing efforts. The B2B Game Changers choose Integrate for demand orchestration and top-funnel automation.

4. Predictive and Intent Data

Marketers use predictive analytics and intent data to predict customer behavior, select target accounts, forecast pipeline and optimize marketing campaigns. Solutions include Mintigo, 6Sense, Lattice, Radius and Bombora.

5. Business Intelligence

Business Intelligence (BI) software give marketers data dashboard to visualize and analyze data in myriad ways. Real-time access into analytics and insights is essential to building a high-performing marketing organizations. BI solutions include Domo and Tableau.

6. Digital and Web Analytics

Solutions for advanced web analytics provide insight into customer behavior on your website and other digital platforms. While Google Analytics tends to be the go-to digital analytics solution for most marketers, other options include Omniture and Adobe Analytics.

7. Budget & Performance Management

Budget management software enables marketers to analyze ROI, optimize campaign budgets, and better forecast marketing pipeline contributions. Allocadia is the number one budget management tool recommended by B2B Game Changers.

8. Project Management

While not traditionally considered a ‘marketing technology,’ project management software was repeatedly reported by B2B Game Changers to be a must-have component in their tech stack. After all, in order to drive revenue at scale, marketers must have disciplined processes to support efficiency and collaboration across all team members. Trello and Asana are two projects management tools worth considering.

9. Data Integrity

Quality data is vital to today’s B2B marketing organizations. It’s not enough to generate high volumes of prospect data. You likely need a data integrity solutions to cleanse, enrich and verify data before it goes into your MAP and CRM. Common data integrity software includes Synthio, RingLead and Integrate.

10. Engagement Tools

You likely need a variety of applications to support personalized customer engagement and outreach. The B2B Game Changers use tools like Outreach and DiscoverOrg to identify the right decision makers to target, support streamlined communications across sales and marketing, and create consistent engagement experiences.

What’s in your Ultimate MarTech Stack?

As you set out to create a best-of-breed MarTech ecosystem, remember to evaluate your strategic objectives, existing tech and current processes before looking at new solutions.

For step-by-step guidance and customizable worksheets and templates, download the “Marketing Tech Blueprint Workbook.”

Every once in a while, I like to do a jigsaw puzzle.  It’s nice to do in the evening, no distraction from devices, there’s the great tactile feeling as I pick up a new piece, trying to figure out where it fits.  Then there’s the great reward at the end, once all the pieces are in place, you finally see the whole picture and it makes sense.

Sometimes, I think selling, and all the things sales people must do to be successful, is something like a jigsaw puzzle.  It’s often confusing and difficult to understand each of the pieces/parts until you have put the entire puzzle together and can see the whole picture.  And the reality is, often, there are a lot of pieces missing.

Too often, we inundate our people with all sorts of things they must do to achieve their goals.  Ongoing prospecting, finding/qualifying deals, moving them through the buying/selling process, building healthy funnels/pipelines, forecasting, account/territory planning, call planning, creating value for our customers, developing competitive strategies, and on and on.

Overlaid on this is the endless administrivia, CRM updates, dealing with all the latest sales enablement or marketing programs that are supposed to be helpful.

And then there are the latest new initiatives, programs du jour, new product announcements, and on and on and on……..

With all this going on, it’s no wonder sales people get confused!  They don’t know what they should be doing, when, where their focus should be–other than the continued quest to make the numbers.

Yet we keep demanding they do these things, but they don’t know why we are asking them to do these things, and how the pieces/parts fit together.  Too many sales people I speak with tend to view all of these as disjointed, vaguely related activities—“My manager is the one obsessed with the pipeline, I focus on deals….”  or “The only reason I do account plans is because I have to do one….”

But all these activities are closely related, and balancing our activities across each is critical to achieving our numbers and sustaining performance.  Failing to do all of them impacts our ability to perform.

How do we put the pieces of the puzzle together, what’s the complete picture look like?

A framework or picture helps understand the relationship of the /pieces parts.

Referencing the image at the bottom of the post, at a high-level, starting from the left:

1.  Account plans and territory plans are, at the simplest level, structured prospecting plans.  It is in our targeted accounts or our territory (however that might be found), we find and qualify the opportunities we want to chase.  To find new deals, we have to be prospecting and the account/territory plan focuses on the most productive areas in which to prospect.  Without them, we would struggle to find the right deals to pursue and to fill our pipelines.
2. The sales/buying process and the related opportunity/deal plans are all about the deal.  These are qualified opportunities, in our sweet spot, with customers that have a high sense of urgency to change.  Successfully executing our deal strategy enables us to win orders and business.  The sales/buying process provides us the most effective way to maximize our win rate, compress the buying  cycle, and maximize our ability to create value with the customer.  The deal plan is the tool we use to execute the process with a specific customer, helping us identify the specific problems/opportunities, the buyers involved in the process and how we help the customer navigate their buying process.
3. Meetings/calls are how we execute our account, territory, and opportunity plans.  We engage with customers in meetings/calls.  The meetings we have in the account/territory plans are prospecting, qualifying, nurturing meetings.   The meetings we have executing the selling process/deal strategies are focused on helping the customer move through the process.  We want to maximize the impact of each type of meeting, leveraging design thinking in planning these is very powerful (but that’s a different post).
4. The pipeline/funnel is the tool we use to track all of these things.  Fundamentally, it focuses on the question, “Are we doing enough of the right things to achieve our goals?”  The pipeline doesn’t solve our problems in achieving our goals, but it helps identify where the problems are–causing us to focus on improving our ability to better execute our account/territory, sales process/deal strategy, call plans.  Pipelines, too lean, focus us on prospecting–executing our account/territory plans.  Win rates too low, deals stalling, our pipeline points us to improving our execution on our deal strategies.  In each of these we want to plan meetings to maximize the impact of each.

I’ve only developed this at a high level, but you get the idea.  Helping our people understand how each piece of the puzzle fits with the others, creating a complete picture about how we most effectively achieve our goals is important.  Understanding the total picture and how the components inter-relate is critical in maximizing performance and helping our people perform at the highest levels possible.

How are you helping your people understand the pieces of the puzzle and how they fit together.

Afterword:  My thanks to my friend, Rene Voorhorst, for helping clarify my thinking about the framework!

Afterword 2:  For a full page PDF of the Sales Execution Framework, email me at dabrock@excellenc.com.

Afterword 3:  There is a larger framework of the Sales Organizational/EXCELLENCE Ecosystem that is core to the upcoming Sales Executive Survival Guide, stay tuned.

 

 

Chart of the Day: 47% of content is for top of funnel buyers Research published from the Content Marketing Institute has shown that almost half of the content created by B2B marketers is for early-stage buyers - to generate awareness and …..

The post Nearly half of content is created to generate awareness/interest appeared first on Smart Insights.

Selling is hard. Doing it well is even harder. On any given day, a seller has to keep track of multiple tasks, diverse objectives, and different layers of information in order to have a chance at making the sale, not to mention meeting quota.

To start, a sales rep has to have the most up-to-date information on products, and be trained on new versions, new messaging, and new features and functionalities. Reps have to understand and put into action their company’s sales methodology whenever they engage with prospects. And they must have just the right content on hand, ready with the information their prospect needs to help them progress through the buyer’s journey, taking another step toward making a purchase decision.

This is a lot to juggle, but getting all of these pieces right is critical in today’s competitive sales environment, where there is very little room for error. Gone are the days when the seller held all the cards and could lead the buyer’s journey from beginning to end. Sales reps now have to figure out how to succeed in an age where the buyer is firmly in the driver’s seat. Today’s buyers have done a great deal of research before ever engaging with a seller and as a result they expect nearly instant responses and personalized communications when they are ready to interact with a sales rep. Modern sellers can scarcely afford a misstep, or the buyer is likely to move to a competitor at a moment’s notice.

While sellers face ever-increasing demands to execute, there is less and less time in the work day to do so. Sales reps must navigate longer, more complex sales cycles, and have to run to keep up with the changing needs and expectations of prospects and customers. The explosion of technologies and tools that have been implemented to help sales teams can create some significant advantages, but unless they are deployed effectively, they can also give sellers significantly more administrative work. Reps are feeling the pain and struggling to spend enough time selling, spending an astonishing 64 percent of their time on non-selling tasks, rather than on building new customer relationships. This means that when they are selling, they need to be engaging with the buyer as effectively as possible.

And it isn’t only the sales team that is feeling the heat. Marketers create volumes of content in an effort to support sellers and provide the assets that will move the needle on sales but are stymied by a lack of visibility into which content sales is actually using, and how effective the content is. Without insight into what content is performing well, marketers are unable to use data to create and update assets reps need to have successful engagements with prospects. This is why good sales and marketing alignment is an indicator of company success, with 74 percent of high-performing organizations having strong alignment across both departments. But it is not always clear how to go about achieving that alignment.

Selling is hard, and it is difficult to find and combine the right mix of elements to achieve sales success. But all of these difficulties can be managed with good sales enablement, which holds the solution to today’s complex sales puzzle.

Where Guided Selling Comes In

Guided selling is an essential component when delivering enablement to a sales team, providing information to reps during the sales process that they can lean on to keep buyers moving towards a purchase decision. A well-built sales playbook is at the foundation of any guided selling solution, and aligns an organization’s sales methodology with the buyer’s journey as it lays out the steps of the sales play. It gives the seller information on precisely what to do and what to communicate in a given sales scenario.

A dynamic guided selling tool delivers assistance to sales reps via the system where they live — the CRM. Integrating guidance into the workflow of reps puts all relevant content, training, and tools at their fingertips and in context, making it easier for them to have effective sales conversations.

Though the point of guided selling is to offer sales reps tailored information that applies to the buyer they are speaking to, the approach can’t be too rigid in order to be truly effective. After all, not every buyer, or conversation will be the same. An effective guided selling approach needs to be dynamic and adaptable to unexpected changes in the sales interaction, to shifts in stages, or to moments when new stakeholders join the conversation. A guided selling tool should be more like an interactive map that gives sellers the ability to find and share what the prospect wants and needs in any given scenario, while continuing to navigate effectively through the sales process.

The most innovative guided selling solutions employ AI that leverages analytics to determine the best information to use as selling scenarios evolve. When done right, guided selling provides a holistic experience for sales reps allowing them to respond to prospects as needed throughout the buying journey and is adaptable enough to allow for the variations that are bound to occur.

Many elements make up comprehensive, responsive and effective guided selling. Check out our new whitepaper, The Guide to Guided Selling, to better understand the necessary components that will truly enable reps to sell more effectively.

The Value of Non-Sales Related Technical Skills

As the sales industry moves towards a technology-based platform rather than face-to-face sales meetings, it is essential to the success of sales teams that the sales leader has a solid understanding of the many non-sales related technical skills.

The following are six non-sales related technical skills that need to be well-developed and fully mastered for any sales leader. Mastery of these non-sales related technical skills will ensure you and your sales team have the tools and resources to communicate with customers, stay organized, and track leads to effectively close them.

1) Time management

The ability to use technology to effectively manage your time as a sales leader is a critical non-sales related technical skill that should be mastered. Using technology to streamline the time you spend on each task frees you up to coach, mentor and work directly with the sales team.

2) CRM expertise

Most companies are now using CRM (Customer Relationship Management) software or cloud-based applications. Understanding how to maximize the potential of this information and educating the sales team on its features is an essential non-sales related technical skill for increasing the productivity of each team member.

3) Apps and platforms

Sales leaders should get to know the various apps, platforms and systems your sales team use, as well as how customers prefer to be contacted. This non-sales related sales skill is critical for communicating with customers and generating new leads. Programs such as Zoom, Google, Ready Talk or similar apps and platforms allow personalized communication from any type of Internet-connected device.

4) LinkedIn

Sales leaders should familiarize themselves with LinkedIn and maintain a healthy online presence within their industry groups. Understanding the LinkedIn social media platform helps to promote both the sales leader as an authority as well as the company. It can also be used a recruiting option for sales leaders when looking for new sales team members.

5) Analytics

The ability to “run the numbers” is no longer a time-consuming task. Having the right software allows for the sales leader to have real-time access to all aspects of the performance of the sales team, allowing for more precise and effective decision-making.

6) Tapping into virtual training, coaching and other growth options

Utilizing sales technology to train sales teams is one of the most important non-sales related technical skills that sales leaders should master. Sale leaders should integrate a combination of highly accessible online webinars, virtual classrooms, attendance at conferences via web services, and even personalized sales coaching to promote sales team growth and encourage professional development among sales professionals.

Sales leaders can find ways to embrace the use of various forms of technology to boost the productivity and personal development of themselves and all members of the team. These non-sales related technical skills will ensure your sales team keeps up with the changing technological landscape of the sales industry.

Building out an email marketing campaign seems fairly simple. All you need to do is draft amazing content, add some eye-catching graphics, find your email list, and hit send. You have the opportunity to reach out to your customers whenever you want, keep them abreast of what’s going on at your end, ask them for feedback, and even introduce them to your team.

But what happens when a new subscriber only receives your new emails and misses out on the amazing content you shared earlier? You can’t send them all the older emails in one go, nor can you give them a link to view the emails. No one’s going to spend that extra time.

Drip email campaigns keep you top-of-mind

Drip email marketing campaigns are a set of automated emails that go out based on specific timelines or user actions. Also known as autoresponders, email drip campaigns are a set of marketing emails which are sent out automatically based on a schedule.

One email goes out when someone signs up to receive your newsletters and is added to your email list, another the following week and perhaps one more the next weekend.

Email drip campaigns can also be based on certain triggers using marketing automation – If someone signs up for a free trial on your website or makes a purchase. These emails can also be called “behavioral emails”.

Research has also shown that pairing marketing automation with email drip campaigns leads to 20% more sales opportunities.

The case for drip marketing

Email drip campaigns have a host of benefits to offer if implemented correctly. A little time and effort in the start go a long way. Emails triggered based on user actions have a better chance of getting a response than standard email campaigns. Drip email campaigns allow you to engage your prospects better and much more efficiently.

With the use of an automated drip marketing campaign, you can lead users through the entire buyer’s journey – from acquisition to the “buy” button on your website. Whenever a user leaves an unpurchased product in their cart, use a drip email campaign to follow up and let them know that the product is still available for purchase.

Your drip emails have a pretty good chance of closing the sale. According to SaleCycle, abandoned cart emails average a 46.1% open rate, a 13.3% click-through rate, and $5.64 per email in extra revenue.

You could also send recommendations based on a user’s purchases or browsing history on your e-commerce store. This doesn’t necessarily only apply to physical products and services, but also for streaming apps and games.

As a small business, you might find it difficult to hand-hold every lead who has the potential of becoming a paid customer. Drip emails are automated and can be crafted to be sent out at a particular time and to a specific audience.

The mark of a good drip email campaign is the prospect of not even realizing that it’s a pre-written automated email. The more personal you make it, the more chances you have of readers responding favorably.

Here are a few examples of how drip email campaigns can work for you:

1. Nurturing leads

When it comes to lead nurturing campaigns, one size does not fit all. You need to strategically nurture your leads using tailored content which will help to improve the results of your email marketing strategy.

According to research by Demand Gen Report, leads nurtured with targeted content produce an increase in sales opportunities of more than 20%.

Zapier sends new subscribers a user onboarding campaign to help them get started. They’ve listed out the different things you can do once you’ve activated your account (essentially walking them through the customer onboarding process) and also added incentive by talking about their rewards program. The overall goal, as with all welcome emails, is to create trust and motivate those key first actions.

As a small business, you might not have enough time and resources at your disposal to handhold every new subscriber, and that’s where an automation campaign steps in. You can add new subscribers to your existing email automation lists and send them relevant emails which are triggered whenever a particular action is performed – moving them further and further down the purchasing funnel.

2. Welcome emails

The first email a new subscriber receives is the welcome email. These are extremely important for they set the tone of your entire email campaign.

If your welcome emails don’t resonate with your audience, there’s a good chance that they’ll click the unsubscribe button then and there. Therefore, you have to get this right if you want to retain your subscribers and turn them into paying customers.

Google Adwords welcomes new users with an email that inspires trust, is visually appealing and the subject line draws recipients in with a reference to a task they’ll want to complete.

Upon creating an account, you will receive this email from them that reminds you to complete setting up your Adwords account and links to their Help Center.

3. Customer Onboarding

Getting users to sign up for a trial is great, but the eventual goal is always to get them to make a purchase from you. That’s where an onboarding drip strategy comes in – Once you’ve sent in a welcome email which introduces customers to your brand, the ensuing step is a user onboarding email. These emails offer targeted “sells” informing your customers of what the next step is.

Collaborative and work management tool Smartsheet employs onboarding drip campaigns to teach people how to use their product.

The best way to connect with your customers is to look at your business through their eyes. Talk about your business, but focus on what’s in it for them. Needless to say, a client onboarding email needs to be simple and smooth. You want your customers to quickly have a feel about your business without making it sound too technical or content heavy.

Don’t forget to highlight the advantages too. Reinforce the value and show how your product/service can help them achieve what they are looking for.

4. Engagement campaigns

People love hearing about themselves – Being tagged in pictures on social media – your brain lights up when that notification pops up on your phone.

As a business, you already have a lot of data about your customers – their likes, dislikes, birthdays, anniversaries and so much more. How can you use that information to teach people something about themselves? An engagement drip campaign email is not only a compelling email to open, but it also motivates people to re-engage to gain more insights about their behavior and progress through the customer journey.

Every day, Twitter sends a customized email informing you of the notifications you have.

It’s great to wake up to this email – everything in a glance. Twitter isn’t waiting for you to fire up their app: they’re providing you added value and delivering it straight to your inbox. Users whose interest is piqued by this email will click on the call to action to visit Twitter and find out more.

5. Recommendations

Once a customer begins engaging with your business more frequently, it’s easy to collect their data and send them highly personalized emails. The best part? You don’t need to discount prices or offer a promo code. Simply curating personalized product recommendations is providing value enough to your loyal customers.

Penguin Publishing uses a customer’s browsing and purchase history on their platform to offer up related books.

They highlight book reviews and stores where you can purchase books from. The more a company knows about you and your buying habits, the better they can predict what you will and won’t like. With that info, they can send you targeted drip emails that contain products or coupons specific to your purchasing tendencies.

The same goes for an entertainment app like Spotify—its team knows what music you listen to, and they can create targeted drip campaigns that email you whenever a frequented artist releases a new single, or when a new band in your favorite genre signs on with Spotify.

You don’t need to shell out millions on your email marketing budget to put this knowledge into action. You can target user segments with drips based on which aspects of your services they use and tailor content according to their needs.

6. Abandoned carts

It may not be possible to persuade all cart-abandoners to go through checkout and triple your sales. Some customers may have never had the intention to purchase in the first place. But it’s worth putting in the effort to resolve as many lingering hesitations as you can because a significant percentage of them are persuadable.

Abandoned cart emails are sent to customers who have added products to their cart but failed to check out.

Online retailer NNNow sent me an email three days after I left some items in my cart.

Right from their subject line, they’re creating a sense of urgency – “Buy now before it sells out”. Along with telling me what I’ve left behind, they’re also giving some recommendations and a reminder to an on-going sale. Clicking on any of the links mentioned takes me back to my cart.

Abandoned cart emails are, in a way, a bonus marketing opportunity. You get another chance to reach out to your customers, remind them of the awesome products they’re missing out on and offer them added incentives to follow through with making a purchase.

7. Re-engagement campaigns

More often than not, promotional emails that you send your customers get lost in the already existing chaos of their email inbox. With so many brands competing for attention, it’s likely that a percentage of your customers might lose interest and stop engaging with your emails. It may not seem like a huge deal, but as a great percentage of your list stops engaging, the greater the risk you run of damaging your sender reputation and your email deliverability rates.

So, how can you address this issue? By creating special re-engagement emails targeted directly at your “inactive” subscribers.

Online furniture store PepperFry sent me a re-engagement campaign with a 10% discount and a list of their top products.

Because I haven’t interacted with them in forever, I did open their email and was pleasantly surprised to see they’d changed their email design – The colors were more vibrant, they’d begun including product pricing and the best part? The discount coupon was right at the top! There’s no way I could’ve missed that.

Setting up a re-engagement drip campaign is a great way to show customers you care about them. You can take this opportunity to try new content and innovation approaches to see how you can bring your old customers back and get you new sales.

8. Cross-Selling/Up-selling

It’s always easier to sell to your existing customers – You already know what they prefer; they already know what you have to offer. Win-win!

Right from new product launches to beta-testing a new feature; your existing customers will be more than willing to try out stuff from a brand they know and trust. In comparison, potential leads might be skeptics when it comes to trying out something new from a brand they don’t know too well. But that doesn’t mean you mustn’t reach out to them. Any and all feedback and sales are great!

For Fitbit users that want to track even more of their life, they can upgrade and try their new sleep tools. For potential customers, this is new software and tracking tool is an up-sell for the newest versions of the Fitbit product. Users with old versions of a Fitbit tracker, new apps are an incentive to upgrade.

Cross-selling and up-selling your products is a strategy that any business in any industry can use. So if you’re a digital marketer, you could create an email on how to cross-sell products, and literally, cross-sell one of your other services through that email.

9. Courses and Newsletters

As a small business, you might find it difficult to keep track of all our customers and where they fit into your . Similarly, you might not know what their preferences are, and sending them tailored content becomes a bit of a problem.

Creating a drip marketing campaign solves that for you. If you can offer a planned set of drips—say a six-week course on how arrange flowers at your store or which bakery products fly off the shelves during holiday season —subscribers won’t just flow in, they’ll interact with the content at an incredible rate. Send stuff at random, and they may just ignore it.

You can also use your weekly (or monthly) newsletter to engage with your customers. Along with giving them an update on your most recent blog posts and what’s been happening at your end, you can also include a link to a free downloadable e-book, or ask them to sign-up for an upcoming webinar.

Haunted House Publishing is part of a community on Reddit. They’re very popular with readers who love scary stories, and one of my favorite online publishers. Every time one of their writers releases a new book, everyone on their mailing list receives a free promotional copy – and in exchange for this, they only want you to review the book on Goodreads or Amazon. Pretty sweet deal, I’d say!

You’ll only know what works best for your email base if you test by sending them different, but relevant content. You could experiment with a three-part autoresponders series, but switch up variables such as your call-to-action or subject lines. See what works best, and then implement those practices moving forward.

10. Unsubscribes

When someone unsubscribes from your mailing list, all you can think about is what went wrong and how you can avoid this happening again. But fret not. There’s a small window of opportunity right as someone hits that dreaded unsubscribe button – use an autoresponder to find out what went wrong and take one last shot at pulling that customer back in!

Sports retailer Puma takes a more lively approach with their unsubscribe confirmation page. They show an icon of a movie reel with the text, “Remember the good times,” and a CTA to rejoin if they would like to re-subscribe.

People might unsubscribe from your email marketing list for various reasons. They don’t hate your brand, they might just prefer to interact with you in a different way. Use your unsubscribe emails to push other channels like Facebook or Twitter.

Turn email drip campaign ideas into action

Whether you’re a newbie or a seasoned email marketer, it’s not difficult to see just how important email drip campaigns are for your business. Drip email campaigns require patience, restraint, and nuance to strike the right tone and successfully nurture leads throughout the buyer’s journey.

Drip campaigns help keep your business in the forefront of your customers’ minds. Quick recognition and recall will guarantee that your business will remain relevant, and drip marketing will provide these “reminders” for the customers.

Al Simon, Sandler trainer, joins us to talk about the attitude, behaviors, and techniques of sales interactions. Learn the advantages and best practices of having a system for salespeople to follow and knowing your own sales gates. Learn how to lead and control the sales interaction and teach your buyer how to make the right decision.

Big businesses have been through the gauntlet of unstable early days and tumultuous seasons to achieve high growth, high employee counts, and high ROIs. They’ve already put in the time and resources to come up with processes and strategies that work for them. Small businesses are a different entity, often with more limitations, but a smart company can “steal” ideas to suit its own needs and fuel growth.

Our company has taken a lot of ideas from big tech companies such as Google and Facebook. For example, Google’s respect for employees’ personal well-being and autonomy inspired our policies on time off, office layout, and leniency. We try to make our office the best place to work in order to retain and grow our people — just like the big tech players do. Of course, we can’t provide our own campus with a free cafeteria. But by using the resources we do have to communicate a similar message that we appreciate our employees, we’ve been able to retain and build a solid team of people.

Scaling Down Big Business Secrets

It’s not hard to find information on what the big companies are doing. Many of them are proud of what makes them different and blast it all over the internet in blogs, interviews, and articles. A number of founders have also written excellent books or have recommended reading lists that can help you understand their tactics at a deeper level.

What’s key is identifying strategies that can be scaled down to effectively work for a small business. What works for a multinational corporation won’t work for a company with 10 people in one office. When first adopting big business processes, it will be hard to predict what might work for your company. As you work toward improvements, don’t be afraid of a little trial and error. You can’t know for sure what works until you implement it. If something does not work, simply pull back and reassess. But if you do nothing, you will never see growth.

With that in mind, here are five big business strategies that small businesses can implement right now:

1. Have a clear and concise company culture.

When big companies onboard team members, the new hires know exactly what culture they’re getting into; it’s easier for new hires to absorb a culture when it is all around them and has many team members reinforcing it. But this fluency can be achieved no matter the company’s size. Make sure your company’s values are clearly listed and laid out for everyone to see on a daily basis. Live by them with your words and your actions, and make a point of communicating cultural expectations even during interviews. This allows every candidate to know and understand what they’re getting into.

2. Hire for personality.

Google has the means to recruit the best developers, but it hires for personality. When building a team, focus on how well an individual fits within the culture. Even the best developer can hurt a company if he or she causes dissension or complains about the company’s direction. After all, you can teach a skill, but you can’t train for personality.

3. Automate as much as possible.

Big companies are crazy about efficiency because every minute or dollar lost in a process is multiplied many times over. But small businesses have fewer people trying to do vast amounts of work with more limited resources. There’s no time or money to waste on repetitive tasks. Automate marketing through email drips. Small businesses can also automate the sales process by creating bots on LinkedIn that generate interest from qualified prospects. Automation helps small businesses spend less money and change more quickly, creating efficiencies in much the same way larger companies already have.

4. Reinvest in people.

Large companies continuously reinvest and aren’t afraid to make less of a profit in the short term or even lose money if it means moving the company forward and growing. You should always be reinvesting in your company and your vision, and talent is the most valuable asset — especially at a small company. When I reinvest, I hire people who can enhance our company’s growth, whether they bring a new skill set that we can monetize, they have new marketing ideas, or they create efficiencies. People can sometimes have the highest return on investment.

Adopting strategies of businesses that successfully moved beyond the startup phase and mastered their techniques can help small businesses join the ranks of high-growth success stories. For “been there, done that” business hacks, turn to big companies for process, values, and strategies.

My instructor gave me very clear directions. He said, “Pull the accelerator towards you.” I barely moved it and the plane started to nudge forward. He said, “No. Pull it all the way out.” I was trying to follow his instructions and managed to pull it half way out, the plane gaining speed down the runway.” My instructor, tired of me hesitating, grabbed my hand and pulled it back and the plane leaped forward, gaining speed. I pulled back on the yoke, as he directed, and we were flying.

Ten minutes later, my instructor explained what we were going to do next. He said, “Now we are going to stall the plane.” That didn’t sound very positive to me, being that we were a few thousand feet above the surface of the Earth. I asked, “Why would do that? Why would stall the plane.” His answer didn’t make me feel any better. He replied, “Sometimes planes stall, and if you don’t know what to do, you can flip the plane, and spiral upside down into the ground.”

To stall a plane, you need only climb at a rate that exceeds the planes ability. The plane gets loose and wobbly, and alarms start screaming. Your instinct is to pull back, which is exactly the wrong thing to do. The right thing to do is to push the yoke forward, and doing so makes everything better very quickly. We did this a few times, and the instructor told me we would practice it at ever lesson. Should something happen, you want to reflexively do the right thing.

Salespeople (and their leaders, managers, and companies) complain about scripts and role plays. They also continually go over the same ground, talking about this objection or that unreasonable client challenge. They recount their continued struggle with commitments that aren’t kept and clients that go dark, as if there is no way to improve their results.

Why wouldn’t one work through the common conversations they have with their clients to ensure they create the most value possible for their client while also creating a preference to work with them?

How could one be harmed by rehearsing their responses to the most common concerns their dream client’s are going to struggle with to ensure they can resolve them effectively, if it is possible to do so?

Why wing it and see for the first time the words that come out of your mouth when your client challenges you? Why repeat what hasn’t worked for you before, when you could gain new language choices that improve your performance in front of your dream client, that same performance in which they are trying to determine whether they should work with you over your competition?

If you are continuously challenged by the same scenario, it is not the challenging scenario that is to blame. It’s your lack of improving your ability to effectively handle it.

The post The Importance of Rehearsing What Could Go Wrong appeared first on The Sales Blog.

The retail landscape may look a lot different today than it did a generation ago, but at least one thing remains true: Sales and discounts still matter a lot.

According to research conducted by Forrester for Retail Me Not, deals on purchases have a primary influence on where shoppers spend (77 percent of consumers polled) and help speed up the decision-making process (48 percent) — trumping customer service and product selection by leaps and bounds.

Where specifically are discounts the most effective?

The report shows that two-thirds of consumers expect to have a discount in hand before they even shop with an online retailer — specifically on mobile. While customers in the past might fill up a shopping cart with items then go seek out bargains, the broad swath of mobile shopping options have given consumers the impetus to seek out the items they want — at the prices they want — rather than bargain with a trusted brand.

On top of that, 55 percent of those polled claimed to have abandoned an online shopping cart because the cost at checkout exceeded expectations, while 32 percent say they’ll have no qualms bouncing to a different retailer after filling up their cart because of a competing offer — like a push notification offering a tailored discount.

It’s not simply about prices.

As the retail paradigm has shifted to empower customers to be more picky and follow the bargains, brands and apps that can centralize enticing offers are gaining steam. Of those surveyed by Forrester, 71 percent prefer having a single destination for all of their discounts and coupons.

This can be a boon or a burden for retail brands: Savings apps and websites that pool the best offers from across the retail landscape can highlight retailers that offer unexpectedly good deals while showcasing just how much other sellers take brand recognition for granted.

Today, 38 percent of shoppers use these kinds of savings applications, which is a jump of roughly 28 percentage points from 2014. At the crux of this is an understanding that consumers may be willing to exchange some personal information with a savings app if it means more personalized bargains — and more meaningful experiences for app users.

Retailers need to be wise to balance just how much information they need with a customers comfort level in sharing it. At the same time, brands need to be sure they’re delivering personalized messaging in the form of push notifications, in-app messaging and “soft asks” so that they aren’t inadvertently “spamming” customers with leading questions.

To avoid alienating potential customers, teams need to be tactical.

Building brand loyalty is a primary aim for retail marketers, but successful strategies can be elusive. This is especially true in the new “omnichannel” world that brands have to navigate just to get customers’ attention in the first place.

As a result, brands need to be tactical and often a little crafty in determining a “multi-channel” marketing strategy. For retailers, that includes making sure discounts are landing at appropriate stages of the buyer journey — which oftentimes lands on enriching mobile.

By following soft-ask best practices, for instance, retailers can get permissions they need from customers without framing their app as as a soulless broadcast channel. This includes balancing the requests for data between high-level questions, ie. personal fashion tastes, with more tangible, private asks, like a shopper’s budget or income.

At the end of the day, it all comes down to building trust and creating retail apps that offer a useful service — a trusted shopping tool — that they’ll turn to first. It also means getting that trust before the competition, as consumers will grow weary of sharing information with an array of retail apps, especially if they’ve been scorned in the past.

What kind of tactics do you recommend retailers employ to deliver the best app user experience and build customer loyalty? Leave your thoughts below!

By Maria Geokezas, VP of Client Services for Heinz Marketing

In the past, for most B2B companies, relationship selling was selling.  There was no social selling, there was no selling automation.  Selling was about the relationship between a salesperson and their buyer.  That’s it.  The focus was on building trust for the long-term: understanding the buyer’s world, their pains, their motivations, and helping them achieve their goals, hopefully through the use of your product or service.  Salespeople invested a lot of time getting to know their prospects on a personal and social basis that then extended into business.  That’s how the golf course became a legitimate business expense – decisions were influenced and made riding around in a golf cart.

Does relationship selling work in today’s ultra-distracted, highly chaotic business environment?  Seems to me there are a number of factors that impede the traditional notion of relationship selling.  But with a change to your approach to building relationships and engaging at scale, you can triumph over these 3 challenges we face in the modern day:

1. Short-term business goals:  With the C-suite focused on maximizing profits over the short term in order to meet or beat investors’ expectations, it makes it more difficult to develop strong relationships with buyers and customers.  During the last few days of each month and each quarter, you can visit most sales organizations and be completely ignored (if you aren’t a potential customer that is).  Sales teams are in a mad rush to close as many deals as possible.  They use high-pressure tactics like discounting, special terms, and other deal-sweeteners to incent faster closings.  All of which turns into a vicious monthly cycle that ends up costing companies millions in smaller deal sizes, lower win-rates overall, and lost revenue.  A commitment to relationship selling, focusing on the customers timeline rather than your own, can protect the business from this cycle.
2. Sales Technology:  With 830 vendors selling different sales tools and technologies that help sales people stay in touch with more people more often, it seems volume is more important than building authentic relationships.  Have speed and efficiency beat out relationships?  Not if you are using these tools the right way.  The right technology and tools will help:

1. • Build relationships with the right people in the buying committee and identify the best path to engaging with them.
   • Track buyers and their needs so that relationship sellers can use these insights to deliver more relevant content, when and how they will be most appreciated.
   • Predict the next best action that will help move relationships forward.
   • Save time by simplifying the creation and distribution of customized messages.
   • Access information and buyer updates no matter where you are.
   • Orchestrate collaboration across both the seller and buyer organizations to accelerate purchase decisions.

1. Sales Methodologies:  Sales people who follow the Challenger approach have been shown to dramatically outperform other sales approaches, like relationship selling.  These two approaches should not be mutually exclusive, however.  Many organizations are moving to a Challenger approach and changing the nature of relationships.  Relationship sales should include the key tenets of the Challenger sale:  use new insights to help your buyers think differently, teach buyers a new way to think about their problem, and focus on customer value rather than customer service to help their buyers make progress against their goals.  Seems to me, to be good at relationship selling, you have to take on the Challenger approach.

I’d love to hear your thoughts on Relationship Selling.  Take our survey for sales leaders and when you complete the survey, you could receive a $50 AMEX gift card for your time and thoughts.

The post The Case For Relationship Selling in Our Frenzied World appeared first on Heinz Marketing.

As any savvy business owner knows, your business is more than the sum of its parts. Yes, factors like profitability, inventory, and stock prices are a significant contributor to your business’s valuation, but they don’t fully represent its success. Less quantitative drivers of business value, like customer loyalty and brand recognition, are also important and can be the difference between selling your business at a break-even or a profitable price. Before deciding on a selling price, it’s important to understand the value of your business’s goodwill, and how to calculate that number.

What is Goodwill?

Chances are, your loyalty to a favorite sandwich shop or hair salon aren’t based entirely in the product or service itself. It’s likely that you keep coming back because you appreciate the customer service, their community involvement, the neighborly brand, or helpful employees. Factors like these make up a business’s goodwill, which is a catchall phrase that describes the intangible — yet highly valuable — factors that can add or subtract from a company’s value beyond their physical business assets. Business goodwill tells buyers how successful the business currently is, which goes a long way in determining how successful it will be if new ownership runs things exactly as they are. More often than not, goodwill is the reason a business is bought at higher than the market-determined asking price.

If your business has positive employee relations, high brand awareness in your area, and a high customer satisfaction rate, these are all achievements that should be accounted for in your valuation. Similarly, intellectual property and potential for profitable future expansion can be considered goodwill. But, because it’s difficult to quantify them, they’re not easy to accurately represent in your financial records, especially for smaller, private companies that are not monitored by the Securities and Exchange Commission (SEC).

It’s important to properly account for goodwill so that you can sell your business for what it’s actually worth.

Negative Goodwill

Goodwill, unfortunately, is a two-way street; a positive goodwill increases your business’s value but negative goodwill has the opposite effect. Unorganized processes, distressed profits, employee tension, low customer satisfaction, or a recent scandal can lower your business’s valuation below market asking price. To sell your business at its highest profitability, it’s important that your goodwill is strong to get the most from your hard work.

How To Determine Your Business’s Goodwill

Quantifying The Seemingly Unquantifiable

It may seem impossible to quantify these intangible parts of your business; however, there are a few simple ways of determining your goodwill.

The first way to determine your goodwill involves identifying the market value on all identifiable business assets. It will take some time, but the results you get will be accurate and therefore, less refutable by a buyer.

1. First, estimate the fair market value of all identified business assets
2. Determine a reasonable rate of return on the identified business assets
3. Subtract the return from your total business earnings to determine your excess earnings
4. Capitalize the excess earnings (using the correct capitalization rate) to determine your goodwill

The second way to determine goodwill involves business income and is much more simplified, but still helpful if you’re under a time crunch and have the information readily available.

1. Calculate your business’s average profits from the last few years
2. Estimate how many years into the future this number could stay consistent
3. Multiply the average profit by the number of years to calculate your goodwill

This number will show a buyer their expected return-on-investment in the future and justify the higher-than-market price you’re asking.

Why It’s Important to Report Impairments

Since the 2001-2002 accounting scandals, where companies were purposefully estimating their goodwill far above its fair value, The Financial Accounting Standards Board requires that companies test their goodwill assets for “impairments” annually and record them, if necessary. Goodwill impairments occur when the fair value of goodwill dips below its expected value, due to anything from increased competition, regulatory action, or a deterioration in the capabilities of acquired assets to generate revenue. Not reporting impairments has cost companies like Macy’s and AOL billions of dollars. If needed, take the time to learn how to report impairments.

When selling your business, it’s important to understand what factors set your business above the average market value of a company in your industry. Take the time to understand what goodwill makes your company successful, and don’t push it aside when it comes time to set a price and negotiate with a buyer.

There continues to be prognosticators on sales who believe that variable compensation is the root cause of bad sales behaviors, namely the self-oriented, “whatever it takes” approach that would cause salespeople to sell their clients something that would not benefit them.

Caveat Venditor

For reasons I fail to understand, those who write about some misalignment between the salesperson and their client’s goals seem to suggest that the salesperson has little to no moral intelligence and cares nothing about their reputation and future sales. From reading them, it seems they believe that the clients these salespeople call on are unsophisticated rubes who are unable to recognize someone selling them something that won’t benefit them, even when they decide by consensus, with many people from their team vetting the solution—and the salesperson and sales organization calling on them.

In a shocking and daring lack of consistent thinking, these same commentators will tell you buyers have all the information they need to make decisions, that they no longer need salespeople, and that the balance of power in the relationship is weighted very heavily towards the buyer, with the salesperson being nothing more than an errand boy or errand girl. This while salespeople continue to evolve into something much more than “pitch man,” and who now creates greater value than any time in the history of commercial sales.

Low Moral Quotient

What causes salespeople to behave badly is not variable compensation, as it’s not what causes executives to behave badly, or thieves to behave badly. It’s a low moral intelligence, something found in all populations, with no evidence of greater representation in sales than in any other human endeavor, least all of all B2B sales, where self-orientation costs one deals (and where quota attainment of less than 50% may be evidence that most salespeople aren’t simply money-grubbing slicks who are willing to do “whatever it takes.”)

It isn’t likely that executives who enjoy variable compensation are going to insist the companies they work guarantee there is no variable compensation as some form of a purity test before buying from them.

Winston Churchill once described democracy as the worst form of government, except for all others. For whatever crimes one might convict variable compensation, where different outcomes are possible, variable compensation is necessary. If two people produce the widely different results, paying them the same would be unfair, just like situations where one company produces greater outcomes is able to charge a high price for those better outcomes than their competitor can command.

The post On Variable Compensation and Bad Sales Behaviors appeared first on The Sales Blog.

In 1994, Nick Szabo, a legal scholar and computer scientist, coined the term “smart contract” to describe the ability to embed contracts, a legal construct, into computer code.

With the emergence of a blockchain ecosystem, the excitement around smart contracts has picked up.

In this article, I’m going to explore what smart contracts are and why it’s valuable to combine them with blockchain technology to make “blockchain smart contracts.” Then we’ll dive into the core problems they solve at a high level and then look at some potential specific-use cases. We’ll finish up by looking at the barriers and drawbacks of smart contracts. Alas, there is no free lunch!

What Is a Smart Contract Anyway?

The simplest example of a smart contract is a vending machine:

IF someone puts in a dollar
AND
IF they press the button for Diet Coke
THEN dispense a Diet Coke

Smart contracts allow for the conversion of “wet code,” human-readable language like legal contracts, into “dry code,” computer-readable language. Wet code is more malleable and subject to interpretation, which can make it more flexible, but it can also make it less fair and more expensive (lawyers gotta make that Ke$ha too). Dry code is more rigid and deterministic, which makes it less flexible, but cheaper and fairer.

Though we don’t think about them much, contracts are an essential building block of our economy. As Ronald Coase pointed out, a firm is just a nexus of contracts with employees, vendors, shareholders and customers.¹

You live in your home or apartment because you have a contract with a bank (a mortgage) or landlord. Whoever owns your home has a contract with a government entity that maintains the property title register saying who the home belongs to. In many ways, our lives are just nexuses of contracts—employment contracts, mortgage contracts and marriage contracts.

The basic idea behind smart contracts is that many kinds of contractual clauses (such as collateral, bonding, delineation of property rights, etc.) can be embedded in the hardware and software we deal with, in such a way as to make breach of contract expensive (if desired, sometimes prohibitively so) for the breacher and, in so doing, reduce the transaction costs associated with that contract.

A more complex example than vending machines might be dealing with a car lease. A car could have a “smart lien” protocol where if someone failed to meet their contractual obligation of making the lease payment, their electronic key no longer works and a key owned by the bank activates the car instead.

This would be a lot cheaper than using a repo man to chase down the car. If the car was autonomous, you could make it part of the contract that if a payment was not met, the car would simply drive itself to a location designated by the creditor. When the car purchaser paid off the car in full, the contract would make the key that the bank was holding useless. Additional clauses could be added for safety. You wouldn’t want to revoke operation of the car while it’s doing 75 miles an hour on I-40.

Dry, Smart Contracts Vs. Wet, Legal Contracts

Smart contracts are not intended to replace existing common law, but to extend them and make it easier for individuals, businesses and eventually computers to make contracts with each other.

There are four important properties to good contracts:

1. Observability
2. Verifiability
3. Enforceability
4. Privacy

If you enter into a contract with someone, like an employment contract, you want to be able to:

1. Observe they are doing what they said they would do in the contract.
2. If they don’t, you want to be able to have a way to verify that they didn’t do what they said they were going to do.
3. Have a way to enforce consequences for breach of contract.
4. Ideally, you would also like to keep the contract private. Not everyone needs to know the terms of your employment contract or mortgage.

Today, the main role of the accounting industry is to take the “nexus of contracts” that make up the economy and make them observable. The role of the auditing and investigation industries is to verify contracts. The role of the judicial system is to enforce those contracts: if someone violates a contract with you, you have the right to take them to court and punish them (through arrest, confiscation of property, etc.) for violating the contract.

Now that we’ve looked at the basics of smart contracts, let’s look at two ways in which blockchain smart contracts could help the existing system be more efficient and fair:

Scaling a company via code and contracts instead of via people mitigates the Principal-Agent problem.

Scaling via community-generated code and content mitigates Hayek’s Local Knowledge problem.

— Naval (@naval) September 3, 2018

Let’s break these two down:

1. How can blockchain smart contracts use code to resolve the principal-agent problem?
2. How can they use community to mitigate the local knowledge problem?

Blockchain Smart Contracts and the Principal-Agent Problem

The current system of common law contracts offers a primarily reactive form of security. Ken Lay and Jeff Skilling, the leaders of Enron, were both sentenced to jail and fined for fraud and corruption, but that didn’t mean grandma got her money back; it was already gone.

The reason the current system can only offer a reactive form of security is, in part, because wetl, legal code means we have to give up privacy in order to get verifiability and observability. Enron didn’t have to share their information publicly because they could claim that it would be giving away trade secrets. In theory, their auditing firm and trusted third party, Arthur Anderson, was supposed to be verifying the books and protecting investors. As Enron investors found out, they were not.

This problem is applicable beyond Enron. Whenever you have a trusted third party like Arthur Anderson in charge of observing, verifying or enforcing a contract, there is the possibility that the third party is corrupt or incompetent.

Broadly, this is called the principal-agent problem. The principal-agent problem happens when one person or entity (the agent) is able to make decisions that impact another person or entity (the principal) but their incentives are not perfectly aligned.

Common examples include company managers (agents) and shareholders (principals), politicians (agents) and voters (principals), or lawyers (agents) and clients (principals). Is a company manager buying back stock because it’s the best thing for shareholders or because it’s the best thing for them personally? Is a lawyer recommending a legal proceeding because it’s the best thing for their client or because it will generate income for the lawyer?

The principal-agent problem is the result of information asymmetry. When the agent knows something the principal doesn’t, the principal can’t directly ensure that the agent is always acting in the principal’s best interest.

The client doesn’t know enough about the law to know the right course of action and so must rely on the lawyer. The same is true with the voter and the shareholder.

These principal-agent problems are often the result of the tradeoff between being able to observe and verify versus having privacy. Enron, or managers of any company, quite reasonably don’t want to publicly share every bit of what they are working on for their competition to see. So we mostly rely on trusted third parties like accountants and auditors, which is much better than nothing but still creates potential problems.

From Arthur Anderson, to Yahoo, to Equifax (the subject of 2018’s massive data breach), trusted third parties always come with a moral hazard—what is best for them is not always best for the principal.

In the film adaption of Michael Lewis’s account of the 2008 financial crisis, The Big Short, there’s a scene where Steve Eisman (played by Steve Carell) walks into Standard and Poor’s and asks why they labeled all those mortgage-backed derivatives as AAA. The rating agent admits that “if I didn’t do it, the banks would have just gotten someone else to do it.”

The scene is apocryphal, but it’s spirit is true. The ratings agencies were not really investigating the mortgages in the bonds they were stamping as AAA. This was the principal-agent problem: Moody’s and Standards and Poor’s (the agent) didn’t have any skin in the game. If the bonds turned out to be worthless, they didn’t lose anything. They did stand to get business from the banks if they rated them AAA, so they did, even though it wasn’t in the best interest of the principal (the buyers of those bonds).

As was the case with Enron, cybersecurity breaches that have happened over the last decade, the agents like Yahoo and Equifax were only punishable retroactively. The customers still had all their data compromised.

Smart contracts make it possible to trust but verify. To deserve our trust, third parties must convince us that their claims are true by allowing us to “ping” their veracity and verify that certain claimed transactions in fact occurred. It would be possible for shareholders to determine that Enron wasn’t committing fraud without them having to reveal their numbers.

This is possible with a cryptographic technique called zero-knowledge proofs. Zero knowledge proofs make it possible for a principal to verify the truth of something said by an agent without the agent having to reveal too much information.

As a very simple example, imagine you are sitting on the opposite side of a table from a blindfolded friend who has two pool balls, one red and one green.

Your friend cannot see the pools balls (because blindfold), but you want to prove to your friend that the pool balls are in fact differently colored, but without revealing which one is red and which is green.

Your blindfolded friend hides both balls under the table and then brings the red ball up for you to see. After that, your friend hides the ball under the table and mixes them up.

They then hold up the green ball and ask, “Did I switch the ball?”

If both balls are the same color, there is no way for you to know.

But if the balls are different colors, you can prove to your blindfolded friend that the colors are different by saying that they changed the balls under the table without revealing the color of the balls.²

ZCash is the most well-known blockchain using zero-knowledge proofs, though others like Ethereum have also integrated it in some way.

Blockchain smart contracts that leverage cryptography make it possible to get both observability and verifiability without sacrificing privacy and reducing information asymmetry.³ This is potentially a big deal.

Currently, there is a tradeoff between control and empowerment between parties in a contract.

A boss can micromanage a direct report (high control, low empowerment) or trust them to do their job (low control, high empowerment). A board can micromanage a CEO or trust her to do her job. A client can micromanage a vendor or trust them. More control reduces the principal-agent problem, but can hamstring the agent. The shareholders know exactly what the CEO is doing, but she are hamstrung and unable to operate the company effectively by having to get approval for everything.

The possibility unlocked by blockchain smart contracts is the ability to truly “trust but verify.” Within companies, there could be less asymmetry between management and other professional employees. Outside of companies there could be less asymmetry between management and shareholders. In politics there could be less asymmetry between politicians and voters. In law, there could be less asymmetry between lawyers and clients.

Today, the problem with “trust but verify” is that verification is both expensive and unreliable—not every investor in a company can afford to have their own team of accountants auditing the company. The result is Arthur Andersen and Enron. When those teams of accountants are 1s and 0s, dry code, they become both cheaper and more reliable. The marginal cost of running a computer script is near zero.

In this way, the combination of blockchains and smart contracts could lower transaction costs (by making verification cheaper and more reliable) while solving the need for privacy, which could let contract participants reduce (thought not eliminate!) the hazard inherent in the principal-agent problem without having to resort to micromanagement.

However, even with smart contracts, there will still be some information asymmetry which can create tail risk. An agent still has local knowledge about how the system is architected and so if the principal isn’t asking the right questions, the agent can answer zero knowledge proofs all day long without revealing where in the structure the risk is hidden.

The CEO can prove certain things to the board, but if the board isn’t asking the right questions, it won’t do them much good. The CEO will always know more than the board and so they will always have the capacity to do this.

Smart Contracts and Incomplete Information

The other the major problem that smart contracts will be able to help with is incomplete information. This was first addressed by Friedrich Hayek in his 1945 paper, The Use of Knowledge in Society. Hayek asks readers to consider a world in which all information is known to a single individual. In this world, allocating resources in the most efficient way is just a math problem – that individual can just add up the pros and cons and pick whatever the optimal solution is.

However, Hayek points out, this is “emphatically not the economic problem which society faces.” In the real world, information is spread out, incomplete and often contradictory.

Hayek observed that most knowledge is not universal knowledge like physics. E=mc2 is true whether you are in Bhutan or Cincinnati, or on Mars. Most knowledge isn’t like E=mc2 though, it’s local: “the knowledge of the particular circumstances of time and place.” For example, I know that the sole on my right shoe is coming off and if I don’t buy a new one soon, it will fall off. How likely is it that anyone else would know that? That everyone else would know that?

The problem of local knowledge is compounded because the world is dynamic and constantly changing, not fixed. If I buy a new pair shoes or glue the sole of my existing pair back on, the knowledge I had about my sole falling off is no longer true. This means the optimal allocation of resources has changed—I don’t need new shoes anymore.

According to Hayek, solving this problem requires some form of decentralization, where decentralized actors need to be able to:

1. Exploit their local knowledge.
2. Make use of some sort of summary of the local knowledge possessed by others.

This problem can be solved by markets and the price system. If a local actor in a market discovers some new valuable use for tin, or copper, or microchips, they will be able to exploit that knowledge to buy more (believing they can use their knowledge to make something more valuable with them and sell them at a profit) and that will drive up the price.

The price is a (very brief) summary of the local knowledge possessed by others. Another actor in the same market doesn’t need to know that new valuable use case, that knowledge is encapsulated in the rising price.

Compared to central planners, markets are better at aggregating knowledge. Much local knowledge can’t be made explicitly legible, easy to comprehend, to the central planner—or at least not without a lot of difficulty. When resources are allocated by market actors rather than a central planner, you only need one actor to understand a piece of knowledge in order for that knowledge to start being incorporated in the price.

If you reflect on your own experience, Hayek’s point intuitively makes sense: Are the difficult decisions in your life hard because you know every last relevant detail and aren’t sure how to do the math and add them together? Or because they are full of unknowns and unknown unknowns?

Consider how many unknowns there are on a daily basis for the CEO of a large company or a government official in charge of a large department.

Here’s Hayek again:

“If we can agree that the economic problem of society is mainly one of rapid adaptation to changes in the particular circumstances of time and place, it would seem to follow that the ultimate decisions must be left to the people who are familiar with these circumstances, who know all the relevant changes and of the resources immediately available to meet them. We cannot expect that this problem will be solved by first communicating all this knowledge to a central board which, after integrating all knowledge, issues its orders. We must solve it by some form of decentralization.”

Because of the price mechanism, individual actors need to know very little in order to properly allocate resources. If the price of a new pair of shoes goes from $50 to $500, I don’t need to investigate the shoe industry demand spike and its supply chain issues to know that I would rather buy some glue and patch up my shoes to make them work than pay $500. The local information about the shoe industry is compressed and expressed via the increased price.

In this way, markets act as a coordination mechanism which contributes to economic growth and wellbeing in large part because they dispense with the need for any one individual to know all information. Markets aggregate local information through price.

Blockchain smart contracts have the potential to more effectively distribute knowledge and mitigate the problem of incomplete information because they make it possible to create markets in areas where it was previously impossible.

How Blockchains Turn Networks Into Markets

1/ Blockchains will replace networks with markets.

— Naval (@naval) June 21, 2017

What we call society is a series of overlapping networks. Some networks are physical—roads, train tracks and electricity grids. Some are digital—the internet and social media. Some are mental—religion, nation-states and money. Blockchains will make it possible to convert networks into markets.

Networks have networks effects. Adding a participant increases the value of the network for all existing participants. More train tracks means the usefulness of each train goes up. More Facebook users make the usefulness go up for all other users.

In order for networks to function, they must be organized according to rules. They require rulers to enforce the rules. Because of network effects these rulers tend to become the most powerful people in society. In Medieval Europe, the Pope enforced the rules of the network of Christianity and so he was among the most powerful.

Today, Facebook runs the social network, Google runs the search network, and different groups of elites run the university network and banking network.

Over the last couple hundred years, we have seen a new type of network: markets. The market networks are titans. These are the credit markets, the stock markets, the commodities markets, and the money markets. Compared with other networks, market networks tend to be more open and meritocratic. The 20th century and the markets that characterized it was the period of the greatest socio-economic mobility in history.

Blockchain allows people to engage in an open and meritocratic network without a ruler and without money (at least as we traditionally think of it). Just as society gives you money for giving society what it wants, blockchains give you coins for giving the network what it wants. Blockchains pay in their own coin, not the fiat money issued by nation-states.⁴

Different blockchains compensate you for different work. Already, we are starting to see some of the early applications. Bitcoin pays for securing the ledger of transactions allowing two parties to transact value or money without a ruler.⁵

Blockchains combine the openness of the internet with the merit of markets. To a blockchain, merit can be security, computation, prediction, attention, bandwidth, or storage. For example, Ethereum pays for performing computation.⁶

Blockchain smart contracts could introduce markets into corners of society that have never before been reached by markets.

We are currently in the process of what Netscape founder Marc Andreessen has called software eating the world. As connectivity spreads and more machines are embedded via the internet of things, more and more networks will become digitized. When you add public blockchains, it’s possible to transform those networks into markets.

Consider the network of roads. When you get in the autonomous cars of the future, you may see a sliding scale offering the ability to set an arrival time and calculate the cost of the ride. If you want to arrive quickly, the car will make a flurry of payments to other cars allowing it to pass. If you’re not in a hurry, you may choose a later arrival time and lower fare, allowing other cars to fly past.

The solar grid on your roof may be able to buy and sell power with your neighbors depending on how hot or cold you want your air conditioning and demand at each time of the day.

No one central planner will have to control these networks because the blockchain will act to secure the ledger, the state of the system, and the smart contracts will execute the logic.

These markets will all be interconnected and aggregate larger and larger amounts of local information in the form of prices.

Blockchain Smart Contract Use Cases

Here’s a few blockchain smart contract use cases, ordered from least weird to weirdest:

Insurance

Currently, insurance policies can take weeks or even months to be paid. The process of getting reimbursed is still very manual, which adds costs, driving up premiums. It’s possible that insurance companies could automate part of the process using smart contracts.

Measurable factors like wind speed, location of a hurricane or magnitude of an earthquake could be recorded onto a blockchain and claims could be triggered if certain thresholds were crossed.

This would reduce administrative costs and make the process more transparent. It would also allow insurance companies to do more accurate pricing. Using smart contracts, a car insurance company could charge rates differently based on where, and under what conditions, policyholders are operating their vehicles.

Copyrighted Content

In an industry like music where copyright privileges allow the copyright holder to receive a royalty anytime their work is used, there’s a big administrative cost in the current system keeping track of who owns the rights and who is using them. A system of blockchain smart contracts could more easily track who owns the copyright and who is using the copyrighted material so that royalty payments could be paid accurately and in real time.

This would not eliminate piracy or copyright violation, but could curb it in some meaningful way. Torrenting music has decreased in popularity in large part because services like Spotify make it so easy and convenient to just pay for the music that users would rather pay than pirate.

Bank Regulation

Currently, bank regulation like liquidity and capital requirements are justified by the fact that there is a principal-agent problem where depositors and shareholders are unable to observe the bank’s ledger.

Bank runs occur when depositors believe that their bank might not be able to cover their deposits and rush to withdraw their funds.

One potential application of blockchain smart contracts would allow depositors and shareholders to know that bank’s reserves and lendings were within some parameters, make it less likely for bank runs to occur.

An even further-reaching application would be a blockchain bank—a decentralized, autonomous organization which matches borrowers with lenders. A blockchain bank could make regulators less needed or, in some cases, irrelevant. At the moment that the blockchain bank becomes insolvent, the underlying assets would be automatically disbursed to shareholders and depositors.

It’s possible that smart contracts could reduce the overall need for government regulation since much regulation is designed to solve principal-agent problems resulting from asymmetric information.

However, there exist definite limitations on the impact of smart contracts. What if there are bugs in the code? Unlike wet, legal code which allows human judgement to be factored in, dry code needs to be right from the start. If you write the contract wrong and accidentally revoke control of a car when it’s on the interstate, that has real consequences. Writers of smart contracts will need to “move slowly and don’t break anything” as opposed to writers of web apps which tend to “move fast and break things.”

Other questions include how should smart contract transactions be taxed? What happens if there is an honest mistake and the person is punished automatically? It seems almost certain that for the foreseeable future, dry code smart contracts will still be highly supplemented by lots of wet code around them to deal with these issues.

The Oracle Problem

Smart contracts have the lowest transaction costs and are near frictionless when everything is on the blockchain. It’s easy for the bitcoin blockchain to know if Bob sent Alice one bitcoin because that transaction happened “on chain.” All parties have high confidence that it truly happened because they both see it on the Bitcoin blockchain.

But what about writing smart contracts for events that happen “off chain,” like for a farmer who wants to insure his crops against a storm in Kansas? Or the selling of a house and exchanging of a property title?

For these sorts of events, you need something in the real, physical world to get that information onto the blockchain. These are commonly called “oracles.”

The Oracle Problem is a new transaction cost and a source of ambiguity: How do you know that the storm really happened? What if the farmer just poured some water over the sensor? How do you measure exactly how strong the storm was? How do you measure whether the damage was caused by wind or rain?

One example of the Oracle Problem today is a system called MakerDAO, which is a decentralized currency that has an active monetary policy, run by smart contracts, which attempts to keep its internal cryptocurrency, called “dai,” at a price as close as possible to one U.S. dollar.

This means dai is what’s called a stablecoin; it’s a cryptocurrency like bitcoin or ether, but the goal of the system is to stabilize the price (in USD terms).

Maker does this with a smart contract facilitated market—if the price of dai goes above or below $1, then smart contracts start to offer ways for traders to arbitrage that away and make money so the price of dai should move back to one dollar.⁷

This requires a price feed to know what a dai is trading at relative to a dollar. The price of a dai expressed in U.S. dollars is not “on chain”; it’s happening off chain at exchanges. This means that, similar to the storm in Kansas, there is always a question of what the price of dai really is. It could be trading for $0.98 one one exchange but $1.02 on another.

MakerDAO uses a decentralized price feed mechanism composed of a few different Ethereum accounts as oracles. These Ethereum accounts are elected by owners of the MKR token and have some restrictions placed on them; however, it’s still possible for one (or all) of them to cheat and inaccurately report the price in a way that would benefit them, just like it’s possible for the farmer in Kansas to try and cheat to get reimbursed for crop damage even if there was no storm.

Once everything is on chain, the system is almost completely frictionless and free of transaction costs.⁸ The blockchain is a secure ledger once the data is on chain, but getting the data on there is still a problem, or more precisely, the Oracle Problem.

In those cases where the data is publicly accessible and easy to retrieve and verify, the oracle problem is likely to be fairly minimal. Getting information like who won the World Cup or a presidential election “on chain” is likely to be possible.

Once you get into very specific issues, like you and a friend are going to enter into a personal smart fire insurance contract where if her house burns down, then you have to pay her some amount to cover the cost then the cost of getting the information is very high because it’s very specific to one transaction. You probably need to have a claims adjuster go out to the house an inspect it so smart contracts wouldn’t be much more effective than what we have now.⁹

In general, I expect that information that is digital and general, like who won the World Cup, will be easy to work with using oracles while information that is analog and specific, like if a particular house suffered fire damage, will be difficult.

In situations where information is analog and specific, it’s easier to cheat (or make honest mistakes).

One way this may start to change is that as the cost of computers come down and they become embedded in more and more of the world, the cost to cheat will go up while the profit will remain the same. In the case of crop insurance, you could have hundreds of cheap sensors around the field meaning that if the farmer wanted to cheat, he would have to tamper with hundreds of sensors instead of just one.

Ultimately, if there’s some way to cheat and profit, it’s likely that someone will eventually do it. However if it’s more expensive to cheat than it is to behave honestly, you can more safely assume that actors will behave honestly. In the case of the farmer, if it was going to cost a $100 dollars to cheat the system, but the farmer would only make $50, they would be far less likely to try to cheat.

More information is becoming digital. Many things that were only available in analog form 10 years ago are now digital and that trend is likely to continue.

You could also come up with mechanisms that build in who the arbitrators are. If all the people in the village put some amount of money into a smart contract, and the people vote and agree that one particular person is in need of cash, then he gets the cash.¹⁰

Because the oracle problem will always exist, smart contracts will never be perfect and never fully replace wet code. However, belief that smart contracts will become increasingly important relies on four trends which seem very likely:

1. The world becomes increasing digital.
2. Sensors become increasingly embedded in everything with the internet of things.
3. Computers become more powerful and “smarter.”
4. Blockchains become more prevalent.

As these four trends play out, dry code will slowly take over some of what wet code does today. Perhaps more interestingly, they may create new, emergent use cases we haven’t ever seen, like a blockchain bank.

Will Smart Contracts Eat the World?

Smart contracts make it possible to embed many kinds of contractual clauses (such as collateral, bonding, delineation of property rights, etc.) into computer hardware and software and, in so doing, reduce the transaction costs associated with that contract.

Smart contracts such as a a vending machine already exist today. Blockchain smart contracts have potential to break the tradeoff that exists in contracts today between privacy and observability. This could reduce the principal-agent problem by empowering the agent while still protecting the principal.

As blockchain markets become more and more prevalent, blockchain smart contracts also have the ability to aggregate local information in the form of price. This would increase the efficiency of those areas of the economy. When you consider that potentially many, many areas of the economy will eventually be “eaten” by blockchain-based markets, then the overall impact could be quite significant.

Thanks to Gabe Bassin and Doug Von Kohorn for feedback on early drafts of this essay.

There is no doubt about it, product led growth (PLG) is transforming the world of SaaS. Here at OpenView we evaluate thousands of software companies every year. We recognize there are varying levels of maturity in adopting PLG strategies. Some businesses have adopted product led growth since their inception. Others are just beginning to take a product led approach to growth by de-laboring their sales process, creating product qualified leads, investing in a delightful user experience and so much more.

Unsure where you are on your PLG journey?

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Most of the time, impatience is a good thing. Business owners and professionals of all ilks should feel motivated to identify problems and to solve them as quickly as possible. After all, modern companies need to react with great speed in order to satisfy the ever higher expectations of the contemporary consumer. Yet, certain problems require a degree of patience. Indeed, sales people looking to reconnect with an old lead, prospect, or client need to understand the delicate art of second engagement. To that end, here’s a look at how professionals can make the second time the charm when they encounter an old lead:

Don’t “Disconnect” in the First Place

Of course, not every lead a business generates results in a sale. However, that doesn’t mean businesses should stop engaging with an interested lead just because they didn’t choose to make a purchase. In many instances, timing is the most important element in marketing, and a lead may be unwilling to spend simply because it’s not the right moment for them to do so. (This is especially true of B2B pros who may only make significant purchases once or twice a year.) As such, marketing and sales teams would be wise to continue to interact with leads even if they’ve rejected a sales pitch once.

Personalize

Keeping in touch with old leads and clients through automated email messages is a basic way to stay on their radar for a few months. Still, automated messages can only go so far. If you really want to elicit a response from an old contact, reach out to them with a message crafted just for them. Include their name in an email subject line, or shoot them a quick note on a social-media platform. A little extra effort can make a big difference when it comes to consumer interaction.

Compare and Contrast

Sometimes, a lead choosing to do business with a competitor is a blessing in disguise. Particularly if you can clearly outperform your rival. You can always win back an old lead by letting them know what they’re missing without your operation. Plus, comparing and contrasting competitors’ products/services with yours directly will underline that point. This is an especially effective tactic if you can provide something special that your competitors can’t. Remember, getting specific won’t turn off interested leads, but rather will give them access to the intel they need to make an informed decision.

The Bottom Line

Subtlety is overrated. Salespeople should recognize that they don’t have to tiptoe when speaking with old leads or clients. Instead, use the familiarity you already enjoy with your contacts to let them know you’re still interested in their business, and that you can offer them valuable products/services in return.

For many years, B2B companies have focused on filling the top of their inbound sales funnel with leads and then filtering out those who aren’t qualified to buy.

While this method of determining marketing and sales qualified leads might’ve worked in the past, focusing on product qualified leads (PQLs) is a better way to reach your target buyer.

In this article, we’ll explore what a PQL is, the difference between PQLs and SQLs, how to make PQLs work for you, and so much more.

• What is a PQL?
• PQL vs SQL: What’s the difference?
• How To Identify a PQL
• What is a product trial?
• Will PQLs work for my business?
• How To Make PQLs Work for You

For example, free trial products, like Intercom, offer an introductory, time-limited product experience. This helps users find value in the product before making a serious commitment.

PQL vs SQL: What’s the difference?

Both product qualified leads and sales qualified leads are frameworks sales teams use to identify leads who have the potential to be long-lasting customers. The difference lies in the way these people are picked.

A PQL is someone who has experienced a brand’s product through a free trial or freemium plan. This, however, doesn’t mean that someone who signs up for a free trial is automatically a PQL. To be a PQL, the person would have to complete some predefined tasks within the product — which are often determined by the marketer.

Every business has its own definition of a PQL, and the markers change as the product matures.

An SQL, on the other hand, is someone who has expressed enough interest in a company and its offers for the sales team to work on converting them from prospect to customer.

Usually, SQLs are a step closer to purchasing than marketing qualified leads (MQLs) — people who’ve engaged with a company’s marketing assets. To be considered an SQL, a lead has to be vetted by the marketing team to determine if they’re qualified to move down the sales funnel.

For example, a person may be considered an SQL when they start asking about product pricing and plans, filling out forms to request free quotes, and skipping product demos to speak directly with the sales team.

How to Identify a PQL

Generally, people have to go beyond just downloading a beta product or using a free trial to become PQLs. This is because some people sign up just for the free trial, and once the time is up, they never use the product again.

Because this term is flexible, you can create your own criteria to determine who a PQL is regarding your business model.

That being said, here are two popular ways sales teams determine their PQLs.

1. Measuring Product Engagement

It’s impossible to qualify a lead based on product usage if you don’t track product engagement. Once you start tracking product engagement, come up with a system where you can rank or score your users based on how much they use the core features of your product.

The higher a lead’s score, the higher the chances of them being PQLs and potential long-term users.

Pro tip: To know what to look out for, study your existing customers and identify what they have in common. That includes:

• The key features they use the most.
• What freemium customers are using your product for.
• Key demographic similarities.

This data, along with insights from your marketing, sales, and customer success teams, will help you set up a practical customer journey to determine your PQLs.

2. Measuring the Activation Rate During the Trial Period

The aim of free trials is to drive new users toward “activation.” Each product has a different activation point, but the term “activation” generally refers to the “aha moment” a new user gets after completing a series of actions.

These actions usually involve using your product’s main features to do simple tasks.

For example, Google Doc’s activation checklist looks like this:

• Create a document.
• Add a teammate.
• Share a document.
• Edit a document.
• Write a comment.

If a customer takes two of those steps, their activation rate is 20%. If they take 4, they are 80% to their activation point.

Pro tip: Not all accounts will be fully activated (100%) so you need to choose a value that a user has to reach before you can regard them as a PQL.

What is a product trial?

No matter the industry, few things tempt prospective customers more than giving away something for free. But the fact so many SaaS products today have a free trial is a double-edged sword.

A product trial gives prospects immediate access to a company’s product for a set period of time at little to no cost. It allows prospects to demo the product themselves and make a purchase decision in their own time.

On the one hand, it’s easier for people to sign up and try your product with a free trial. On the other hand, a lack of commitment means switching costs between products are lower. People can leave as fast as they joined.

To generate PQLs via a free product trial, it’s necessary to:

1. Ensure they’re successful in that trial.
2. Communicate quickly and proactively to facilitate a high trial conversion rate.

Will PQLs work for my business?

While many B2B SaaS businesses still rely on MQLs and SQLs to guide their marketing, PQLs are better and more effective for SaaS companies looking to expand their customer base. This is because a PQL is an actual user of your product.

PQLs have problems they think your product can solve, so they signed up for a free trial and got value during that period of time. Leads like this give you an idea of who your ideal users are, their pain points, and how they use your products to make their lives easier.

If you publish content (blog posts, videos, webinars, etc.) or run ads for your business, you may benefit from measuring MQLs and SQLs. Many people also make purchasing decisions when they consume a company’s marketing assets. This can work for both B2B and B2C companies.

How to Make PQLs Work for You

1. Find your PQLs.

First, find the in-product action (or series of actions) correlated most often with someone showing real buying intent.

For a product like Slack, it might be that a team on a free plan has sent 2,000 messages. Or it might be that a customer support team has replied to and closed 100 conversations.

These actions will differ for every company, but there’s an easy way to find yours. Ask yourself, what does a successful customer look like? What are they doing in your product?

Work backwards from that ideal customer, asking “How were they able to do that?” Follow these steps to identify the ultimate causes of success and you’ll find the actions that determine your PQLs.

2. Prioritize your PQLs.

In-product behavior is only one piece of the jigsaw and must balance with other factors to make sure your sales team spends time with the right PQLs.

HubSpot’s VP of Product, Christopher O’Donnell has identified four distinct types of product qualified leads:

• Free users who’ve hit a given PQL criteria.
• In-product hand raisers (i.e., users who have requested sales assistance).
• Users who’ve reached a limit in their free plans.
• Self-service users who’ve purchased without any sales involvement.

Image Source

To understand these different PQLs take what you know people are doing in your product and enrich it with other data, including.

• Demographic Information. Look at the demographics of your most valuable customers and find commonalities. For example, if you only sell to a certain geographic location, you might remove any PQL falling outside the proper city, state, zip code, or country.
• Company Information. Use third-party data sources, such as Clearbit, to get rich information about your PQLs’ businesses. Are you more interested in B2B organizations or B2C organizations? If you’re a B2B organization, are organizations of a certain size, type, or industry more interested in your products?

By understanding who’s really interested in using your product right away and who’s just starting to kick the tires, it becomes easier to tailor the sales process to their exact needs.

3. Start converting your PQLs.

The secret to converting your PQLs is to send the right message to the right person at the right time based on their activity (or lack thereof). Don’t send a cookie-cutter series of messages blasted to everyone who’s signed up for a free trial on day one, day five, or day 14.

Here are three messages you can send right away to guide PQLs towards conversion.

When They’ve Hit a Usage Limit

When someone has reached the usage limits for your product, you should automatically trigger a message that outlines the increased value they’ll get from upgrading from a free trial.

Most of us want what we can’t have, so they’ll be open to an upgrade, provided they have a genuine need for more of your product in their lives.

See a sample message below.

“Hi Pete,

It looks like you’re getting organized with DropBag.

Unfortunately, you only have 2GB of space left in your plan. You can upgrade to our Pro Plan for just $5 a month and you’ll get an extra 1TB of space to keep your files in sync — and the first month is free!”

When They’re Heavily Using a Feature

Another effective trigger for converting a PQL is when your customers have achieved a milestone with your product, such as:

• Spending over a certain number of hours in your app.
• Accomplishing a certain number of tasks in your product.
• Logging in a certain number of times.
• Installing particular integrations or add-ons.

Use these events as opportunities to remind your customers about the value they’re getting from doing business with you and consider how to convert them now to take things even further.

For example, you can use the following message to demonstrate heavy account usage.

“Laura here, from account management. I see you send lots of messages between the hours of 9:00 p.m. and 11:00 p.m. your time, which seems tough on work/life balance.

I thought you might be interested in our Pro Plan, which lets you schedule messages in advance. Would you be interested in a free trial?”

When They’re Getting In-App Results

Your best PQLs are the ones who’ve passed one or more “success milestones” — the point at which they’ve received tangible value from your product. If you sell software for ecommerce stores, a milestone might be “Customer makes first sale.”

As your customers achieve various success milestones along their journey, their willingness to convert goes up. It’s up to you to recognize and take advantage of that.

For example, you can modify the template below.

“Hi Nancy, it looks like you’ve gotten your store live with a few products. It looks great!

If you haven’t already checked out your sales dashboard, this is a great place to start: [link to how-to resource].

Also, now that you’ve gotten your products live, you might be interested in our marketing automation tool to convert visitors into customers. Here’s more information on that: [insert link to landing page].

Is there anything else I can help with at this stage?”

The Bottom Line? PQLs Work

By flipping your funnel 180 degrees and starting with product adoption, your sales and marketing teams will spend time and energy with those leads that have raised their hands, are engaging with the product, and will end up becoming happier, more valuable customers.

Without specialized tools, it’s virtually impossible for marketers to make sense of the customer and prospect data available to them. This is why most B2B organizations adopt marketing automation and related technologies.

Before CRMs for example, many companies tracked leads and opportunities in spreadsheets. Version control, file bloat and user error opened the door to conflicting information, slow processing times and irregular data entry, which made analysis painfully inefficient.

CRM software solves these problems and further increases the sales team’s productivity by centralizing many of the common tools and processes involved in the typical sales workflows. A sales person can mine data sources, send templated prospect emails, and update record information all in the same program!

In many cases, CRMs can also become a source of new, actionable data. Most CRMs integrate with email and call tracking software to automatically log sales touchpoints in the buyer’s journey. Record views, contact updates and task completions are tracked on a user-by-user basis, giving sales managers a view of team productivity, as well as a view of engagement among the different accounts. This data answers questions like:

• Which accounts haven’t been worked in a while?
• How many sales touchpoints on average lead to an opportunity?
• Which accounts have non-responsive contacts and need to be updated?
• How many outbound calls need to be made a day to reach our sales goal?

Framed this way, a CRM is basically a data management and productivity tool for the sales team.

Marketing automation technology serves a similar function for marketers. More specifically, marketing automation helps companies to:

Improve the efficiency of marketing operations

The most comprehensive marketing automation tools allow you to monitor and manage your marketing efforts all within the same platform. This enables the centralized collection of marketing data, so marketers can easily extract insights and optimize campaigns for improved results.

Data on email clicks, page views, ad impressions and social shares help to identify the best-performing channels and most popular campaigns. This information in turn informs the overall marketing strategy and budget.

It’s possible to collect data and execute on marketing plans in multiple tools:

• there’s Google Analytics for website tracking
• MailChimp for email marketing
• Unbounce for demand gen landing pages
• and the list goes on and on

However, it becomes harder to keep track of marketing activities when they happen on disparate systems. Using an all-in-one tool reduces the amount of data that needs to be transferred and makes analysis quick and easy, returning precious hours back to your team.

Gain a wider view of prospect behavior

An added benefit of an all-in-one marketing platform is that it allows you to track the lifecycle of a prospect from beginning to end. This gives a more ROI-focused view of marketing performance: It’s great to know which email marketing campaign resonates the most with prospects, but it’s even better to be able to prove which influence a purchase.

Though many popular marketing tools integrate with one another, they don’t provide the same quality of information as a well-built marketing automation instance. They just weren’t designed to be a hub for different kinds of marketing data. Marketing automation platforms are specifically designed to track the activity of a prospect from an anonymous website visit to a purchase.

With engagement occurring via outbound efforts and multiple digital channels from email to social to website engagement and more, marketing automation platforms help teams see their prospects more clearly and improve their experience.

Generate more qualified leads

Not only does marketing automation measure performance across channels, it also allows the different channels to interact. This is where the “automation” component comes in.

Marketing automation platforms can trigger actions based on tracked activities. For example, someone visits a webpage, fills out a form to download a piece of content, and becomes a known, “cookied” prospect within the marketing automation instance. The platform can then send the lead the appropriate autoresponder. Afterwards, it uses the data collected to segment him and add him to an industry-specific email drip whose purpose is to keep the brand top-of mind until he’s ready for purchase.

Every time the lead visits the website again, the marketing automation platform serves personalized content to incentivize him further. These messages can vary depending on where the lead is in the sales funnel.

By analyzing engagement data along with customer/prospect characteristics, marketing automation can act on opportunities to move individuals further along in the buyer’s journey.

Maintain sales and marketing alignment

This brings us to a key use case of marketing automation platforms: lead qualification and lifecycle management.

As marketers, our goal is to keep the sales pipeline full of fresh leads. If you’ve already achieved that—congratulations! Now the challenge is to help sales focus their efforts on leads that are likely to close.

Marketing automation allows marketers to assign a score based on the demographic and firmographic information gathered on a prospect.

It also scores behavioral activity, allowing sales to see not only which leads fit the profile of the typical customer, but which have been engaging with the brand frequently, flagging those that show intent to purchase.

This is especially important in the B2B setting where buyer lifecycles are longer. A solid inbound marketing plan can bring in a host of leads—some may not be viable prospects at all, others may be at the beginning of the buying process, or close to the end.

The behavioral and demographic scores assigned to these prospects can give a measure of where they belong in the lead lifecycle.

Marketing automation handles the scoring and then also moves the lead from stage to stage based on pre-approved thresholds. This prevents junk data from cluttering up the sales workflow. It also prevents leads in the preliminary stages who are first assessing their organization’s need from being put off by a persistent salesperson.

Marketing automation helps ensure that the right leads get to the right people at the right time. By collaboratively defining criteria and parameters, marketing can help sales to prioritize their efforts.

For many companies, the decision to purchase CRM licenses is a no-brainer. Many of them have realized similar productivity and data management benefits by adopting marketing automation as well. According to the 2017 Salesforce State of Marketing Report, 67% of their 3,500 global respondents have adopted a marketing automation platform, and 21% plan to in the next two years. But a martech stack is only as good as the people who build it and manage it.

With near limitless opportunities for application, selecting and shaping a marketing automation platform for your business can be intimidating. Finding the right platform to fit your business model and ensure adoption is a must for success.

Don’t force yourself to go it alone; consider collaborating with an experienced external advisor that has previously implemented a variety of platforms and understands the pitfalls to avoid.