Entrepreneurial Marketing Ted Finch Chief Marketing Officer Titan Solutions Group Overview • • • • • Objectives Background Marketing defined The marketing organization A Plan of action – Strategy – Tactics – 4 p’s – Operation Objectives • To explain how to setup marketing at a high-tech startup, which positions and tripwires for when. • Startups can be external (started from scratch), or internal (started from existing company with handpicked team). – External startups usually require self-funding, friends & family, angel investors, VC, or public funding. – Internal startups are usually new divisions or new companies funded internally—and are often spun off (like my current company). – All startups use a similar marketing process • By the way, these slides will be a little “text heavy” so you can refer back to them later Background • • 21 years of marketing. 7 years consumer marketing in entertainment industry. 14 years high-tech marketing. Sold the company—was acquired five times. First high-tech external from scratch startup in ’89, VP of sales and marketing, original 13 people grew to over 4,000 people. Sold company. – • • • • • • Executed over 400 product launches from over 150 companies (Sony, Microsoft, Ashton Tate, Compaq, Adobe, Lotus, IBM, Citrix, Aldus, Corel, Autodesk, HP, Intel, Canon, plus many more). Industry mercenaries – launched entire categories. Sold company. Later formed an internal startup—”publishing” software. Helped launch a category called the Internet. Four world-wide top sellers, including Netscape Navigator and AOL. Sold company. Formed another internal startup (1/2 owed by us, and ½ owned by Tom Clancy)--Red Storm Entertainment. Sold company. Senior VP at Metrowerks, sold to Motorola. Sat on 7 person marketing board, headed up $2 billion division. Headed marketing at internal startup division. VP of Marketing at $130 billion GE, highest % growth sector. Responsible for rebooting acquired company marketing. Chief Marketing Officer at Titan Solutions Group. Currently creating a software startup division—intend to take public. Founder of “Chanimal – The Ultimate Resource for Software Marketing” at www.chanimal.com. 8 years old and over 53 meg and 250+ pages of content. Marketing Defined • Often marketing is referred to as advertising, pr, collateral – the promotional arm of the company • Marketing is providing satisfaction. To provide that satisfaction, marketers study their target customers to find out what they want, design products or services to satisfy those wants, appropriately price, promote, distribute, and support that offering, and monitor customer satisfaction to fine tune their product (and then start all over again with the next release). • Basically, marketing is finding a need and filling it. Marketing Defined • Marketing includes strategy (determining what to do) and tactics (determining how to do it) • The four P’s of the marketing mix is an easy framework to remember – Product (definition, validation, profitability) – Price (margins, positioning) – Placement (sales, distribution) • Sales is a subset of marketing – Promotion (PR, ads, events, online, etc.) Organization • Always start with the marketing – period (even before engineering – so you know what engineering must do and can hire accordingly) – Initially you must have product marketing/management to define, validate, position, price and profitably drive product through development, promotions and sales into the market – Too often the product is created first, by engineering (usually an engineering founder with an idea), before the first marketing person is hired. Marketing then applies “reality therapy,” promotes what they’ve got, and soon starts the real process over to properly refine it – hence the usual better 2nd release – Engineering driven companies use “field of dreams” marketing. If you build it… – Market driven companies ask, “What do you want (and are willing to pay for), and then they build it” • The following org charts show a standard marketing organization, the stages of startup/marketing dept. development and tripwires Marketing Organization VP Marketing Director, MarCom Director, Product Mgmt Product Definition, Price Channel Marketing Mgr Markeing Alliance Mgr Promotion Admin Admin Event Marketing Product Marketing Mgr Marketing Operations Build, buy, align International Marketing Product Marketing Mgr Trade Show House Product Training Mgr Marketing Research Public Relations PR Agency On-line Omsbudsman Ads / Direct Response Research Assistant Research Firm Webmaster Mgr, Creative Services Chart represents functions that exist within a marketing organization. Production / Traffic In startups, multiple functions are handled by one person. Graphics Designer As the organization grows, and the workload increases, each area is handled by a specialist. Areas “plump” from this point on depending on the # of products, channels, international, inhouse work, etc. Outside Design Copywriter Early Organization Titan Solutions Group Titan Solutions Titan Pro Services Titan Software Engineering Titan Solutions & Pro Support QA Docs Product Manager (Product) 1 Product Marketing Research, Bus Intel 1. 2. 3. 4. 5. Get the product defined, validated and into development Wordsmith positioning, collateral (packaging, on-line, copywriting) Start pre-sales Formal alliances to ensure complete product Setup channel kit, define program, early recruiting Hiring order Marketing Sales (Direct Sales) 3 MarCom (Promotions) 2 Marketing Alliances (Product/Promo) 4 PR On-line - Web Direct Response Advertising Events Graphic Design Copywriting Agency Mgmt Channel Marketing (Channel Mgmt) Next Stage Organization Titan Solutions Group Titan Solutions Titan Pro Services Engineering Titan Solutions & Pro Support QA Docs Product Manager (Product) 1 Product Marketing Research, Bus Intel Titan Software Marketing MarCom (Promotions) 2 PR - 6 On-line/Web - 7 Sales (Direct Sales) 3 Marketing Alliances (Product/Promo) 4 Direct Response Advertising Events Graphic Design Copywriting Agency Mgmt 5. Additional sales to pre-sell product and start long sell-in 6. Start analyst meetings, prepare for press release, product launch 7. Setup on-line presense, product information, line up promotions, setup portals (press, reseller, customer) 8. Start recruiting in mass Definition, setup and initial promotions come first. The rest of the positions are filled as the product is launched. Sales Person - 5 Channel Marketing (Channel Mgmt) - 8 This is a self-funding model. External funding may accelerate the process (but actually shouldn’t – unless entering a hyper competitive market) Sage Tip: Organizational Chasm • Having personally gone through this stage six times (and having consulted multiple companies), I have found that the marketing generalist (wearing multiple hats) stage typically changes when the company transitions between 12-20 million and between 75 to 110 people. • At this time, the workload is usually too great for the initial marketing individuals. The team must diversify and specialist must be hired (or be ready to step up internally). • This is also the time that the original entrepreneurial “do it all” skills may bottleneck the company growth if they don’t evolve, or let go (of 2-3 roles) for the group to specialize. • I have seen some companies move all the way to 50 million and then stick there like glue, until they get through this transition so they can move to the next level. Observations • • • • • Marketing has a mixed reputation—often deserved. Management seems to know the least about the roles of marketing and typically fill the department with engineers, customer support, sales, accounting, interns, you name it. To top it off, they throw in a graphic artist, since this position has to be specialized. Also, most VPs of Marketing that I work with, don’t know much about marketing (having no formal marketing education (school or books), having come up through the ranks with similar non-marketing backgrounds). At Motorola Semi-Conductor Sector, with about 400 marketing people, only a handful had any marketing training. At multiple GE divisions (industrial systems – not consumer goods), most of marketing was from support and engineering—with only 1 business degree within the entire group. Other “marketing” VP’s were technical lightweights, and usually only knew marketing communications--no formal pricing, product marketing, alliances or channel marketing background. Best background, technical undergraduate (or aptitude), graduate degree with marketing emphasis. Plus, sales and consumer marketing experience—to apply to technical products. “Real” marketing professionals, that are skilled (and practiced) at all 4 of the marketing P’s are rare. However, they can chew up a market and eat competitors for lunch and can easily recognize big holes to capitalize to help their startup succeed. They can also train and mentor existing folks with templates, processes and example. I’ve spent much of my time mentoring teams—many became world class (such as the team that launched Netscape Navigator, the oldest had been out of college for 18 months). Overview – Plan of Action • Setup (equipment, hook up, create plan of action, internal assessment) • Strategy – Situational analysis – market strategy • Market environment (competition, economy, regulations, etc.), Market segments, Product offering – Organizational strategy (adoption cycle, growth strategy) – Market size, share (forecast), growth potential, product positioning • Tactics – Product (product & company, build, buy, align, positioning, , naming, branding approach) – Pricing (objectives, strategy, structure, levels) – Placement (direct, indirect, OEM, channel) – Promotions (PR, on-line, ads, events) – Collateral • Operations – Goals, budget, organization, support – summarized in Marketing Plan Start with a Plan of Action • In a start-up (internal or external), I always start with a plan of action. Personally, and require it of each team member. • This is a high-level action plan that sets the framework for how you are going to proceed. It helps level set the team and establishes the stages and high-level target deadlines. • The 2nd step estimates the time frames, could go into a Gantt chart, and proceeds to the business and marketing plan (with a lot of definition/validation work up front). • I will take you through my actual plan of action for actual live work (nothing confidential, but this is the “real” process – you are seeing how it is done, line by line) • Note: it contains information to level set the executive team on terms and processes Setup & Plan of Action • Done. Setup laptop, network, password, access, filing system • Done. Initial assessment. Competition, market size, alliances, budgets, organization, collateral • Done. (need to review & sign-off). Plan of action. Identify and sequence most of the marketing, sales, training, support, and product action items to create a commercial software division. • Done. (setup meeting). Hook up with John to parse out Business Plan deliverables. Prepare w/Plan. Strategy • Identify the “uncontrollables” (competition, economy, regulations, market demand, market size, existing segmentation), and decide how to address them with the items we can control (product positioning, marketing mix (4 “P’s” (product, price, placement, promotion) to achieve our overall financial objectives (including sustainable financial growth). Formal Plans • Business Plan – Marketing plan is a subset of overall business plan covering the market section. – I will work internally to further delegate so we can meet our timeframe. – Marketing plan will dove tail with financials and projections. Situational Analysis • Market environment – Define our current and future space (hi-level, where do we want to play now, where should we play later) – Competition • Identify current and potential competitors - ranked • Review product (install, timing, usability, features—everything a prospect would see), price, distribution and sales, promotions, alliances, OEM’s, supply chain. Identify holes. • SWAT analysis – Technological issues • Preferred platforms (.net versus Notes), latest technical options, trends – Economic issues • State of the economy, current impact on home sales, dynamics of sales to software systems adoption – Social political issues • New regulation that will help, hurt us (financing, security installation, etc.) Situational Analysis • Market size – – • Compile list of top 10, 25, 100, 1000 to evaluate size and characteristics Compile secondary research (reports) to validate sizing Market segments – 5 questions to evaluate – – – – – Smaller homogeneous subsets of overall heterogeneous market (will one product satisfy the wants of everyone within the market? (size, sophistication, platform)? Easy to identify and characterize? Easy to reach, find and promote to? Individual segments large enough to be profitable? Are all buyers in same segment responsive to similar promotions? Organizational Strategy • Growth or Consolidation – Consolidation strategies • Determine course of action for existing product (harvesting, pruning, retrenchment, divestment) – Growth strategies • Market penetration – better ingress into existing markets • Product development – change product or perception • Market development – find growth in new markets • Diversification – introduce new products Strategy - Growth Potential • Market share – Percentage - justification – Gaining • Sales forecast – – – – By product By segment By region By distribution Product/Company Positioning • The APEX of strategic analysis – how do we expect to compete and grow in this space? • What is our product’s key differentiators, unique value and positioning? • What is our company’s key differentiators, unique value and positioning? Marketing Mix – 4 P’s • Product – Product type, name, features, benefits, competitive positioning, buy/build or align • Price – – – – Objectives (marketshare, ROI, sales growth, long-term profit) Strategy (22 options – floor, penetration, parity, cross-benefit, etc. Structure (which products, by account, time & conditions) Levels (volume break points, site license, by product, service and peripherals) • Placement – Direct or indirect • Promotions – PR, advertising, direct response, on-line, alliance, events Product • Review current product (install, learn, demo) • Product definition – – – – Existing product fixes (usability, bugs, enhancement request) Competition (more detailed analysis – summary) Review, evaluate and contact potential alliances (align or build) New product research (or shortcut and summarize any existing) • Decisions – if we believe we know most of the requirements based on previous product, we can proceed until we receive early validation and then move into Market Requirements Document (MRD) • Secondary – reviews and reports • Primary – qualitative and quantitative (to validate frequency) – Competitive matrix – Internal assessment (engineering, support, QA, sales) – Current customers (CIO, roundtable (person, phone, webinar), test for usability, installation, platform, features – Analyst, consultants and resellers – Prospects » Focus groups, trade show meetings, roundtables, phone calls, webinar – Survey prospects, analyst, resellers and have them prioritize suggested features Product • Product definition – Summarize customer business case • • • • Identify major problems we need to solve Evaluate which can be solved currently Create roadmap to address overall needs Quantify our savings and $ in pain – Positioning (transfer this info to strategy section) – Finalize our build, align, buy strategy – Market Requirements Document (MRD) • Formal as necessary to create the product (less formal, less time, more hands-on) – – – – – – Functional characteristics Use case scenarios Usability requirements Performance capacity, speed, concurrency Interface/integration requirements w/3rd party hardware and software Prioritized according to a phased roadmap – Name product (review naming conventions, follow 5 step process). Not necessary until the product is defined. Warning: Never release name until press release. – Name division (review naming conventions, follow 5 step process) – Create brand identity (name, logos, messaging, look and feel, usage guidelines) Product • Brand identity – Not necessary to name the product, division, etc. until the product is defined (have not even solidified its positioning until then—which may come into play with the naming). Always use code name. Never release name until the press release (or we don’t have “news”). – Name product (review naming conventions, follow 5 step process). • Review naming conventions (budget, abstract/descriptive/suggestive (etc.), positioning, tag lines) • Brainstorm for names (that meet objectives and finalized conventions) • Narrow the list and do basic name search • Conduct basic and quick acid test with prospects/customers • Decide final name candidates, prioritize and conduct advanced name and trademark search • Finalize name – do not publish until press release – Name division (review naming conventions, follow 5 step process) – Create brand identity (name, logos, messaging, look and feel, usage guidelines) Product Development • Get alliance or OEM agreement w/timeline for anything we align, versus build • Review and validate our architecture to ensure modularity, standards, expandability • Review product specification to ensure it maps to MRD • Formal sign-off (as needed) • Setup beta sites for testing, pre-sales • Setup initial usability and benchmarking review • Product sign-off meeting Price - Strategy • Price distinguishes our offering from the competition and similar products. It communicates our value proposition and influences buying behavior. • Review pricing for competitive and similar like products • Review prospect’s cost for home grown and alternative application (how have they been getting the job done) • Review cost for the entire system (looking for ways to reduce the overall price, not ours) • Understand the overall cost (software, customization, support, maintenance) Pricing • Pricing objectives – Marketshare, return on investment, sales growth, short/long-term profit, etc. • Pricing strategy – Floor pricing, penetration, price taker/maker (pariy), premium, crossbenefit (razor/blade – software vs. customization), etc. • Pricing structure – Which products need to be priced • Software, professional services, installation, support, maintenance – Time and conditions • Pricing levels – New customer matrix, competitive upgrades, update price matrix, alliance pricing, OEM pricing, sample (NFR) pricing, reseller discounts, international pricing, gratis items, exception policies • Price sales dialogues – price savings build-up, reduce to simple, price versus “cost” Placement - Sales • Direct vs. Indirect – trip wires • Direct sales – company initiative – – – – – Hire a “hands on” sales director/manager Setup sales compensation, commission, bonus program Recruit appropriate sales people and/or hire rep firm Prepare sales kits (see collateral) Train sales people (product, market, customers, sales training) – Setup field systems (contact mgmt, etc.) – Create and populate field database – Setup field sales lead dissemination and follow-up system Placement - Sales • Indirect – Program setup • Program definition – reseller levels w/benefits and requirements • Setup co-op, mdf policies and guidelines • Reseller kit w/program descriptions – Intro letter, Reseller PowerPoint, checklist, reseller application and agreement, levels, contact information, reseller prices, part numbers, customer PowerPoint, training requirements, collateral samples, product reviews, etc. – Recruit resellers • • • • Setup distribution agreements (Ingram, Tech Data) Identify target resellers (size, type, markets) Setup contact database and compile list Setup initial reseller database (password protected, overview of program, product info, bbs—collaboration, lead dissemination and follow-up • Contact and recruit (PR, alliance resellers, direct mail, VARVision, roadshow, temp firm, reseller-centric events) – Reseller training (certification, training materials, physical and/or on-line training) – Reseller promotions and Co-op/MDF management - ongoing Promotions • PR (1/7th the cost, 15 times more believable – always start with PR!) – Setup • • • • • • • Determine objectives and measurement Company positioning statements 3-5 key talking points division and product Company backgrounder Internal media training (what to say, cautions) Establish policies (flaming, spokesperson, routing) Setup crisis management process – External PR – hire PR firm – Internal PR • Build target list, database and calendar – Identify and compile industry influencers (analyst, consultants, organizations) – Identify and compile target publications – Identify target trade events • Create master calendar • Create reviewer’s guide Promotions • PR – Internal PR • Proactive campaigning – – – – – – – – – Setup interviews with analyst and key executives Follow-up with executives to stay in contact with press as experts Issue press releases Setup press tour (preferably at trade events) Speak at trade show events – as the industry expert Write ghost stories and submit to freelance writers Create white papers to validate company’s unique value Place success and case stories On-line ombsbudsman • Follow-up and tracking – Read, correct all mistakes – Setup clipping service, clip books, bulletin board – communicate – Calculate response and value (Media Quality Quotient Analysis) Promotions • On-line marketing – Definition stage • Solidify objectives, consistent look and feel, PR/reseller/alliance portal, buy domain name – Building stage • Setup lead portal, product information, plan-o-gram and ecommerce • CD-ROM version, site stats, on-line surveys, search engine, Web policy – Promotion stage • Metatags & key search words, submit to search engines, link to/from alliances, organizations, op-in list, announce on-line forums, affiliate program Promotions • Alliance marketing – Setup & definition stage • Define objectives • Identify potential alliances based on product, complimentary sales contacts, etc. • Prioritize alliances into top 10 (most of your time spent), top 25 and self-serve (compile contacts) • Define the levels, benefits and requirements • Create alliance policies (screening criteria, process) • Setup “self-serve” alliance info for non-top 25 and above • Alliance kit – Intro, benefits, agreement, NDA, logo usage, hi-level roadmap, calendar, order form, contacts, workshop agenda, alliance PowerPoint, Titan sales script and presentation (cross-selling), alliance portal – Recruiting stage • Contact top 10, sign agreement, setup workshop dates, contact next 25 – Development, sales and promotions stage • Complete alliance workshop, issue alliance press release, link web sites, add to alliance portal, exchange demo software/training materials, prepare an alliance promotions plan and follow-up Promotions • Advertising – Determine objectives – Review competitor’s campaigns (if any) – Adscope, personal clippings – Determine target audience (buyers, influencer, resellers) – Media selection (order trade pubs, review demographics and editorial schedules, initial media selection) – Create ad concept, copy and design (Z format, direct response w/offer) – Determine frequency, negotiate placement, submit ads – Create on-line direct response landing page – Measure and evaluate media, message and response Promotions • Event marketing – Roadshow for resellers and prospects • Prospects 1st half, resellers 2nd half – Trade shows • Attempt to exhibit in alliance booth • If own: – – – – – – – Determine who will coordinate Booth size Rent or buy a booth Pre-show activities Post-show follow-up Lead dissemination and follow-up Show report Collateral • • • • • • • • • • • • • • Price list and matrix Customer PowerPoints Reseller program PowerPoints Alliance PowerPoints Alliance kit Product demo script Folders w/sticker space Product packaging Product slick Sell sheet (resellers) Family brochure (if applicable) Press reprints Customer testimonials Business plan - investors • • • • • • • • • • • Demo CD-ROM / Video Case stuides White paper Sample RFI and RFQ templates Competitive matrix (sales version) 3rd party add-on book Branded give-away items PR Reviewer’s guide 35 mm slides, Web versions Hi-res .jpg of key executives and products Logo usage guidelines Marketing Budget • To be added, depending on programs and ability to use existing resources • Process, first we create the promotions with the expected ROI, then we get sign-off • Note: Be prepared to sell your budget, by first selling and getting agreement that your promotions are needed. Under funding (and over funding) is death to your product – you must cost justify Budget Summary – Expense/ROI • • • • • • Channel Marketing – recruit new resellers, sell more through existing resellers (increase recommendation rate). Expense: $160k + Channel Mgr Return $4.9 million. Advertising – new product announcements, generate leads for sales and resellers. Expense: $416k (50% new verticals) Return $1.8 million. Promotional PR – generate leads, credibility and awareness. Expense: $144k + PR Manager (contractor). Return $2.3 million. Events – generate leads, customer, consultant, reseller and press meetings—only ASIS ‘03. Expense: $338. Return: $513k Customer & Reseller Conference – customer, consultant and reseller support, presell on-going releases. Expense: $320k ($320 CASI, $110 other divisions). Collateral – product catalog, price lists, CD’s (support material), reseller sales kits, data sheets, etc. Expense: $394. Return: Cost. Required to sell the products. Channel Marketing • Promotions – Direct Response • 2,000 targeted locations – $8k – ROI: 2,000 x 5% response = 100 leads x 10% conversion = 10 resellers x $100k/reseller/1st year = $1 million • Reseller database list - $5k ROI: Needed to run campaign – Events • Reseller Roadshow (10 cities, $80k less contribution) - $25k – ROI: 10 cities x 25 resellers/each x 10% conversion = 25 resellers x $100k = $2.5 million – Reseller Collateral ((brochure, binders) (2,000 x $50/ea)) $100k • ROI – Necessary to run the program. Summary • This process is exactly how products like Netscape Navigator were published and launched. • This process helped create the world’s largest services company (launching over 400 products and over 1 million promotions) • This process helped companies like HP, Corel, Microsoft, Motorola, and GE • There is still a lot of expertise involved in knowing how to execute each phase of this plan and get a high-tech startup off the ground. The process is not secret, and not particularly brainy (besides, it was condensed), but it works and should be helpful in jump-starting your future startup efforts. Resources • To find out more, visit my industry resource, Chanimal – The Ultimate Resource for Software Marketing at www.chanimal.com. It has over 53 megabytes and 250+ pages of FREE real-world startup tips and tricks (sample marketing plans, packaging guidelines, examples of how to do product research, budget templates, etc.). It is compiled content from some of the best high-tech marketing folks in the world and is all free. • Also, check out practical, real-world books like, “The Product Marketing Manager’s Handbook for Software Marketing” by Rick Chapman. • Also, check out “In Search of Stupidity, 20 years of high-tech marketing disasters.” Some of us lived through many of the mistakes this book references. We can all learn a lot from seeing what didn’t work. Any Questions?