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Marketing leaders share secret: Spend wisely

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Tough times call for tough leaders who can make smart decisions about money, technology and marketing. This year, facing a recession and a post-Sept. 11 world, marketers in every industry face the challenge of spending limited dollars wisely.

BtoB recently assembled a virtual roundtable of senior marketing executives from a spectrum of industries: financial services, materials distribution, high tech and industrial manufacturing. The group responded to questions about where they're spending and how they're using technology. Participating in the roundtable were Cathy Bessant, corporate marketing executive, Bank of America Corp.; Kathy Hebb, VP-marketing, W.W. Grainger Inc.; Mark Jarvis, senior VP-CMO of worldwide marketing, Oracle Corp., and Dean Landeche, VP-brand marketing, Hobart Corp.

BtoB: How has the down economy affected your marketing budget this year?

Bessant: Our goal is to be a growth company, and we've got to do everything we can on a regular basis to attract new customers and retain and deepen the relationships we have with existing customers. A lot of that can be leveraged through integrated marketing. So the investment is more important to us than ever. We have made a mid-course correction [for marketing] and have boosted our plan for the fourth quarter.

Landeche:: Our marketing budget has held remarkably flat in a down year for us. But I think that is largely attributed to the fact that we've been reducing our marketing communications budgets and our overall spending for probably the last eight or nine years. So operating with a flat or no-growth budget is nothing new for us.

Jarvis:: Oracle's marketing budget has gone down every year for the past five years. As the economy has slowed, our marketing budget has slowed, although not as a direct result of the economy. We simply believed we could become more efficient and spend less money. We generate more leads today than we have ever generated, simply by doing things differently. We leverage the Internet more, and we are clear about differentiating our marketing between our existing customers and focusing on getting new customers.

Hebb: It's more about spending our marketing dollars very smartly and ensuring that the way we spend our marketing dollars is in an integrated manner across all the channels in which we participate.

BtoB: What percent of your overall marketing budget is allocated to the Internet?

Landeche:: We've grown from about 25% of our marketing budget being spent on Internet about three years ago to about 40% this year.

Jarvis:: Very little, because the Internet is extremely low cost. I am not necessarily referring to banner ads, but to doing things on the Internet that allow us to educate and market to people and to sell to people online.

Hebb: We look at all of our channels very closely-and make sure we allocate and spend our marketing dollars in a smart manner-so that we are making contact and interacting with our customers.

Bessant: We have an Internet component of every campaign that we run. It's important today, but not overwhelming. We're paying a lot of attention to it as a channel of communication now, because the Internet as a marketing tool will really accelerate.

BtoB: What types of Internet programs are most effective?

Jarvis:: We provide technologists with free software, free education, free information, and we provide them with a marketplace that allows them to share information and their own skills. Those 2.3 million people in the [Oracle Technology Network] program are remarkably loyal to Oracle, and we can market to them at virtually zero cost. As a leader or a chief marketing officer, you should keep in mind that the less money you give people, the more creative you will force them to be.

Hebb: Last year we did about $330 million through [Grainger.com], and this year we're on a run rate of anywhere from $410 million to $440 million, which represents about 12% of our total sales. We have our salespeople interact at a very critical level with key customer contacts. As we get registrations on the site, and as we understand about the customer and understand what kinds of products they're buying from us, we do a lot of direct marketing to them via e-mail. That seems to work extremely well for us.

Bessant: The [Internet programs] that are most effective for us are ones that target very specifically what we're doing and directly address the needs of the individual client we're trying to reach. We use e-mail, Web sites, joint venture work with AOL Time Warner and Yahoo!, and all of our relationship marketing capabilities.

Landeche:: The key piece we have with our existing customer base is our extranet system. [The extranet system gives us] the ability to provide information appropriate and effective to our channel partners to help us take our products to market and help us reach end users more effectively. [It also provides] the ability to educate the distributor and channel sales force and to help provide interactivity about both our products and best practices in our industry.

BtoB: What Internet programs haven't worked well?

Landeche:: One lesson from failure in our industry has been actually selling anything online. We go through a distribution channel for some of our sales, and some of our sales are direct. Like many companies two to five years ago, we thought, "Let's try to sell things over the Internet." What we found was that with our product mix and [the] configuration requirements of our product, selling over the Internet was just not a good opportunity for us.

Hebb: What we found is that you have to be careful about how much e-mail you send to customers. At the start of our Web site and getting people interested in coming, as soon as we got their registration, we probably flooded them with e-mail and e-marketing. What we're doing right now is being a lot smarter about what we talk to them about and what we tell them about.

Bessant: It's the mass use of the Internet that I think customers find completely annoying and is not helpful at all to the sales process. Will the Internet ever be capable of delivering trusted advice? That is a very open question and something we're working to figure out. Another open question is: What is the choke point for consumers and business customers on the Internet? At what point does a pop-up box become so annoying there is only a negative effect?

Jarvis:: Banner ads just don't work to a C-level audience at all. The return compared to the cost is very, very low. On the Internet, when you're selling applications, you need to get to users and to the line-of-business audience. We have built much stronger relations with trade associations. We assist them and give them information. In return, we get the trade associations' eyeballs and their members' eyeballs on our message.

BtoB: In which technologies are you investing for marketing?

Bessant: We're investing heavily in CRM. CRM is a technology solution. But, as anyone who does it well knows, it's a business process issue more than anything else. Point-of-sale technology is really important. There are technologies for interactive ATMs that didn't exist five years ago. You can program your preferences and almost create a "My Bank of America ATM experience." I'm also referring to capabilities that use Web-based technologies in the [bank] branch to expand the range of services we can offer. We're testing interactive posters that offer varying kinds of information. The whole idea is to have a very consistent capability to deliver and delight our customers.

Landeche:: It's pretty evenly split between our public Internet technologies and our extranet technologies. On the extranet, We're trying to harvest information from internal systems and put that in the hands of our channel partners in a variety of ways that makes it more interactive and useful on a day-to-day basis. We have not made a major investment in CRM. We have taken CRM-type principles and portions of CRM-like application software and tried to adapt that inside our business to build relationships with existing customers.

Hebb: We bought SAP [software] in 1998 and implemented that in the organization. We have decided to extend our relationship with SAP by purchasing the mySAP suite of products. So we're really going to be exploring that particular technology and, in particular, the CRM module to understand how that might add value to our organization as we move forward.

Jarvis:: If you look at sales force automation systems as they exist today, they are not really helping the sales force sell. They are used for tracking opportunities and leads. We're building systems that allow our customers to interact with us online, get a demo online and go through an evaluation online. The sales force can get into the sales cycle later. Marketing can carry more responsibility for building the opportunity, and the customer does a lot more self-service, which reduces our costs and makes it more efficient at the same time.

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