Do You Know Where Your Marketing Funnel Is Leaking – And How To Stop It?

Your sales and marketing funnel can be like a pair of pants with a hole in the pocket.  You don’t notice the hole at first.  You notice it, however, when you start losing things out the hole, like small coins.  While you hate to lose any money, it gets really frustrating (and more costly) when the hole grows large enough that you lose your keys or something else really valuable.

Putting your budget dollars into a leaky sales and marketing funnel is very much like putting money in a pocket with a hole in it.  You will inevitably lose some of your money, but you may not know how much.

Finding Those Sales and Marketing Funnel Leaks

The problem is all sales and marketing funnels leak.  Whether you are marketing for B2B sales leads, selling consumer products in store or online, driving diners to a restaurant, or recruiting new students to your university, your marketing and sales funnel is leaking.  The leaks in your marketing funnel cost you money—and potential customers.  The good news is that if you know where it’s leaking, you can take appropriate steps to help stop the leaks or at least minimize their impact.

A thorough analysis of your marketing and sales analytics can reveal where your funnel is leaking.  The first challenge is to find and understand the leaks.  The next challenge is to identify how to stop or reduce the leaks.  How many people who see your ads and read your emails actually visit your store or website?  How many of those who reach your website ask for information or make a purchase?  How many people leave a store without buying what they came in to buy?  It’s critically important to know what is and is not working within each step of your marketing and selling funnel.  More importantly, you need to understand how your customers are making decisions at each step in their purchase decision journey.

It is critical to understand your sales and marketing funnel and your customers’ purchase decision process in order to optimize your market effectiveness and marketing ROI. 

• You need to identify your Points of Loss (POL)—where you are losing people at each step in your funnel.

• You also need to understand your Points of Influence (POI)—the key points in the decision process where you can win or lose the engagement of your potential customers as they move towards making a purchase decision.  These are the points in the decision process where your potential customers seek information on what they want to buy.  You need to understand what these POI’s are and who/what is influencing them at each one. 

POL’s and POI’s are your key leverage points in making your marketing and sales process much more productive. 

Adding More Sales Productivity to Your Marketing Funnel

There are three key ways to build sales productivity in your current marketing and selling funnel:

• Put more total people in the funnel.  Your funnel still leaks, but more people in should mean more people out.  If only 1-5% of the people at the top of your funnel actually buy from you or sign up for your services, you need to first focus on improving your funnel rather than putting more people into it.

• Put more of the right people in the funnel.  You hope to attract and sell more of your target audience.  But, if you don’t clearly understand why they are choosing you, this approach will not be fully effective.

• Retain more of the right people in the funnel.  By slowing or stopping the leaks in your funnel, you will optimize your efforts to attract and retain more target customers.  This is usually a much more productive near-term effort versus just spending more on ads or offering promotions.

Our work with clients shows that the leaks in a funnel can happen for very different reasons.  Some can be as simple as the wrong web link was attached to an ad or email, sending the right person to the wrong place on your website.  They don’t find what they want, get frustrated, and leave your website.

Other leaks come from only communicating the features of a product or service but not the most relevant benefits.  Often, a leak comes from not providing the key information a target customer wants to learn prior to deciding where to shop and what to buy.  While these leaks sound like marketing fundamentals, they happen frequently in different stages of marketing funnels.

Shoppers stay in the funnels that best fit their shopping process and POI’s.  Companies who best understand how their customers shop and make purchase decisions and can align their marketing funnel with customer information needs will boost their funnel productivity, sales, and marketing ROI.  If your competition understands your customers’ shopping and decision process better than you do, your marketing funnel will become less effective and you will lose share to your competitors.

Unfortunately, today’s lean marketing and very busy staffs often don’t have enough time to invest in understanding their Points of Loss and Points of Influence.  Whether your internal team does this work or you get outside help, your marketing will be much more productive if you take time to understand why each of your key marketing initiatives may or may not be working effectively in your marketing funnel process.

Are programs ineffective because your funnel process is leaking or are you just not effectively engaging your target customers?  Once you better understand your Points of Loss (POL) and your Points of Influence (POI), you can more effectively focus your efforts and marketing investments in the right place.  Once your sales and marketing funnel works well and you know how to best engage and sell your target customer, you will accelerate your market success!

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This blog was originally posted by GrowthSpring Group on the MENG Blend website.

GrowthSpring Group is a unique strategic growth and marketing innovation firm that helps clients accelerate sales and profit growth. We help you identify and implement new business insights, opportunities, winning strategies and plans. 

www.GrowthSpringGroup.com

Have You Identified How To Achieve Your Next Step Change In Growth?

Does your company’s business plan always tend to have the same approach – the annual plan is based on growing sales and profits steadily through incremental line extensions, a variation on last year’s promotions or low-risk geographic expansion? Is your planning process often more about controlling costs and risk than driving significant growth? 

“Growing sales 3-5% in in our key product segments combined with some targeted cost cutting will allow us to achieve our financial goals.”

Does your annual business planning process fall short of generating breakthrough ideas that could achieve real step-changes in growth?

If you are hitting your financial targets year after year, staying on the current plan could make sense.  It could be the right fit for your company.  But for others, if you are not growing as fast as you or your stakeholders would like, or if your competitors are out innovating you, it could be time to consider a fresh approach.

It may be time to invest in new product or marketing innovation, but the first innovation you may want to consider is in your planning process.  Sometimes an organization’s commitment to its annual planning ritual can be a constraint to achieving significant year-on-year growth.

As a strategic growth consultant, I often see companies that either have not identified or pursued new opportunities, or they have created enough of their own roadblocks that they cannot achieve their growth aspirations.  They are so used to planning incrementally that they miss key opportunities to transform their company and achieve breakthrough growth.

Looking back on your career, have you worked for companies that:

• Just updated the promotional calendar each year to align with last year’s events?
• Only developed and launched new products that were close-in line extensions because the risk of failure was lower – but often just ended up cannibalizing existing sales?
• Defined their market segments so tightly that there was little room for growth?
• Spent time and money each year just to churn customers with competitors – with the real results being lower prices, lower margins and modest, if any, share gains?

If these are familiar scenarios, let me share three planning steps to try this planning cycle to help you identify potential new approaches to accelerate your success.  They include:

• Revisit what made you successful – What insights from your success-to-date can be applied to drive new growth with new products or new markets?
• Redefine to create new advantage – Change the definition of your market to allow you to change how you go to market.
• Remove the barrier – what is holding you back from achieving greater growth? How will you remove both internal and external barriers – or change the game so they no longer constrain you?

Here are some examples of how to apply these steps when reviewing different components of your business plan:

Who you are selling?

• Revisit: Which customer segments value your brand and your products?  Why?  Are there other customer segments that are similar that would also value your brand for the same reasons?  (e.g. travel gear vs. camping gear)
• Redefine: Is your market defined too narrowly?  Can you expand the definition of who you are selling by redefining your market.  Either expand up or down the supply chain or expand to include other segments in the larger category that includes you.  (e.g. breakfast buyers vs. breakfast cereal buyers)
• Remove: Remove barriers to purchase by being available in new channels, in new forms or at new price points (e.g. develop a special pack that will help you gain distribution into new retailers – or – add ecommerce as a sales channel)

What you are selling?

• Revisit:  the benefits and attributes that differentiate you vs. the category you compete in.  (e.g. easy-to-use, stylish, unbreakable)
• Redefine: What are adjacent categories where you can apply these same attributes to introduce relevant new products that go beyond line extensions to your core market.
• Remove: Remove resistance to launching into new categories.  Put together a new product development team that combines brand experience and product development strength with fresh innovative thinking.  Do not include people who are locked into old biases and approaches that could limit the potential of your new innovations.

How you are selling?

• Revisit: How are you engaging, educating, exciting your target and how do you close the sale?
• Redefine: How you disrupt your target customer in new ways to enable them to clearly see the differentiated value in your products versus competitors.
• Remove: Remove your own sales prevention processes that create friction for customers trying to do business with you.  Take a fresh look at how easy or hard it is to buy from you.

Before you introduce these planning steps, look at your internal planning team.  Do they view the planning process as an opportunity or a burden?  Do they take delight or dread being on the company’s annual planning team?  Is it time to bring some fresh perspective onto the planning team by including others beyond department heads and your finance staff?

This is one set of tools to energize your planning process.  If you are on calendar year timing for your fiscal year, your planning process will begin soon.  Look at how you can infuse your planning this year with new energy and some fresh thinking.  If your company’s planning team is resistant, consider bringing in someone from the outside to help your team take a fresh look with the help of an outsider’s perspective.  This could be the year you develop the plan that changes the future of your company!

This blog was originally posted by GrowthSpring Group on the MENG Blend website.

GrowthSpring Group is a marketing innovation and growth strategy firm focused on accelerating your sales and profit growth. We help you identify new business growth insights & opportunities and execute winning strategies & plans. www.GrowthSpringGroup.com

How to Limit Cuts to Your Marketing Budget

This is the time of year when marketing budgets start to get cut.  As the first quarter ends, corporate finance teams roll up the numbers.  If there are negative cost and profit variances vs. the plan, they will look for ways to close that gap before they report quarterly results.  Too often, the marketing budget is seen as the first source of funds to close the gap. 

Why is that?  In many companies, it is because marketing leadership has not proven marketing investment can predictably drive revenue and profits vs. investments made by other departments.  The finance team and the executive team know they need marketing, but unless the marketing team can demonstrate an ROI, the budget remains vulnerable to cuts.

As a strategic growth consultant, I talk with many Vice Presidents and Directors of Marketing.   Recently, many companies have been focused on survival and cost-cutting vs. strategic investment in building their brand and market share.   There has been great frustration as marketing budgets were reduced at the planning stage and then cut again mid-year.

Only marketing leadership can stop this trend. The process of cutting the marketing budget will continue until marketing leadership can educate management and demonstrate a better approach.

This starts in the planning cycle.  The marketing planning process can take several forms. 

• For some companies, the planning process is very involved.  The marketing team and their agency work to develop an elaborate marketing plan, presentation and binder.  These plans can be detailed strategic growth plans or just a fancy presentation with a lot of charts.  The best of these companies develop a strategic plan and tools that they will put to work all year and measure the results as they go.  The worst put the binder on the shelf after the presentation, and will do the same thing next year that they did this year.
• Some companies just wait for the marketing budget number to be communicated.  They then allocated the budget into different spending categories.  There is no strategic plan.  The marketing plan is just a to-do list based on available funding than a growth plan.  For some in this situation, they have given up fighting for strategic growth funds and just want to make sure they have enough funding to do what they did last year.
• A last group develops a strategic growth plan that drives achievement of the company’s strategic objectives. The plan identifies specific strategies, programs and investments to obtain long-term strategic objectives.  It identifies near-term programs that drive sales and profits this year.  A strong plan channels all investment into these two categories.  Some may include tactical legacy programs with limited impact on sales or strategic objectives – these should be replaced with more strategic programs over time. 

Work upfront in the planning cycle can establish the foundation and expectations for future budget cutting conversations.  If your company’s annual and 3-year business plan does not call out your strategic marketing goals and the related investment, your marketing department should be prepared to serve as the banking account to go to when your finance team is looking for money.

Each year there is pressure to do more with less.  The ability to protect or receive additional budget funding will depend on the work marketing leadership has done to demonstrate that:

1. Marketing gets real results – agreeing on key performance metrics and then demonstrating results helps create new understanding and value in marketing.  If you cannot achieve the desired results with the funding you have, you must identify what is holding you back – and work to change it.
2. Marketing is strategic – All year long, marketing leadership needs to demonstrate and communicate how the work of the marketing team and the investment in marketing is helping the company achieve its goals.  If you cannot demonstrate this, revisit the focus of your marketing plan to achieve this result.

Preparing for the Mid-Year Budget Cutting Meeting  

Once you have been notified that a marketing budget review is pending, preparation is needed.  Marketing leaders tend to approach meeting preparation in one of four ways

• Some will go into this meeting without any preparation - waiting to see how much needs to be cut from the budget before spending time on the issue. 
• Others will just plan to reduce all their programs by a little bit and limit the execution within available budget.
• Others will just prepare a list of what has been committed vs. what is available for cutting.
• A fourth group will prepare for these meetings in depth - and likely will be more successful in protecting their funds.

What does this fourth group do?

First, they separate their marketing budget into long-term strategic, near-term strategic and tactical investments.  Ideally this was done in the planning stage, but if not, it can be done in preparation for this meeting. 

• Long-term strategic programs move the company toward long-term strategic objectives – cutting this funding endangers long-term company growth. 
• Near-term strategic programs drive sales this year – cutting these will directly reduce profits.
• Tactical investments are programs we like, but do not result in a measurable financial or strategic impact. 

Gain advance understanding of what is triggering potential budget cuts.  Are sales down or are costs up? Understanding this will help Marketing be part of the solution in closing the financial gap.

Identify proven ways to drive sales growth to solve the problem rather than cutting your way to a financial target.  Prepare a proposal identifying the investment required, the potential ROI and why management can have confidence in the expected result.

Prepare talking points on how other departments may help close the gap.  Since the company as a whole has a shortfall, all departments should help in closing the gap.  This will reduce some pressure on the marketing budget.

Lastly, prepare a list, in order of cutting priority, of non-committed tactical investments. Prepare a separate list of non-committed strategic investments for discussion if you must move beyond the first list.  Identify the budget value and the current year profit impact of each potential program cut.  This list prepares you for an open, thoughtful conversation on what to protect and what to cut. 

When the budget review meeting comes, approach it with a positive attitude that marketing can and will take a leadership role to help the company achieve the desired results.  Identify the funding that can be freed from each department, including marketing.  When reducing the marketing budget, cut entire programs rather than reducing the budget across all programs. The most important programs will remain intact.

Ideally, you have previously gained agreement to programs your company will never cut for strategic reasons.  If you have not, the first budget review session is a good time for this conversation. 

What can you do now to prepare for potential future budget cut meetings? 

• Have a discussion on the strategic role of marketing – and the programs the company will protect no matter what happens this year
• Measure program results to demonstrate the ROI of marketing investments
• Communicate program results!
• Spend time with your finance team showing them the financial and strategic benefit of marketing

With these efforts, you will not only limit cuts to your marketing budget, you will likely build understanding and trust to build further investment in marketing over time!

This blog was originally posted by GrowthSpring Group on the MENG Blend website.

GrowthSpring Group is a marketing innovation and growth strategy firm focused on accelerating your sales and profit growth. We help you identify new business growth insights & opportunities and execute winning strategies & plans. www.GrowthSpringGroup.com

Is It Time for You To Reinvent Your Retail Experience?

Retail is changing.  How consumers research products, shop and buy are changing.  Some of this is due to mobile shopping, some is due to consumers’ ready access to product information online and some is simply due to some retailers cutting back staff – forcing consumers to do their own product information gathering.  And shoppers are becoming better informed – according to a 2012 Motorola Holiday Shopping Study, 61% of retail store managers surveyed said they believe that shoppers are better connected to product information than their in-store associates. 

Given this changing retail world, a question retailers need to answer is:  do you have a strategy and plan for this evolving marketplace and the experience you deliver to your shoppers in store and online?

Mobile shopping is growing – maybe not as fast as some predicted, but it is still growing at a healthy pace.  In 2012, according to eMarketer, $25 billion in purchases were made on phones and tablets – up 81% vs. 2011.  While mobile sales were just 11% of total ecommerce sales, eMarketer predicts this will reach $87 billion by 2016.  According to a recent study from Adobe Systems, 55% of tablet owners use the device for buying products vs. just 28% of smartphone users.  And while, more was spent on tables ($13.9B) vs. phones ($9.9B), shopping on tablets was more likely to be done at home.  According to a 2012 Viacom study, only 36% of tablet owners use their device when shopping in store.

The use of tablets and smartphones as shopping information and purchase devices will continue to evolve and reshape retail as both manufacturers and retailers develop content, apps and better ecommerce tools.  According to the 2013, Shop.org/Forrester Research State of Retailing Online survey, 51% of the retailers surveyed, stated their top priority for 2013 is site optimization, including checkout optimization, user experience, and product detail page enhancements.  Additionally, 43% of retailers surveyed stated that mobile and tablets are among their top three priorities for 2013. 

Different Brick and Mortar retail strategies are evolving – Retailers need to react to this evolving world.  While ecommerce only reach 5.2% of total retail sales in 2012 (source: US Census Bureau), it is growing at 17.7% per year.  Many retailers have concerns about “Showrooming”, where consumers shop at retail and buy online to save money.  Given the rapid growth of ecommerce, retailers appear to be adopting one of four strategies to win shoppers and their purchases in their traditional brick and mortar stores. 

Multi-Channel Retailing – many key retailers, especially the big box stores, are rapidly working to create content-heavy marketing experiences that integrate consumer shopping touch points across stores, retailer websites, social media and email.  Macy’s CEO, Terry Lundgren, refers to their efforts as “Omni-channel” – combining multichannel marketing with new capabilities to fulfill purchases across their system from both fulfillment centers and fulfillment stores.

Multi-channel retailers are working to make sure that in-store shoppers have an easy shopping experience with ready-access to helpful and knowledgeable sales associates.  One retailer in particular working to improve in this area is Best Buy.  Best Buy is a frequent stop for consumer showrooming before buying online.  They are at risk of losing their business if they cannot solve this problem.  Best Buy is working to confront showrooming by creating better in-store experiences that will convert shoppers to buyers.  As Best Buy CEO Hubery Joly put it recently:  “Once customers are in our stores, they’re ours to lose”.  

The key to the multi-channel retail strategy is to offer the right combination of helpful product information, product availability and a good price for the shopper who is ready to buy now.  In stores, this means knowledgeable store associates who can help the shopper find the right products.  Online, it means product selection tools including product reviews, product comparisons, plus upselling and cross selling recommendations to boost total sales.

Experiential Retailing – These retailers have also chosen to give shoppers a great shopping experience, but the path to loyalty has less to do with product information and availability as it does with the experience itself.  These are typically high service retailers that stand out in their category by creating unique and desirable shopping experiences that leaves the shopper wanting to shop in that store again.  While most retailers are looking to enhance their retail experience, there are those who have chosen to create a real difference.  In grocery retailing, smaller retailers like Stew Leonards (CT) and Jungle Jim’s (OH) have created highly unique experiences.  But bigger chains such as Wegmans, Loblaws, and Publix stand out in their experience and service concepts.  Specialty stores such as Starbucks, Sephora, Build-A-Bear and Bass Pro Shops all provide truly unique experiences.  Petco uses puppies and the opportunity to interact with them in store to engage shoppers and create emotional connections. 

The challenge and opportunity for retailers choosing this strategy to identify the key experience activities that combined with store merchandising practices will help them stand apart and engage their shoppers.

Lowest Price – This strategy focuses on the price-driven shopper.  These retailers’ business plan, consumer communication and merchandising are all focused on offering goods at a low price.  The level of sophistication varies from the highly integrated multi-channel marketing efforts of Walmart to the much simpler approach of Dollar Stores.  DSW, Stein Mart and Harbor Freight Tools are examples of this strategy.  This is not a high-service model.  Staffing is kept low and shoppers often have to discover products and product information on their own.  Shoppers are willing to shop there to save money – trading in service and experience for savings.  The key to this strategy is to consistently deliver great prices.  These retailers will successfully compete with other business models by continuing to offer low prices every day on popular products.

Walmart got in trouble and started losing shoppers when they redesigned their stores and tried to offer upscale fashions in addition to everyday low prices.  They cut back many departments shopped by men to add space to categories that women would shop.  The result is they eliminated thousands of low price SKU’s across many categories – and lost the shoppers who came to Walmart to buy them.  Walmart has since changed their strategy and has been adding back many of the categories and SKU’s they previously dropped.  A renewed focus on offering and communicating low prices across key category has helped them regain shoppers and sales.

Do nothing new – The last group of retailers is noted more for inaction in this new world rather than responding to the changes.  They continue to use the same go-to-market strategies that they have for years rather than choosing one of the three strategies above.  They are losing shoppers to the tech-savvy multi-channel retailers, the much more engaging experiential retailers or the value of the lowest price retailers.  Stuck in the middle without a clear reason for shoppers to go there, their only strategic advantage is often the convenience of a particular store location.  Getting lost in the middle of these winning strategies, these retailers will slowly erode sales and market share.  Examples include Sears/Kmart, Sports Authority, Barnes & Noble and The Gap.

Refine Your Experience

Which of these is the best strategy to win in the evolving world of retailing?  The best strategy is the one that differentiates a retailer and attracts and keeps loyal shoppers.   The first three strategies all offer this opportunity.  The winning opportunity is to embrace one strategy and stick to it to create the shopper experience that keeps your shoppers coming back to your store.

This blog was originally posted by GrowthSpring Group on the MENG Blend website.

GrowthSpring Group is a marketing strategy, market research, and innovation firm focused on accelerating your sales and profit growth. We help you identify new business growth insights & opportunities and execute winning strategies & plans. www.GrowthSpringGroup.com