When it comes to hiring the marketing head, I have always preached hard the importance of looking at a marketing professional’s breadth of experience and hands on skills across ALL marketing functions and disciplines. Specific domain is important but secondary. Get a great chef and he can figure out the recipes. Get a line cook and you’ll need to give him specific recipes. At a startup, you often don’t have recipes etched in stone. So, go for the chef. I guess I should’ve also mentioned that preceding any of this is the more basic question of “consumer or business?”
I felt the timing was good to write about this a bit since in today’s tech industry and economy there will be more than a handful of folks considering the crossover from consumer to business marketing or vice versa.
There are some obvious differences between business- and consumer marketing in the technology arena. For example, in business marketing, the sheer number of customers you target are lower, frequency of interaction is higher, duration of engagement is longer, and level of conversation is higher. Another natural difference is in understanding buyer motivations. In business marketing, you’re really selling a complex product to a complex buyer with simple motivations (profit, cost savings, efficiency). In consumer marketing, you’re selling a simple product to a simple buyer with complex motivations. These seemingly obvious differences lead to an inordinate amount of subtle differences in the way various aspects of marketing are thought through and performed, or executed.
Here are just some examples for business marketing to better illustrate the distinctions. Recall that I am focusing on technology startups.
Customer Sales Cycle
The business marketer must recognize that the sales cycle is very long. It often takes many months to close a deal AFTER the initial desire to purchase has been expressed by a customer. This is primarily because you’re selling to an organization (vs. individual) where there are multiple decision makers. Even when there is one clear cut decision maker, you still need to equip him to persuade others to “buy in” or “support” the purchase. Beyond that, large business customers are a bureaucracy. It just takes a long time even when everybody loves your product. For marketers, it is tedious work to deliver compelling sales tools that meet the requirements of each part of this long sales process. You’ll need technical collateral to support the immediate buyer as well as business-oriented material for the others in the chain such as CXOs.
How it translates: You have to focus on a distinct segment and get some early wins. Each win takes a great deal of time and effort. This is precisely why most startups don’t go after the government buyer even though government outspends everybody on IT. Every technology (even those that serve horizontal needs) has verticals that are urgently served. At NetScaler, the urgent segment for us were high volume traffic e-commerce customers that delivered Web applications to the masses. Who urgently needs your product?
Market Positioning
The business marketer’s toughest job is to commit to a position and stick with it. It’s not as difficult as we make it out to be. One of the advantages of business marketing is that – unlike consumer marketing – we have some strong clues on buyer motivation. All business customers have fairly uniform buyer motivations. That is, customers buy product to help their organizations make or save money. With consumers, individuals have all sorts of motivations beyond profit or money. Consumers are unlimited in motivation and limited in resource. Businesses are limited in motivation and less limited in resource. Your positioning strategy has to keep this in mind. The key to positioning an emerging technology is to recognize pre-existing positions in the mind’s of customers. Position against their “knowns” with the eventual goal of displacing or dethroning those existing positions. Remember that markets are made up of buyers so focus hard on initially on finding a position in a buyer’s mind and moving up that ladder of priority.
How it translates: Don’t be afraid of taking a general position in an established category with a goal of growing your narrow position within it as you go on. Eventually, your position will widen as the entire category grows.
You’ll be a small fish in a big pond but, gradually, you’ll be able to become a big fish in a big pond. This is exactly what happened at NetScaler. (Quick note: Raj and I worked together at NetScaler during the tough IT buying winters of the post-dot bomb period so we tend to refer back to it quite frequently. NetScaler was a networking starbntup that pioneered application delivery, growing from less than $1 million to well over $100 million in revenue today. In mid-2005, Citrix Systems acquired this once nearly bankrupt startup or $325 million. It’s a great case study for startup execution during tough times – an environment we seem to be in now). In 2002, NetScaler was positioned as a “god box” or “traffic management appliance” or “multifunction performance and security and access appliance“ or “Request Switch.” It can be deployed inline or hang off another box. Endless choices. It couldn’t sell. No one understood it. No one cared. (See Raj’s post on Packaging and the Paradox of Choice).
It turned out that customers saw our products in a more generalized way. Countless times, they told us that our products were either powerful load balancers or advanced Layer 4-7 switches that did a lot more than existing offerings. The RFPs we were exposed to were for replacing aging load balancers and content switches. We quickly began selling into the load balancer market while creating a distinct position for “application delivery” within that market. Today, the narrow position we created and occupied is on a course to overtake the broader category for L4-7 networking.
Messaging
Startups typically sell a complex product to a complex buyer with simple motivations. Messaging needs to reflect an understanding of this reality. Frankly, it’s very hard to get across business-level messages on the value of the product (to address the buyer’s motivation to purchase) while at the same time getting across a deep, highly complex set of information (to address the complexity of the product as well as complexity of the implementation into a (you guessed it) complex IT environment – which, in turn, supports a critical business process). It’s a sophisticated problem for tech marketers. The ideal approach is to have a balance of the two. But, if one must be chosen over the other, it is always better to err on the side of simplicity and focus on the business-level message than the other way around. Buyers need to know your end value vs. the means.
For consumer marketing, you’re dealing a lot more with a shorter sales window using simpler messages all around. Plenty would argue that messages in consumer marketing is a lot more sophisticated because of the need to appeal to unknown motivations. Consumer marketing has to get customers to act. This is why consumer marketing is heavily reliant on call-to-action. Business marketing does some direct marketing but it’s never to get them to buy on the spot, it’s rather to get them to consider buying. The goal is not to get an order right away but rather getting them into testing or trialing the goods.
How it translates: Make your top-line messages fairly high level so it addresses values vs. features to drive, or open, selling opportunities. Beneath it, support those value messages with a series of specific material detailing how the product achieves those values for a given set of customers to help shorten the sales cycle. Blurry, unclear language lengthens the sales cycle. Use clear, descriptive English. But, the operative phrase is “given set.” If you do not focus on a handful of core use cases, your efforts will go into a chaotic tailspin because there are about a hundred use cases that’ll be thrown at you. The use cases on which to focus must be defined and set with sales – not in a vacuum. The reason why this is important is because your frontline sales people are in the best situation to sense or gauge the level of urgency of a particular set of customers.
Marketing Mix
This is the area where business vs. consumer marketing shows the biggest practical gap in terms of specialization and skills. Consumer marketing relies heavily on pricing relative to promotions. Emerging technology products are somewhat price inelastic and thus, product promotions are not as effective. Beyond promotions, consumer marketing employs sophisticated pricing strategies such as comparative pricing (list vs. special), penetration pricing (enter low, raise later), loss-leader pricing (below cost), and so on. Many of these schemes do not work in business marketing. Can you imagine penetration pricing for a new technology in B2B? Business tech buyers are not as price sensitive as consumers.
Advertising is not used in business marketing as frequently as it is in consumer marketing. Strong (industry) Analyst Relations is important in business marketing while it’s nearly irrelevant to consumer marketing. Word-of-mouth is powerful for both. Distribution is another factor that uniquely impacts the marketing mix.
How it translates: If you’re a B2B marketer, don’t waste a lot of energy and time on having a great big mix. Do a few things and do it well. Above all, get to know your customers and care about them. Consumer marketers monitor a prospect through the entire sales process and make all kinds of adjustments as they go along (e.g., tweaking POS promos, signage, new offers, pricing changes, etc.) to increase conversion rates. Business marketers rarely get the opportunity to adjust midflight because they hand off a prospect to the sales team (direct sales or channel partner or whatever) then move on. Do your best not to move on. A good customer marketing program will allow you to keep close quarters with customers and help sales close the deal in the process.
- John
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