Saturday, December 16, 2006

Consumer Behavior

The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how
  • The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products);
  • The the psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);
  • The behavior of consumers while shopping or making other marketing decisions;
  • Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome;
  • How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and
  • How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

Understanding these issues helps us adapt our strategies by taking the consumer into consideration. For example, by understanding that a number of different messages compete for our potential customers’ attention, we learn that to be effective, advertisements must usually be repeated extensively. We also learn that consumers will sometimes be persuaded more by logical arguments, but at other times will be persuaded more by emotional or symbolic appeals. By understanding the consumer, we will be able to make a more informed decision as to which strategy to employ.
One "official" definition of consumer behavior is "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society."
Although it is not necessary to memorize this definition, it brings up some useful points:
  • Behavior occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use).
  • Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. Product use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest.
  • Consumer behavior involves services and ideas as well as tangible products.
  • The impact of consumer behavior on society is also of relevance. For example, aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national health and economy.
There are four main applications of consumer behavior:
  • The most obvious is for marketing strategy—i.e., for making better marketing campaigns. For example, by understanding that consumers are more receptive to food advertising when they are hungry, we learn to schedule snack advertisements late in the afternoon. By understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, we learn that (1) companies that introduce new products must be well financed so that they can stay afloat until their products become a commercial success and (2) it is important to please initial customers, since they will in turn influence many subsequent customers’ brand choices.
  • A second application is public policy. In the 1980s, Accutane, a near miracle cure for acne, was introduced. Unfortunately, Accutane resulted in severe birth defects if taken by pregnant women. Although physicians were instructed to warn their female patients of this, a number still became pregnant while taking the drug. To get consumers’ attention, the Federal Drug Administration (FDA) took the step of requiring that very graphic pictures of deformed babies be shown on the medicine containers.
  • Social marketing involves getting ideas across to consumers rather than selling something. Marty Fishbein, a marketing professor, went on sabbatical to work for the Centers for Disease Control trying to reduce the incidence of transmission of diseases through illegal drug use. The best solution, obviously, would be if we could get illegal drug users to stop. This, however, was deemed to be infeasible. It was also determined that the practice of sharing needles was too ingrained in the drug culture to be stopped. As a result, using knowledge of consumer attitudes, Dr. Fishbein created a campaign that encouraged the cleaning of needles in bleach before sharing them, a goal that was believed to be more realistic.
  • As a final benefit, studying consumer behavior should make us better consumers. Common sense suggests, for example, that if you buy a 64 liquid ounce bottle of laundry detergent, you should pay less per ounce than if you bought two 32 ounce bottles. In practice, however, you often pay a size premium by buying the larger quantity. In other words, in this case, knowing this fact will sensitize you to the need to check the unit cost labels to determine if you are really getting a bargain.
Article source: consumerpsichologist.com

Case Study: eBridge reduces CPA by almost 40%

eBridge reduces CPA by almost 40% for its Web hosting advertisers with Revenue Science Search Re-Targeting™

Synopsis:

eBridge Marketing Solutions is a leading provider of Internet marketing solutions for online advertisers. Its clients include Web hosting advertisers that are among the top buyers of paid search in the industry. eBridge was looking for a way to help these clients optimize their search ad spend and lower their cost per acquisition (CPA).

eBridge found the solution with Revenue Science’s Search Re-Targeting Program. This program helps extend search dollars by re-targeting searchers who click on the advertiser's ad but don't immediately convert. After the searcher leaves the advertiser's site, the program re-targets ads at them across a network of sites representing 30 billion impressions per month.

After implementing the program with its Web hosting advertisers, eBridge saw their CPA fall by nearly 40 percent. The advertisers were so pleased with the results that 100 percent of them renewed their campaigns with eBridge. And the success of the program has enabled eBridge to expand program adoption among its other clients.

CLIENT:
eBridge Marketing Solutions representing multiple Web hosting advertisers
• Almost 40% reduction in CPA for advertisers using Revenue Science program
• 100% campaign renewal and increase in program adoption
• Improved campaign performance with personalized support to help optimize media plans
• An ideal complement to advertisers' existing paid search programs

“Revenue Science Search Re-Targeting is the perfect way to maximize clients' existing search dollars. Our clients saw an almost 40% decrease in CPA.” -- Hartland Ross, President and CEO, eBridge Marketing Solutions

Company:
eBridge Marketing Solutions is a leading provider of Internet marketing solutions for online advertisers. Its clients include technology companies such as Web hosting advertisers that are among the top buyers of paid search in the industry.

Situation:
eBridge's Web hosting clients are big spenders of search marketing. But the agency wanted to achieve more with its clients' ad dollars. As cost per click for paid search rises and less than 25 percent of purchases happen on the day of an initial search, the agency was looking for a way to lower its clients' cost per acquisition (CPA) and optimize their existing search ad spend.

eBridge found the solution with Revenue Science’s Search Re-Targeting Program. This program helps extend search dollars by re-targeting searchers who click on the advertiser's ad but don't immediately convert. After the searcher leaves the advertiser's site, the program re-targets ads at them across a network of sites representing 30 billion impressions per month. This means advertisers can re-message to their target audience during the most pivotal time in their decision cycle.

Results:
eBridge implemented the Revenue Science Search Re-Targeting Program with some of its top Web hosting advertisers. Since then, eBridge has seen an almost 40 percent reduction in CPA for these advertisers. The results were so impressive that all existing advertisers renewed the program, and eBridge expanded program adoption among their clients.

"The Revenue Science Search Re-Targeting Program gave us a compelling new offering to recommend to clients as part of an integrated search media plan. Our clients are really interested once they see how effective the program is at maximizing dollars spent on paid search," says Hartland Ross, President and CEO of eBridge Marketing Solutions.

The agency was also able to help clients optimize their Search Re-Targeting campaigns through exceptional customer service from Revenue Science. A dedicated customer experience manager helped the agency get started, analyze clickthroughs and conversions, and make adjustments to improve campaign performance.

Learn More about Revenue Science Search Re-TargetingTo learn how you can extend dollars and results for your current paid search program with Search Re-Targeting, contact Revenue Science at sales@revenuescience.com or call 1.888.308.3444.

About eBridge Marketing Solutions
eBridge Marketing Solutions makes online advertising simple. Their online marketing consulting services will better position your products and/or services for your appropriate target market so you will see increased qualified website traffic in less time and at a lower cost. Their knowledgeable website marketing consultants are extremely well connected and work with hundreds of online advertising sites as well as numerous email lists, list managers, networks and search engine optimization services to save you, the advertiser, both time and money.
For more information, visit http://www.ebridgemarketingsolutions.com.

About Revenue Science
Revenue Science is the Behavioral Targeting leader for brand and search advertising with the science, service and scale that make targeted advertising easy to buy. The Revenue Science Behavioral Targeting Marketplace™ connects marketers to qualified audiences while creating a more relevant consumer experience. Innovative programs provide behaviorally targeted solutions with proven results to the world’s top brand and search advertisers.

With Revenue Science Search Re-Targeting™, advertisers can extend search marketing results and lower CPA by identifying and re-targeting a qualified audience after their initial search. This program provides the most cost-effective way to influence and drive conversions from your target audience during the most pivotal time of their purchase cycle.

For more information, visit www.revenuescience.com.

Making Money on the Web

by: Mat Greenfield
source: Conversion Results
published : May 02, 2006

There are essentially two sides of the equation for creating an effective website. First, how much traffic do you drive to the site? And second, what happens when a visitor gets there?

An effective web marketing strategy addresses both of these issues. Here’s a metaphor; imagine that you’re trying to put out a fire, but you have two problems – the water pressure is just a trickle, and your hose leaks. Which do you fix?

On the web, most companies seem to ‘turn up the water pressure’, spending money to drive more traffic to their site with strategies such as pay-per-click advertising, e-newsletter sponsorships, and search engine optimization. What happens? The hose leaks faster. Sure, they experience some increase in overall results (some water makes out of the hose), but most of their efforts are wasted in ‘leaks’.

A more effective approach for the web is to patch the holes in the hose, and then increase the water pressure. You’ll substantially increase the amount of ‘useful’ water. That is to say, your website will produce dramatically more in the way of leads and sales.
Here’s an example to illustrate:

LeakyHose.com receives 100 site visitors per month, and converts just 2% of them into qualified leads (the B2B average, according to research). They decide to spend $5,000 on a search engine optimization program, and $1,000 per month on pay-per-click advertising ($17,000 annual total). These strategies are fairly successful, increasing visitors by 5 times.
This is how their numbers would look:

• 12 month cost: $17,000
• Site visitors: 6,000
• Number of leads: 120

Let’s assume that they ‘close’ 25% of their website leads, with an average sale amount of $200. Their sales for the year (from web leads) would be just $6,000 - not even close to their investment amount.

If their average sale amount were $1,000, they would make $30,000 – a reasonable return on investment.

Let’s contrast FixedHose.com that has an identical business, but decides to increase website conversion rate before implementing site promotion strategies. FixedHose spends $15,000 on a new website that converts 15% of site traffic into leads.
Assuming that all the other numbers are the same as LeakyHose.com, let’s see their results

• 12 month cost: $32,000 ($15k for site design plus $17k for site promotion)
• Site visitors: 6,000
• Number of leads: 900

If they close the same 25% of web leads as LeakyHose, with the same average sale amount of $200, their sales for the year (from web leads) would be $45,000, easily reaching their ROI point in the first year. (The second year would be even more favorable, because costs would be just $12,000.)

If their average sale amount were $1,000, they would make $225,000 in their first year – a fairly impressive return on a $32,000 investment.

Now I understand that that’s an oversimplified example, not accounting for product costs, etc. But it’s a powerful illustration of how essential it is to address both sides of the website equation – site promotion AND conversion rate.

Incidentally, if the company in the example above decided to do the site conversion project, but not the site promotion (they still only have 100 visitors per month) here’s how the numbers look:

• 12 month cost: $15,000 for site re-design
• Site visitors: 1,200
• Number of leads: 180
• Revenue at $200: $9,000
• Revenue at $1,000: $45,000

At this point you should be asking yourself two questions. First, is it possible to increase conversion rate to 15%? And secondly, is it possible to get 5 times the leads using site promotion strategies? We have found that the answers are yes, and yes! But you will need a very deliberate approach to both – you’re unlikely to create these sort of number ‘by accident’. It’s also likely that you’ll need to undertake a fairly major project, a few tweaks of your homepage won’t do it.

Even then, this type of strategy won’t work for every business. Here are a few ‘symptoms’ that indicate that this type of approach would be helpful (and a few quick band-aid ideas):

• ‘Home page only’ – excessive use of the back button by your visitors indicates a failure to engage their interest. Consider a strong ‘positioning statement’ on your homepage, and reduce the overall number of links on that page.

• ‘Click vs. brick’ – a low number of site visitors to a niche product/service provider, but a good number of (off-line) satisfied clients and customers can highlight the need for a more robust site promotion and lead capture strategy. Test some pay-per-click advertising such as Google Adwords by putting a hundred buck or so into an account and just experimenting.

• ‘No thanks, just browsing’ – high traffic but little or no conversion can indicate a site structure and strategy that does not facilitate lead capture. Consider ‘steering’ visitors sequentially through key points of your value proposition, and then making them an offer.

• ‘Ha, just kidding’ – a high number of shopping cart abandons can indicate some sort of sticker shock, or red flag in your purchase process. Ask some impartial associates for an honest opinion.
If you can relate to some of these ‘symptoms’, you might consider a more robust strategy to convert site visitors into ‘action-takers’.
An effective strategy will likely be:

• Highly pre-meditated – you won’t do this by accident.
• Based on specific goals – as Covey says, you must “begin with the end in mind”.
• Focused on your target audience – the sniper rifle is almost always better than the shotgun.
• Complete in its approach – a more appealing graphic design won’t be enough.
You’ll have to address issues such as site structure, messaging, calls to action, offers, and lead capture.

Copyright © 2006 Conversion Results

Tactics for Turning Visitors into Customers

by: Mat Greenfield
source: Conversion Results
published : May 07, 2006

If you’ve been involved in generating leads or sales on the web for any period of time, you’ve probably reached the same conclusion that many of your web colleagues have, namely increasing the amount of traffic that your site receives is easier than turning more of your existing traffic into leads and customers (we’ll call this a ‘conversion’).

An effective web marketing strategy addresses both of these issues. Here’s a metaphor that will explain the situation that many companies find themselves in: imagine that you’re trying to put out a fire, but you have two problems – your water pressure is just a trickle, and your hose leaks. Which do you fix?

On the web, most companies seem to ‘turn up the water pressure’, spending money to drive more traffic to their site with strategies such as pay-per-click advertising, e-newsletter sponsorships, and search engine optimization. What happens? The hose just leaks faster. Sure, these companies experience a slight increase in overall results (some water makes it out of the hose), but most of their efforts are wasted in ‘leaks’, and their costs are increased in greater measure.

A more effective approach for the web is to patch the holes in the hose by increasing the number of visitors that take action (a conversion), and then increase the water pressure. You’ll substantially increase the amount of ‘usable’ water. That is to say, your website will produce dramatically more in the way of leads and sales.

I’m convinced that ‘conversion’ is the next great frontier for web marketers. Think about it, a few years ago it was possible to out-tech your competitor. What I mean is you could create a better website just by knowing more about the technology – more about flash, more about shopping carts, more about search engine optimization, more about pay-per-click, etc. But in 2005 your competitor has the same access to great information and tools that you do. But the need to out-sell your competitor remains – hence the importance of conversion.

The Purpose of this Guide

There are many tools, tips, newsletters, and books that assist with increasing the amount of traffic that a site receives, but much less information on increasing conversion rate. I think there are two reasons, the first is that driving traffic is easier than increasing conversion rate, and second, any increase in traffic will yield some return (assuming that the conversion rate remains constant) giving the illusion of an acceptable increase.

However, increasing conversion rate is actually a much more profitable activity, and is top priority for serious web marketers (and inevitably hits the radar screen for other companies once they’ve exhausted the ‘low hanging fruit’ strategies for increasing traffic).
The purpose of this guide then, is to provide five step-by-step activities that will increase website conversion rate. Now, I won’t mislead you – these tactics won’t take the place of a complete marketing strategy, nor in some cases will they take the place of a complete site re-design. But, if these steps are followed, any website will have a better overall conversion rate.
Where do the Five Tactics Come From?
Over the past few years, my company has evolved from a general marketing consulting company, to focusing on developing high-conversion websites. During that time, we have identified a number of effective principles which increase conversion rate. These principles have become ‘best practices’ for us, as we design and implement full-website projects for our clients. These principles are fully effective when implemented during a complete web site re-design, but can be partially applied as a band-aid to an existing website. In this guide I pass five of these best practices on to you in the form of step-by-step tactics.

To sum everything up, this guide does not offer an entire view of everything that could or should be done to increase conversion on a website. Instead, it provides a fast, but effective way for the web marketer to increase website conversion rate with very little effort. In addition, these tactics can likely be implemented by a business owner in just a few days, with the aid of any competent web programmer.
The Five Tactics
Here are the five tactics for increasing your website conversion rate – today!

1. Simplify your homepage
2. Add a call-to-action to every page
3. Get your copy edited by an outsider
4. Give something away
5. Implement an autoresponder follow-up process

I understand that these steps look simple (perhaps too simple to be effective), but don’t be deceived. There is an inherent power in these five steps despite their simplicity.
Let’s look at the five tactics in detail:

Web Alchemy Tactic #1 - Simplify your homepage

For a moment, I’d like for you to reflect on your experience of driving along the freeway. Have you ever seen a new billboard, but before you could understand what it was, you were past it?
Your web site home page is actually not so different. The visitor’s mouse hovers over the ‘back button’, just waiting for a reason to click. So, your goal is to provide a reason for the visitor to stick around and delve deeper into your site.

One of the problems with many homepages is the sheer amount of everything. As an Englishman living in the US, I feel somewhat qualified to comment on the American philosophy that ‘bigger is better’ (think SUV’s, hamburgers, and retail stores). However, for your homepage, I want you to change your mantra to “less is more”.

Ideally, viewing your entire homepage wouldn’t require any scrolling. In addition, in a split second it should be pretty clear what you offer, and to whom you offer it (remember the billboard drive-by). There should also be a few very specific places to click next. Any extraneous information is likely to be a distraction.

So here goes your assignment:

1. Identify any information that really doesn’t need to be there (your goal is to reduce the overall page length to eliminate scrolling).
2. Reduce the overall number of possible links, and make sure that the main items visitors are looking for are more visually prominent than other navigation options.
3. Replace any detailed text with a ‘positioning statement’ that describes your main value in less than 25 words. Use graphic design to make this positioning statement stand out.

Web Alchemy Tactic #2 – Add a call-to-action to every page

Have you ever visited a website, read a page that you found very interesting and compelling, but then been forced to scroll back up to the main nav bar to figure out where to go next? Wouldn’t it have been more helpful if there had been an obvious next click for you to continue learning about that product or service? Wouldn’t you have been more likely to buy if the site had made it easy for you to get all your questions answered by reading about a product in a logical flow?

You should implement a call to action on each page to achieve exactly that. In the general sense, a ‘call to action’ is an instruction. When you see an infomercial on TV and they say “pick up the phone now to order” – that’s a call to action. When a local car dealership sends you a flyer in the mail which reads “come to our showroom for a test drive” that’s a call to action. In the same way, you can use calls to action on websites to instruct and direct visitors what to do next.
Consider the call-to-action a ‘signpost’. In other words, it’s a navigation tool, literally telling the visitor where to click next. Essentially it says, “if you like what you read here, then go here next”.

A signpost call-to-action is often as simple as a “click here for more” or “next” link at the bottom of a page. Our testing has shown that more descriptive calls-to-action are often more compelling than simple text like “more” or “next”, so consider using a little ‘tease’ in your signpost. “Learn how we do it” was a call-to-action that we used quite successfully on a recent client site.
Graphically, the call to action should obviously be the most appealing click for a visitor to take. Using a ‘roll-over’ effect on your text is often helpful to guide the visitors’ eye towards your CTA.

Your assignment:

1. Individually consider each page of your site. Where would it make sense for you to direct the visitor to go next?
2. Based on that, create a graphically appealing call-to-action for each page and place it below the last sentence of text.

Remember not to get visitors lost in a perpetual loop of inter-linked pages. Ideally, wherever they enter your site, each visitor will end up at your main offer (see Alchemy Tactic #4) within a few clicks.

Web Alchemy Tactic #3 – Get your copy edited by an outsider

In many ways, your site text (‘copy’ or ‘messaging’) is the single most important element of your website. The key is to speak to your target audience in a way that they really understand. Just like any other marketing copy, your web text must be concise, clear, and compelling.

Concise: We’re all busy, so don’t use 57 words when 7 will do.

Clear: I understand that some visitors are more savvy than others, but if your message requires a technical manual to understand then you’ve probably lost most of your visitors in the first sentence.

Compelling: You need to appeal to emotion as well as intellect. Tell me why I want it before you tell me what it is…

Remember your message is what highlights your unique value in the marketplace. It’s what sets you apart from your competitors. Give people a reason to do business with you. Get them excited about the benefits of your products and services.
Intellectually, most web marketers understand the need for clear, compelling text. The problem is that many have difficulty actually writing text that meets that description. One of the reasons is that people get so close to their products and services, becoming experts in their respective industries that they lose the ability to explain what they do in simple terms.
So here’s the solution (and your assignment). I’ve heard it called ‘the history professor test’.
Find someone outside your company and industry that is intelligent, but has no training or education in your particular field (like a history professor). Ask them (or pay them, or whatever) to review your website text and give you feedback on three key concepts:

1. What products and services do you provide?
2. To whom do you provide them?
3. How does that group benefit from using your products?

This is the real key. If your ‘history professor’ can’t explain these 3 points from having read your site text then it must be re-written.

You mustn’t second-guess your history professor. If they say you’re your text is unclear, believe them! For that reason, choose your History Professor carefully – pick someone whose opinion you value, but is entirely outside your industry.

Ideally, you’d enlist their help in refining your text to better communicate these 3 points. Once you’ve re-written your text, you should repeat the test – with a different history professor.
This will give you an objective eye, which allows you to develop concise, clear, and compelling web copy.

Web Alchemy Tactic #4 – Give something away

One of the keys to website conversion is to offer something for free. Well, not exactly for free, but in exchange for the visitor’s contact information. This is even a good idea on websites that are primarily e-commerce in nature, because the free giveaway offers a lower commitment transaction for the visitor who hasn’t yet decided to purchase. The real advantage of course, is that you now have the opportunity to follow-up and create a sale at a later point (see Alchemy Tactic #5 for more on a follow-up strategy).

The key to an effective offer is that it must be of high-perceived value to the site visitor, and low cost of delivery to you. Using that measurement, you’ll realize why “contact us for more information” isn’t terribly compelling.

My favorite types of giveaways are information based. If you sell products, think about offering a buyer’s guide or a ‘getting the most out of your new widget’ guide. Service companies can usually put together some valuable ‘insider information’ such as the travel agent who gives tips on how to get upgraded to first class.

These guides can be nicely formatted, and turned into a PDF using a free tool like PDF995 (www.pdf995.com). Always remember to include your contact information so that if your document gets forwarded, readers can still contact you for more information.

Your assignment:
1. Create an ‘offer’ that meets the ‘high perceived value, low cost to deliver’ rule.
2. Build a web form to capture lead information as an entry to your offer.
3. Promote your offer at various points on your site.
(Using some of the calls to action from Tactic #2 is a good starting point.)
Web Alchemy Tactic #5 – Implement an AutoResponder follow-up process

I worked at a software company a few years ago. One day I came across a dusty old box of what looked like a couple of thousand sales leads. When I asked what it was, I was told that a couple of years earlier, the company had scraped together the cash for an ad in Fortune magazine, to promote a new product they had launched. When I inquired how successful the ad was, I was told that the sales team had been too busy to follow up on the leads, and no sales had resulted... (Excuse me?!)

Now I’m not sure how typical that is, but I suspect that most companies have a ‘didn’t-follow-up-on-good-leads’ skeleton in their closet. The sad part is that, in 2005, following up on sales leads isn’t at all difficult.

Just imagine having an assistant that would send out follow-up emails in a pre-set sequence, on a pre-set schedule to individuals that request information from your company. Sounds expensive, right? Not really – an autoresponder will do exactly that for about $20-$50 per month.

Here’s how a simple 3-step autoresponder campaign might look:

Immediate – “Thanks for downloading our Widget buyer’s guide”3 days later – “10 reasons to buy widgets from us”4 days later – “Special offers for first-time widget buyers”

Of course, your campaign can (and probably should) be more elaborate than that. You can also create an autoresponder campaign for new customers (offering them add-ons, up-sells, and new models).

One of the most robust and simple to implement autoresponders that we have found is IntelliContact (www.intellicontact.com). Their monthly fees are reasonable, and you get a pretty awesome toolkit for the money.

What’s Next?

Earlier in this guide, I mentioned that you should be able to implement these tactics in a day or so, and I’m serious. I’d imagine a day for planning, copy writing, etc, and a day for actual web changes.

As I also mentioned earlier, this guide has not attempted to provide an entire view of everything that could or should be done to increase conversion on a website. Instead, we have outlined a fast, but effective way for the web marketer to increase website conversion rate with very little effort.

Since you’ve reached the end of this guide, I know two things about you. First, you’re serious about improving your website results. Second, you understand that you have to invest time and effort to make that happen. With that said, the decision is yours about whether to set this guide aside, wondering whether it would have been effective, or actually implement the tactics and reap the rewards of a higher conversion rate. As you know, increasing website conversion rarely happens by accident. It’s a highly pre-meditated activity, and only those companies that implement a specific plan will reach their goals.

Article source: AMA

Saturday, December 09, 2006

Case Study: Driving Sales Revenues By Targeting The Perfect Customer

Company: Viking Components, Inc. (dba Viking InterWorks)
Operations: Memory chips and modules manufacturer
Web site: http://www.vikingcomponents.com

Company Overview

“Viking InterWorks designs and manufactures a comprehensive range of DRAM, SRAM, Flash, Digital Signal Processing (DSP), Chip Scale Packaging (CSP) and other memory solutions to enhance the speed, power and performance of all leading computing and communications platforms and devices. Viking InterWorks memory solutions are available directly from leading OEM partners or through authorized channel resellers worldwide.”

Business Roadblock

Although it is tempting to think of every sale as a good sale, experienced sales professionals know better. Bad customers can cost more in time, complaints, and credit checks than they ever generate in revenues. Fortunately, most bad customers can be quickly weeded out, but how do you separate and target quality customers that meet your company’s ideal profile?
Doug DiMaio, director of sales at Viking InterWorks, turns to Hoover’s. DiMaio uses Hoover’s to pre-qualify prospects and identify potential customers that match Viking’s best customer profiles.

Solution

“As director of sales everything comes to me before it goes to a different department,” DiMaio said. This means that before a salesperson contacts an account, or before a potential customer is processed by the credit department, DiMaio checks them out first.

DiMaio uses the information on the Hoover’s Fact Sheet to determine if the prospect is part of Viking’s target. He can look up the company’s customers, its products and operations, where it is located, and its key people (“who’s who in the zoo,” DiMaio said colorfully). He can determine if the prospect is in Viking’s marketplace and can get an idea of the company, the territory, and most importantly, Does this sale make sense? Do the prospect’s priorities or goals fit with Viking’s for future business?

By pre-qualifying potential customers, DiMaio can avoid sending inappropriate prospects to the credit department and thus ensure he is not putting work into developing an account that ultimately gets turned down.
According to DiMaio, “Since I’ve used this method I don’t get near the rejection rate. Once we have all the proper information and the paperwork that we require, my clients have got at least an 80% or 90% hit ratio.”
In order for DiMaio’s prequalification process to work, he has to compare these potential customers against an existing profile of “the perfect customer.” Viking has completed such profiles for each segment of its business. Of course, not all customers will match these profiles, but they do have to fit into the overall goals of the company. And by setting these standards, Viking ensures that it will come close to achieving these goals.
As DiMaio puts it: “I don’t need other customers who are going to be part of our bottom 400. I want to add customers who are going to be in our top 20.”

Once sales reps have identified these dream accounts, they use this profile when prospecting on Hoover’s to determine if leads match these traits. The profiling process can also be used to identify warning signs, allowing reps to avoid putting time and effort into pitching an inappropriate company.
DiMaio sums it up this way: “Everyone has always had that great customer. ‘Man, if I only had more customers like that! I would just be killing it.’ Well, describe what that customer is. And what they do, and you have that perfect customer.”

Bottom Line

“I am very much about getting to know the right customers,” DiMaio said. The people in sales spend too much time getting to know the wrong customers, dealing with the customers who are complaining or they are trying to open clients that are not on that path. They will go for low-hanging fruit and go for the quick deal, but it’s a customer that is going to use a lot of your time and effort and your sales personnel’s time and effort and your customer service time and effort for very little revenue.”

DiMaio speculated that without Hoover’s, he would spend a great deal more time and energy pre-qualifying prospects by going to their Web sites and reading through their marketing materials and company documents — with no guarantee despite hours of work that they would be approved. He summed up Hoover’s value succinctly:
“We use it, we uncover business, and that’s why I pay to have the subscription. It pays for itself in the first order, with a year’s subscription.”
Article source: AMA

Monday, October 30, 2006

Marketing Brain



THE BRAIN OF MARKETING IS PROBLEM SOLVING.....