Is your company addicted to bad profits?

Fred Reichheld argues in his new book titled, The Ultimate Question, Driving Good Profits and True Growth (HBS Press, 2006), that most companies are “addicted to bad profits” and that makes it hard for them to achieve real and sustained growth:

“A recent study by Bain & Company found that only 22 percent of the world’s major firms achieved real, sustainable growth of even 5 percent a year over the ten-year period from 1994 to 2004.”

Bad profits are defined as any profit earned at the expense of the customer relationship.  The logic is that if you don’t treat customers well, they will not only leave you at the first opportunity, they will also tell everyone they know, to do the same.  These “detractors” extract a huge financial toll on your company.

The other side of the coin is that if you do take good care of your customers and turn them into “promoters” then they will sing your praises to everyone they know and new customers will flock to you as a result.  Further, these new customers will be very profitable and loyal.

So far, this is not new information to most of us.  Here’s what’s new.  Mr. Reichheld and his colleagues at Bain & Company have figured out how to measure the quality of the relationships a company has with its customers. 

This is huge.  Pause, take a deep breath and ponder the ramifications…

No, we are not talking about that old satisfaction survey voodoo that everyone knows doesn’t help.  We are not talking about transaction surveys like you may get after buying something or calling technical support.  We are talking a predictive snapshot that very reliably predicts future customer behavior.

If you are willing to give up bad profits and pursue only good profits, you can then and only then, deliver real and sustainable growth. 

It will take a decade or more for this approach to work its way through the economy.  It will happen because it’s more profitable and we love profits.  You will know it has happened when you find investors and customers demanding to see audited Net Promoter Score (NPS) data.

This is also the beginning of the end of “sales” as we know it today.  The profession will vanish and be replaced by customer service…but that’s another story.

How to triple your event response rate…taking a lesson from direct mail

We recently began a multi-channel event recruiting campaign.  The goal was to get as many target market prospects to our event as possible. 

We began by launching a broadcast email wave.  We send everyone on our list a customized email.  A day later we called everyone and either spoke with them or left a voice mail message.

We ended up with a 3% response rate.  Not bad for enterprise security at the executive level.  Then we tried running the same campaign against another list.  We came across the second list almost by accident and only decided to try it because we still had seats to fill at the event. 

The difference between the first and second list was noticeable within the first hour of calling.  You can just tell when one of your key variables like list, improves.  The calls are warmer, the resistance is lower. 

Fast forward through days of calling and emailing.  When the dust settled, the final response rate ended up at…drum roll please…a whopping 9%. 

All we did was change one key variable, the list, and our response rate tripled.  We didn’t change the script, the email copy, the offer or the presentation, only the list. 

Okay, so what’s so special about the second list that it caused the response rate to triple?  The short answer is that the second list was based on behavior and not just demographics.

The first list was just names and titles based on where someone worked and the geography.  The second list was a list of people who had shown up at a similar event.  The second list was an attendee list for an event that was somewhat similar to ours.

The key was that people on the second list were not only demographically within our target zone, but more importantly, they had recently demonstrated the behavior we wanted them to do, namely come to our event. 

Any good direct mail professional will tell you that the best responders are those people who have responded to a similar offer in the recent past.  Direct mail professionals have all kinds of formulas and metrics to help them identify the people most likely to respond.  The one that applies here is called Recency.  Another key one for them is Frequency. 

The long and short of it is that if you can get your hands on lists of people in your target market, who have attended the kind of event you are trying to fill, do it.  This kind of list will respond at a much greater rate, as compared to ones based on static demographics.
 

JabberDog - broadcast voicemail

Insidesales.com, my dialer of choice, began offering a new service called JabberDog. The service allows you to send broadcast voice mail. You can send the same voice mail to as many people as are on your list.

You record your message, for example, a webinar invitation. The system dials the number and begins playing when the phone is answered either by a person or their voice mail box.

If the call ends up at the operator, a receptionist or call center, it won’t work. It can’t distinguish who answers. It assumes the person answering is the target contact. As a result, if you are B2B calling, you will only be able to call direct dial numbers. Not a deal breaker for me.

The message gives the person receiving the call three options at the end. The person listening to the voice mail message can be transferred to a live agent, request an email be send, or ask to be removed from the list.

With a good list, most of the contact I make as a result of a round of calling is voice mail. This could automate most of that. Cool. JabberDog could automate and speed most of my event pre and post contact stuff. Cool.

Cold broadcast B2B email is pretty much dead from a response rate standpoint. Cold broadcast B2B voice mail is new. It may take a year or so before response rates drop to the point of being a waste of time.

Hummm…cool. I think I’ll give it a try.

The worlds first self-cleaning CRM - courtesy of Jigsaw

Most people just dump names into their CRM and don’t give it a second thought. They think they’re done. They think they have a stable asset. They think that they have something that will not change.Then, a few weeks or months later, they try to fill an event such as a webinar or in-person seminar and almost no one registers. The response rate is well below miserable. At this point inquiring minds want to know what happened.

The first thing they notice upon closer inspection is that the bounce rate is through the roof. Most people throw up their hands and call it a day at this point. The prospect of dealing with the 50% of their CRM database that just bounced is daunting.

The real issue is that people’s situations change with astonishing frequency. And more so all the time. Statistically, some part of the information on the business card you just entered, will obsolete within just weeks or months.

Long gone are the days when you could just load up a name and expect it to still be good months later. A sales territory is no longer a stable thing demarked by state lines. Instead, a sales territory is like a big game of musical chairs. Everyone is moving all the time.

A CRM containing obsolete information is referred to as being “dirty”. All CRMs are dirty to some degree. The cost of keeping a CRM totally clean at all times is probably prohibitive and not necessary. You need to keep your CRM clean enough so that when you make an offer, you get an acceptable response.

Here’s where the rubber meets the road. So, who is responsible for cleaning CRM data? That’s right. No one is. Not marketing, not sales, no one.

So why isn’t anyone responsible for cleaning and making current one of the company’s most valuable assets? Mostly because nobody sees the issue. No one’s aware of the problem. Among those who are aware, the issue comes down to money. Cost.

There’s another related problem. Even if you are willing to pay the cost of buying clean data, you can’t. No one sells it. Everyone claims to sell “leads” but they are really only selling stale names. List providers are not immune from the forces that cause data decay.

So, if you can’t buy it, at least at a price that’s not astronomical, what can you do? Unfortunately, you have to do the work yourself. You have to validate every name, company, title, address, email and phone number by hand at a bare minimum of once per quarter.

The good news is that you can do this validation in conjunction with your lead generation or lead incubation (drip marketing) campaigns. You have to call, mail and email them all and then take the time to research, update and or delete anything that bounces in any way. We are talking time-costly grunt work.

Jigsaw is a business card sharing service that represents some light at the end of the dirty database tunnel. Jigsaw allows sales people to share business cards (leads). More importantly, it allows for data cleaning. This happens by virtue of the fact that members update each other’s business card entries with updates.

The result of over 100,000 members all editing and updating the Jigsaw database is that you get a leads database that is twice as clean as your average CRM database. All for a very low price.

ROI by channel: telephone wins

Which channel is best? Should we invest more heavily in telemarketing or direct mail, or something else? Marketers must wrestle with questions like this every day, as they try to come up with a mix that’s best for their situation. These are important questions as the stakes and the money are big.

This is a very helpful chart as it stack ranks the channels by an ROI index. The good folks over at the Direct Marketing Association have made his kind of comparison possible by factoring both revenue and cost.

The telephone channel scored the highest ROI index rating (18.2). E-mail came in second at 16.0. See the chart to review the ten other channels rated.

Even though I’m biased toward the telephone because I’m mostly a phone guy, I’m still somewhat surprised by the results. It should be noted that this information does not apply directly to technology sales and marketing, my beat. It’s broader in scope and I’d assume focuses on lower price points. Still it is a data point, and as such, it’s helpful.
This data point deals with revenue generation, not lead generation.

On the lead generation side, I ran across this interesting post at Brian Carroll’s blog:

B2B marketers voted B2B telemarketing as the #1 safest tactic they would be most likely to invest in if their CEO gave them an extra $50,000 for lead generation. (MarketingSherpa survey of 729 marketers)

It would seem that the telephone channel is alive and well on the lead generation side also.

Of course, it’s best to use a multi-channel sequenced touch point approach, but that’s another story.

Beware the coming recession (ECRI can ease the pain)

The media “talking heads” are beginning to use the r-word. There is some speculation that we may be heading into a recession, beginning in 2007.

Those of us, like me, who got flattened by the tech bust of 2001 are keen on keeping an eye on the economy. Nothing can dry up and blow away a pipeline, job or company like a good recession.

I’m here to share a wonderful find with you. I stumbled across the ECRI (Economic Cycle Research Institute) a few months ago on a blog.

The short story is that these guys are the undisputed primary source when it comes to calling recessions and or recoveries. These are the guys that other economists turn to when it comes to recessions. From the ECRI website:

As The Economist magazine recently noted “ECRI is perhaps the only organization to give advance warning of each of the past three recessions; just as impressive, it has never issued a false alarm.”

The ECRI has accurately called every recession and recovery in modern times. They are super-smart and have their own funding.

They publish a very concise weekly report with commentary and charts. If you buy their book you get access to the weekly reports for three months.

Even though most people consider economic cycles to be “dry as dirt” from an interest standpoint, I highly recommend their book. The book gives you an important understanding of how and why we have economic or business cycles. We tend to forget how painful they can be for so many of us.

We also forget that they are inevitable; like death, plaque and taxes. Best to be aware of them, to understand the basics and do what you can to prepare.

Nothing beats being able to see into the future of the business cycle like you will if you become an ECRI subscriber. My ECRI subscription is some of the best money I spend. It saves me the time and trouble of getting bad information from the mainstream media on this very important topic. This belongs front and center on your dashboard.

Now is the time to check your value proposition. Only the strongest value propositions have a chance of surviving a real recession.

Dr. Evil speaks

As a long-time user and huge fan of Jigsaw I was excited to read this article. I was surprised to find out that Jim is such a wise CEO, far above average.

Guy Kawasaki interviews Dr. Evil, aka Jim Fowler, CEO of Jigsaw.com.

His comments about how all employees will be the ultimate beneficiaries of Jigsaw, are interesting. Not just sales people and or business owners. His observation is that having so much employee information available will mean recruiters can find and place more people more often. This tilts the balance of power from employers to employees. Interesting and plausible.

I was also impressed by his comments about how Jigsaw will reduce the number of “innocents” who have their time wasted by us sales people who are trying to find the “right” person.

“Many critics don’t understand how the process of selling actually works. Sales people spend a huge amount of their time just looking for the right people to contact. Surveys of our 100K+ members show that the average time spent doing this is 33%! Sales people must call and crawl all over a target organization and waste the time of many ‘innocent bystanders’ who are not the right people. This process sucks for everyone involved.” (Jim Fowler as interviewed by Guy Kawasaki)

The interview also reveals the history of the nickname.

A good read.

Bay Area Telebusiness Alliance

This is a really good group. Once per quarter they, now we, get together to share information about topics of concern to technology company inside sales people and organizations.

I attended my first of their meetings today. It was time well spent. I got a lot of good information that I will be able use and met new people.

The best parts of the meeting were the vendor presentations. We saw Jigsaw and Nomea - both were eye openers!

See the invitation listed below for more details.

Find out more here.
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Please Join us for our 2006 Q3 Bay Area Telebusiness Alliance Meeting

The goal of the Telebusiness Alliance group is to share industry best practices and provide support and mentoring. The Telebusiness Alliance is a group of Telebusiness (Inside Sales) professionals who meet regularly under nondisclosure to discuss mutual business issues. Members benefit by networking with industry peers and sharing expertise in areas that relate to professional business-to-business sales, support, marketing, compensation and other topics germane to the unique needs of the inside sales function. As a result of attending Telebusiness Alliance meetings, members gain access to information that will lead to increased productivity, increased revenues and decreased cost of sales for their companies.

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What?

Motivation and Recognition

o Based on the feedback that we received in our last meeting, we are dedicating our August 8th session around motivation and recognition for all Inside Sales teams. This discussion will be driven from the attached survey that the board members have compiled to share best practices on what each of us are doing today with motivation and recognition. We will review your feedback in small break out sessions keeping with a few key goals in mind:

ü What’s working for similar inside sales groups

ü Brainstorm different ways to motivate and recognize

ü Benchmarks that we can refer to and build towards

Two Guest Speakers

o What tools are available to increase lead generation productivity? Today we are honored to have two guests share how their companies add value in making the qualification process an efficient and successful one!

ü Garth Moulton, Co-founder & Director of Business Development of Jigsaw, http://www.jigsaw.com/

o Jigsaw is a Global Business Contact Marketplace, where members get business contact information. Members get two contacts back for every good business contact they add to Jigsaw. Contacts have complete information including business email address and phone number. The contact information allows sales professionals to contact prospects DIRECTLY, and bypass gatekeepers.

ü Andrei Stoica, Partner of Nomea, www.Nomea.net

o Nomea software connects a client’s sales representative with virtual one or many assistants who place outbound calls on their behalf. When the assistant reaches a decision maker, they say nothing, and simply transfer the call to the client’s sales representative who then begins the pitch. The transfer is seamless and the prospect is left with the impression that the salesperson placed the call.

Where?

Juniper Networks has volunteered to host our next meeting (Thank you Jeff!) and it will be held at the following location:

Juniper Networks

1194 North Mathilda Ave

Sunnyvale, CA 94089

When?

Tuesday August 8, 2006 8:30am to 12:00pm

What to bring?

Your completed Motivation and Recognition feedback form for the break-out sessions

Join our next meeting!

Please RSVP to this email address (mjshutte@riverbed.com) and feel free to forward this invite to other Inside Sales Management that you know.

Looking forward to seeing you,

Fran Kathriner, Mary Jane Shutte, Randi Laforge Board Members, Telebusiness Alliance

How to “own” the Fortune 500

If you sell a technology product into the Fortune 500 you are in luck today. You are in luck because I’m going to tell you about ITS Profiles. ITS Profiles is a company that has twenty full time researchers who find out everything you need to know to get your foot well into the door of any Fortune 500 IT department.

We’re talking complete organization charts, 100% direct dial phone numbers and extensions and 100% direct email addresses. For example, a large bank in Ohio that has been profiled by ITS includes 188 IT contacts and is 28 pages long.

The power of the organization chart is big. You can instantly zero in on the key people and departments you are targeting. For example, you could target the Information Security department and launch a coordinated direct mail, email and telephone campaign. You have the power to “touch” all relevant people (not including the business unit) quickly and in a powerful way.

The ITS Profilers update every record a whopping six times per year. The only data I have ever come across that is as accurate is Jigsaw and they don’t offer organization charts.

Dead chicken parts, fried in grease at 200 degrees

This article is some of Kristin Zhivago’s best work. She says that to be successful you must make a promise to your target market. That promise should relate to what she calls the, “visual moment of satisfaction.”

This is when the customer gets what was promised and is satisfied.

Her formula is to make a promise that describes the visual moment of satisfaction, based on what customers tell you. And therein lies the rub. You can’t describe the moment, only your customers can, no matter how smart you think you are.

Do yourself a favor and read the article.