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We took a closer look at two recent reports highlighting how sales and marketing priorities and budgets are allocated in 2011. The good news is, according to CSO’s 2011 Lead Management Study, marketing budgets are on the rise. CMO Council’s The 2011 State of Marketing Report also confirms this, with 57% percent of respondents indicating that they are adding to their 2011 marketing spend. (Note that this represents a budget between 2 and 4 percent of revenue.)

So how are we spending all this money?

In CSO’s Lead Management Study, respondents reported their top three strategic marketing objectives this year as:

  • Increasing new customer acquisition – 82.6%
  • Optimizing cross-selling and up-selling – 41.7%
  • Increasing brand awareness – 41.5%
However the real story is in the bottom three:
  • Increasing customer renewals – 17.6%
  • Enhancing customer experience – 16.3%
  • Becoming customer-centric – 14.5%
CMO Council’s data also weighs in on our apparent lack of focus on our existing customers. Their State of 2011 Marketing report indicates that only 4% of marketers are concerned with customer churn when allocating their budget. CMO says “… marketers continue their focus on more costly customer acquisition strategies in place of customer retention initiatives.”

It’s been said before: it is far cheaper to keep a customer than to acquire a new one. So why is customer retention falling behind?

If we take a closer look at the data, we find that marketers are facing some big challenges this year:
  • A lengthening sales cycle. Marketers now own more of the customer as sales cycles slow down and prospects spend more time on the web, learning and comparing on their own, before engaging with sales.
  • Overwhelming amounts of customer data. Many more of us jumped on the social media bandwagon this year, afraid of being left behind and without having an integrated solution in place. Now, we have lots of customer data all over the place, and we aren’t sure what to do with it (or how to get at it.)
  • Lack of talent. CMO Council reports that 37% of marketers plan to bring on new digital and interactive marketing talent this year. We’re not surprised. In 2011, marketers found themselves with Facebook pages, Twitter accounts, even going mobile, and did not have a well-thought out strategy for any of it.
What is being lost as we fight our way through these challenges? The opportunities to build loyalty, increase revenues, and promote brand equity through our most precious resource: our customers.

Determining what priority customer retention should take in your marketing strategy starts by understanding the lifetime value of your customers. If you’re not sure where to start, check out our Customer Value Pack. It is designed to calculate the core value of your best customers and help you more effectively define, acquire, and retain the ideal customer set within a reasonable budget.

Knowing the numbers allows marketers to prioritize customer acquisition and retention strategies with more precision and authority. Because of this, we believe that all marketers must understand how much they can truly afford to spend to acquire a new customer.

Do you?

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Successful selling requires an understanding of the buyer’s mind, and most MSPs fail to develop a clear understanding of their customer’s true needs. Specifically, many MSPs don’t understand why buyers do — or don’t — buy from them. Great businesses take the time to understand their buyer’s psyche. Let’s delve a little deeper.

First, there’s the psychology of buying. People buy based on emotion rather than logic — even large corporations. Why do we all yearn for BMW 7 Series when a Honda Civic gets us from point A to point B just as well and for a lot less? Spending $90,000 on a car defies all logic and reason when you think about it. Here’s why we do it.

Maslow’s Hierarchy of Needs:

Remember Maslow’s Hierarchy of Needs from psych 101? Well, it applies to sales, too. We want the BMW because it tickles the desires at the top of Maslow’s pyramid. Driving a nice car makes us feel important, like we have achieved greatness. It earns the respect of our clients and friends. These needs trump the basic transportation needs at the bottom of the pyramid.

The BMW Hierarchy of Needs:

  • Physiological Needs: We need transportation.
  • Safety Needs: A car allows us to work and earn income to support our family.
  • Belonging Needs: Having a nice car like the people we aspire to be means we belong.
  • Esteem Needs: A luxury car earns respect and adoration.
  • Self-Actualization Needs: A luxury car gives us the edge we need to be successful.

The MSP Hierarchy of Needs:

  • Physiological Needs: My business needs a computer network to function.
  • Safety Needs: My business needs a safe and secure IT infrastructure.
  • Belonging Needs: Good businesses use technology effectively and have competent IT departments. So should mine.
  • Esteem Needs: Being a successful technology leader in business will make our company the envy of employees, customers, and competitors.
  • Self-Actualization Needs: Effectively leveraging technology will allow me to build a more profitable and successful company.

The Seller’s Mistake:

Here is where most people falter. They sell from the bottom of the pyramid up, rather than from the top down. We tend drill in on the technological (“physiological” and “safety”) needs rather than higher level business concepts. We’re going to keep your equipment running, backup your data, patch your servers, and so on. Blah, that’s boring. These are important aspects of what we do, but they don’t inspire CEOs to pay top dollar for managed services.

The Right Way to Sell:

Selling from the top of the pyramid down excites people. No CEO gets hot and bothered by patch management. Instead, focus on high level concepts. Show them how they can better use technology to increase sales, keep their employees productive, and reach their ultimate business goals. Demonstrate how their competitors are using technology more effectively than they are. Making more money and achieving success excites CEOs. Work from the top down. Show them how you can enable their business to be great.

Paul Barnett is VP and COO at Network Depot, the MSP that launched Virtual Administrator. Monthly guest blogs such as this one are part of MSPmentor’s annual platinum sponsorship. Read all of Barnett’s guest blogs here.

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Since RBS started the Online Backup industry in 1987 many other companies have come and gone, most of them attempting to follow in our footsteps. Over the past 24 years many of these “me-too” companies have based their software on the basic protocol that we invented. The basic process is simple and has few variants. […]

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Selling isn’t easy. However, if you adopt a systematic approach, support new technologies, and offer best-of-the-class services, you can really accelerate your sales. The following five points provide insights into such things and help you win new customers.

Among my top recommendations:

  1. Take sides with a winning idea
  2. Sell the idea, they’ll come
  3. Show the difference in dollars
  4. Share your customer stories and learning from the field
  5. Use social media to reach out

1. Take sides with a winning idea
Your website is a basic sales requirement that gives details such as “who you are” and “what you do.” It helps prospects understand your portfolio of services. First create a website, it’s so easy. WordPress helps you create your own website. Next, choose a winning idea or product. It could be about cloud computing, virtualization, a good RMM or helpdesk. If you choose virtualization, contact all the vendors and try to provide the best offers that the market has to give.

2. Sell the idea, they will come
Follow the domain closely and try to establish yourself as a strong cloud/virtualization information company. Add flavor by writing informative blogs on the domain and educate your followers how it can help them. As the time goes by, people will recognize you and start asking advice. Gain the advantage of offering advice and selling to them.

When you have built your expertise in the domain, conduct webinars. Invite a keynote speaker to give some valuable information that helps customers improve their IT performance. Educate your customers on how technology helps them save their time and money. Focus on how you can help them with the technology.

3. Show the difference in dollars
Sell them an idea of parallel evaluation or a test run for a few departments. For example, if you are providing help desk service, offer RMM services free for 30 days. At the end of the month, provide a mock bill for the RMM services. Calculate the cost of inhouse IT staff vs. your mock bill (provided you can deliver services that cost less than inhouse IT). Educate the customer on the dollars that he can save by off-shoring IT and the pros and cons of in-house vs. managed services model.

Here’s a sample calculation: The cost of setting up an operations support team in Florida vs. outsourcing…

Some details about the chart and the calculations…

  • Total number of devices to be managed is 500 and the number of operations support personnel required is 5. At an average salary of $55,000 per operations person per year, you would be shelling out $275,000 on salaries for five operations members.
  • Workout the price for the managing the 500 devices. If you are charging $30 dollar per device on an average for 500 devices per year, it costs $180,000. A win-win for sides. Moreover, if you have multi-year contracts the difference becomes high when you include salary increments every year.

Also, get a user satisfaction survey. If the user experience improves, it’s great. It’s good even if people say there is no change. You can take the credit of having implemented an efficient system that costs less, without impacting the user experience. Reduced bill and improved services are a win-win for both you and your customer.

4. Share your customer stories and learning from the field
Share your customer stories that help other customers to improve their IT performance. However, be cautious that you never disclose the name of a customer to other customer.

Keep in touch with your customers via newsletters or monthly mailers that help them. Avoid using discounts and buy now links in the newsletter and mailers. Include at least 4 or 5 knowledgeable materials such as whitepapers, videos, analyst’s reports, etc. that benefit the customers. Target them month on month and the buy in will happen eventually. To send bulk mailers you can make use of effective email tools. These tools are available for as low as $15 per month.

5. Use social media to reach out
It’s hard to find someone who doesn’t use twitter or Facebook. Setup fan pages and use Twitter to send out relevant messages to your followers. Follow the analysts’ tweets and feeds, and retweet them. Keep the message stream focused to useful info – absolutely no place for “my cat did this” or “checked in at odd places”. Create a profile in the Facebook for you company, and make it interactive and informative. Post whitepapers and videos, and share useful articles that benefit the customers.

Conclusion
Include the above activities in your day to day process. Make sure you are in constant touch with your prospects and keep providing valuable information and tips to improve IT performance and reduce operational expenses. You will start reaping success in a very short period.

Bharani Kumar is the marketing analyst of MSP Solutions at ManageEngine. Read ManageEngine’s well received book “How to Set Up a Managed Services Business.” Monthly guest blogs such as this one are part of MSPmentor’s annual platinum sponsorship.

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We reviewed Marketo’s Definitive Guide to Marketing Metrics and Analytics and found it lived up to its title with 70 pages of detailed advice on how to most effectively gather and measure key marketing metrics.

Within the Guide, a new profile emerged: the Revenue Marketer™. Marketo describes them as marketers who, “begin to operate and sound more like sales.” Trademarked by The Pedowitz Group, The Revenue Marketer™ “…knows how their key metrics stack up against their targets, and what they plan to do to improve their results.”

If you don’t classify yourself as a one of these new breed marketers, you’re not alone. 44% of marketers have no idea what profits a 10% increase in their marketing budget would generate (Lenskold Group’s 2010 B2B Lead Generation Marketing ROI Study)

However, we should.

As the Definitive Guide tells us (and as most of us suspected already), to gain more credibility and respect (translation: budget and resources) within our organizations, marketing needs to measure the things that will guide decisions that improve profitability. We need to start speaking the CEO and CFO’s language.

To do so, we first need to understand and develop goals around:
  • How many sales we anticipate our marketing program(s) will generate
  • How much revenue each sale produces
  • What the gross margin percentage is
Next we need to design our programs so that we can effectively measure results. With clearly understood goals and well-defined ROI estimates at the outset, we can then track and connect measurements to our pipelines, revenue, and profits. We also can make adjustments to programs with actionable data to improve results, and therefore improve credibility.

To get started, we recommend you download our Marketing Audit Pack. This group of templates includes our Marketing Plan Audit Template, Marketing ROI Template, Sales & Marketing Scorecard and S.W.O.T. Analysis Template, and will help you:
  • Make well-informed adjustments to your marketing strategy
  • Understand the true performance of your marketing plan vs. the estimate
  • Report your status on a weekly basis to raise awareness about your sales and marketing results
  • Calculate the ROI on your marketing plan
    Think about it. Prospects are taking more time to gather information from the wealth of content online, content that marketers produce. This means we are presiding over a much larger share of the revenue cycle than ever before. If you aren’t yet measuring your ROI, it’s time to start. The Revenue Marketer™ is here to stay.

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