Tomicide Solutions, April 2010
14 Ways Information Technology Companies Waste Their Marketing BudgetsBy Tom "Bald Dog" Varjan
Podcast version: MP3 Version. Right click the link and click "Save As".
One day an old farmer decides to visit his national capital. He's never been anywhere outside his village, and wants to visit the big city before he dies.
He decides to take his favourite goat, Rosie with him. They go to the railway station, try to get on the train but the old man is not allowed to take the goat on the train.
So, he ties Rosie to the last train car and off they go into the sunset.
At one point the old man looks out the window to check on his goat.
He sees Rosie off the ground, flying behind the train, flailing sideways as if trying to overtake the train.
The panic-stricken old farmer runs to the engine and yells to the driver.
"Hey driver, put your foot down! My goat is overtaking the train."
And the same happens when many IT companies' leaders feel that the goat is about to overtake the train. That is, when the competition is about to out-market them.
And what is the standard response?
In most cases, just to speed up the rate of the existing marketing activities and hope.
The majority of the IT companies out there are risk-allergic imitators that are so busy aping each other that they have no time and energy left to do a bit of in-house thinking and break out of the lemming-like crowd.
So, what happens is that so many IT companies are wasting their marketing budgets on imitating others and repeating their retarded mistakes.
"If our competition has a half-page Yellow Pages ad, we'll have a 3/4 page one."
"If our competition has a 10-page brochure, we'll have a 20-page one."
"If our competition uses 10 cold callers for prospecting, we'll use 20 and double the mandatory number of calls."
It's all about more of the same. No thinking of doing things differently and more effectively, just doing more of the same, that is, doing things more efficiently.
I think David Dunham is 100% right in saying..."Efficiency is intelligent laziness."
And this is what doing more of the same is all about.
And using this efficient, "more of the same" mentality, many IT companies waste their marketing budgets on doing more of what the competition is doing.
It reminds me of Jeffrey Pfeffer's[1] saying..."What kind of doctor would you be if your patient was bleeding faster and faster, and your only response was to increase the speed of the transfusion?
Rephrasing Jeffrey...
"What kind of business leader would you be if your business was losing ground in the market faster and faster, and your only response was to do more of what the competition is doing?
But what's the difference between doing more of the same and less of something different?
In my experience, doing more of the same is about to avoid losing, and doing less of something different is about winning. And as we know from Walt Disney, when he was advised to create a sequel to the super successful "Three Little Piglets"...
"You can't topple pigs with more pigs!"
So we have to do, as the Monty Python crew is fond of saying, something completely different...
So, let's look at some "more of the same" ways on which many IT companies are wasting their marketing budgets just to create - mediocre the best and barely lacklustre the worst - performance.
1. Doing What The Competition Does
Many IT companies think competitors have already figured out what is right for marketing, so the herd of imitators are following them. There is one problem here. If we become part of the herd, we get either trampled on or shit on. Besides there is a very good chance that the herd is running in the wrong direction very very fast.
If I remember correctly, it was Earl Nightingale who once said...
"The majority is always wrong."
I think it's still a pretty accurate statement.
The whole situation reminds me of a song called Hurricane Years by Alice Cooper: Enjoy it with my comments (They even rhyme here and there which only shows that I could have become a great poet too).
Ain't got no time for the future (we are too dumb to build our own future)
Ain't got no time for the past (we are too dumb to learn from our past)
I'm running up and down escalator (we're just too busy being busy)
I'm going nowhere fast (running around without a clear direction)
I'm hanging on like a spider (having just enough cash to survive)
Blowing in the wind (living hand to mouth)
This storm's gonna tear a hole (but the competition is bearing down on us)
Right thru this web I'm in (and will eventually blow us to Kingdom Come)
Hm. Maybe I should start writing lyrics to rock music.
But whatever the competition does, the reason for that is that specific approach matches its culture, values, vision and mission.
But different companies have different cultures, values, visions and missions, so the strategies must be different too.
Some companies want to grow big and focus on gross revenue. Some want to stay small and focus on net profit per employee.
Some companies focus on low prices. Some focus on high value.
Some companies are run by profit obsessed tyrants who treat their people like dirt and ruin their companies on a "hire 'em => tire 'em => fire 'em" basis.
Some companies are run by socially conscientious leaders who want to make both good profits and build conducive cultures and work environment to attract top-tier talents.
So, their marketing strategies and tactics are totally different. They can't just ape each other indiscriminately.
2. Marketing Only After Sales Have Gone Down
Look at many IT companies out there and realise that they treat marketing as a miracle function. When times are good, CEOs want to save the marketing budget and use that money for something more visible, like a new company car (minimum a Porsche of course).
Then when the slow times come, they try to do some kind of marketing, which is not really marketing but only clutching at straws. And while a straw can float when left alone, when you attach something to it, it sinks.
Marketing only when slow times hit the land is the same as paying your mortgage after you have been evicted for non-payment.
Peter Drucker wrote this in his 1954 book The Practice of Management...
"Marketing is the distinguishing unique function of the business. A business is set apart from all other human organisations by its marketing activities. Any organisation that fulfils its purpose through marketing is a business, and any organisation where marketing is absent or incidental is not a business, and shouldn't be run as such."
Marketing must be an ongoing process, and a significant marketing budget is one of the best investments a company can make in its future success.
Often people say that marketing is for giants like Coca Cola or General Motors. That is bullshit. Just like all other companies out there, these too companies too had their own humble beginnings.
The Coca-Cola Company, first called the J. S. Pemberton Medicine Company was established in 1894, as a co-partnership between Dr. John Stith Pemberton and Ed Holland. The company was formed to sell three main products: Pemberton's French Wine Cola (later known as Coca-Cola), Pemberton's Indian Queen Hair Dye, and Pemberton's Globe Flower Cough Syrup.
General Motors has grown out of a little outfit, when in 1899 Scottish-born David Buick turned his interest from plumbing to making engines. He called his business the Buick Motor Company. Within four years he drove the company to the brink of bankruptcy.
So, we all start somewhere.
So, when we look at sales and marketing, we can see that the sales function is the effect and the marketing function is the cause.
Impressive sales numbers in the books are the result of effective marketing. Nowadays Coca Cola is a branding company with very little hard assets. Yet, its market value is way higher than that of General Motors.
All right, I know that marketing commodities like Coke is different from marketing premium IT solutions, but what's important here is the consistency in marketing. That you do it regardless of your sales numbers.
So, make certain that in your organisation marketing is an ongoing process.
3. Hiding From The Media
Many IT business leaders perceive them as intruders. Yes, but how many intruders do you have in your life who can make you nipple-piercingly popular and successful? Probably not many.
Isn't it interesting how many interruptions IT business leaders are willing to tolerate, even if they know that most of those interruptions are trivial?
In most cases their very own people interrupt them, but these leaders feel obligated to help them right away. And in most cases, not because they really want to help. It's because leaders can practise a little paternalistic command and control over their people. There is an opportunity to reprimand, and as of today that seems to be the most widespread tactic when it comes to managing people.
It's not surprising that some 67% of all employee attrition is caused by incompetent managers chasing away good people.
Especially when the shit hits the company's fan, and it starts sliding down the organisational chart, stinking up every nook and cranny where it goes. So, leaders are eager to pass the shit on to the people who are under them in the organisational pecking order.
So, soon the full load ends up on the frontlines. And by now the whole company stinks like a whorehouse at low tide.
Also, leaders have an opportunity to demonstrate to their people why they are the leaders and they are the frontline grunts. Many leaders love being interrupted by subordinates.
But since they can't play their pervert superior-subordinate games with media people, for they are peers, there is no fun for the leaders, so there is no reason to be available to them.
But it's very important to figure out how to work with the media. An occasional article on the company can make a huge difference both in branding and sales. The media in general is helpful to businesses, but you can't have 100% control of what gets written.
Yet, you must make a concentrated effort to draw the attention of the media and then to keep in touch with the appropriate media people.
4. Focusing On Design At The Expense Of Copy
Marketing must combine good copy and eye-pleasing appearance. Neither good design nor good copy is cheap.
And what happens?
IT companies engage the best graphics and web design people and pour their entire budgets into design.
Then the design is ready but the budget is blown to the last penny. So managers often end up asking some of the technical folks to write copy.
"Hey Fred, I've heard you were great at writing essays in school (30 years ago). I'd like you to write copy for our new website."
Or they ask their receptionists...
"Hey Alice, I've heard you have a degree in journalism. Are you interested in writing copy for our new website? We need is right away, so we can publish the new website"
Or if no one is available to write copy, management puts an ad on Craigslist.
Ace Web Copywriter Wanted
Established local company(1) has an immediate need for an experienced freelance web copywriter to write copy for our new website on our information technology products and services.
You will start small, and if we like what we see(2), we'll give you bigger assignments(3).
And if we like(4) the full work, there's a strong possibility for more copywriting work(5).
To apply, you MUST have experience at writing web copy(6). Please respond with samples, your resume(7), three references(8), your rates(9) and a link to your online portfolio(10).
Let's take the ad point by point...
(1): Who the bloody hell is this no name "established" company, and why is it hiding in the shadows like a terrorist group?
(2): If you want to hire an ace copywriter, it means you're not an ace copywriter, so what gives you the right to judge something that you don't know shit about?
(3): You either have a writing project or not. If you do, present it properly. If you don't, why do you advertise and pollute cyberspace with your ad?(4): What do you mean by "like"? Whether or not a layman likes the work of an expert?
(5): There is a chance that this is a price negotiation trick purchasing agents love using.
(6): What else dum-dum? Nuclear warfare or grasshoppers' sex lives? Who do you expect to respond? Homer Simpson?
(7): Freelance professionals don't have resumes. The good ones don't even respond to idiotic requests that ask for resumes.
(8): This advertiser must be out of his moronic mind. Send references to a no-name entity where the only contact is an automatically generated Craigslist email address? Where is this application with all the personal information going to land? On a spam list? That's very possible.
(9): What a dumb request? It's like asking a realtor, "How much is a house?" What house? A doghouse or Buckingham Palace in London? Sadly, the world is full of idiots who know costs and prices they have to pay but don't have the intellectual firepower to comprehend the value they receive in return. And purchasing agents and HR recruiters seem to be on the top of this list. Asking for rates this early is a clear sign that this entity is looking for the lowest bidder.
Over the years I've taken lots of copywriting courses, and one thing they have in common. They all teach you that if the buyer is asking for your rates too soon, that's a bad sign and the best bet is to get up and leave the discussion.
(10): What for? Without knowing the details of the portfolio items, there is no point in judging them. And without comprehensive copywriting expertise, you have no right to judge it anyway.
Copywriting is knowledge work, thus copywriters are knowledge workers whose performance can't be measured. It must be judged and discerned but only by people who understand copywriting.
Knowledge work is a non-linear process, unlike the linear cadences at an assembly line. Copywriting, like other knowledge work, moves by iteration and reiteration, a mental process.
I think there is a reason why Craigslist has put a scam, alert on every post, knowing that many of the advertising companies are scumbags and they are out there to scam people may they be employees, customers and suppliers.
Yes, I agree design must be good but let' not get carried away.
Just look at Google. 99% of 10-year old kids can design such a site.
But look at the copy and the overall content with the Google brand. That's mastery. And rest assured that's where Google's money lies. In the content.
Also, in my experience, content has more to do with establishing your brand than your logo and other web graphics combined.
So, let's focus on content.
5. Doing Printing On Your In-House Printers
Most laser printers used in offices can do printing, but when it comes to printing promotional materials - creating perceptions and deepening your brand identity - every IT business needs proper printing. Just because something can be done, it may not be the best way of doing it. If you need surgery, would you go to a medical student to perform it just because the service is cheap and he lives next door?
Minimise your printed materials - for everything can be put online, but when you absolutely need printed materials, then go to the best place your budget allows you even if you have to stretch yourself financially a little bit.
Of course, the other side of the same coin is that make sure you have a healthy budget. It's had to build a palace from materials you've got from a demolished pig pen.
In a previous newsletter issue, entitled Setting Marketing Budget For Optimised Client Acquisition, we discussed how and why linearly increased marketing budgets produce exponentially increased returns on investment. Yes, if you invest 1, you get back 1, but if you invest 5, you can get back 25. And that's pretty sweet.
6. Haphazardly Buying Ad Space in Papers or Randomly Sending out Emails to the Marketplace
In most IT companies marketing is either a non-existent or a pretty erratic process. What so many IT companies do is that every now and then they place ads in haphazardly selected publications. They often select the publications based on the price of ad space.
Or haphazardly send out emails to hodgepodge lists.
Individual tactical activities must be parts of the company's overall marketing plan and they must be pre-planned and pretty consistent.
Before placing ads, publications must be pre-screened for effectiveness, and ads must be tested for maximum effectiveness. That can be done in Google AdWords quite easily.
7. Publishing One Issue Of A Newsletter On A "Let's See" Basis
In my experience, when we do something on a "Let's see what happens" basis, it's always done half-arsed. And the reason is that "Let's see what happens" is not commitment. It's mild interested the most. Often even less. Often it's a very strong "It doesn't work around here."
"Let's see" can come after checking interest over an extended period of time. A newsletter must be at least quarterly, but monthly publication is even better. A lot better.
Besides, if your level of belief in your own business is just a "let's see", maybe you had better pack up the business and get the hell out of your industry and find something you truly love and enjoy doing.
Your newsletter is one of the items that establishes your brand, so it pays to pay attention to it.
8. Expecting Great Results on a Near-Zero Budget
Well, it takes money to make money. With this in mind, many IT companies hire more sales people and send them out to pound pavements, tear down doors and dial for dollars, instead of investing that same money in better marketing and have qualified prospects come to them.
IT companies must factor in that marketing is not instant gratification, and the sooner they start investing in marketing, the sooner they start reaping the benefits. Noble goals without money are not enough. We all need some dough to pull those goals off.
And for the IT companies that are looking for instant gratification, well, they could re-start in prostitution with the following motto...
"We do anything for anyone for money."
But then what sort of word of mouth will be spreading about this company then?
9. Skimping on a Designated Marketing Person
Look at most - usually - small IT businesses. Who is responsible for marketing? The receptionist, some of the techies, sales staff or the secretary. Wow, holy sausage, man! Yes, and the same company can appoint the receptionist's pet parrot to be the CEO. Why not? It is the same dumb hare-brained idea.
Realistically, every IT business - regardless of size - must have at least one person who is dedicated to marketing. But no! Look at most even sizeable IT companies and you find a full-time graphics artist, a full-time accountant and even a full-time fire extinguisher inspector, but you have to search long and hard to find a full-time marketing person.
We know from Peter Drucker that...
"Because its purpose is to create a client, the business has two - and only two - functions... Marketing (you get paid for creating a customer) and innovation (you get paid for creating a new dimension of performance). Marketing and innovation produce results, all the rest are costs."
...which is nice, but we also know from Dan Pink[2], that...
"There's a mismatch between what science knows and business does."
So, most IT companies sooner hire parking lot attendants than dedicated marketing people. And as a result, due to a chronic absence of clients and customers, the attendants keep attending empty parking lots.
Relying on a random group of people to do your marketing will advance your business' success just about as much as relying on just about anyone and everyone to make love with your spouse to improve your marriage. That is retarded.
10. Advertising In The Cheapest Papers
Well, you can advertise in the free community papers, and most of your readers will be the welfare people who spend their days browsing the only thing they can afford: The local free papers.
Cheap-minded prospects will read the ad, categorising your company as the provider of cheap stuff. What about buyers who need good stuff? They are likely to read different papers, thus buy from your competitors.
You have to select advertising mediums carefully. You have to understand both the publication and your target market.
Do your perfect clients read this type of publication? What is the publication's circulation? What geographical area? Do you want to have clients from that area?
11. Ignoring Research and Working on the President's Whim
And what do you see as a result of this? Something like "Hi, I'm Joe Tiggernuts, the president of Retarded Technology Inc." Most companies have the ability to find what the market is seeking, but quite more often, retarded executives overrule research results and put their own whims and moods into marketing.
I've heard it far too often from presidents...
"Make sure that my super-large photo is on the landing page of our website and on the title page of our brochure with a nice quotation from me."
All right, you must not overdo market research, but make sure you use the right information not only the stuff you get from your ego-driven, marketing-ignorant president.
12. Sending out Brochures In Direct Mail
Now, that is junk mail big time. Direct mail must be personalised, and a brochure is just like a letter delivered to your home, addressed to "The Occupier."
A well-crafted letter - either short or long copy - that offers valuable information is much more successful. My clients can routinely pull 20% plus response rates on 1-2-page letter sequences, without wasting money on expensive brochures.
Mind you, in our letters we don't try to sell anything or to get appointments.
No!
We offer relevant, thus valuable information for decision-makers, and let the quality of the information do the selling.
13. Running an Advertisement Only Once
Let's start with a conflicting view here.
If your ad is a good direct response ad, the right people will respond right away.
Imagine that a starving convict reads an ad in the latest issue of The Gulag Times...
"All you have to do is to return this coupon to barrack #116 where you can redeem it for a FREE three-course lunch."
For this convict it's enough to read the ad once, and he's likely to run for this meal. The right message exposed once to the right person at the right time.
However...
If you have money to run an ad only once, it's a colossal waste of effort and money.
Yes, people will respond, but you may not be able to exploit the full potential of the ad.
Any ad should run at least 3-7 times to make sure it creates the right impression, and all the right people read it, understand it and act on it.
Also, it's been established over the years through experimenting that only one in three ads are read. The other two are ignored. So, we have to present that ad 21 times to achieve seven readings.
14. Assuming the Company's Own People Know Everything Just Because They Get Well Paid
The outsider's view and broad experience can be a huge asset and can make a huge difference on your overall marketing investment. People who think they know it all are in the vice grips of their egos, and can be very harmful to their companies.
There are people who do marketing day in day out. The better the person you hire, the sooner your marketing investment starts paying off. You get what you pay for. A good marketer can bring you a new dimension and a new perspective, and that will make a huge difference to your bottom line.
Basically you have to pay the price to win the prize. Putting it differently, if you want to play the tune, you must pay the piper first. And if you have a problem created by your own pipers (you or your people), then you have to find a new piper to help you to invent a new tune for your specific situation.
It's not enough to increase the number of poor pipers just because they are cheap to hire.
Otherwise you may well end up screaming your old tune from the top of your lunges for the rest of your life, and all you achieve is swollen vocal chords and a pretty ugly and irritating voice from which even your existing and most loyal disciples run for cover.
Conclusion
And now we have one important question left...
So, should you hire a marketing administrator (MBA) or a marketing practitioner?
It's not about that one is better than the other. It's about suitability.
MBA programmes teach so-called Kotlerian[3] marketing, which is great for large behemoths with virtually unlimited marketing budgets, but can be a huge waste of time and money for agile and flexible entrepreneurial small- and medium-sized IT companies.
There are a few points to consider. Here is a short comparison...
| Administrators | Practitioners |
|---|---|
| Designed for large corporations with unlimited budgets | Designed for small and medium-sized businesses with limited budgets |
| Mass marketing: Gunslinger with a shotgun shooting from the hip | Niche marketing: Sharpshooter with a rifle and scope carefully selecting and aiming |
| Selling commodities to consumers | Selling unique solutions to businesses |
| Make profit on high volume | Make profit on high margin |
| Short-term focus | Long-term focus |
| Pleasing shareholders, investors and Wall Street analysts | Pleasing all stakeholders, including owners, clients, employees, investors, suppliers, etc. |
| Think like employees | Think like owners |
| Proud of their credentials | Proud of their achievements |
Confucius once said...
"By three methods we may learn wisdom: First, by reflection, which is noblest; second, by imitation, which is easiest; and third by experience, which is the bitterest."
MBA administrators can't use the first because there is nothing to reflect upon. They won't use the last because they rather die than go through the experience. So, they have the middle option, imitation.
But for street-smart practitioners only the first and the last options are open. Since they are pushed for results, they can't afford the luxury of imitation.
So choose wisely.
But both MBAs and practitioners are pretty expensive. It shouldn't surprise you considering that we're talking about the most profitable business function.
Yet, I've bumped into many IT companies where programmers were making as high as $150 per hour and the company was on a recruiting spree to find a marketing manager for $12 per hour.
Yes, some business owners can be that stupid.
So, look at what you want this new person to achieve and pay her accordingly.
And read these mistakes we've just discussed again, and see if any of the above points apply to your company. If they do, then start correcting them. The sooner the better.
Marketing is a vital function in any business, and it's worth paying due attention to it.
Come and let's discuss this newsletter issue on my blog...
[1] Thomas D. Dee Professor of Organisational Behaviour, Stanford Graduate School of Business. Continue where you've left off...
[2] Expert on knowledge work and the author of A Whole New Mind: Why Right-Brainers Will Rule the Future and Drive: The Surprising Truth About What Motivates Us. Continue where you've left off...
[3] Named after Dr. Phillip Kotler, the S.C. Johnson & Son Distinguished Professor of International Marketing at the Northwestern University Kellogg Graduate School of Management in Chicago. Continue where you've left off...
Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.
