Remarkable Content is King: The Power of Free, Building your reach, Influencer Campaigns

Remarkable Content is King: The Power of Free, Building your reach, Influencer Campaigns

The web has forever changed people’s buying habits. Instead of needing to rely on sales people to send them information, buyers now have Google and other search engines to research products, find competitors, and see how other people rate those products in blogs and reviews. Furthermore they are greatly influenced by individuals that have emerged as experts in particular subject areas who use social media to get their messages across.

This sea change in buying behavior requires vendors to re-think how they go to market, and optimize to make sure that they will get found by buyers using search engines, blogs, reviews, and social media. The term Inbound Marketing was invented by the crew at HubSpot, to describe the techniques that are needed to get found by buyers, and to make sure that the reviews and blogs around your industry segment cover what you are doing. (HubSpot is a SaaS company that provides great software tools, plus education to help you automate Inbound Marketing. The founders, Dharmesh Shah and Brian Halligan have also written a great book about the topic: “Inbound Marketing: Get Found Using Google, Social Media, and Blogs (The New Rules of Social Media)”. Full Disclosure: I am an investor and board member at HubSpot.)

HubSpot produced this great humorous video that highlights the hopelessness of the old techniques in this new world:

As further evidence of this change in buying behavior, I was recently talking to the CIO of a large pharmaceutical company, and he told me how he hates spam emails from vendors, and how he had developed a canned email response to them. I asked him to forward me a copy of that email, and have excerpted a couple of paragraphs from it that quite clearly describe the change:

“Please understand that I get dozens of these types of messages a week. I simply do not have time to read them, dig into them, follow-up on them, or reply to them. The most effective solution to this problem is for me to ignore the messages, which is what I usually do. …

… Finally, a small comment. As a customer, I find this type of approach to sales to be largely annoying to me and unproductive for you. We learn far more about what we want to purchase by searching the web, looking for customer references in blogs and forums, word of mouth, and by finding white papers on your site that concretely describe solutions to problems we are having.”

Remarkable Content is King

A key part of getting found is making sure you show up on the first page of a Google search. The lazy marketer’s approach to doing this is to purchase Google Adwords, and pay by the click (referred to as SEM, Search Engine Marketing). However 85% of people ignore the paid ads, so to be really effective, you will need to perfect your SEO (Search Engine Optimization) skills.

SEO requires you to develop great content that your buyers will find sufficiently interesting, different or insightful, that they will want to remark on it. (The authors of Inbound Marketing refer to that as remarkable content.) When your readers remark on your content on-line, using tools like Twitter, Facebook etc., they spread the word virally to other readers and broaden your reach. These comments lead to links back to your site, which lead to ever increasing page ranking in the search engines.

To be successful at this, you will need to keep the content fresh. Traditional web sites don’t work in this regard, as they don’t change frequently enough. What is needed is a blog that you update regularly.

Your blog cannot simply be a sales pitch for your product, but needs to be about topics that your buyers care to read about. The tone could be educational; or humorous; or controversial. But above all it needs to be highly engaging and relevant to them – i.e. remarkable.

When you post a new blog entry, you will see your site traffic surge for a few days, then die back to a level slightly higher than before.The more you post, the faster your traffic will build. But in the end, it is the really great articles that you post that will have the most impact.

Once you have interesting content, you can use social media like Twitter, Facebook, LinkedIn, Digg, StumbleUpon, etc. to get the word out. Your goal is to get other bloggers to link to you, and to have people tweet about your content.

An interesting thing about a marketing department that focuses on Inbound Marketing: it will place a high value on people that know how to write and develop content that draws in an audience. A silver lining to the damage that the internet has inflicted on the publishing industry, is that there are plenty of very talented journalists seeking employment, and they possess the perfect skills for this job!

SEO versus SEM

Like most of things that are good for us in life, SEO requires work and patience before it will payback. So it can be tempting to take shortcuts, and just use SEM (paid search ads). However if it is done right, the results will continue to build, and you will start to build your own audience, and own your own traffic.

We have also seen that the cost of paid search increases as the need to scale the lead volume grows.

The Power of Free

Another extremely powerful way to create inbound traffic and qualified leads is to use a free product or service. A great example of this is the WebSiteGrader service from HubSpot. (If you haven’t tried this, I recommend giving it a try now. It will only take a few minutes.) WebSite Grader has a couple of interesting attributes that are worth studying:

• It is free of charge
• It takes very little work by the customer to get some very valuable results
• It provides its results in the form of a score out of 100. Human beings are very competitive, and when they don’t get a good score, they want to find out how to improve their score. That leads them to wanting to find out more about HubSpot which can help them improve their score.
• It allows them to compare themselves to their competitors. All businesses care about how they are doing relative to their competition. If they are doing worse, this is a powerful motivator to drive them to change.

Think hard about your audience and whether there is an opportunity to build a similar free web service that would draw them in, and provide great value.

If you are interested in learning more about how Free products and services can help your marketing, please refer to this section: The Power of Free.

Building your reach

Once you have great content and possibly a free product/service, you will want to find ways to drive the maximum traffic to that content. In the last couple of years we have seen some powerful new tools emerge to help with this process in the social media space. Get yourself accounts on Twitter, Facebook and LinkedIn, and join in the conversation. (For Twitter, I also recommend downloading the Tweetdeck application.) Start by listening. Watch what people are talking about in your topic areas, and take note of their interests. Once you have an idea of how the conversation works join in. Be careful not to take a sales stance to promote your products, as that will rapidly lose you your audience. However you can draw your audience in with short url’s (see http://bit.ly/) that link to your blog posts and other non-sales oriented content.

This short paragraph is not going to be enough to fully educate you on the ins and outs of using social media to build your audience, so if the topic interests you, I recommend going here to learn more:

Internet Marketing Webinars (see the section on Social Media Marketing).

Influencer Campaigns

In every product area, there are usually already influencers that write the most about that area, and have the largest audience that follows them. To conduct a successful social media campaign, you will want to identify those influencers, and reach out to them to get them to write about your product/service.

To get them to pay attention to you, you will first need to understand what they care about. Read their blog posts and tweets, and try to get inside their minds. Try to determine what appeals to them, and what has clearly turned them off. Then prepare your pitch, and use social media to engage with them.

You will then want to monitor the results by tracking their blog posts, links to the articles, tweets, etc.

Blockage Points, Conversion Rates, Throughput, Cost of Customer Acquisition -- Sales and Marketing Machine

It would be a mistake to think that once the process has been designed and implemented that it will not need further attention:

• As soon as you fix one part of the process, you will move the blockage point to somewhere else in the process.
• You may need to double revenue next year, and want to understand how the process can scale to achieve that.
• You may be wanting to get a better yield out of the process

Like most things in business, this process needs regular attention and management. In this section, we will give you some ideas on how to structure a regular brainstorming process. This meeting should not be thought of as the usual weekly pipeline review. Instead it should be structured as a brainstorming session, where the goal is get the maximum creative thinking going.

I recommend holding a quarterly meeting that brings together the CEO, VP of Marketing, VP of Sales and any other interested constituents. The following topics should provide you with the key questions to get creative thinking going:

• Blockage Points. Where are our blockage points? Brainstorm possible solutions using methodology in “Solving Blockage Points”
• Conversion Rates. Review the metrics, starting at the end (Bookings), and working backwards. Look at each step, and review conversion rates. Brainstorm to see if there are creative ways to improve conversion rates.
• Throughput. Ask the question “Why can’t we quadruple the overall throughput (number of prospects at each stage).
• Cost of Customer Acquisition. Look at the overall cost of acquiring a customer, and ask whether there are cheaper ways to perform each step. For example, can we replace some of the outside sales function with cheaper inside sales people? Can we replace some of the inside sales function with cheaper telemarketing resources?
• Duration. Look at how long it is taking to comlete the whole sales cycle, and ask if there are creative ways to shorten any of the phases.

As preparation for the meeting, it is useful to have the following documents:

• The original diagrams that show the customer-centric Buying Cycle, and the company-centric Sales Cycle. These ensure that you have an easy way for all participants to see the overall process and remind them of where the issues are.
• Metrics and reports that show the throughput and conversion rates for each stage, and the trend lines

Instrumenting a Sales and Marketing Machine

In the same way that we need instruments to understand how our car is running, we also need instrumentation to understand how well our Sales and Marketing Machine is running. Without measurement, there can be no improvement. The goal of instrumentation is to show us what is working well, and what is not working, so we can make adjustments to fine tune the process.

A machine also has levers that we can pull to adjust how it is running. In the car analogy, these are the accelerator pedal, brake, and steering wheel. For our Sales and Marketing Machine, these might be our spend on SEM (Search Engine Marketing) to create leadflow, the number of sales reps we hire, etc. We will also want to use the instrumentation to understand the effect of changing these levers, so we can optimize their settings.

What we want to know

Before we start, it is a good idea to think about what we really would like to know about our machine. Here are some thoughts on that topic:

• We would like to be able to spot a shortfall in bookings far enough in advance to be able to take action and rectify the problem. Requires us work backwards from the steps that lead up to a closed deal. We need to check that the numbers of prospects in those stages are what they need to be, and that the Conversion Rates between stages are working as expected.
• We would like to know what adustments are needed to hit growth targets for the following quarter/year. e.g. if we want to double revenue, what needs to happen to leads numbers, sales hiring, etc.
• We would like to understand the cost of the entire sales and marketing process, and its various constituent pieces.
• We would like to know which sources of leads have the highest ROI. To do that we need to know the cost per lead, and the conversion rates to closed deals for each different lead source. Looking at that data combined with the average deal size , will allow us to determine the return on investment for each different lead source.
• We would like to know the effectiveness of the various Actions that we are taking to move prospects along the sales cycle. For example, if we are doing Webinars, how effective are those at getting attendees to sign up for a trial? Or if we are spending money on Pay per Click Google Adwords, how well are those visitors to the site converting into registered users on the site (where they have given their contact information)?

Spotting a bookings shortfall well in advance

Rather than applying instrumentation randomly to various points in the process, we should try to determine which parameters really matter. To do this, I recommend that you think back to the model that you use to forecast sales. What do you believe are the key drivers of sales growth? Is it the number of sales people that you have hired, and their productivity? Is it the number of resellers that you have signed up and made productive?

Start at the end and work backwards

I have found that the best way to understand how the model works and what instrumentation you need, is to work backwards from bookings. Bookings can be determined by looking at the number of deals that closed, and the average deal size. So we clearly need to instrument those two variables.

Now we need to go back a step, and look at what creates a deal. This will vary depending on our go-to-market channel. Here are some possible examples:

• Direct Sales: bookings = the number of sales reps that are fully productive x the average productivity per repx the average deal size
  Bookings could also be forecast by number of POCs (proof of concept) completed x conversion rate to closed deals x average deal size
• Reseller Channel: bookings = no of mature resellers x average productivity of a mature reseller x average deal size (plus deals from less mature resellers, or non-certified resellers)
• Touchless Web Sales for SaaS: bookings = number of trials x conversion rate at the end of the trial.
• eCommerce: bookings = number of shopping carts x conversion rate (opposite of abandonment rate) x average basket value.

The above clearly shows which variables we will want to track to be able to understand what is happening to the key elements affecting bookings.

Next we will want to go back one step in the process, and look to see what comes before this final step. For example, this might be:

• Direct Sales: sales hiring and number of POCs.
• Reseller Channel: the number of resellers trained and on-boarded x the conversion rate to mature reseller status.
• Touchless Web Sales for SaaS: number of visitors to the web site, and the conversion rate of visitors into trials.

To fill out the complete set of instrumentation, keep going back one step until you have reached the starting point. So for direct sales, before deals turn into POCs, they may be identified as Opportunities, and before they become Opportunities, they may be identified as Marketing Qualified Leads, etc. For each stage, you will want to track theConversion Rate. e.g. how many Marketing Qualified Leads (MQLs) turn into Opportunities.

Instrumenting the effectiveness of Actions

As described elsewhere, the key building blocks or our Sales and Marketing Machine are Actions that we take to move the prospect through the sales process. For each Action, it is useful to know:

• The cost of that Action per lead
• The number of Actions that you completed. For example: how many visitors did you get to your site, how many attendees came to your webinar, how many trials took place, how many proof of concepts were completed.
• The Conversion Rate that you got from taking that Action. The conversion rate will always be a percentage that measure the percent of leads that moved to the next step as a result of taking this Action.  For example what percentage of prospects that visited your web site converted into registered visitors; what percentage of webinar attendees signed up for a trial, what percentage of trials converted to a closed deal; etc.

These are best shown with trend lines showing how they are moving over time.

Building a Sales and Marketing Machine

Building the machine involves the following steps:

1. Identify your buyers
2. Diagram their buying processes
3. Add to this diagram the steps you will take to address their buying process
4. Diagram the Actions you will take to move prospects through the process
5. Examine the linkages between Actions to make sure the next steps are obvious
6. Define the qualification criteria
7. Examine the customer motivations for each Action
8. Define the organizational resources responsible for each step
9. Define the technology/software that you will use to automate the process

1.  Identify your buyers

Start with an intense study of the Customer

If you are like most of the people that I talk to, you already have a sales process, and can show a diagram of the different steps. However most of the time when I work with people to diagnose what is not working as well as they hoped, the problems arise because they have not found a good way to motivate their customer to move forward through a particular step. This happens because they have designed their sales process from their point of view, and not created a customer-centric process. A good way to make sure you are building a sales process that will work for your customers, is to diagram out their buying process. This will help make sure you have appropriate steps in your sales process to address the issues and questions they need answered before they will purchase from you.

I recommend starting by identifying the different job functions that are involved in purchasing your product or service. Often your champion may be a business buyer that is interested in your product for how it can improve a particular business function. But they may have to get approval from the IT department before they can make a purchase. And if the size of the purchase is large enough, you may find that you have to deal with the CFO who only cares about the return on investment.

Also if you work through channels, such as VARs or System Integrators, you will want to develop a completely separate sales and marketing process for how you will locate and qualify them, sign them up, and make the productive.

2.  Diagram: customer’s buying processes

Once you have each player identified, I recommend diagramming the buying process for each individual. Only when you are armed with this information, can you properly design your own sales and marketing process.

The flow chart below was produced using an excellent flow charting program called SmartDraw that I highly recommend for this purpose. I found SmartDraw after a lot of research and trials of various other products, and it was by far the easiest and fastest. All other tools that I worked with got in the way of thinking through the process, and required me to pencil out the process before trying to use them to document it.

Note that while the above diagram only looks at the main player in the sales cycle, the tech champion, it is important to repeat this step for all other players that are involved in the sales cycle. For example if there is also a business buyer who is the actual decision maker, understanding how they think is going to be important. Or if your sales process involves using resellers or systems integrators, you will want to do a similar diagram for the VAR/SI, thinking about the owner, the reseller sales person who will sell your product, and the technical resource who will demonstrate and install your product.

3.  Diagram: add the steps to address the buying process

This next stage involves adding the steps that you can take to address the concerns and needs of the prospect that you identified in the prior stage diagram. Those steps are shown here in the beige color.

Since the Free Trial has become such an important part of the sales process for many products, I have included a separate sub-process diagram for this here:

4.  Diagram Actions to move prospects through the funnel

This step involves creating a diagram showing how you plan to move prospects through your sales process, and is the company-centric view. (The diagrams above are all customer-centric.)  Having done the work above, this step should be fairly simple.

The concept behind this part of the process is that we are breaking down a complex sales cycle into a smaller set of Actions that should result in movement of the prospect through the sales cycle. Later on when we instrument the machine, we will want to track how many people went through a particular Action, and how many of them were we able to successfully move to the next step (conversion rate).

5.    Examine Linkages between Actions

The next step is check that there are clearly defined linkages between every action on the diagram, and the following step.  One of the most common problems I see is marketing activities that have no clear call-to-action; or no clear step to process the leads after the action is completed.

For example, a company will visit a trade show and collect leads. However when they return, no one has thought of how they need to be processed, and as a result they will sit there for many days without being called or emailed.

Another common problem is marketing activities that have no connection to this process. For example, they may sponsor some event, hoping to build brand. But that activity does not result in leads. In my view, ot startup can afford to do any kind of marketing activities that doesn’t directly contribute to the process of moving a prospect through to a closed deal.

6.    Defining Qualification criteria

Another common problem is no integration between sales and marketing. Sales complains that marketing doesn’t provide them with enough leads, and marketing complains because they gave sales a ton of leads, and sales won’t call them. This happens because there wasn’t a discussion between sales and marketing where they mutually agreed on a clear definition of what represents a Qualified Lead that is acceptable to sales. Getting the lead to that level of qualification (often referred to as a Marketing Qualified Lead or MQL) is the responsibility of the marketing department.

To help with qualification, a set of questions are defined. In many cases these are the standard BANT questions (Budget, Authority, Need and Timing). It may also be valuable to ask additional questions that are important to your particular company to make sure they are in your target market. For example: are they a mid-sized company; are they B2B or B2C; are they in a particular vertical; etc. A lead can become an MQL when certain number of these are answered positively.

7.    Examine the customer motivations for each Action

This step represents one of the most important and powerful aspects of this methodology. If you started off by looking carefully at your customer’s buying process, you are already beginning to think the right way. But this step takes things further. To this well, you will need to get inside your customers head, and learn to think the way they do.

For each Action that you want your customer to do in your sales process, ask the following questions:

1. What concerns are they likely to have that will make them not want to take this action?
2. What motivations might they have that will make them want to take this action?

The most common reason that a sales process isn’t working well is because your customer is not adequately motivated to do a particular thing that you want them to do. For example, your customers may not be going through with your Free Trial because they have to register on your web site beforehand. Or your customers may not be completing your free trial, because it requires them to open a port in their firewall (or similar).

To fix this problem, you will need to get inside your customers head and understand their concerns and motivations, and brainstorm a way to provide additional incentive to motivate them to complete the step. For example, offer them something meaningful if they complete your registration. Or find a way to eliminate the need to open the firewall port, and allow them to do the trial in the cloud on your own systems.

There is a lot more discussion on this important topic under the section entitled “Solving Blockage Points” that comes later.

However, I have found that the most important part in the art of designing a successful sales process lies in this step.

8.   Define the organizational resources responsible for each step

This step is simple: for each action you have in your sales process, make sure that there is a clear organizational resource that is focused on that step, and make sure they are measured and incented based on the number of leads they process, and their conversion rates.

9.   Define the underlying technology and software

Since we want our sales process to be scalable, we need to automate the way that information flows from one step to the other. This requires software or software provided as a service (SaaS). CRM software is a well understood category with Salesforce.com as the dominant vendor that we see in startups. However the are of software for marketing automation is an emerging and rapidly changing area. As of today, there is no one vendor that provides all the tools you are likely to want to use, so you will need to combine several products/services.

Interesting areas for marketing products are Inbound Marketing; Social Network monitoring and management; Lead Nurturing and Scoring; eMail marketing; and Web analytics. (This list is not meant to be complete, as this area is evolving fast, and interesting new ideas keep emerging.)

There is a complete section dedicated to looking at technology and services that can be used to help your process:click here.

Introduction to “Building a Sales and Marketing Machine”

Introduction to “Building a Sales and Marketing Machine”

Building a Sales and Marketing Machine is a structured methodology for designing and reviewing your customer acquisition process. It stresses the idea that the only right way to build a sales and marketing process is to design it around your customers (customer-centric). Although this is obvious, it turns out to be radically different to the way most companies have designed their processes, which is based on what they want to happen (i.e.company-centric). Most of the time company-centric processes will now work as well as hoped, it will be because they failed to take into consideration the customer’s concerns and motivations.

This methodology will help you grow sales by addressing the following specific issues:

• Ensure your process is Customer-Centric (as opposed to company-centric)
• Design a process that is scalable, optimized and efficient
• Provide you with clear instrumentation showing what is working, and what is not
• Provide you with a clear understanding of what levers you can pull to grow sales
• Identify bottlenecks, and show you how to resolve them
• Lower the cost of customer acquisition
• Ensure that Marketing is correctly aligned with Sales, and directly helping to close business
• How to grow lead flow using the latest web marketing techniques

The following illustration shows the steps involved in the process:

The methodology has been evolved over more than 25 years, and applied to many companies with some outstanding success stories along the way. Several of these will be used as examples to illustrate the concepts.

Table of Contents

• Introduction
• Building the Machine
• Instrumenting the Machine
• Solving Blockage Points
• Refining the Process
• Lessons from Leaders: How JBoss did it
• Get Found using Inbound Marketing
• Focus and Market Segmentation
• Where it all started

Introduction

As a VC I have had the opportunity to study many startups and seen several successes and many failures. What I have observed is that there are a series of critical factors that need to be in place for success to happen. Most of these are obvious and well known, such as the importance of having a large market, good management team, barriers to entry, etc. (See Criteria for a Successful Startup.) However one of the biggest causes of failure that I have found, is not well recognized or discussed: the inability to acquire customers in a cost effective way.

If your business is suffering from any of the following symptoms, then this series of articles is for you:

• You have sales process that feels broken, with bookings that are less than you hoped for
• You need to grow bookings fast, but you don’t have a repeatable or scalable process
• It is costing you more in sales and marketing to to acquire your customers than you make from each sale
• Sales is unhappy with marketing and wants more leads
• Marketing is doing a lot of things, but they don’t seem to be clearly leading towards a sale
• Marketing is unable to show the ROI on their programs

Definition: What is a Sales & Marketing Machine

A sales & marketing machine is a scientifically designed process to take suspects and convert them to customers. It has the following attributes:

• Scalable, so that it can be cranked up when needed
• Automated where possible, so that it requires minimal manual intervention
• Instrumented with a Dashboard that provides Key Performance Indicators
• The levers that can be pulled to grow sales are well understood
• There is a clear understanding of costs and returns
• Marketing is tightly aligned with sales
• Every step has a clear purpose of moving the prospect further down the process, and leads directly to a subsequent step

In the following sections, we will take you through how to build such a machine.

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Optimizing your Customer Acquisition Funnel

This blog post focuses on how B2B companies can optimize their customer acquisition funnels using a customer-centric methodology to analyze and remove blockage points.

Acquiring customers in the B2B world involves using a variety of marketing and sales steps with the goal of converting prospective customers into paying customers. The process is often thought of as a funnel (see diagram above) where you pour in suspects at the top, and various steps in the process, some percentage of prospects successfully convert to the next stage, making the funnel narrower as the process evolves.

No matter how large or successful your business is, you will have at least one place that is a blockage point in your customer acquisition funnel. This is the point where the conversion rates from one stage to the next are not satisfactory, or the point where you have a scaling problem, (i.e. you cannot profitably increase the number of people coming out of that part of the funnel because you have maxed out the capability of one marketing or sales technique). If you solve that blockage point, usually it will cause another to appear somewhere else in the funnel.

As an example, you may have too few visitors coming to your web site, which you see as the top of your funnel. Or you might have plenty of visitors to your website, but too few of them signing up for your trial.

In this blog post, I will talk about a method that I have found to be highly effective at removing blockage points. There is enormous power in this exercise, as removing blockage points will increase conversion rates in your funnel. Readers of my prior blog posts on the importance of lowering the cost of customer acquisition (CAC), will know that increased conversion rates have a huge impact on increasing sales and lowering the cost of customer acquisition.

Identifying Blockage Points

The easiest way to identify your blockage point is to ask the question: “What is stopping us from increasing sales by 5x?”.   Common answers to this might include:

• We don’t have enough leads coming in the top of the funnel.
• We have plenty of visitors to our web site, but not enough are converting to registered users.
• We have plenty of users signing up for our freemium product (or free trial), but not enough are converting to paid users.
• We can’t get meetings with the key decision makers.
• We’re doing OK getting people to sign up as customers, but there is not enough growth in the account after the first sale.

The Most Common Causes of Blockage Points

Product/Market Fit

If you are a new startup just going to market, one of the greatest causes of problems in your customer acquisition funnel is that you have not yet found product/market fit. It is important to diagnose if that is the case, as the wrong diagnosis will likely lead to management wasting a lot of money on sales and marketing for a product that is not right. The correct course of action if this is the case, is to focus all your energy and attention on solving product/market fit. While you are doing this, you should limit your spending on sales and marketing to just the minimum level required to have adequate amounts of customer interaction to determine where your customers have the highest levels of pain and urgency, in an area that you can provide a solution. You will need to conserve your cash to continue to pay for product development to evolve a product that does fit the market need.

Solving for product/market fit is a topic that has been widely discussed elsewhere on the web, with great contributions coming from Steve Blank, and Eric Ries with the Lean Startup concept. This primary topic of this post is aimed at companies that are confident about their product/market fit, and who are now working on the next problem that should be addressed: optimizing their customer acquisition funnels.

Beyond Product/Market Fit

After many years of helping to diagnose problems in different companies’ customer acquisition funnels, I have observed that there is a common cause of blockage points:

For example, you may be hoping your prospects will come to your web site in droves. However you may not have solved the problem of how to make them aware of your site, and secondly of providing a motivation or reason for them to want to visit it. (A quick look at your web site might reveal that it is entirely sales oriented, and contains no content of interest to them.) Alternatively, you may be hoping that your prospects complete your on-line registration form and give you their email address, but they will find that step annoying, and be concerned that you will spam them in the future.

This happens because most companies design their customer acquisition process around their own view of the world, instead of first taking the time to understand the customer’s buying process, and their concerns at each stage.

Readers of my other article, Building a Sales and Marketing Machine, will know that I recommend designing sales processes from the outside in. i.e from the customer’s point of view.  This involves mapping out the customer’s buying cycle first, and then designing a process to fit that. However since most companies have already got a sales process in place, that advice is less helpful to them. For those startups, the technique I will describe below will be more helpful as it will focus on fixing what is most broken in their current funnel.

Solving Blockage Points

Once you have identified your blockage points, the best way to start to solve them is to get inside your customers head and study their concerns at this particular stage of the sales process:

These concerns represent the friction in your sales process. Mapping these out clearly in a written form will give you the basis for the next step, which involves studying the possible things that you could use to motivate them to take the step or action that you want them to take:

Think of the concerns as being the friction in the process, and the motivations as being the forward pulling forces that you can use to overcome the friction.

The art is finding the right motivation that is great enough to overcome their concerns, and have them move forward in the sales process. This is where you need to muster your brightest and most creative thinkers to brainstorm the issue. Since customers have such an aversion to being sold to, and now have real control over the buying process, the old ways of moving them through a conversion funnel will usually have mediocre results. Getting superb results requires thinking outside the box and creativity.

Below  I will walk you through a few examples to help illustrate how this works.

Problem: Driving Traffic to your Web Site

One of the most common blockage points for startups is right at the very top of the funnel: i.e. how to get found on the web. If you can’t even start a dialog with a prospective customer, then you have no opportunity to sell them.

A very common misperception amongst first time entrepreneurs is “If you build it, they will come”. Given the huge pressures of today’s always-on lifestyle with iPhones, BlackBerries, instant messaging, SMS, Twitter, social networks, etc., the average buyer is suffering from severe information overload. Their most scarce and valuable commodity is rapidly becoming their time and attention. Getting their attention by simply creating a web site and hoping for viral spread will not work in this environment.

Lets start by writing down their concerns and motivations:

Concerns

• Don’t want to waste time on anything that is not immediately valuable and directly relevant to me
• Hate being sold to
• If it doesn’t come up in the first page of Google search results, I can’t be bothered to look further
• Concern about whether they have found the best product/service for this category. (i.e. is there a better product out there that I haven’t yet found?)
• Concern about whether this is the best deal (price) they can find for this product category
• etc. (please add more in the comments section)

Motivations

• I do have a problem to solve, and would love to find a solution to it.
• If my friends recommend this product then I’ll want to check it out, and will be favorably disposed towards it
• If I can get something for free, and it will help me with my life/work, then that is valuable to me
• I am really interested in learning about XYZ (where XYZ may be totally unrelated to your product area)
• I trust this review site/individual/consulting firm/etc. as an expert in this area, and would like to know what they have to say about the topic, and which products they rate as the best
• I like to hang out on Web sites that entertain and educate me on areas that I am passionate about
• etc. (please add your own thoughts in the comments section)

To get them to pay attention to you, you will want to think about giving them something valuable to earn their attention.

Example 1: Use a Free Product (HubSpot’s WebSite Grader)

A good example of using a free product/service as a motivator to drive traffic to your web site is HubSpot’s WebSite Grader tool. HubSpot is a company that sells a SaaS product aimed at helping small and medium size businesses implement Inbound Marketing. The components of their product include blogging, SEO, social media, etc. (In full disclosure, I am an investor in HubSpot.)

HubSpot’s two most powerful tools for driving traffic to their web site are a) their blog, which is full of valuable educational material on Inbound Marketing, and b) the free products, WebSiteGrader, AlertsGrader, TwitterGrader, etc. The first of these, WebSiteGrader, gives customers a way to find out how well their web site will perform in Google searches (SEO), and what can be improved to make it perform better. This leverages the third motivation in our list above: “If I can get something for free, and it will help me with my life/work, then that is valuable to me”:

There are several powerful lessons to take from WebSiteGrader in how it works to drive customer motivations to pull them through their sales funnel:

• It is a free tool that offers customers a lot of value. Because of that, bloggers will recommend the product and users will tweet about it, spreading the word. (High value, low cost.)
• It requires a very small amount of non-private information to get going (just a web site URL), and gives back a lot of value from that small amount of input. (Low customer effort.)
• It offers a rating (score out of 100) which takes advantage of the competitive nature of humans. They want to get the best score, so if their score is low, they will likely want to improve it, and if that’s the case, HubSpot has the answer. (Leverages customer’s competitive instincts.)
• It positions HubSpot as an expert in the SEO space, and it shows their ability to use technology to perform a task that is normally done by highly paid SEO-experts. (Leverages the respect accorded to experts.)
• It builds trust between the customer and HubSpot, by creating a value for the customer (Trust is key to making sales.)
• It has minimum sales pitch, and yet has a clear call to action at the end (see below). The two calls to action are carefully pitched in such a way as to offer more value for free to the customer. (The connection to the next step is obvious an natural.)

Contrast HubSpot’s approach to driving traffic and and providing value for free with the worst types of website that require you to give them an email address before they will allow you watch a marketing video that will tell you about their product. If you’re like me, this will drive you mad, and make you immediately dislike the vendor.

The key to success is to provide value first, which builds trust. Then at an appropriate time the customer will be more willing to offer their email address.

Using Engineering for Marketing

HubSpot’s WebSiteGrader tool is a great example of another idea that is really powerful: using engineering resources for marketing. The power of your engineers is that they can build things that can be used by your customers and provide value to them. These are powerful motivators to overcome friction.

These tools can also be hugely scalable. Compared to the traditional spend that you might put into marketing programs, this can frequently be a far better investment, and be more effective at building the right kind of relationship with your prospective customers.

The power of Education as a selling tool

If you are wondering what to offer to your customers to provide value, I have a suggestion to make: think Education. HubSpot’s highly trafficked blog is a great example of this in action.

Get inside your customers head, and understand what area they are most interested in learning about, and offer educational material in that area. It helps if this is in the same area as your product/service, but it is not essential. There is an interesting thing that happens when someone learns from material that is well put together and intelligent: They develop respect and trust for the person that is educating them, and will listen to suggestions that come from that person, including for products and service. Think of the following situation: you attend a course on social media marketing, and really like the material and the teacher. At the end of the course, they tell you that the product they use to manage their Tweets and other social interactions is XYZ. You are highly likely to go out an buy XYZ for that job.

You may have heard of consultative selling. In that role, the consultant places themselves at the same level as the customer. In the educational model, the teacher who does great work is automatically placed into a superior role to the person that is doing the learning. This is an important insight, and can be used as powerful tool.

Important note: most companies that I talk to think that they are doing this well, but a quick review of their materials reveals that what they think are educational materials are just thinly disguised sales collateral. This will not work, and will actually turn customers off. To do this well, you may need to hire a dedicated writer who is measured on the quality of material, traffic, and positive comments they generate.

Example 2: Using Data to drive customers to your website

Many companies collect interesting data as part of their business. Frequently it is possible to use insights gained from that data to create interesting articles or services that can be used to drive traffic to your website.

One good example of this is a company called Sysomos (recently acquired by Marketwire). Sysomos provides a SaaS service to help enterprises monitor the conversations going on in blogs and social media that might affect their company. The backbone of the service is a series of crawlers feeding data in to a huge and constantly expanding database. Sysomos uses the data that they have to search for interesting insights on any current topic, and then publish blog posts. Topics they have covered include insights on Twitter usage, social media and the Iranian election, the oil spill, Facebook, etc. Since the topics they look at are of high interest, these blog posts often get picked up by national media, such as The New York Times, and many other bloggers. These published articles and blog posts have led to major traffic increases for Sysomos’s main web site, which they convert to free trials, and then closed customers.

If you don’t have your own data, then collect it from customers

After reading the above, you might be wondering how you could do something similar, but realizing you are held back by not having a data source. Don’t let this hold you back. There are several examples of companies that decided to issue surveys to get collect that data, promising people that participated that the would have access to the results. Amongst businesses there is a strong desire to learn how they stack up relative to the peers and the best in the industry.

One example of a firm doing this is PriceWaterhouseCoopers, who collect data on venture funding, and publish a report called the MoneyTree. This helps them get the attention of VCs and venture backed companies who are their prospective customers.

Another example of this is a Dutch SaaS business intelligence company called Mirror42. Mirror42 has created anon-line KPI repository that tracks the Key Performance Indicators (KPIs) that are used in various different vertical industries. They have over 200,000 users signed up to use and contribute to the database. Customers can also compare their performance in this KPIs to industry benchmarks, which is highly valuable. Mirror42 then uses these customer relationships to market their SaaS offering.

Top of the Funnel: Harvesting Demand versus Creating Demand

A important note for those readers considering the concerns and motivations of people that they are wanting to attract to the top of their funnel: there are two actually two different classes of customers that you will be dealing with:

• Type A: Those that are aware that they want a solution where your product fits the bill
• Type B: Those that are not aware of your product category, and aren’t aware that it could benefit them

For Type A customers, you need to Harvest Demand. For Type B customers you will need to Create Demand.

For Type A customers, the most likely starting point for an interaction will be a Google Search, since they are likely looking for a product to solve a particular need. For Type B customers, the problem is much harder, and will likely cost you more effort and money. You will have to reach them in some other way, and get them to hear about your product. The very best method is having them hear about you from a trusted source such as a friend, respected blogger, main stream press, etc.

These two audiences require different marketing programs, and have different motivations.

2nd Problem: Getting Customers to Register

Another frequent problem are in conversion funnels is the point where you want your visitors to register and provide you with their email address or other contact information.

Let’s look at their likely concerns and motivations:

Concerns

• Don’t like to give their email addresses, as they hate getting spam emails from vendors
• Distrust vendors with my email. Not sure how they may abuse this in the future. You need to earn my trust that you won’t abuse this.
• That information is personal, and the time it takes for me to deal with your future emails has considerable value. You need to earn the right to ask for that.
• You are asking me to put my valuable time and effort in to trying out your product. I have concerns about whether it will be easy to use, fast to evaluate, and effective at meeting my needs.
• etc. (please add your own thoughts in the comments section)

Motivations

• I have a problem, and would like to find a solution. I have seen enough about this product/service in your intro video/content, that I believe it will work and take away my pain.
• This site seems to have enough positive feedback in comments from users, and reviews from the press that I feel it is likely a good product, and worth my time to try
• I care a lot about being amongst the best in my industry. These guys have data that will allow me to benchmark myself against my peers. That is valuable. (If I find out I am below the industry top performer group, or not following best practices, I will want to improve.)
• I’d like to impress my boss/co-workers with my ability to come up with clever ideas and solutions to problems that we have
• I am passionate about XYZ and like to learn more about things in that area
• I have heard about this from my friends, which means I believe that it is very likely to be good, and worth my time
• etc. (please add more in the comments section)

Example 3: Move gratification upfront

Many of the good marketers that I have worked with talk about the time to Wow!. That is how long it takes before your customer gets to the point of Wow! (i.e. experiencing some gratification from use of the product). The conventional approach to registration is to make the customer register before they can get to experience the Wow! moment and get some gratification.

If you are doing this, you may want to try a different approach, and place the Wow! moment before you ask them to register.

Examples of companies that have done this well are:

• uberVU (www.ubervu.com), a social media monitoring service which allows you to enter your website’s URL and see a partial version of their reporting before signing up for a free trial (which requires registration).
• Posterous (www.Posterous.com),  a blogging site which doesn’t require you to sign up to start using it. You simply email them your first post, and it get’s your registration information from your email address (pretty clever!).

Example 4: JBoss

JBoss, the Open Source Java middleware company, leveraged two powerful customer insights to create a very high growth business. The first was that giving the product away completely free would create immediate interest and viral growth. This worked extremely well: the free product was downloaded over 5 million times.

However that first insight created the next bottleneck in the funnel to solve: the millions of users that had downloaded the product for free had not registered, as JBoss felt that putting a registration in front of the download would greatly reduce download volume. In order to market paid services to that user base, JBoss needed to get the contact information for these users. At the time that we did the brainstorming session to apply this methodology, they were charging money for the documentation, which was bringing in a very nice steady revenue stream of $27,000 every month. The solution to the blockage point was to offer the documentation for free, and use that as an incentive to get them to give us their email address. Because of the significant revenue hit this entailed, it took a while to get everyone’s buy-in, but once implemented, the process generated 10,000 leads per month, which grew over time to 16,000. (The full story behind JBoss’s success can be found here.)

Example 5: Getting a meeting with a Decision Maker

The second company that I started in 1986 was called International Software, which later became the European branch of Corporate Software. 1986 was the time when PCs were just starting to be adopted by enterprises. Before International Software, the typical way you purchased a PC and associated software was through a store like ComputerLand, or BusinessLand. However the problem with these stores is that they primarily focused on the hardware, and didn’t stock more than 5-6 software titles, and certainly didn’t know how to demo them or support them. We spotted an opportunity, create a new channel that only sold software, and focused on the needs of enterprise buyers. We would stock a huge range of products, and provide excellent consulting advice on which products to use, as well as great support.

When I first started the business, I purchased a copy of the Times 1,000 top companies in the UK, and started at the top, dialing the biggest companies, trying to reach their PC buyers. Not too surprisingly, I would get to voicemail, leave a message, and not get a call back. This was a frustrating blockage point, and there was clearly lots of buyer friction at this stage in the sales funnel.

I started brainstorming for a solution: One of the key parts of our service was content. We published The International Software Guide, a 600 page book that reviewed almost all the software products available for the PC at that time. The book was given to our customers as part of our service if they purchased their software from us. It was highly impressive (see below).

My insight was that if I sent them a free copy of the book first, and then asked them for a meeting, I might provide them with proof that we were different, and capable of providing more value to them than all the other vendors calling on them. The results were spectacular: I went from a 2-3% success rate in getting meetings to around 90%!

(Once in the meeting, our value proposition was so compelling that we converted approx. 50% to customers within a month of the first meeting. The company grew to $100m in sales in four years, and was incredibly capital efficient.)

In today’s world we have the web, and print media like that book are a thing of the past. Using compelling high value content on the web is the modern equivalent of the above story, and is exactly how companies usingInbound Marketing are driving web traffic.

Example 6: Getting to Executive Decision Makers

One of my portfolio companies, Enservio, sells high value products and services to Insurance companies. As part of their sales process, they need to get to senior executives in the insurance industry that are capable of making decisions. Not surprisingly, the average sales person will struggle if they simply try to cold call those executives.

While sitting in the audience of a TechCrunch 50 presentation, the CEO, Jon McNeil, had the brilliant idea to hold a similar conference for executives in the insurance industry, bringing together the very best startup companies that were innovating in the insurance industry. They put together an annual Claims Innovation Summit, and pulled in prestigious speakers from highly respected analyst and consulting firms, and invited speakers from within the industry to add valuable content around the startup presentations.

The net result was a great success, attracting executives that their sales people could never get to. Not only did they get hard-to-reach executives to the event, but due to the incredibly professional way in which they managed the event, they built trust with those executives, which is a key requirement before a sale can be completed. (A key part of that professionalism was to avoid the temptation to use the event as a selling platform, and to stick to valuable educational content.)

The other benefit of getting executives to an event like this is the amount of time that was available for relationship building. This worked far better than a typical short meeting in an office setting.

Example 6: Applying the technique to Web Site Design

Most web sites represent a mini-funnel in a marketing process where you’d like to move your customer from through a series of steps/pages to the point where they will sign up to purchase your product, download your trial, etc.

The great thing about web sites is that we can get precise analytics that tell us where the bottlenecks are occurring.  To improve the conversion rates at these bottlenecks, I have found it highly valuable to apply this same technique: i.e. document the customer concerns and brainstorm the possible motivations that could be used to help get them to move through the bottlenecks.

One of the other powerful techniques I highly recommend for this purpose is A/B testing. When coming up with new ideas for content on pages, split the traffic so that one half goes through the new page and the other half goes through the old page. Or try two variations of the new page with different wording to optimize the conversion rate. Once you have found the winner, repeat until it’s clear which messaging is having the best effect.

Take a look at the Posterous screen shot below. It has some great examples of how to address customer concerns:

1. You have to like how they put a redline through Step 1: Create and account, highlighting the fact that you don’t need to register to set up a Posterous blog.
2. Use a quote from a well known name, in this case Leo Laporte, to reinforce the fact that it really is easy to get going.
3. Make them feel comfortable that thousands of other customers are using the site, so they can feel comfortable that others like the site, so they probably will, and the risks of anything going wrong with their personal information are likely to be low.
4. The “Who is it for?” provides a nice way to allow each user type to get comfortable that this site has features that make it well suited to their needs. Without this, there is a risk that a power user could see the site as too simple for them, given all the focus on simplicity in the messaging.

One thing missing from the above screen that might add value to lesser known sites is some quotes from reviews that say positive things about the product. (I also personally like to see a video demonstrating any new product right on the front page, as it is the easiest way for me to see how a web service works.)

Brainstorming

It is important point to realize that all sales and marketing funnels have blockage points. As soon as you remove one blockage point, another one will appear elsewhere in the funnel. This means that there is always room to improve. I recommend using quarterly brainstorming sessions where the key execs including the CEO, heads of sales, marketing, and product, get together to work on coming up with creative ways to address the latest blockage point using the technique described in this post: Analyze the customer’s concerns and seeing if it is possible to come up with a motivation that will overcome those concerns.

When running these sessions it is highly valuable to have a flow chart diagram of your sales and marketing funnel process as one of the starting places for discussion. Without this diagram, you are unlikely to find that all the players have the same picture of what is going on.

I also recommend that the customer concerns, and possible off-setting motivations, are written down on a white board or similar during the meeting.

Assigning a person to become the customer

In my own startups, I found that I naturally gravitated into the role of being the person who tried to think like the customer, and represented their point of view to the rest of the group. In other companies, it is not always going to be clear which executive has the best natural tendencies to play that role. I recommend that you choose one person from the executive team to play that role, and encourage them to become intimately familiar with how your customers think. This will only happen as a result of them spending time with a lot of customers listening and and asking questions. Then in the quarterly brainstorming meetings their job will be to ensure that the voice of the customer is heard loud and clear.

The importance of Metrics

Elsewhere in this blog, I have talked a lot about the importance of metrics (here and here). If you don’t measure your funnel’s performance, you have very little chance of understanding how to improve it. also when designing any of these creative solutions, you will likely want to understand how effective your solution is, and whether is providing a good return in the investment you made. They key metrics you need are shown in the diagram below:

You will want to measure the number of prospects going into each stage, and the conversion rate to the next stage. You will also care about the overall conversion rate of prospects from the top of funnel to closed deal, and the average deal size.

The shape of your funnel will likely vary for each different lead source. e.g. a leads from Facebook ads may not convert well into trials, but those that do convert to trials may have a higher conversion rate to closed deals than normal web traffic, and the deal sizes may be larger. That means you will need to track the funnel metrics separately by lead source.

These metrics will show you your funnel blockage points, and help you understand whether your actions to improve funnel flow are working.

Summary

• All sales and marketing funnels have blockage points, and as soon as you remove one, the blockage will move to another place.
• Blockages are frequently caused because you are hoping your customer will take a step in your process where they are not adequately motivated to do that step.
• By analyzing their concerns, and brainstorming with creative thinking executives, it is often possible to figure out customer motivations that can be used to offset their concerns, and get them to willingly take that step.
• The best solutions often require out-of-the-box thinking.
• Free products, educational content, and insights based on data that you may possess or collect are examples of tools that can be used as motivations for your prospective customers.
• Removing blockage points increases conversion rates in your funnel, which is one the most important things you can do to increase revenues and profitability. (A small improvement in conversion rates can dramatically lower your cost of customer acquisition.)
• I recommend setting up quarterly brainstorming sessions to focus on removing blockage points, which could also be referred to as increasing conversion rates.
• I also recommend choosing one executive to become the voice of the customer, and setting them the task of getting inside your customers’ heads to understand how they think and react to all stages of your sales and marketing process.