Sunday, December 18, 2022

Our Most Popular Posts of 2022

This will be my last post of 2022, and I want to thank everyone who has spent some of his or her valuable time reading this blog. My goal here has always been to provide content that readers will find informative, thought-provoking and useful, and I've been immensely gratified by the attention and engagement this blog has received.

I'm planning to make a few changes to this blog in 2023. The plans are mostly final, and I'll be detailing them in my first post of next year on January 8th. In general, though, I plan to focus more of the blog content on the strategic themes that are shaping the practice of B2B marketing. More to come on this next month.

For the past several years, I've used my last post of the year to share which posts have been most widely read. For this list, I'm only considering posts that were published in 2022. I've ranked the posts based on cumulative total reads, so those published earlier in the year have an advantage.

So, in case you missed any of them, here are our five most popular posts of 2022:

  1. [Deep Dive] Online Marketplaces Reshape B2B Commerce and Prompt New Marketing Tactics
  2. Why Brand Loyalty Is a Rare Commodity
  3. [Book Review] A Strategic Guide to Using Artificial Intelligence in Marketing
  4. Novelty Is Essential for Compelling Thought Leadership
  5. [Deep Dive] Is Purpose Marketing Right for Your Company?

Happy holidays to everyone, and best wishes for a great 2023!

Image courtesy of Republic of Korea via Flickr (CC).

Sunday, December 11, 2022

Why You Should Spend Part of Your Marketing Budget on Things That May Not Work

Marketers work relentlessly to optimize the performance of their campaigns and programs in order to maximize marketing ROI. But optimization isn't always the right objective. Read on to find out why marketers should spend part of their marketing budget on things that may not work.

The United States is the largest and one of the most vibrant venture capital markets in the world. In 2021, venture capitalists invested $329.9 billion in over 17,000 deals, according to the National Venture Capital Association (NVCA).

NVCA has also reported that total 2021 exit value - which is the cash venture capital investors receive when VC-backed companies are acquired or go public - was over $774 billion.

Venture capital investing isn't for the fainthearted. The venture capital business model is governed by what is usually called the "power law," which holds that out of every ten early-stage investments VC investors make, two will produce all the returns they earn. The other eight investments will generate little or no returns, and some will completely fail.

A successful venture capital investor is like a baseball power hitter who hits home runs, but also strikes out a lot.

So, why am I discussing venture capital in a blog about B2B marketing? Because the venture capital model can help marketing leaders make better decisions about how to manage a small but important part of their marketing budget.

The Revenue Allocation Challenge

The most important and difficult decisions marketing leaders must make inevitably involve the allocation of marketing resources (money, people, time, etc.). Regardless of company size, the resources available for marketing are rarely (if ever) sufficient to enable marketing leaders to do everything they'd like to do. Therefore, resource allocation is an intrinsic part of every significant marketing decision.

Resource allocation decisions can be difficult for a host of reasons, but one of the greatest challenges marketing leaders face is the need to deploy their resources to both maximize performance in the present and build a solid foundation for success in the future.

To increase the odds of achieving future success, marketing leaders need to consistently invest in programs that are specifically designed to identify the capabilities, tactics and other innovations that may become critical for effective marketing in the future. But the reality is, there is a strong tendency to prioritize investments that will produce short-term benefits and to underinvest in activities whose benefits are delayed or uncertain.

The 70-20-10 Rule

Fortunately, there's a resource allocation "rule of thumb" that can help marketing leaders overcome this strong human tendency. It's called the 70-20-10 rule (or sometimes the now-next-new rule), and it's been used for a variety of business purposes. Many companies have used it to allocate innovation resources, and Coca Cola reportedly used a version of the rule for years to guide marketing investment decisions.

Here's how the rule works.

The 70 ("Now") - The rule states that 70% of your marketing resources should be devoted to capabilities and programs with a proven performance track record. This will typically include the marketing channels, tactics and technologies you're already using. The primary goal of these capabilities and programs is to drive short-term performance.

The 20 ("Next") - The rule provides that 20% of your marketing resources should be allocated to emerging marketing channels, tactics and technologies. This category would include capabilities and practices that a growing numbers of other companies are successfully using. It would also include marketing channels or tactics that you have previously tested in small pilot programs and now want to use on a broader basis.

The 10 ("New") - The remaining 10% of your marketing resources should be invested in new capabilities and techniques that have just appeared on the scene. This category would also include the investments you make to test new creative concepts, value propositions or customer segments.

Use a Venture Capital Mindset

One of the main benefits of the 70-20-10 rule is that it prompts marketing leaders to consistently allocate part of their marketing budget to the development and testing of new marketing strategies, capabilities and techniques.

The 10% investment category funds the activities that drive true marketing innovation. In fact, this "bucket" of activities and investments can be accurately described as a company's marketing innovation incubator.

But . . . 

The marketing activities in the 10% bucket are by definition new and unproven, and therefore they are high-risk undertakings. These activities are inherently experimental, and, as we all know, experiments aren't always successful.

That's why marketing leaders should use a venture capital approach when selecting and managing the activities in the 10% bucket. Venture capitalists recognize that, no matter how much research and other due diligence they perform, they can't accurately predict which of the companies they invest in will turn out to be big winners. They understand that most of their portfolio companies won't produce significant returns, and they view this high "failure" rate as part of the cost of reaping the benefits produced by the winners.

Marketing leaders should adopt a similar mindset when thinking about the activities and investments in the 10% bucket. Many of these activities and investments probably won't be highly successful, but some of those that are can potentially produce exceptional marketing results.

Image courtesy of Vall d'Hebron Institut de Recerca VHIR via Flickr (CC).

Sunday, December 4, 2022

4 Questions You Should Ask Before You "Go All In" on Personalization

It's almost an article of faith among marketers that delivering personalized content and experiences to customers and potential buyers will improve business results. The value of personalization has gone largely unquestioned for nearly two decades. Most marketers now view personalization as essential for success, and many companies are on a mission to improve their personalization capabilities.

This strong belief in the power of personalization is easy to understand. There are now dozens of surveys showing that most consumers and business buyers want and expect to receive messages, offers and other content that are personalized based on their wants and needs.

But while support for personalization in marketing is widespread, it isn't unanimous. Earlier this year, Peter Weinberg and Jon Lombardo wrote an article for Marketing Week calling personalization "the worst idea in the marketing industry."

Weinberg and Lombardo base their case against personalization on two points. First, they argue that it's impossible to consistently produce effective personalization because the data used to fuel personalization is often inaccurate. They are particularly critical of third-party data, writing that, "Most third-party data is, to put it politely, garbage."

The second argument against personalization is that it wouldn't work even if marketers had accurate data about every customer and potential buyer. Weinberg and Lombardo write, "Arguably, there has never been a successful piece of personalized creative in human history. The biggest movies, books, songs and ads all speak to universal experiences that resonate with everyone, everywhere."

According to Weinberg and Lombardo, marketers would be better served by investing in performance branding, which the authors define as using "one-size-fits-most" marketing content that "speaks to the common category needs of all potential buyers, all the time."

The Four Critical Questions

In my view, Weinberg and Lombardo go way too far when they assert that personalization is "the worst idea in the marketing industry." The research clearly shows that when personalization is used under the right circumstances and in the right ways, it will boost marketing performance. But as with most business tools, the key to being successful with personalization is understanding when and how to use it.

The first important thing to recognize is that personalization isn't a single, monolithic marketing technique. It's a term that encompasses a wide variety of use cases that differ in significant ways. They have different business objectives and different data requirements, and they can demand different human and technological capabilities. Therefore, you need to assess each potential use of personalization as a discrete marketing project.

When you're evaluating any potential use of personalization, there are four critical questions you need to answer.

"Do we have enough accurate data to successfully implement this use of personalization?"

No proposed use of personalization will be successful if you don't have relevant and accurate data. Unfortunately, personalization efforts often miss their mark because of inadequate or inaccurate data. In a survey of U.S. consumers conducted earlier this year for Redpoint Global, 70% of the respondents reported receiving mistargeted information at least once a month, and 24% said they receive mistargeted information daily.

Each proposed use of personalization will also require specific types of data. For example, offering a research report to potential buyers working in a set of selected industries will require different data from making a product recommendation based on an existing customer's previous purchases.

So, this is really a two-part question:  "Do we have the right types of data to execute this proposed use of personalization, and is the data accurate and reliable?"

"Will this use of personalization provide a meaningful benefit to members of our intended audience?"

Research by Gartner has shown that personalization works best when it provides meaningful, pragmatic value to the intended audience. The most effective uses of personalization will be those that help members of the intended audience solve important problems, or address important issues, or get more value from a product they've already purchased. Personalization can also be effective if it makes it easier for a customer to do business with your company.

The important point here is that when you're evaluating a prospective use of personalization, you need to put yourself in the shoes of your audience and ask, "How will this help me?"

"Is this use of personalization appropriate based on the relationships between our company and members of our intended audience?"

No one likes "creepy" personalization, and today's consumers and business buyers will react strongly to personalization that goes too far. In the Gartner research mentioned above, 38% of the survey respondents said they would stop doing business with a company that sent them creepy personalized messages.

The lesson here is that the level of personalization you use needs to match the real-world status of the relationship between your company and each member of the intended audience. To be effective, personalized marketing must be based on genuine insights about your audience. When you take personalization beyond such insights, it becomes inauthentic and will likely be perceived as superficial, presumptuous or creepy.

"Do we have informed permission from the members of our intended audience for this use of personalization?"

Numerous research studies have shown that marketers are facing a Catch-22 when it comes to the use of personalization. On one hand, the research shows that most consumers and business buyers want and expect personalized messages and experiences. The research also shows, however, that many consumers and business buyers aren't comfortable with how companies are collecting, accumulating and using their personal or business information.

Personalized marketing will not reach its full potential unless marketers use an approach to personalization that addresses these privacy concerns. If the huge volume of personalization research tells us anything, it tells us that consumers and business buyers will welcome and value personalized content and experiences when they are helpful, authentic and based on permission that is willingly and consciously given.

So how can you gain this kind of informed permission? There are three key steps.

Use personalization "programs" - In most cases, personalization should be organized into discrete programs, each of which is designed to provide a specific type of value to a specific type of customer or prospect. This approach will help you to focus on the purpose of personalized marketing from the perspective of your intended audience.

Ask for participation - Invite the members of your intended audience to "subscribe" to personalized content on a program-by program basis, and reassure them that subscribing to one program won't open the floodgates to other marketing communications.

Be Transparent - It's important to be radically transparent in your invitation about the details of the personalization program. So, the invitation should include:

  • Why the program will be useful and valuable for the recipient
  • What personal information will be used, and how the information will be used
  • How the personalized content will be delivered (format)
  • How frequently the personalized content will be delivered
  • How long the program will last
  • A clear statement that the recipient can "unsubscribe" at any time
It's About When and How - Not Whether - To Personalize
The issue for marketers is not whether to personalize marketing content and experiences. The evidence is clear that customers and prospects want and appreciate the increased relevance that personalization can provide. The real challenges are about how to deliver personalization. By making personalization helpful, authentic and based on informed permission, you can reap the maximum benefits of personalized marketing.

Top image courtesy of Jernej Furman via Flickr (CC).