What the Pleasure Paradox Can Teach Us About Great Marketing

(With Christmas Day only a week away, I wanted to write a post with a holiday theme. Unfortunately, I lack the creativity to write a clever (and poetic) post based on "'Twas the Night Before Christmas" or something similar. This post does, however, make the point that marketers can achieve great success by truly serving their customers and prospects. That message fits the season. Happy Holidays!)

In life and in business, some of our most important goals are best pursued indirectly. All of us want to be happy, but the reality is, we can't achieve happiness by trying to be happy. In the disciplines of philosophy and ethics, this principle is usually called the paradox of hedonism or the pleasure paradox. The pleasure paradox is the idea that happiness can only be acquired indirectly. In his autobiography, the philosopher John Stuart Mill described this principle in the following terms:

"But I now thought that this end [happiness] was only to be attained by not making it the direct end. Those only are happy (I thought) who have their minds fixed on some object other than their own happiness . . ."

Victor Frankl described the pleasure paradox even more succinctly:

"Happiness cannot be pursued; it must ensue, and it only does so as the unintended side effect of one's personal dedication to a cause greater than oneself . . ."

Business success is obviously different from personal happiness, but variations of the pleasure paradox also exist in the world of business. In Obliquity, John Kay called one of these variations the "profit-seeking paradox," which holds that the best way for a business to maximize profits is not to seek to maximize profits.

Although they never used the term, Jim Collins and Jerry Porras described the profit-seeking paradox in their best-selling book Built to Last. Collins and Porras compared the long-term performance of several pairs of companies in the same industry. In each pair, one of the companies (the "visionary" company) had achieved exceptional long-term financial performance, while the comparison company was just average. Collins and Porras found that profit-driven companies were less profitable than companies that were driven by other goals. The authors wrote:

"Visionary companies pursue a cluster of objectives, of which making money is only one - and not necessarily the primary one. Yes, they seek profits, but they're equally guided by a core ideology - core values and sense of purpose beyond just making money. Yet paradoxically, the visionary companies make more money than the purely profit driven companies."

By now, you're probably wondering what all this has to do with marketing. Most marketers would say that the ultimate goal of marketing is to drive revenue growth. But like profit, revenue growth is a goal that is best pursued indirectly. In today's marketing environment, there is a "revenue-seeking paradox," which holds that the best way for marketers to drive revenue growth is to stop focusing directly on revenue growth as the ultimate objective.

Jay Baer captures the essence of this paradox in his best-selling book Youtility. Baer argues that the key to successful marketing is to make marketing useful to the recipient. He defines "Youtility" as "massively useful information, provided for free, that creates long-term trust and kinship between your company and your customers." The underlying message of Youtility is that you will achieve greater long-term marketing success by intentionally promoting less at the point of customer interaction - that revenue growth is a by-product of the help and usefulness you provide.

The revenue-seeking paradox runs counter to the conventional wisdom of marketing that's existed for decades. So, it's not likely that most marketers or other business leaders will rush to embrace it. But those who can put helping above selling will achieve the greatest marketing success.

Why B2B Branding Still Matters

Most of the content that's been published recently about B2B marketing has focused on demand generation topics such as lead generation, lead nurturing, and lead qualification. This is understandable because the providers of B2B marketing automation software have been prolific at developing and publishing content resources that are centered on those topics.

B2B brand marketing or "brand building" has received considerably less recent attention from marketing industry commentators. Some respected marketing experts have even asserted that branding is no longer important for most B2B companies and that new marketing techniques have made B2B branding largely obsolete.

Recent research by CEB and McKinsey & Company reveals that branding remains critical to the success of most B2B companies and that brand building is still an essential marketing function.

In a 2013 study titled From Promotion to Emotion, CEB studied the impact of a strong brand connection on various buyer behaviors. CEB compared the behavior of high brand connection customers with no brand connection customers. High brand connection customers were those who gave brands high scores for trust, image, and industry leadership. The CEB study found that high brand connection customers were:

• 5 times more likely to give consideration to a brand
• 13 times more likely to purchase from a brand
• 30 times more likely to be willing to pay a premium for a brand's products or services

Research by McKinsey has also found that strong brands create significant value for B2B firms. For example, B2B companies with strong brands generate a higher operating profit (EBIT) margin than other firms. According to McKinsey, in 2012, strong brands outperformed weak brands by 20%, up from 13% in 2011.

A strong brand is critical for B2B companies because of the role it plays in a buyer's decision to make a purchase. Most marketers tend to view B2B buying as a rational process. We usually say that business buyers make purchase decisions by following a logical, step-by-step process and move through stages that we label something like awareness, consideration, evaluation, and purchase.

It turns out, however, that B2B buying behavior is often far from rational and that emotions play just as big a role in B2B buying as they do in consumer buying. More importantly, it's now clear that the most powerful emotion in B2B buying is fear. As Gord Hotchkiss wrote in The BuyerSphere Project, "B2B buying decisions are usually driven by one emotion - fear. Specifically, B2B buying is all about minimizing fear by eliminating risk."

A strong brand alleviates some of the fear that business buyers inevitably experience (even if only subconsciously) when they're facing a major purchase decision. The power of a brand to reduce the perception of risk is captured in the old saying:  "Nobody was ever fired for buying from IBM."

The marketing techniques used for brand building have certainly changed. Traditional brand building methods and tactics are far less effective today than they once were. Business buyers are quick to tune out promotional marketing messages, so what companies need is a more effective method for building the brand and communicating the brand promise. As I argued in an earlier post, content marketing is now the best way to build the brand for most B2B companies. The tactics may have changed, but B2B branding is as important today as ever.

Two Keys to More Effective Marketing in 2014 - How Marketing Content Must Change

With 2014 now less than a month away, most B2B marketers are well into their planning for next year. For most marketers, the ultimate question is:  What can we do to boost the effectiveness of our marketing efforts in 2014?

This is the second of two posts that are describing two key actions that marketers can take to improve marketing effectiveness in 2014. In my last post, I discussed why most B2B companies need to implement marketing automation and CRM technologies. In this post, I'll describe how marketing content needs to change in 2014.

More than nine out of ten B2B marketers now say they are using some form of content marketing, according to research by the Content Marketing Institute and MarketingProfs. The irony is that the popularity of content marketing is creating a new challenge for marketers. As more companies implement content marketing and publish more content, it's becoming more difficult to make your content stand out.

The key to content marketing success in 2014 will be to make your content useful. The concept of utilitarian marketing - marketing that is truly useful to the recipient - has gained increased attention in recent months largely due to the publication of two books - Youtility by Jay Baer, and Ctrl Alt Delete by Mitch Joel.

In Youtility, Jay Baer argues that there are only two ways for companies to break through the marketing and advertising clutter that engulfs today's consumers and business buyers. They can be amazing or they can be useful. Being amazing works, Baer says, but it is more difficult to do and provides less predictable results than being useful.

Being useful is what Baer means by "Youtility," which he defines as follows:

"Youtility is marketing upside down. Instead of marketing that's needed by companies, Youtility is marketing that's wanted by customers. Youtility is massively useful information, provided for free, that creates long-term trust and kinship between your company and your customers."

In Ctrl Alt Delete, Mitch Joel contends that what he calls utilitarianism marketing will be the "next great business disrupter." Joel describes utilitarianism marketing as follows:

"What is utilitarianism marketing? It's not about advertising, it's not about messaging, and it's not about immediate conversations. It's about providing a true value and utility:  something consumers not only would want to use - constantly and consistently - but would derive so much value from it that it would be given front-and-center attention in their lives."
 
In the CMI/MarketingProfs study mentioned earlier, 73% of B2B marketers surveyed said they are currently producing more content than they were twelve months earlier. There is every reason to think that companies will produce more content in 2014 than they did in 2013. With so much content available, potential buyers have little patience for content that doesn't provide real value and utility. If they don't see value in your content, they'll simply move on to someone else's.

There are several actions you can take to improve the effectiveness of your marketing in 2014, but nothing is more important than producing content that is truly useful to your customers and prospects.

Read Part 1 of the series here.

Two Keys to More Effective Marketing in 2014 - Part 1

Two years ago this month, I published a post here titled Five Ways to Improve Your Marketing in 2012. With the end of 2013 now only a month away, I thought it would be a good time to revisit this topic with 2014 in mind. How much of what I wrote in 2011 is still relevant, and what would I change about (or add to) my 2011 post.

In my earlier post, I made five recommendations:

• Develop a marketing strategy
• Shift primary responsibility for lead generation from sales to marketing
• Increase the number of leads you acquire via inbound marketing
• Develop and implement a sound lead management process
• Implement a content marketing strategy

These recommendations are as valid today as they were two years ago, although I believe that the number of B2B companies using some or all of these practices has increased substantially over the past two years.

So, what are the most critical actions that B2B marketers should take in 2014 to boost marketing performance? There are several plausible answers to this question, but I suggest that two actions stand out in importance. In this post, I'll discuss why technology has become all but essential for effective B2B marketing in 2014, and my next post will describe how marketing content must change in 2014.

Why Marketing Technology is Essential

I don't write frequently in this blog about marketing technology for a couple of reasons. First, there are many other good sources of information on that topic. In addition, the hype surrounding marketing technology can easily create the erroneous impression that technology is a "silver bullet" that will automatically improve marketing and sales performance.

It's clear, however, that marketing and technology are deeply entwined and that it's now practically impossible to build and execute effective marketing programs without the use of technology. For example, unless you're working with a very small number of prospects, it's extremely difficult and highly inefficient to run sophisticated lead nurturing programs without the right technology tools.

B2B marketing automation (aka lead management) software enables companies to execute personalized and behavior-driven lead nurturing programs. These technologies also typically enable extensive data collection regarding lead behavior and the use of automated lead scoring systems. B2B marketing automation solutions are typically integrated with CRM solutions, and this combination of technologies can significantly improve the effectiveness and efficiency of both marketing and sales efforts.

The good news is, both marketing automation solutions and CRM solutions are now widely available as hosted solutions, they are relatively easy to use, and they are affordable for most B2B companies. These factors, combined with the pressing need to improve marketing performance, have made B2B marketing automation software extremely popular. David Raab, a widely-respected marketing automation industry analyst, estimates that revenues from the sale of B2B marketing automation software will reach $750 million in 2013, and the market has been growing at about 50% per year for the past several years.

If you don't have the internal skills needed to successfully implement a marketing automation solution, you should consider working with a marketing services firm that can use these technologies to execute marketing programs on your behalf.

Marketing technology is not a panacea, but it will be essential for effective B2B marketing in 2014.

Read Part 2 of the series here.

Is Account-Based Marketing Right for Your Business?

One of the hot topics in B2B marketing circles today is account-based marketing (ABM). ITSMA (the Information Technology Services Marketing Association) led the development of account-based marketing about a decade ago. Although it started in the technology sector, ABM is now used by many kinds of B2B companies.

ITSMA defines account-based marketing as:  "A structured approach to developing and implementing highly customized marketing campaigns to markets of one, i.e. accounts, partners, or prospects." (emphasis added) By this definition, the distinguishing characteristic of account-based marketing is that it entails the development of a unique marketing strategy and communications program for each target account.

Recently, some marketing consultants and software companies have been arguing for a broader view of account-based marketing. For example, SiriusDecisions has identified four varieties of ABM - large-account marketing, named-account marketing, industry-account marketing, and customer marketing. For a description of these four varieties of ABM, read this post at the SiriusDecisions blog.

Firms that advocate the broader view use the term account-based marketing to describe marketing programs that focus on a specific group of named accounts, but do not necessarily involve the implementation of a unique marketing program for each target account. While these programs are often based on solid marketing principles and can be very effective, they are not true account-based marketing, at least in the original sense of the concept. In this post, I'm using the term account-based marketing as it was defined by ITSMA.

It's now clear that account-based marketing can be highly effective in the right circumstances, but is ABM right for your business?

Your answer to this question largely depends on the attributes of your universe of existing and potential customers. True account-based marketing is typically used only for very high-value customers and prospects because it's expensive to execute. For example:

• ABM requires both marketing and sales personnel to be deeply involved in the development and execution of each account plan.
• Many of the activities involved in ABM cannot be automated because they require the exercise of human judgment.
• Account-based marketing will usually require the development of unique marketing and sales content resources for each target account.

Because of the costs associated with account-based marketing, most companies that use ABM do so selectively. The diagram below illustrates how account value and the diversity of account needs influence which approach to marketing is most appropriate.

The lower left corner of the diagram represents accounts (existing customers and prospects) with relatively low value and relatively homogeneous needs. A mass marketing approach (i.e. "one size fits all") is probably most appropriate for this group of accounts. Note, however, that this group represents a small part of the total universe of accounts.

The top portion of the diagram represents very high-value accounts. These are the types of accounts that are suitable for account based marketing, even when their needs are fairly homogeneous. In most companies, these accounts also represent a fairly small portion of the total account universe.

As the diagram illustrates, targeted marketing (which may, in fact, focus on a specific group or set of named accounts) is the most appropriate marketing approach to use for most accounts. As I'm using the term, targeted marketing refers to the use of customized marketing messages for market segments and buyer personas, but not for individual accounts. When targeted marketing is done correctly, it enables a company to obtain many of the benefits of account-based marketing at a significantly lower cost.

So what's the bottom line? If you're a B2B company with a few existing customers who are "too big to lose," and/or if you can identify a small number of potential customers who would provide exceptionally high value to your company, then consider implementing account-based marketing for those selected accounts, and use targeted marketing programs for the rest.

How to Know if Your Marketing Strategy is Working

The foundation of all effective marketing efforts is a sound marketing strategy. Most marketing leaders feel fairly comfortable formulating strategy, but many find it difficult to measure how well their marketing strategy is actually working. The solution for this perennial challenge is a marketing Balanced Scorecard.

When Robert Kaplan and David Norton introduced the Balanced Scorecard in the early 1990's, they saw it as simply a better way to measure organizational performance. However, many early adopters started using the Balanced Scorecard as a tool for implementing business strategy. They recognized that if the objectives and measures included in their Balanced Scorecard were derived from their strategy, the scorecard would become an effective tool for describing the strategy in
measurable terms. Therefore, the Balanced Scorecard quickly evolved from a pure performance measurement system to a tool for managing strategy.

This is my third post about using a Balanced Scorecard to measure and manage marketing performance. In my last post, I described the four "perspectives" used in a Balanced Scorecard. In this post, I'll describe how a Balanced Scorecard can help you determine how well your marketing strategy is working.

The key to using a Balanced Scorecard to manage marketing strategy is something called a strategy map. A strategy map is essentially a set of linked strategic objectives that are organized using the four Balanced Scorecard perspectives. The diagram below depicts a high-level, generic version of a Balanced Scorecard strategy map for marketing.



Each of the rectangles in a Balanced Scorecard strategy map will contain objectives that are derived from your company's marketing strategy. In the above diagram, the rectangles contain descriptions of the kinds of objectives that would be included. For example, in the internal process perspective, one set of objectives will relate to the campaigns or programs that marketers design and execute.

In a Balanced Scorecard strategy map, the lines connecting the rectangles represent the cause-and-effect relationships that exist among your company's strategic marketing objectives. These causal relationships define the "logic" of your marketing strategy, and they tie the objectives together to create a cohesive strategy. Describing these cause-and-effect relationships is one of the most critical steps in building a sound marketing strategy, and using a strategy map forces you to make these relationships explicit and visible.

In a Balanced Scorecard strategy map, the cause-and-effect lines indicate that achieving one objective is what enables another objective to be achieved. For example, the above diagram is indicating that if a company successfully achieves its customer value proposition objectives, the company will achieve its objectives relating to customer acquisition and customer loyalty. And, if the company achieves its customer acquisition and customer loyalty objectives, it will be able to reach is revenue growth objectives.

The most powerful argument for using a Balanced Scorecard to measure and manage marketing performance is that it provides a mechanism for demonstrating and documenting how individual marketing activities fit into and support your marketing strategy, and for connecting individual marketing activities and programs to ultimate business outcomes. The objectives and measures used in the customer, internal process, and learning and growth perspectives are leading indicators of the business outcomes that define marketing success. So, by monitoring your progress toward achieving all of the objectives included in your strategy map, and by testing the validity of the cause-and effect relationships you've defined in your strategy map, you are also measuring the effectiveness of your marketing strategy.

How a Balanced Scorecard Measures Current and Future Marketing Performance

In my last post, I argued that marketers should use a Balanced Scorecard to measure and manage marketing performance. The Balanced Scorecard was introduced by Robert Kaplan and David Norton in the early 1990's, and it's become one of the most popular and effective business management tools. In the Management Tools and Trends 2013 survey by Bain & Company, business leaders from around the world ranked the Balanced Scorecard as the fifth most widely-used management tool.

The Balanced Scorecard was created to address the deficiencies of performance management systems that rely exclusively on financial performance metrics. One of the main shortcomings of financial accounting measures is that they are lagging indicators. They measure the financial consequences of actions taken in the past, but they can't measure how today's activities will affect future performance.

To address these deficiencies, a Balanced Scorecard uses both financial and non-financial metrics, and it includes measures of both leading and lagging performance indicators. This framework enables company leaders to monitor both current performance and the factors that drive future
performance.

These capabilities make the Balanced Scorecard a powerful tool for measuring and managing marketing performance. A Balanced Scorecard measures marketing performance across four perspectives - financial, customer, internal process, and learning and growth. The financial perspective measures the current performance of the overall marketing function, while the other three perspectives measure the drivers of future performance. The diagram below shows the basic architecture of a Balanced Scorecard.

A thorough explanation of how the Balanced Scorecard is used for marketing would require a book, not a blog post. In this post, I'll briefly describe the four perspectives of a marketing Balanced Scorecard. In my next post, I'll describe how you can use a Balanced Scorecard to measure the effectiveness of your marketing strategy.

The Four Perspectives of a Balanced Scorecard

Financial Perspective - As noted earlier, the financial perspective of a Balanced Scorecard measures the current financial performance of the marketing function. When a Balanced Scorecard is used for marketing, the ultimate financial measure is usually return on marketing investment.
This perspective will also typically include objectives and measures relating to revenue growth and the operational efficiency of the marketing function. For example, most marketing Balanced Scorecards will measure overall revenue growth. Depending on a company's growth strategy, this perspective may also contain specific objectives and measures pertaining to certain sources of revenue growth, such as growth from specific customer groups, products, or geographic market areas.

Customer Perspective - The customer perspective of a marketing Balanced Scorecard will contain a set of objectives and measures relating to customer acquisition and to customer retention, growth, and satisfaction. This perspective will also typically include objectives and measures that focus on the most important aspects of your customer value proposition. Some of the measures commonly found in this perspective include number of new customers acquired (or number of new customers of a particular type) and average deal size. The "logic" of a Balanced Scorecard is that if a company achieves the objectives included in this perspective, the company will achieve the revenue growth objectives in the financial perspective.

Internal Process Perspective - This perspective will contain objectives and measures relating to the internal activities and processes that are critical to (a) understanding your current and potential customers, and (b) communicating your value propositions to prospects and customers. Some of these processes relate to how you gather and use data from and about your customers and prospects, and some will relate to how you design and execute marketing campaigns and programs. So, for example, this perspective is where you track the performance of lead generation and lead nurturing programs. The internal process perspective will also include objectives and measures relating to the operational processes in the marketing function that affect efficiency and productivity.

Learning and Growth Perspective - The fourth and final perspective of a Balanced Scorecard is the learning and growth perspective. This perspective measures the intangible assets that your company must posses in order to perform your critical internal processes with a high level of competence. This perspective will typically contain objectives and measures relating to three types of intangible assets - human capabilities, technological capabilities, and organizational/cultural attributes.

So, how do you determine what objectives and measures should be included in a Balanced Scorecard? In my next post, I'll explain why objectives and measures should be derived from your marketing strategy. When this is done, the Balanced Scorecard becomes a powerful tool for managing your strategy and measuring its effectiveness.