Who is listening to you? You might be surprised

That takes some effort to listen and be aware of what the opportunities actually are but if you ignore them you do so at at your own peril.

Throughout my career as a professional communicator I come across clients who are absolutely sure they know who their audience is. Invariably they are wrong.Let me give you an example.

Many years ago I counseled a semiconductor company that had a great business selling components to Apple for the iPod. They sold almost 30 percent of all their product to Apple. They knew that Apple was never going away.

In our research into the effectiveness of their content we found what seemed to be a discrepancy. We knew that there were multiple product groups that the client’s technology would fit, but they were focused only on the iPod team. We told them they needed to start a focus on development teams.

They responded, “We know who to talk to, you just concentrate on putting out press releases.”

Six months later, at a trade show, two Apple team managers came by the client booth to take a look at a new codec chip and after a brief introduction one of them said. “It’s too bad we didn’t know about this two months ago. It would have been a perfect fit for a new product we have coming out.”

One year later, Apple introduced the iPhone. One year after that, Apple switched to a competitor’s chips for the next generation of iPod. The client lost all of Apple’s business. Today, that client is part of their competitor having been bought out after their stock tanked about 5 years ago.

The moral is that there is always someone listening, or who needs to listen, to what you have to say. It is your job to figure out who that is and what they need to hear.

A good communication strategy requires looking at all the potential customers and influencers in a particular market. You might be concerned only with the companies and people that will buy your product, but you might not be thinking about the ultimate user of the product; or the people that provide the pieces of your product that you don't manufacture; or the service companies that are distributing your product; or the people that actually influence all of those people. Each of those “publics” can determine the fate of your organization as much, if not more than the immediate customer.

Now you might believe that one set of information is enough for all groups, but you would be wrong. In the case of the client, they were focused on the needs for one application of their technology. when there were, in fact, multiple applications. The iPhone project managers may have been hearing that information somewhere inside Apple, but it wasn't targeted at their product. It needed to be communicated in a way those project engineers could relate.

That takes some effort to listen and be aware of what the opportunities actually are but if you ignore them you do so at at your own peril. Just remember: what you don't know may actually kill you.

Echo Chamber Marketing

While you may have many happy customers, you can rest assured that every unhappy potential customer and past customer is going to your competitors and telling them how awful you are. You just don’t know it.

No matter how many tech companies we talk to we are constantly amazed at how many believe the exact same thing about two issues.

1. Customer satisfaction


2. Technical superiority

In issue one they believe that their customers are, collectively, more happy with their service and technology than with their competitors’; that their competitors are widely hated by their own customer base; and that their competitors, even those that no longer exist and all that are going to be are incompetent boobs.

In issue two they believe that customers see their contribution as the “secret sauce” behind the customers’ end products (e.g. “Our chip makes their mobile phone the fastest/lowest power/most versatile mobile phone ever). But that contribution is considered to be a “competitive advantage” by their customers and, therefore, the customers do not want to be identified or quoted.

Reality, however, is not as clear cut.

Reality check #1: There are incompetent people in every company and they annoy customers, some to the point that a customer will drop a product or service simply because they are annoying. But if the product or service provided gives them what they want at the price they are willing to pay, they will put up with the annoyance and incompetence. Any company that demonstrates incompetence, bad products and poor customer service will cease to exist. So if your competitor is still in business then they are doing something right.

While you may have many happy customers, you can rest assured that every unhappy potential customer and past customer is going to your competitors and telling them how awful you are. You just don’t know it.

Reality check #2: Every company we talked to in the past 20 years has told us, “off the record”, that they are providing products and services to a very large customer, or selling products and services to a vendor who is selling products to a very large customer. But at the same time, they say they are not allowed to publicly mention that customer or vendor because they are considered a “competitive advantage.” Every. Single. One.

We have found that smaller customers are generally more willing to give endorsements because it gives them attention in the marketplace, but we have also found that the companies we talk to prefer to talk only about the customers that they cannot publicly talk about.

So in both cases, their claims of customer satisfaction and technical superiority are unprovable.

This is what we call echo chamber marketing.

In their defense it is the only option they have because they really don’t know what the market is saying about them, or even if the glowing reports they get from their customers is anything more than polite conversation and a means to get a price cut for the next round. We have also noted that most of these companies have significant outstanding invoices on the books that have yet to be paid by their “happy” customers and when they threaten to withhold service or delivery the customer immediately calls a competitor. So how “happy” are they, really.

It does not have to be this way.

There are several tools and services that can get you honest feedback from your current and potential customer bases. There are ways to encourage customers who are truly satisfied with you to state so publicly. The choice is yours: Survive as long as you can in your self-built echo chamber, or learn how to thrive in the real world.

Related articles

Marketing automation is a must for success, but you may need some help in figuring it out.

Marketing Automation vs. Customer Relationship Management: What is the difference?

The biggest barrier to adoption of marketing automation (MA) is a complete lack of understanding of what it is and what it does. That is also the single biggest barrier to effective use of customer relationship management (CRM) software.

 The biggest barrier to adoption of marketing automation (MA) is a complete lack of understanding of what it is and what it does. That is also the single biggest barrier to effective use of customer relationship management (CRM) software.

According to the Content Marketing Institute, (CMI) which issues reports on the state of the content marketing),the use of content marketing as a strategy is growing and is prevalent in growing companies. However, only 39 percent of the companies reporting having a strategy are claiming to see results, which tracks well with the stat that 35 percent have a documented strategy.  

To check those numbers, we approached more than 50 companies in the past year and asked them if they were doing and we focused on the use of marketing automation tools as part of the documented strategy and, if so, what were they using.  Less than half of companies actually had a clear understanding of what content marketing actually is which tracked well with the CMI study Howver 43 said they were using marketing automation tools identifying Salesforce or Microsoft Dynamics, primarily. We found that interesting because neither are MA platforms. They are CRM platforms.  So, in this post we would like to spell out the difference.

• 
  

  CRM will help you manage the relationship of customers you already have.

  
  


• 
  

  MA helps you create new customers.

  
  

It is that simple, but let’s expand a bit.

As Salesforce defines CRM: “You can store customer and prospect contact information, accounts, leads and sales opportunities in one central location, ideally in the cloud so the information is accessible by many, in real time.” That’s a really good thing… once you have the customer on the hook. Getting them on the hook is the job of the MA platform.

Marketing is a combination of advertising, public relations, social media and just plain relationships. Until MA technology came along, that required an overwhelming amount of work for a few people, or an overwhelming amount of personnel to do it well. An MA platform does for a marketing team, what CRM does for the sales team, and does it with relatively low cost and complexity, depending on what platform you choose (see previous post).

Some CRMs, like Salesforce and Dynamics have options for marketing automation, but none of the companies we talked to were using those options because they are expensive, difficult to understand and buggy. In fact, none of them were using the CRM capabilities to their fullest, even though they were spending thousands of dollars every year on the tools (and almost all were unhappy with the results).

All MA companies we talked to provide integration with leading CRM platforms. Some MA platforms, like Hubspot and Sharpspring, offer CRMs included in their offerings at no additional cost, although they are not as robust as a leading provider, like Salesforce. However, since most companies are not using their CRMs to their fullest potential, it is something of a waste of money to have a top-of-the-line CRM in place. 

With that in mind, a company hoping to get the most out of automation on a minimal budget, it makes more sense to purchase a subscription to an MA service than a CRM. And if you can afford the cost of a leading CRM, adding an MA service will increase the value and ROI of all your sales and marketing efforts.

Your company might be one of the few that has truly embraced modern digital marketing, but it is unlikely, especially if you have not seriously considered a marketing automation platform. From our personal experience at Footwasher Media, our use of MA has increased our ability to find new leads by an order of magnitude. Our clients who adopt it willingly have seen similar results. Those that rely only on the CRM do not see growth.

In our next post, we will get into the specific value of these tools in respect to content strategy and development.

If you'd like to talk about how to figure out this content strategy thing, drop us a line.

Related articles

Marketing automation is a must for success, but you may need some help in figuring it out.

10 Ways to Use CRM to Maintain Client Relationships

Nine words and phrases that kill your content

Avoid these words at all costs. And if you discover that by removing them your content ceases to be interesting to you, imagine how little it means to your customer.

There are lots of lists that identify words, phrases or concepts you should avoid using in your content, but I've had a list of nine for several years that I've never seen included in those lists.  Joe Basques and I went over a few of these in a Hangout (that you can see here).  The full list follows.

Leader/leading

There's an old Afghan saying. “If you think your are leading, turn around.  If there is no one there, you are just taking a walk.”

Everyone who claims to be a leader in this world is really following after someone else.  They’re probably far behind the pack and everyone knows it.  If you want to know who the leader is, look for the company that never uses the term to describe itself.  Leaders don’t have to say it.

Key

This actuality means “of crucial importance” but if it really was important, anyone who doesn’t have it will fail, and since many have succeeded before you, they know your stuff isn't "key." It is so overused that it has lost all meaning and can be replace with “Blah.”

First/only

Lots of companies say they are “the first” to do or provide something and they are usually wrong.  A VC once said in a meeting with a client, “If you are the first/only company to do something that either means no one thinks it is worth doing or you have not done proper market research.”  Then there are those companies that actually were the first to do something but no one remembers because someone came along and did it better.  GO was the first company to come out with a tablet PC.  But they are gone with the dinosaurs now.

Solution

This means either how a problem was solved or a stable amalgamation of multiple components.  But most companies describe neither the problem, nor the components so no one knows really what they are talking about.  An engineer once told me that whenever a scientist designates something as a “field” it means they know something is there, but they don’t know what, why, or how it exists; only that it exists.  (Electric fields, magnetic fields, etc.)  Complete mysteries.  A solution is the same thing in marketing.  It would be more interesting and accurate to call it a Felgergarb. (No, that isn't a word, but it would create more intereste than "solution.")

Seamless

This is as useless a term as saying “I breath air.”  Every technology should interact seamlessly with other related technologies.  No one is going to say their product doesn’t interact with anything else, even if it doesn’t.  Someone out there is going to find the seam and call you out on it, and then you will be in CYA mode.

Working closely

This is a synonym for seamless. The opposite of the term is, we really don’t work well with those folks, but that’s your problem.  No one is going to say that, either, but it is probably what your customers believe because all marketers are lying rat-bastards, you know.  Why stir up bad thoughts.

Easy to use

Speaking of lying…  You should never EVER say this.  You should let a customer say it.  And if you can’t find one that will, then you aren’t.

Powerful

This is often used as a qualifier for “solution.” What you mean is that it actually accomplishes a task that you said it would accomplish within the parameters you define.  More simply: Hey, this thing actually works! That reality, in itself is a major accomplishment, but, then, most customers don’t believe you when you say it.  So, again, it’s something a customer should say.

Exciting

An earthquake is exciting.  A walk-off home run is exciting.  Shakira doing a belly dance while singing is exciting.  Your “powerful, easy-to-use, seamless solution” is not exciting.  Neither is your recent partnership with a “leading” company.  No one but your CEO is excited about this.  And no one cares that he is excited about it, nor that he is “pleased” about it.  In fact, unless he is a hatchet-wielding maniac, no one cares about his mental state.

Avoid these words at all costs.  And if you discover that by removing them your content ceases to be interesting to you, imagine how little it means to your customer.

Related articles

Why some people don't want to tell their story

Seamless integration remains focus of unified communications solutions

Our crisis of confidence and what to do about it

Our economy is struggling for a lot of reasons, but one reason that seems to get almost no practical discussion is the lack of trust.  Everyone knows it exists but very few believe it is their problem because, after all, each of us knows we are trustworthy.  Right?  Lawyers, corporate executives, politicians and journalists know their poll numbers are in the tank collectively, but individually they all believe that they are, somehow, different than everyone else.  What’s more, individually, they are appalled when they find out that, no, few people trust them.

“That’s their problem, Not mine!”
I understand that position and, personally, I believe most people are trustworthy and act ethically most of the time. Yeah, I’m naive, but if find that to be true more often than not.  What I also find, however, is that very few people invest any effort into presenting themselves as trustworthy and put no thought into how they present themselves. They merely assume people trust them.  What's more, they are not at all creative in how they present themselves. They just use what they have heard everyone else say about themselves… which means they don’t say things that are trustworthy.  The result is the only people that trust you are those that have invested the time and effort to get to know you. Your customers are not likely to do that and that's how we get into the economic problem.

Statistically, various polls have shown that less than 1 of 7 customers trust what any company says to them. And that’s current customers.  Imagine how few potential customers distrust companies trying to sell them something.

Corporations are spending an enormous amount of money on technology to distribute their current content to more people, faster and with greater efficiency.  Venture capitalists are investing 75 cents of every dollar into companies making technology to advertise to the customer base.  But they are using all these vehicles to say the exact same thing they have always said to their customer bases, which is the same thing that every competitor say, that most of the customers don’t believe. Why? Because it costs nothing, which is what it is worth. Moreover, the investment of nothing results in nothing.

A good example of this is the semiconductor industry.  Annual reports from SEMI have indicated that while more chips are being delivered than ever, overall revenues are down and multiple companies are entering into the second year of layoffs and consolidation.  Revenues are down because the companies have not provided enough differentiation or built enough trust to drive customers to do business with them on anything other than price.  The companies with the lowest price always win. Only 10 percent of the companies are reporting revenue growth, though not necessarily profit growth.

Our recent independent survey of 100 leading semiconductor-focused technology companies found only two companies with a documented content strategy: Intel and Qualcomm.  The rest had only invested in distribution means and more than 90 reported less than satisfying results.  Do you see the correlation? Ten percent with growth, 90 percent dissatisfied.

Let me spell it out in even more direct terms.  I’ve written extensively in the past about how the McLuhanesque paradigm of media was dramatically supplanted by social media; that the audience now controls the message, not the messenger.  I’ve also written about the almost absolute absence of strategy in corporate communications.  I’m not alone.  The Altimeter Group and the Content Marketing Institute have issued extensive studies on the success of strategic content programs, but pointed out that less than 5 percent of all businesses are adopting the strategies.

If you are one of the companies that have not invested in strategic content, you are probably among the 95 percent that are not seeing results from content distribution tactics.  Your customers don’t trust you and your potential customers can’t tell why they should choose you over anyone else, so they will always choose the least expensive alternative.  It doesn’t matter if you have superior technology.

Trust is the currency of modern business and you are broke.

It’s time you started building trust.  Shel Israel and Gale Porter are working on a book about how companies have lost trust are rebuilding it and it cannot come out too soon.  In the meantime, give us a call.  You will not succeed until you do.

Related articles

Trustworthy content is in the best interests of corporations... and good for professional journalists

The issue is a foundation of Trust. Nothing more

Finding the small data in Big Data is what makes you grow

 The technology world is hell-bent on serving the needs of big data in the cloud because, after all, the cloud is the place to be, right?  And one of the big benefits of the cloud is how it simplifies the marketing process.

However, the technology industry (mostly semiconductor and its related industries) that support those customers generally hate marketing, don’t want to invest in it and say they already know who their customers are.  They really don't need the cloud, they think. Those industries are still using mass market techniques and a shotgun approach to marketing, blasting the marketplace with generic, repetitive messages; targeted at the people who have no authority to make purchases and very little influence on those who do.

 For example, several years ago I worked with a rapidly growing semiconductor company who happen to have gotten into the iPod when it first came out.  Gave them instant credibility and massively growing sales.  They were coming out with a relatively exciting new component that they wanted to unveil at a major trade show.  We advised them that they should start with a  blitz directly to their primary customer, Apple, before the show.  They said, “We already know our customers well and we have talked to the right people, already.  So we backed off.

On the first day of the trade show, two men with Apple badges came up and took a look at the display with the new component.  No one from the semi company knew who they were.  They got a briefing from the marketing people about the component and then one of them said, just before leaving, “It’s too bad we didn’t know about this.  Could have worked well in our new product."

Shortly after that, the client fired us. A few months later Apple came out with the iPhone, with a component from their number one competitor. The client started a rapid downhill slide.  They never again hit the growth they were on before.  In April, the competitor acquired our former client.

What was missing from their marketing?  Small data.

Small data is that crucial information about the one person in your customer base that makes the crucial decision to buy whatever it is you are selling.  It’s the information that makes a salesman’s contact list important to him keeping his current job or getting his next.  It used to be found by excruciatingly endless sales calls and foot numbing trade shows and mindlessly expensive lunch meetings.  Today, however, it comes out of effectively shaving down the yottabytes of data gathered through social media and discovering the name of that one person that will make the sales quota for the year.

And, according to recent research from the Content Marketing Institute, companies who have figured out how to do that are making money.  Lots of money.  Unfortunately, less than 10 percent of those companies have figured it out, and a lot of those clueless companies exist in the world of electronics.

Earlier this year, Alix Partners issued a report that shows most of the semiconductor industry, from chips, to CAD tools, and all the way to solar panels is in financial distress, and within two years, the entire industry will be, even though these companies are selling more product and services than ever.  The basic problem of the industry is that they are creating products and services that do not meet the actual needs of their customers and they are investing millions of dollars in effort to sell those reluctant customers even more  of their unwanted products and services.  The industry is still buying tons of Big Data, but they won’t invest in the means to winnow that information down to the right person and make the sale.

Yes, they know who their customers are, but they are, for the most part, the wrong customer.

 We’ll be doing more on this soon.  There is a new marketing technology about to hit the streets and it solves the problem.  Only time will tell if it is used by the people who need it most.

If you want to know more, contact us.

Related articles

Trade show approaches need some imagination

IBM (IBM) Announces $3B Investment in Cloud Computing, Big Data Initiatives

Your customers aren't searching for you: An Interview with Douglas Alexander

The content that matters is not about you. It's about the problems your customers are trying to solve.

Over the past few weeks I'm mentioned the changes in search technology from Google (Hummingbird) and how it will affect both B2B media and marketing.  I've also touched on google's concept of the Zero Moment of Decision (ZMOD), the moment when a customer actually decides to Google a company or product to make a purchase decision (which is actually long after the decision has been made).

Today, however, I sat down with a good friend by the name of Douglas Alexander, who told me a very interesting story about his product search and selection process.  You may recognize Douglas's name from reading EBN, Electronic Purchasing Strategies or any number of component engineering and design publications.  He's currently writing what may become the definitive educational book on component engineering.

I published the audio from the discussion on my Spreaker page, linked below, but let me give you a brief overview:

Douglas rarely goes to a company website or does a Google search for companies or products.  His purchase decision has very little to do with SEO and everything to do with concepts and questions.  This is not a new way of doing things.  If you are a marketer in the technology field, you need to understand that all the marketing collateral, white papers and web advertising is doing very little for your company to gain new customers. The content that matters is not about you.  It's about the problems your customers are trying to solve.  

Related articles

Google's Hummingbird is giving SEO GERD

You have to collaborate with your customers to be found

The Impact of Google Hummingbird on Online Reputation Management

Maybe engineers need to grow up

When you've been in the communciation game as long as I have, you want to run, screaming, from the room when a marketing guy says, "We really don't need much media coverage.  Our customers are engineers and they all talk to each other.  So we just need to reach a few of them."  I swear, if I had a dollar for everytime I heard that I'd be an angel investor (who could fire a long of marketing guys).

So when UBM TechWeb CEO Tony Uphoff tossed out a Facebook link to an article on word-of-mouth marketing I was immediately drawn to it.  I was surprised to learn, however, that the age group most influenced by word-of-mouth marketing are teenagers, while adults will use word of mouth early on in their shopping process but rely more heavily on media when they make their decision.

That immediately brought to mind the axiom above.  If it is true, that engineers make buying decisions based on what their peers tell them, without benefit of third-party input, than engineers have the research skills of high-school students.

I'm sure that's not what the marketing guys are implying.  At least not what they wanted to imply.  Maybe they should go talk it over amongst themselves.

There's media and then, there's media , Part 3

Contributed articles became a very big deal during the Web 1.0 boom.  Suddenly, print and online publications had a huge need for new content.  Not only did publications start running news releases, verbatim, but they started asking companies to write opinion and analysis about their own industries.  Public Relations companies were flying high organizing the rush of opportunities.  Then the boom busted.  Publications started disappearing, mostly print but several online publications as well and both journalists and PR folks started looking for other means of income.

That did not, however, stop the demand for contributed articles.  The publishing world found that they could fill a lot of space, especially on line, with opinion, white papers, technical documents and presentations that they didn't have to pay for and could cut their newsroom budgets even more.  When webinars came around, they could actually charge companies to put their crappy power point presentations on the publication websites when they couldn't get them to buy advertising space.

Much of this material was managed by sales/marketing/pr departments and it is considered "earned media" because it doesn't directly sell products or services.  It isn't, though.  It's still owned media and edges into purchased media more often than not.  It is two steps up from advertising, one step up from press releases and it still doesn't reach into the realm of trustworthy media.

Moreover, it probably gets read/viewed less than press releases, according to many senior editors I talk to.  Most contributed articles get significant engagement, judging from the comments that follow publication online, but the publications say very vew people are actually reading them.  Those that do are mostly the author, the people that work for the author, the PR firm hired to place the article, the marketing department of the company the author works for, and the competitors who want the publication to run a rebuttal.

So to wrap up, before we get into truly trustworthy content, Websites, marketing material, press releases and contributed articles are all owned content, even if they make it to a third-party site.  They are viewed as slightly more trustworthy than advertising, but not by much.  To be trustworthy, content must be created by and published by a third party that is specifically engaged to be as objective as possible.  That will be the next post.

Total unique visitors: Who cares?

Been having some interesting discussions with web managers for b2b companies.  All of them start talking about their web traffic and SEO results.  I always step into the discussion with a series of questions that ends up stumping all of them.

"So.  Who are all of those people visiting your site?"

They stare at me blankly for a few seconds and then respond, "Why they're our customers, of course."

"Like who?"

"Well, we don't know who they are specifically..."

"Then how do you know they are your customers?  Maybe they're your competitors."

"They might be..."

Then the stumper:  "So if you really don't know who it is visiting your site, why does it matter how many there are?"

It is possible to determine if the right people are visiting your site, but the problem is that most marketing managers never ask that question and so most web site managers never take the time to dig deeper into the numbers.  They just say how many unique visitors and how many referrals the site got and everyone is happey... except when they look at the sales numbers.

This is not to say that unique visitors and referrals aren't important numbers... if you are an online media company.  After all, a media company is in the business of getting as many eyeballs as possible on the site to make sure they can justify their advertising rates.  But if you are a b2b company the volume on those numbers is meaningless unless you are driving current and potential customers to engage with you.  That's why it is more important to know that the one customer you really want visits your site than the hundreds of thousands of people that found your site through a search.

Cadence and Bruggeman: Saw that one coming

A few months ago I wrote that life was not all goodness and light in the Cadence marketing world, but that seemed to be a false prophesy with the presence of EDA 360 all over the Design Automation Conference in June.  Today it was announced in EE Times that Cadence marketing wunderkinde John Bruggeman had abruptly left the company, as the company reorganizes its marketing effort once again.

Kinda reminds me of what I was saying even earlier about what happens when engineers make marketing decisions.

So it seems that Cadence is moving away from the big vision to expand their markets and go back to "the Cadence that wants to keep building increasingly complex tools for a shrinking and unrewarding market," as EE Times editorial director Ron Wilson said.

Then again, maybe we are seeing preparation for the sale of Cadence.  Could be...?

Knocking the ball back to Gabe Moretti

Just got Gabe Moretti's email newsletter where he takes me to task for bagging on the EDA industry's lack of marketing acumen.  Always like to know when people disagree with me and Gabe makes some good points.  But there was one that popped out to me:

"Lou repeats the old mantra that EDA companies area really not making the tools that the costumers want, and that should they ever get smart enough to just do that they would become widely profitable. There is nothing farther from the truth than this statement. I agree that EDA could benefit form an injection of capable marketing know how, may be even using social media. We do not need to discover what is needed to take a design to silicon: we have done that for over thirty years as an industry and longer than that as in-house CAD departments."

To which I answer with an old adage, "If you guys are so smart, why ain't you rich?"

I'm off to check out a profitable industry.  C ya.

UPDATE:

Just got home to find a big, steaming pile of DeepChip from John Cooley that talks about the acquisition of Azuro by Cadence.  John, no great lover of EDA marketing people, calls it a "fire sale" and describes Azuro as a company that could not market itself properly, in spite of having great technology.  As I was saying...

The value of content

The term “return on investment” (ROI) gets bandied about a lot in my business, as in “what’s the ROI of you service?”  We all know what that questions is supposed to mean: how much money can I make back from what I pay you?  But no matter how many statistics and case studies you throw at the questioner, the real question is: “How little can I actually pay you for your service?”

I’ve started answering that question with another question: What is your content worth?  If the customer can answer that question, I can better answer their original question.

Every company, especially engineering-driven companies, says their content has immense “value.”  They believe that their customers have an absolute need to hear what they have to say.  It is so vital that the customers very existence depends on purchasing a particular product or service.  At least, that’s generally how they answer the question.  But they can’t put a monetary value on that content.  They can assign a monetary value to their product.  They can justify the price with studies and statistics and benchmarks.  But they have no idea how to valuate their story.  So I break it down for them this way:

If the customer won’t pay to read your content, if the media won’t pay to publish your content, and if you wont pay the media to publish your content... then your content has no value.  And if I promise a 10X return on your investment in proliferating your content, 10 times 0 is still 0.  So the ROI will be 0.

At this point of the conversation, they state that they are making an investment in my services, which is a good point, but that’s where we come back to my original question.  So what is the value of your content?

If you go cheap on your investment in content generation, management and distribution, you won’t get much in return.  On average - 9 times out of 10 - a technology start-up doesn’t want to spend more than $500 on the development and distribution of a news release (possibly the most worthless piece of content any company can ever make), including the cost of the wire service.  Over the years I have determined that even the most incompetent execution of a communications strategy can net a 5X ROI.  So by that measure, the $500 investment can net a $2500 ROI.  

 And that is the value of most content.  You have to determine if that is worth your time and effort. 

Mousetraps, alligators and EDA

I didn’t go to the 2011 Design Automation Conference in San Diego because this year I decided to stay home and see what I could pick up virtually from video, audio and news coverage day to day.  It was much more cost effective and focused, despite the usual bandwidth problems with the convention center. My apologies for mixing metaphors but this is how I wrap up the issues arising out of DAC. 

It is said that if you build a better mousetrap the world will beat a path to your door, but when your customers are up to their asses in alligators, vermin are not their critical problem. 

Gary Smith gave his usual glowing report of the future for the industry (he thinks it’s well on the way to being a $6.6 Billion industry by 2015, and once again he claims that this year Electronic system level design (ESL) is going to be really big this year (just like it has every year for the past decade, according to Gary.)  But this year he added a big caveat.

He said that the industry needs to provide tools to the design community that they need to do their jobs.

Um, isn’t that why companies in EDA are in business? Smith’s caveat has the implication that they aren’t.  I agree with him.  Apparently so do the VCs who are pointedly NOT investing in EDA or semiconductor companies because neither can turn profits.

The problem with EDA is a simple one: failure to communicate.  

The industry largely concentrates on making tools that only sort of solve the problems their customers have, which forces the customers to hire more manpower to make those tools actually help them do their jobs, or design and maintain their own tools (Smith has said before that the primary competition for EDA tools is actually the tools their customers are making.)  The tools the customers make actually resolve the specific issues, but it keeps them from concentrating on the job at hand, i.e, making new complex ICs.

So why aren’t the companies making the right tools?  Because they have no idea what the customer really wants.

Most EDA companies start out to solve one problem for one design inside one IC company; either be a design team that spins out of another company or design consultants that discover a nifty resolution to the specific problem.  In the old days (pre 1990) that was enough to get a buttload of money from a VC and launch a new company, but this is not the old days and those one-off solutions are not the money makers they used to be.  The EDA industry, however, is still acting like it is.

Infant industries are always engineering driven. When they reach adolescence they morph to sales-driven philosophy.  Mature industries are market driven. EDA is stuck, however, between infancy and adolescence and can’t seem to break out of it.  People like Smith and investors like Jim Hogan have been telling them what to do do break out of it for years, and they all nod their heads annually to the advice, and when DAC comes to a close they go back to the cubicles and start the process all over again.

The industry needs to mature and do it really fast or there is going to come a reckoning. It will be consumed by more savvy industries that are already making inroads, judging from what I could see, hear and read from the various media portals I was monitoring.  They need to learn how to really speak with, rather than at their customers and stop using the tired old sales tools (trade shows and press releases) that have passed for marketing efforts over the past 20 years. 

If the engineers running these companies can’t figure out what I’m talking about, they need to step aside and bring real marketers into management.  If they don’t, then the investors need to start making some changes in management themselves.

Churches are getting it. Are you?

Just sat in a webminar on the use of social media in churches, hosted by TheCity (a division of Zondervan).  I wasn't as impressed by the product as I was by the representatives of churches talking about how they are using social media to reach their "market."  

Churches have a pretty captive base market in the congregations.  A church of 130 regular attenders knows they are going to reach that 130 people, plus potentially another 6-10 people every week that the attenders interact with.  So that church, weekly, has a reach of 1300 people.  That's without social media.  Factor that in and the number goes to 13,000 very easily.  Put 10 churches like that into play and you are covering a small city.  But not all churches are doing that and for good reason.  It takes focus.  That's what the churches involved in the webinar were. Focused.

Each one had a single person, either paid staff or committed volunteer who's only duty was to monitor, measure and manage their social media program.  As a result, their churches were growing, connected and involved in the larger community.

I run across few companies, much less churches, with that kind of focus on reaching their market.  Social media is always something they know they should do, just as soon as they can get around to it.  Same with public relations, market research. lead development... everything needed to make a company grow.  Those efforts are always poorly funded (if funded at all) afterthoughts to the process of product development.  And when it's really crucial, There is no time to do it right.

Churches, like companies, have faith that what they have is the greatest thing since sliced bread.  If someone would just walk through that door, they know they can prove it.  The problem is, no one can find the door in all the noise of our lives.  Don't you think it's time to start pointing people in the right direction?

Communication takes another hit in EDA

Disturbing, though not surprising news out of the EDA industry this week.  I've stated a few weeks ago that Cadence has been going through another round of culling in the marketing departments and last week I learned that Synopsys, too, has been quietly downsizing marketing (why market when you're number one and your competitors aren't even trying).  Haven't heard a peep out of Mentor, but with Carl Icahn barking at their heels they have other problems... and Magma cuts it's marketing budget every year so that's nothing new.

None of that is disturbing, though.  At a recent company meeting in Cadence fairly recently, the executive team did a panel presentation on where the company was heading.  My sources (confirmed twice) reported that after the presentation, one brave soul rose to ask someone to clarify the vision for the company (because it just wasn't clear in the presentation).  Charlie Huang, chief strategy officer took the microphone and said, "We are going to follow the same strategy we have had for the past 20 years..."

And not a peep from EDA360 guru John Bruggeman. 

The entire premise of EDA360 is that business in EDA has to be done differently and it is a premise I completely agree with.  I've said before that I thought the philosophy Bruggeman brought to Cadence was bold while not entirely original, but definitely a direction Cadence and the rest of the industry needed to consider seriously.  I've also had my doubts that the powers that be and have always been in Cadence -- and the rest of the industry -- would ever allow the vision to see reality. 

The vision of EDA360 was pretty sweeping.  in Bruggeman's own words:

"First, the EDA and semiconductor industries have until now focused on design creation. With $100 million development costs on the horizon, there will be far fewer creators. Many designers will become integrators who make heavy use of pre-designed IP [intellectual property] to build SoCs and systems. EDA tools so far have only addressed creators, and this must change.

"Second, EDA until now has primarily focused on helping creators overcome the productivity gap. This work must continue, but what integrators are most concerned about is a profitability gap. Closing this gap requires new tools and approaches that can reduce design costs and bring in more revenue.

"Third, design going forward will be driven by apps. People will start with the applications and then build, or source, highly optimized hardware/software platforms. The traditional approach, in which hardware is built first and software and applications are tacked on later, has become too inefficient and costly. Thus traditional design tools and methodologies must evolve, and EDA360 will accomplish that."

So, doing things as you have for the previous 20 years...? Not so great an idea.  And yet, that is the plan.

I'm not picking on Cadence, just to be clear.  The entire industry's vision is sclerotic.  The EDA360 team came in with what was, essentially, a revolutionary approach to make the industry grow again.

But all of this is still not the disturbing thing.

The disturbing thing is that I have know some pretty amazing marketers and communicators in EDA and just about all of them have given up on the industry and are leaving.  Some, who are out of work now, have resolved never to return.  That means the ability to communicate with the market is leaving the industry altogether.  That's not good.

EDA is an important industry, but it's not set for growth anytime soon with the current leadership.  That makes Icahn, possibly, its savior... as distasteful as that may be. 

Catharsis

Following up on my last post this morning, I needed to vent.  This is what I came up with.

The kind of marketers available to the EDA world

 

Their reward for their efforts

 

EDA executives discussing what they really want in a marketing program after they have punished the marketing team and/or cut its budget.

Where EDA executives go to look for marketing and PR to replace laid off marketing teams or fired agencies

 

The type of customer EDA executives are trying to reach

 The type of customer that would respond positively to the message the executives come up with

 How EDA executives view the power of the messages

How EDA customer view the messages EDA executives produce

I feel better now

Who's in charge? Finale

The announcement of Steve Jobs taking another medical leave is an unfortunate but timely bit of news to put this series wrap up in perspective.  Jobs has established Apple as the leading consumer electronics company in the world.  For all intents and purposes, what Apple does drives the rest of the industry. Apple did not introduce the media player, it just made one that most people could use.  Apple did not introduce music sharing, it just made it legally acceptable.  Apple did not introduce the smart phone, it just made the smart phone practical for the mass market.  Apple did not introduce the tablet computer, it just reintroduced it when the public actually wanted one.  Jobs was at the center of all these decisions. 

Important to note: Jobs is not an engineer.  He has some technical experience but he has stated the college course that was most responsible for the creation of the Mac was a calligraphy class he audited at Reed College, shortly after he had dropped out of the school.  What made him successful was not technical knowledge.  He knew smart engineers that could realize his ideas, but the engineering never interested him.  The user experience did.  This is the man that has driven the direction of the electronics world for most of the past two decades.  But if he showed up today at any of the leading electronics companies for a job, he would not even get in as a janitor.

Yesterday, after establishing my evidence for the lack of vision or even understanding of the consumer market within the leadership of the electronics industry (most of whom are engineers) I said something drastic had to be done.  I repeat my assertion from the first part of the series: Engineers need to be removed from the management of the electronics industry. Specifically:

1. Any member of management, in fact, that cannot demonstrate a basic understanding of modern communications practices (yes, that includes Twitter) needs to be contained in the engineering division and kept away from the financial and technological marketing decisions.  This includes anyone in finance that continues to defund marketing programs. These people should be replaced with personnel within the company that have this knowledge, or my consultants who can step in immediately. (I can make recommendations.  In fact, I know several in EDA companies that should be recruited)


2. Any marketer who utters the phrases: "We know who our customers are...," needs to be reassigned.


3. Any employee who asks: "What is the ROI...?" and cannot answer the same question for the company's product in specifics and on his own job, needs to be shown the door.


4. Budgets must be immediately reworked.  At least 1 percent of R&D budgets should be reassigned to real market research.  If staffing does not provide for that research, it must be acquired either through personnel or outsourcing.  At least 10 percent of all trade show budgets should be applied to social media budgets, including measurement tools (If you want to know how, my rates are reasonable. If you don't want to work with me I can suggest a lot of good people) At least 10 percent of sales collateral budgets, including that assigned to press releases, should be reassigned to advertising, based on the information developed by the new market research and input from the conversation developed from the social media program.


5. Everyone in the company with any connection to the decisions of company direction and vision should be required to spend at least 15 minutes a day maintaining a social media presence and conversation, and then providing regular reports to management about what they have found. (there are tools available to manage this process.)

I would make a comment about venture capitalists working in the electronics industry, but they abandoned it long ago so I don't think there is any point in bringing it up

We have a very short window to turn this mess around.  Let's get to work now or call the grave diggers.  There will be no bail-out this time.

Who's in charge? Act 3

In the past two posts I've shown that the consumer electronic industry, with few notable exceptions, has consistently failed to address and meet the need of the buying public; that the semiconductor industry that follows that lead has delivered suspect information regarding market demand; and that the support industries to the semi industry has no solid idea what their value is to their customer, much less express that value to them.  How have we got to to this place?

First off, we have a leadership in place; and a generation of engineers in marketing that were trained by that leadership, whose frame of reference rests in the 1980s markets -- back when electronics was still in the entrepreneurial phase of its life.  In the 1980s, Lockheed Missiles and Space Division was still putting together technical documents with pen, ink and typewriters.  Semiconductor-based products were just the province or technology early adopters (nerds) and were considered generally beyond the ability of less mortals to comprehend, much less work with.

Today, however, there are people in IT departments with high-school equivalency certificates building desktop computers with components they get at Fry's.  Most cell-phones are upgraded every 20 months and some are considered disposable.  Consumer electronics has crossed the chasm and marketing needs to focus on late adopters to expand the market.  But what does the industry market to?  Engineers who think Twitter is stupid.  

No, that's not fair.  There are many engineers that find Twitter to be quite valuable and they buy these products.  No, it is more accurate to say that the market is addressed by companies, run by engineers who think Twitter is stupid.  The people who buy the products that are made by these companies have adopted social media in totality.  More than half of the US population has Facebook account.  These people are talking among themselves about these products, but the engineers in charge of marketing... or at least those engineers in management who are telling marketing that Twitter is stupid... have no idea what is being said.  Instead, they are talking, by email, phone and tradeshow meetings, with their friends who agree that Twitter is stupid about how smart they are.

They are living in a virtual biodome of their own construction that has preserved a 30-year-old paradigm perfectly.  It is a fantasy.

Is Facebook really worth $50 Billion?  They create a product that more than half the country uses and has spawned multiple additional industries with companies also valued in the billions.  The company is creating a lot of wealth and business.  It is a source of optimism and news.  The real question is, what is an EDA company really worth?  They create products used by a very small group of users to create products that 95 percent of the market will send back because it isn't what the customer wants.

So what is the answer to this problem? I really think it comes down to management.  And the electronics/semi industry management is filled with engineers who are making marketing decisions based on 30-year-old paradigms.  These guys are remarkably talented and knowledgeable -- when it comes to making complex technology, but they need guidance from people who are equally remarkable in talent and knowledge about the market.

A few weeks ago when I was considering writing this series, I got a call from a journalism buddy who encouraged me to go for the jugular on this subject.  He was royally PO'ed at a particular industry that does little to no advertising for the simple reason "they say they know their customers and what they want" so advertising doesn't help them.  And yet, this editor says he gets calls from company after company, that uses this same excuse for not supporting an industry publication, and that still expects the magazine to take their calls, send out editors, take meetings and write stories about their cheap little companies.  "If the customers already know everything they need to know about these companies," he wondered.  "Why do I need to write about them?  Why do they still send me their lousy press releases?  Why do they even go to trade shows?"  And why are they still not profitable?

Over the past 20 years, B2B publications have taken a major hit as more companies took this attitude to the point that we almost lost them altogether. What many people may not realize is that these publications found gold in social media and are using it to gather information about companies while, at the same time, creating sources of revenue.  They no longer need top go after these little companies to advertise once or twice a year, because they can sell their content to engineers who DON'T think Twitter is stupid.  They have found new, exciting industries to write about and less and less of those industries reside in the electronics world.

The engineers running the majority of electronics, semiconductor and EDA companies have run the market into the ground.  They have received a brief stay of execution in the current turn around, but don't expect it to last.

To get out of the cycle some drastic changes need to be put in place.  

To be continued.

Who's in charge? Act 2

So yesterday I talked about the failure of the semiconductor industry, as a whole, to accurately anticipate much of the market need.  I identified the causes of that failure as an inadequate funding of the marketing effort as well as a pervasive preference to withhold accurate data from industry analysis that is relied upon to develop new products.  How deep does this go?  I’m going to use the Electronic Design Automation (EDA) Industry as an example.  They support the semi industry with the tools they need to design and analyze complex products.

At the Electronic Design Automation Consortium (EDAC) industry forecast meeting this month it was pointed out that while semiconductor revenues have increased by double digits in 2010 while EDA is still in single digits (although it had decreased the previous two years).   Aart DeGeus, CEO of Synopsys, repeated an observation he has had many times in the past that EDA is not “getting its fair share” of the value it creates for its customers.

 Well, there are three reasons for that.  It could be any and all of them.

1. EDA is basing it’s forecasts on information provided by the industry analysis it’s customers provides... which we’ve already seen to be flawed.  So EDA is building products to support semiconductor and systems development that is going the wrong way.  (That may be a stretch.)


2. EDA has not done sufficient research into market needs to understand the what their customers value and is not communicating how they provide that value.  (That’s getting pretty close.)


3. Because EDA spends so little on real marketing and relies on rumor and tradition primarily as market research, it is not building products their customers’ value.  (I think we may have a winner.)

Here’s why I think the latter is more accurate.

Like many of his colleagues and competitors, DeGeus likes to trumpet how much money they spend on research and development.  I remember some years where it is as much as 20 percent of revenue for Synopsys.  I also know most of the companies in EDA have been increasing sales staff budgets every year.  I also know that every company in the industry has been cutting its marketing budget by an average of 10 percent every year for the past 10 years.

Now if you look at marketing as a function of sales, and that it’s duty is to crank out press releases, advertising and brochures; and to run trade show operations, well then you probably should look at ways to economize.  But marketing --real marketing-- is the advocate for the customer.  A marketer is supposed to converse with the customer through media, conduct professional surveys, and set up two-way channels of information between the company and the customer to get an accurate picture of what the customer needs before he know he needs it.  It’s a research function first and foremost. And that’s pretty much the way marketing works in every industry... except semiconductors.  And it’s even worse in the EDA world.

If Aart decided to take one percent of his R&D budget and put it back into marketing to do that kind of work, he would quintuple his marketing effort and possibly find out what the next big thing is going to be, not for EDA, but for the electronics industry.  It would make Synopsys the thought leader for his customers’ customers.  He would be able to explain his value clearly in hard numbers.

In fact, forget Synopsys.  Any EDA company, including the smallest startup, could do the same thing if they put some effort into marketing.  That means hiring a real marketer, and not an engineer with an MBA who once took a course on communications.

Instead EDA has marcom admins running Surveymonkey polls that make the statistician in my cringe.  

I recently got the results of a survey that I had participated in a few months ago.  The survey started out with an explanation of what engineering discipline was being explored.  

Right there, if I was an engineer from a different discipline, I would take a pass on the survey, so the only people that would take it are in that discipline.  OK, I can accept that in an effort to winnow out the non-relevant.  the next question was, “How important do you think (this discipline) is?” 

Gee, I wonder what the answer was? Sure enough, the survey result showed that a great majority of the engineers polled thought it was very important.  Whodathot?

The rest of the survey was pretty much the same: leading questions and obvious answers.  

What really caught my eye in the summary was a statement in the summary that estimated the savings a customer can realize from using this company’s technology was $5 million annually.  There was nothing in the survey that asked questions about costs.  There was one about “time savings.”  So I sent the CEO a question about how they arrived at that number.  They extrapolated that number from an assumption of the number of engineers a customer has and what they might be paid.  

This is a practice I’ve seen in every... I mean every... EDA company when I ask how they justify their product.  It’s based on sheer guess work.  they have no idea how much the customer is paying.  They don’t know the size of the engineering teams of the customers.  They don’t know anything about the market, other than the one or two companies they have actually sold product to.

So to answer the question: How deep does this lack of real marketing go?  Right to the core, baby.

To be continued.