Marketing Memos

Short is sweet.

No, this is not another diatribe on compact market messages, though that lesson is well worth repeating.  Where sweet and short nicely collide is in the sales cycle.  The shorter the cycle, the sooner the revenue, the happier the stockholder and the fatter your bonus check.

Marketers know that social media is becoming an intrinsic, if not superior, tool for finding and landing customers.  What has not been well quantified is the degree to which social media helps.  The folks over at the Software and Information Industry Association, where I am a perpetual CODiE judge, recently presented some data that indicates how and which social media may be helpful in shortening the sales cycle (click the graphic for one large enough to read).

The blue bars represent sales closing in less than 90 days, and the gray bars sales lasting more than 90 days.  Where you see a significant height difference are those tools that accelerate sales (huge caution – the survey size was small, so use several grains of sodium chloride when ingesting this snack).  We see that marketing mavens believe that videos, Facebook and Twitter are significantly better at getting people to part with cash faster than any other mode.

The problem is that each serves a different purpose.  Thus you may need to use all three to get great sales close speed.

Video: Videos are best at communicating conceptual information.  From product value gestalts to detailed product functionality reviews, videos provide a consistent, reusable, self-guiding system for helping people discover what they need to know about your products.  The problem is that you never will be James Cameron, and if you direct anything bigger than an elementary school play, your lack of chops will show.  Frankly, most product videos stink because they try too little or too much, and at the wrong point in the education cycle.  It is better to make a series of small videos that guide the viewer from concept to functional details, and let the videos self-qualify the viewer in the process.

Facebook: The first authentic borg may be Facebook.  When old ladies actively use a web site for sharing videos of their grandchildren, swapping recipes, and joining the George Clooney fan club, then it is all encompassing.  For marketers, community hubs are for building communities.  Like her or loath her, Sara Palin’s 1,460,713 Facebook followers (as of this afternoon) connect directly to the product that is Palin.  Facebook is not a sales tool, but by assembling a community, increasing the credibility and approachability of a brand, you ease resistance to a sale and speed the sales cycle.

Twitter: Twitter is triage.  Though there are limited options for promotion on Twitter (Dell being good at it) it is more for management of a brand.  The internet has a habit of growing cojones on people, even women.  They speak their minds and Twitter provides people an instant outlet.  Twitter is best used to identify and coddle malcontents, and to reward loyalists.  It is also good for finding people asking key questions about your products and addressing those questions as instantly as possible, and for their friends and followers to see your very personal attentiveness and answers.

For marketing executives, these facts create both opportunities and hemorrhoids.  Anything that shortens sales cycles is a valuable tool.  However, unlike advertising, each requires a human touch, and with the exception of videos, requires hourly participation.  More work, more manpower, more costs.  If you are creating a new market and you need to dominate it so thoroughly that competitors never prosper (the SalesForce.com and Success Factors approach), social media is a must.  By compressing the sales cycle (or the ‘buy cycle’ when looked at creatively) you block competitors by saturating the market as quickly as possible.

That’s inequitable, and in business that is a Good Thing.

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I’m hoping for antisocial media.  I can see how to make a buck off of that.

Meanwhile, social media continues to gain dominance in marketing, and for good reason.  Humans, and even politicians, are social animals.  We commune for pleasure, profit and procreation (which pretty much describes a day in the life of Eliot Sprtizer).  Even the most sterile of pursuits requires some social aspect.  Every poor blogger, alone in his office, hammers out prose in order to asynchronously connect with other humans.

Business-to-business (B2B) activities are thus social interactions.  Oracle commits social acts when it interacts with other enterprises, aside from the select few it eats.  Thus social media should be a component of B2B. The oddest aspect of B2B social media concerns who in the relationship needs to socialize and why.  The failure to think through these two questions have led to various B2B social media catastrophes including most of the old executive blogs at Sun Micro.

Relationships, regardless of how tenuous, are the heart of social media.  Your B2B worries center on buyers, suppliers and thought leaders.  These are the primary external groups who are influenced by you and your competitors and thus the ones to which social media is important.

Just ask Oracle’s 28,918 Facebook fans.

When stripped bare, social media for business is mainly about branding.  You need people to perceive your company and products in a particular way.  Social media offers the ability to communicate brand both directly and personally.  The personal aspect is what creates an emotional connection with a human (politicians, having no souls, have no emotions).  B2B social networking is mainly about the communication, amplification or defense of your brand.

Brand communication: At the risk of repeating myself … again … if you do not define and consciously communicate your brand, the market will, and the market is unkind.  Social media’s personal touch gives tremendous opportunity for communicating brands.  Sadly most companies treat the opportunity as advertising, which some people perceive as an antisocial assault (ever notice the advertising you remember most are those that entertain and make you feel).  Any employee (including the CEO) who communicates in social media needs to do so only after reciting your internal brand statement ten times.  Once the brand is reloaded into memory, any social media communication will reflect that brand.

Brand amplification: Often members of an audience will correctly state your brand.  Such acts deserve acknowledgement, appreciation and rephrasing what the other person said with your specific branding words.  Doing so clarifies and amplifies your brand in public places.

Brand defense: Other folks are not as kind, and may have many nasty things to say about your products, your company and maybe even your mama.  Left unchecked, these can escalate into a negative brand image.  Some companies are proactive, and upon seeing a negative comment help the person to resolve their problem or explain why it has to be.  Other companies (most notably the self-destructing Intuit) either ignore community outrage, or worse yet try to censor negative branding.  Social media has to be treated as an opportunity to connect.  As you would with friends or family, treat the other person well.

The hard part about B2B social networking is finding or establishing relevant places to participate.  Proactive companies create social media spaces, be it a Facebook fan page, a public forum based around their market or segment, or even private executive panels.  Many marketing dilatants hijacked these sites for promotional purposes, and rapidly killed the value originally promised.  In more mature markets where social media arose from the masses (such as within trade or technical interest groups), enterprises have joined as members.

The take-away is that your suppliers and your buyers are people and need to be treated as such.  Online social media is merely a rapid extension of normal social interaction.  Since social media is global, asynchronous and everlasting, even B2B businesses need to incorporate it into their overall marketing plan.  Just understand that social does not mean sales, but it does mean social.

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Growing your market in the modern age without knowing your positioning is like driving motorcycle down an Interstate while blindfolded.  You will lose and the resulting splatter will not be pretty.

Positioning is simply establishing where on a competitive map your products are in the eyes of the market.  The concept is quite simple if you ignore for a moment the complicating factors of market maturity, multiple segments many buyer genotypes, or 3,274 other elements.  To determine one’s position you simply have to identify the issues that are of primary concern to your buyers, and either measure their attitudes about competing products and perform a realistic evaluation of all the entrants.

Sounds simple, but it isn’t, and often leads to awkward issues.  Here’s an unfunny example.

Silicon Strategies Marketing recently performed a series of investigations for a client to determine what the market felt was important about a services offering and where the various competitors stood in the eyes of the market (since the quality of services are subjective, surveying the market was essential).  In our surveying we discovered that three issues were of primary importance to buyers, and that our client was a market leader (happiness) but in a tight cluster with two top competitors (unhappiness).  What this particular analysis showed was that in the eyes of the market, there was little differentiation between the top contenders.  This is a dangerous positioning because in the absence of differentiation, price becomes a negotiation tool for the buyer.  In these situations you must either explain with utter clarity what actually makes you different and better than your competition, or invent a new and meaningful differentiation, or both.

Standing still is not an option.

Refining market messages is a perpetual activity, but urgent when you discover that your position lumps you together with competitors.  Reviewing all messaging in light of the principle buyer motivations will gain good short-term benefits as well as getting everybody inside your company to focus on what is truly essential in their daily work and outreach.  However, agile competitors may well realize they are in the same cluster and face the same positioning issues, and clone your messaging.  Thus, over the long run, you must invent new capabilities that are meaningful to buyers.

This leads to the second aspect of positioning, namely how to work around your competitors.  Going toe-to-toe with competitors is slow motion suicide.  It is expensive, produces few sales, and depletes your staff’s enthusiasm.  However, finding a path around your competitors not only generates revenue, but also starts what the Chasm Group defines as the “bowling alley” process.

This is where positioning gets complicated and fun (well, fun is you are a slightly masochist marketing guru … like me).

Segmentation, the process of dividing your entire market into small, manageable pieces is based on finding groups with common expected outcomes (“needs”, though that term is somewhat misleading).  Instead of attacking the entire market, an effort that will fail, you attack one segment until you dominate it, then move on to the next.  If you evaluate each possible segment with clarity, obvious paths to market-wide dominance will appear as you identify segments where your product is or can be made strong, where there is revenue, and where there is extensible similarity of need from your current segment.

Which gets back to positioning.  Your position in segment ‘A’ is not the same in segment ‘B’, ‘C’ or ‘Zed’.  It is one thing to map your position against a whole market, and another to map it within each segment.  Both are valuable, but only the latter leads to a segment-by-segment growth strategy.  If you are not planning a segment-by-segment growth strategy, you can only grow as big as your current segment.  That is good enough for some businesses, especially those that are led by calcified founders.  It is not good enough for Silicon Valley and investors.  None of that crowd likes leaving money in other people’s pockets, but unlike politicians and other professional pickpockets, The Valley prefers to earn their income.

The marketing lesson herein is to map your entire market, segment it, identify and position-map what segment you are in and which ones you should be in next, then march through them like Marines through Tripoli.

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I’m starting an Internet wide office pool – pick the date and place a dollar ante on when antitrust will be filed against Oracle.

Seriously, Larry is all but begging for it.

With the integration of Sun into Oracle, many executives – including Ellison – said that Oracle was the IBM of the new millennia.  They waxed techno-poetically about how Oracle, and only Oracle, could provide complete iron-to-apps IT, that they owned the middle of the datacenter.  They claimed their ability to cross-integrate every element of the stack provided Oracle power that no other vendor could offer.

Those statements were followed by amused FTC lawyers grunting.

IBM was the original and last computing monolith.  As Ellison’s Archangels echoed, the IBM of the 1960’s provided everything a customer could want and that IBM’s floor-to-ceiling solution sets created impenetrable barriers to competition.  That is precisely why the federal government sued IBM, and for thirteen bone-grinding years prosecuted Big Blue for allegedly violating the Sherman Act by attempting to monopolize the general purpose business computer system market.  Indeed, the only reason litigation was abandoned was that the market, IBM and computing technology all changed over thirteen years, and IBM was no longer in monopoly mode (though some people slightly less cynical than me believe Ronald Reagan simply ordered a halt to the Federal Lawyer Full Employment Act).

Would we believe today’s FTC and Justice Department would not view Oracle with the same suspicions?   Even under more business-friendly administrations, Oracle faced government intervention when they swallowed PeopleSoft and JD Edwards in a single gulp.  Back then rather feeble justifications, citing SAP as a major competitor, were offered.  With stagnant net profits and leadership changes at SAP, this argument rapidly vanishes.  Toss in Oracle aiding and abetting NetApps (which is positioned to handle the SMB market while Oracle dominates the high-end) and the temptation for the government to intervene will simply grow too great.

It is not a matter of if but when the government decides that Oracle is indeed the IBM of the new millennia.  They will pick a fight, though it is unclear if Larry would lose.  If nothing else, the PeopleSoft acquisition shows Ellison knows how to stand-up to government regulators and win.  The question for the rest of us is when to buy and when to bail out of Oracle stock.  Left alone, Oracle stands to make major money given their dominance.  But like IBM, a decade of litigation will weaken them and their share price.

Me?  I’m going to get rich on my Internet office pool.

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Oracle, as always, has a good game plan, though they have not thought out everything under the Sun.

I attended Oracle’s outbound communication extravaganza concerning the completed swallowing of Sun.  In the time from initial purchase to the final approvable by European Union regulators, Oracle has been busy deciding what parts of Sun to keep (pretty much everything), how to integrate to company (interestingly) and where to create real market value (specific).  In an event short on surprises – unless Larry did something quirky, which I missed by having to leave early – OraSun changes the game, which is the entire point of marketing.

Aside from seeing “Sun” positioned over “Oracle” on all the event branding (the last time this will undoubtedly occur), the basic market strategy of the merger can be summarized as “We are your IT hub, we are specializing the center of your operations, and don’t look at that man behind the curtain labeled ‘cloud computing’.”

The first and recurring OraSun gestalt was that Ellison owns a stack, from iron to apps.  They are not kidding either.  Ignoring technology religion, Oracle now provides a solution for servers, storage, virtualization, middleware, databases, applications and the management of the two major strata (systems/apps).  They may have nothing in the networking realm, but they will next year when Oracle buys Cisco (that was a joke, but I heard you gasp).

This is an interesting turn of events.  As one OraSun exec noted, the IBM of the 1960’s offered head-to-toe solutions, insinuating that Oracle was the IBM of the new millennia.  Given how close to financial death IBM came to in the 1980s, we should add an Outlook entry for 2030 and retake Oracle’s financial pulse.

History is its own recycling bin.

OraSun’s marketing strategy is to be one-throat-to-choke for the hub of datacenters.  They rightly recognize that mission critical work is both ill-suited to cloud computing and that by tightly cross-tuning the OraSun stack, they will create a market domineering solution set.  Much of OraSun’s presentation spun tales of how the database, Solaris, SPARC and flash-enhanced storage are being co-designed.  The end goal is to assure that the OraSun stack is inarguably the most technologically effective data hub.  HP can’t compete as their Itanium solution is rapidly evaporating and their database offering almost isn’t.  IBM has a shot, but with fat margins in services, declining acceptance of DB2 and a post-Gerstner reluctance to centralize authority, they likely will not challenge the throne.

OraSun positioned themselves very well.

Oracle’s (wo)men in black – black suits and white shirts were the corporate executive uniform – repeated the manta of removing the systems integration task from the datacenter.  Oracle’s messaging was pointed like a revolver at CIOs and CTOs, claiming that systems integration is a major headache for these folks and that no other vendor offers all integrated points.  Granted, Oracle artfully ignored some plumbing products necessary to even a data hub (routers and network management), but their point was compelling assuming that the top of the stack – applications – met customer needs.

One OraSun spokesperson was somewhat defensive on the subject of cloud computing.  Obviously Oracle understands the issue and also understands that they do not have a clear market advantage at present.  He struggled with the concept of saying “grid” computing is “cloud” computing before tossing up a hit-piece slide on VMWare, which does own the cloud space.  For now it will be an uncomfortable stare-down:  OraSun is willing to own and dominate the hub of the data center on specialized Sun hardware, and let VMWare handle less-critical cloud computing with generic hardware.

For now.

Since OraSun gives away virtual machine solutions, they have the ability to buy cloud management tools that lost to VMWare and integrate those into OraSun systems management utilities.  After Sun is completely integrated into Oracle and together they dominate the datacenter hubs, expect Larry’s Legions to make a cloud play.  The market exists, is important, complements OraSun’s virtual desktop products, and is acquirable.  OraSun is merely talking-it-down for the moment.

Heads-up VMWare:  Larry will gun for you next.

The prelude is a hiring binge.  OraSun is vacuuming the salesperson market and adding 2,000 head to their global sales squad.  Ellison understands his “unified stack” position in the market is unique but not impenetrable.  Alliances will be formed and cloud computing offers some alternatives to raw central-server and grid approaches.  OraSun’s mission is to move as many customers to their combined solution as quickly as they can, because the switching cost of disengaging from a stack as complete as OraSun’s will be huge.  Lock-em’ in rapidly while working out the cloud initiative, then dominate the remainder of the datacenter market.

OraSun’s wildcard was not as wild as expected.  No real news was released about MySQL aside from OraSun integrating controls for their infrastructure management tools into the almost universally popular and largely free DBMS.  This is less of a commitment than a loss leader.  MySQL has invaded the enterprise in much the same way as Linux did.  It is not ready to be in the mission-critical hub, but it needs to be managed more effectively than most current tools permit.  By adding MySQL to the OraSun infrastructure management suite, Oracle is blocking alternatives and thus avenues of escape for customers.

From a marketing standpoint, Oracle shows once again that old lessons should not be ignored.  They have taken the enduring one-throat-to-choke market demand and amplified it.  CIOs – aside from the rightfully paranoid ones – will be hard-pressed to argue against adopting Oracle.  Marketing is first and foremost about identifying and satisfying needs, and OraSun is aggressively doing just that.

Let’s see if the scheme works.  Oracle likes buying successful companies, but Sun was nearing fiscal death when Larry swept in.  Larry’s also trying to buy one of the worst basketball teams on the planet, so maybe he has simply run out of good investments.

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