Category Archives: Miscellaneous

Poor Metrics Will Undermine Your Marketing Efforts

A recent article in the McKinsey Quarterly discusses how “how poor metrics undermine digital marketing”, something The Brain and I have been trying to tell you for a while now. (Hint: clicks and page-rank don’t matter!) The article notes that, at least as far as measurements are concerned, the digital world has developed faster than the tools needed to measure it and as a result marketers are failing to tap the digital world’s full power. This is a problem, because the old standby metrics usually tell you to spend the bulk of your marketing dollars in the worst way possible.

Traditional metrics, and to some extent even traditional web-advertising strategies, are very limited in their applicability. The realities are the following:

  • Ad-words are only good when you’re selling well-known widgets.
    They do nothing when you’re trying to make a conceptual sale, or even a sale of anything even modestly complex, because the universe of ad-words you would have to “cover” is impossibly wide. This is doubly true if the buyer doesn’t even know what to search for. If you’re selling a facial tissue product, you probably have to buy 3 ad-words: “kleenex”, “facial tissue”, and “facial wipes”. If you’re selling a spend-analysis enterprise solution, the universe increases to at least a couple of dozen ad-words, including: “spend analysis”, “data analysis”, “business intelligence”, “spend reporting”, “data reporting”, “spend visibility”, “transaction analyzer”, “transaction reporting”, etc. Now imagine that you’re a consulting firm trying to sell purchasing / sourcing / procurement / supply management / spend management / supply chain / etc. consulting. What ad-words do you buy?
  • Ad-word and targeted-search clicks aren’t as relevant as you think.
    There are three things you have to remember here. (1) Most surfers click on the top few links that are returned. (2) Many surfers don’t know the best term to search for. (3) Many words, especially in the English language, have multiple meanings. Let’s say you’re Bob’s Sponge Emporium, and you just ran a big ad campaign that you expect will entice people to search for your online store. Guess what, an average user searching for “Sponge Bob” WILL NOT be searching for you! They want the Nickelodeon character who lives in a pineapple under the sea. Of course this is an extreme example, but you get my point.
  • Page views can be misleading.
    For example, Purchasing gets A LOT of page views. But in addition to the buyers, vendors, and consultants you might expect to reach, guess who you’re also going to reach a lot of — sales people who are reading it because it is viewed (by those who think that numbers alone tell the whole story, as it has the largest distribution list) as the leading traditional print publication in the space.
    If you’ve already reached the Purchasing audience, you might try a publication with a larger circulation that would include people affected by the purchasing profession — for example, Information Week, which covers all types of technology. But then the number of purchasing professionals who saw your ad would be an even smaller percentage of the total number of people who see your ad — for which you’re likely paying by the impression.
    The reality is that only two types of sites get mega page views: sites that are generic in nature, or sites that are popular culture (gossip) in nature. Chances are that, unless you’re selling trinkets to travelers, neither is going to be very effective in reaching your target audience.
  • Position and placement on the page is VERY important.
    Consider your average companion web-site to a print publication. Banner ads at the top. Mini-banner ads on the sides. Small banner windows in the page. Banner ads at the bottom. Is anyone going to notice all those ads? Especially if average page width is wider than the average browser window (since not everyone surfs with a wide-screen with a maximized browser window, especially if they’re doing research and have their screen split to view on one-side and take notes on the other) or, as I find to be quite common these days, the page depth is four or five screens deep. Sure your advertisement might be displayed 25,000 times, as per your agreement, but if it’s at the bottom of the page, I doubt even 2,500 people saw it … and, if it’s on a site that gets generic readership, I doubt that even 25 of those people would be your target market. (Which means you’re paying a lot more per ad than you think you are!)
  • It may be hard to quantify, but it all boils down to brand.
    People buy the brands they know. If you want a sale, and in particular, a complex software or service sale, if people aren’t aware of your brand, you’re never going to be invited to the table. More importantly, new research shows that a very large number of people are never going to buy on a click anyway — instead, they “store up” your impression for later, and then navigate explicitly to your home page. Furthermore, many surfers are likely to combine on-line and off-line research before making a decision, and they may then contact you through a traditional channel rather than going through an impersonal web contact form, or what they may perceive as a “dangerous” click-through.

So what are the right metrics? That’s a good question. It’s very hard to capture brand impact from clicks, downloads, and “impressions” when you don’t know whether your ad was somewhere on the screen where a surfer would see it. What we do know is that repeat impressions matter (because impressions build brand awareness). And, those companies who have tried to rigorously measure the success of their on-line marketing efforts against traditional marketing efforts have found that digital marketing, done right, is successful. Per the McKinsey article, 55% of them are cutting their expenditures on traditional media in order to increase funding for their online efforts.

So forget about click-throughs and downloads and focus on brand. Ask yourself where you can place your logo so that your brand will repeatedly reach the largest percentage of your target market — and not just a random web surfer. Don’t forget “Web 2.0” blogs, wikis, forums, and social media sites that not only attract a large number of visitors in your target market but primarily attract visitors in your target market. Chances are, that’s where you’re going to get the exposure you’re looking for.

Public Sector vs. Private Sector Procurement : Does One Size Fit All? II

Yesterday we noted that if you were looking for a way to quickly and easily segregate the vast array of companies offering procurement solutions in the marketplace, you’d quickly find that they could quickly be divided into those that almost exclusively serve the public sector and those that almost exclusively serve the private sector. We also noted that public sector organizations operate quite differently than their private sector enterprise counterparts. We then discussed the differences in day-to-day procurement public sector organizations vs. private sector enterprises.

Based on the operational differences we identified, we reviewed the fundamental differences in workflow, awards, and approvals and discussed the underlying technology required to support both the public sector and private sector needs. And we found something quite surprising – pretty much the same solution was needed in both cases. Which left us scratching us head and asking, so what’s the difference?

Well, when you get right down to it, there are no differences in the fundamental e-procurement technology requirements for public sector and private sector organizations. They both need to create RFXs to solicit information, accept bids, generate awards, create and approve contracts, cut purchase orders and goods receipts, accept invoices, issue (e-)payments, and track and report on spending. And they need to be able to do it in a smooth and integrated manner that minimizes data entry (and eliminates rekeying of data already in the system, as that just leads to human error).

The fundamental differences are in the processes they use. Public sector organizations have one set of rules for whether it’s a public RFX, renegotiation with an incumbent vendor, or a direct award and private sector enterprises have another. Public sector organizations tend to use the RFX, Bid Management, and Contract Management solutions more heavily than their private sector counterparts who are free to chase the award with the greatest long-term value and use non-discriminating e-auctions and cutting edge decision optimization to get the best value for their shareholders. But the fundamentals of procurement don’t change.

So why are most e-Procurement companies either or?

I think the answer is two-fold.
(1) Most technology-focussed solution companies don’t understand the differences between public sector and private sector procurement, and thus focus on one or the other.
(2) Most technology solution providers are still selling B2B 2.0 solutions, which have been customized for one environment or the other. In order to support both environments on one platform, you have to have very flexible workflows that are extremely customizable by the customer (to meet their needs) and a user interface that is trivially easy to use. This is easy with flexible B2B 3.0 solutions, but almost impossible with rigid B2B 2.0 solutions.

And if you have the right platform, you can easily support both types of customers.

Public Sector vs. Private Sector Procurement : Does One Size Fit All? I

If you were looking for a way to quickly and easily segregate the vast array of companies offering procurement solutions in the marketplace, you’d quickly find that they could quickly be divided into those that almost exclusively serve the public sector and those that almost exclusively serve the private sector. And if you’re like me, you’d wonder Why Is That?

It’s true that public sector organizations operate quite differently than their private sector enterprise counterparts, and that’s good, because they’re supposed to. A public sector organization is supposed to first and foremost serve the public good, a private sector organization is supposed to first and foremost bring value to its shareholders. Public sector organizations need to be fair when awarding contracts in terms of minimum minority awards, small business awards, disadvantaged business awards, and woman-owned business awards, especially when all else is equal. Private sector organizations need to select the best vendor for the job — every time, as that is their duty to their shareholders.

But does it mean that the solutions have to be different? Are not the fundamentals of good end-to-end e-procurement the same whether you’re public sector or private sector? I guess that’s the Trillion Dollar Question, isn’t it.

Let’s start by examining your average public sector procurement organization a little more closely. Public sector is not only very policy driven, it’s very stake-holder driven. In the private sector, most purchases don’t require more than two approvals — the procurement specialist and, if the dollar value is high enough, her boss. Yes, the stakeholders need to be consulted and have to be given a chance to provide their input, but the contract can be inked once the procurement manager, and her supervisor with enough fiscal authority, sign off. In the public sector, most procurements require no less than four or five signatures. You have the procurement (or contract) specialist, her supervisor, the project/program/department manager who needs the product or service, the Equality Awards Office (EAO) responsible for insuring that enough awards are made to MWBE and disadvantaged vendors, and, if any clause or term in the agreement is non-standard, legal. If the procurement carries risk, you might need the signature of the officer responsible for risk management, if the procurement will result in recurring payments, you might need the approval of accounts payable or finance, and if the spend is significant enough, you might need a senior VP in addition to your boss’s signature. But all of this can be handled by a flexible workflow with a configurable approval chain.

In the public sector you primarily have RFPs and sealed bids where the award often HAS to be given to the lowest bidder who can fulfill the demand at the minimum level of quality, safety, and performance, whereas private sector organizations can select the bidder that they believe will generate the most value for them in the long run. This means that the public sector requires an extensive RFX application with weighted scorecards and good comparison reports … the same thing that the private sector has gotten for years since GE implemented the reverse auction and FreeMarkets made it famous.

The public sector needs to support the lowest common denominator in terms of issuance of POs and receipt of invoices. If a supplier still operates out of a 1970’s production plant and can only accept and receive faxes, then the organization has to deal with paper for part of its procurement process whereas a private sector organization can dictate that it will only accept invoices electronically. But e-Procurement solutions have been accepting attachments for over a decade, and allowing the user to define the appropriate meta-data (vendor, po #, contract #, line items, quantity, amount, taxes, total invoice amount, etc.) for just as long. So it’s still easy for a data entry clerk to create an e-invoice in the system on behalf of a vendor and print, and fax, an e-PO on behalf of the public sector organization.

And so on.

So what’s the difference?

Come back tomorrow for Part II!

A Sense of Urgency is a Good Thing

Strategy + Business recently published an article that transcribed part of an interview with John Kotter of the Harvard Business School on why urgency in the face of change matters. Since most executives would agree that change is no longer a luxury, but rather a necessity, leaders need to help their companies cope with the turmoil of transformation.

Kotter, in discussing his new book “A Sense of Urgency”, indicates why a sense of urgency is important and what it takes to maintain that sense of urgency in a corporation. Kotter claims that a sense of urgency must be pursued relentlessly because a sense of urgency, and a sense of urgency alone, is the only way to eliminate the risk of complacency.

So how do you build that constant sense of urgency? You start by driving an organizational culture built on the belief that change is not only desirable but something that is to be pursued relentlessly. The steps Kotter recommends are to:

  • allow outside influences in,
  • encourage change on a daily basis,
  • look for opportunities that arise in a crisis, and
  • adeptly manage the “no-no’s” — the employees who insist that change efforts won’t work.

Why is change so important? Things have changed drastically since the end of WWI. Consider the quote from a DuPont executive who said that “After World War II we had a product line that was technologically relevant for 20 years. Nowadays, none of mine last five years.” As soon as your product hits the market, it’s already in the obsolescence phase of its life-cycle. Success in today’s market is growth, not holding your own. And, the newer, smaller companies that succeed are the ones who realized that change must be the driving force of their business plan and day-to-day operations.

What needs to happen to get change moving? According to Kotter, you have to take the Gerstner approach. When Louis Gerstner became CEO of IBM in the early 1990s, the company was hugely complacent. And he told everyone, “We’re going to win. We might not win the series, but we are going to win the next game. We aren’t going to take days off — that’s not how you get there. That’s not how you make big things happen. I’m not asking you to work 200 hours a week and die. What you’ve got to do is take all the junk that you’re doing right now — and trust me, you’re doing lots of junk — and get rid of it, purge it, delegate it, whatever.” Once you do that, all of a sudden there’s more time to pay attention to opportunities and hazards and to do that consistently, without fail and without letup.”

Empirical Proof That Saving Is Easy

Earlier this month, Supply Management . com ran a story on how a “21-year old student saved Dow Corning 370,000”. Gareth Davies, who is currently studying purchasing and supply chain management at the University of Glamorgan, spent a year at Dow Corning in Barry, Wales as part of his training where he renegotiated a variety of contracts making savings worth around 20 per cent.

That’s right, a 21-year old student kicked-ass in his first outing. Imagine what you can do as a pro if you take Gareth’s simple advice and take the right approach to get the right deal, using the right tool in the right circumstance! Knowing where to start, what tool to use, and how to use it is a great edge … and if you have optimization and spend analysis in your toolkit, the savings, even in today’s economy, are there for the taking. (And if you need to brush up on your skills, I’d recommend checking out Next Level Purchasing’s (now the Certitrek NLPA) SPSM curriculum. It might be for you.)