How business works

198 199HOW SALES AND MARKETING WORKS
Marketing approaches

Niche market

Who and how

❯ Business targets a select group of consumers
with specific need and wants.

❯ Customers often prepared to pay a premium
price for an uncommon product.

❯ Sales volume of niche product low, so does not
benefit from production economies of scale
(manufacturing large quantities to decrease the
unit cost of production).

Mass market HYBRID APPROACHES

Who and how Using social media to identify and reach
more than one target market, marketers have
❯ Business targeting a large group of consumers developed hybrid approaches that are more
with generalized wants and needs. flexible than conventional niche or mass-
market positioning of products.
❯ Requires high marketing spend to promote
products, which must be widely distributed. Mass market

❯ Marketplace often crowded with other An unfocused strategy that aims at
competitors selling a similar product. the broadest customer base.
Large segment

Channels marketing resources to one
large segment of the mass market.
Adjacent segment

Once large segment is fully penetrated,
product expands into related segment.
Multi segment

Markets to several segments at once,
with a customized strategy for each.
Small segment

Markets to a small segment with few
competitors, if resources are limited.
Niche segment

Focuses marketing resources on a
specific group of customers.
Mass customization

Customizes a strategy for each
sub-segment within the mass market.

Traditional marketing

Before the digital age, marketers relied exclusively on non-digital
channels, such as TV, radio, and print media, as well as direct mail,
events, and cold-calling, to convey their message to the consumer.

How it works Events TV

Traditional marketing encompasses Staging sports activities, Promoting sales through TV ads,
a number of tried-and-tested ways themed displays, parades, program sponsorship, or
of building a brand and pushing or exhibits to promote a product placement.
a product to sell more. It remains a product, cause, or brand.
key facet of marketing. Nowadays,
however, most businesses use
a mix of traditional and digital
marketing methods. One of the
advantages of traditional marketing
is that companies have face-to-face
contact with customers through
person-to-person selling, special
events, and event sponsorship.

Traditional
marketing process

Small and large businesses use
a range of conventional marketing
channels, and often integrate them
with digital marketing strategies.

Face-to-face Direct mail

Approaching customers directly Mailing catalogs or circulars
to create brand awareness or to a targeted list of consumers,
persuade them to buy a product. often promoting special offers
on products.

Telemarketing

Calling potential customers who
have an identifiable need for a
product with a sales pitch.

200 201HOW SALES AND MARKETING WORKS
Marketing approaches

Product samples Billboards

Offering free samples of a product to customers, giving them the Renting large outdoor advertising
opportunity to try it before making a purchase—an effective way spaces to market products. Cost
to launch new products and build a customer base. depends on the size of space, its
visibility, and the amount of traffic
that passes the location.

Radio Newspapers and 25%
magazines
Using commercial slots on radio Traditional
to promote products either Buying space in print media to marketing
locally or nationally, depending run advertisements, or creating Digital
on the station’s reach. advertorials to market products marketing
or services. 75%
Brochures and flyers
Networking 25%
Promoting through mailing or
locally hand-distributing printed Interacting with other people of US companies
materials to promote businesses. at special events to develop surveyed in 2012
professional contacts. valued traditional
marketing while
75% valued
digital marketing

Digital marketing

Using the internet, marketers can connect directly and instantly
with current and potential customers to build brand recognition,
collect data, and encourage word-of-mouth recommendations.

How it works Consum er experience

Unlike traditional offline Customer blogs
marketing, digital marketing about the gym
gives a business direct, two-way
communication with customers. CUSTOMERS VISIT THE GYM Blogwlinekbssittoe
Digital marketing employs some QR codeoins tcaekllepnhtoongeym
conventional approaches, such custoDimreercttos
as “pop-up” or “banner” ads
on web pages, but it also relies raditional marketing Customer scheodnulweseabsfriteee workout
heavily on the power of social Customer takes coupon to gym
media for raising awareness of
a product or brand. This makes
it harder to measure return on
investment. Digital marketing
is often used in conjunction
with traditional marketing
techniques, a hybrid known
as “tradigital” marketing.

Tradigital POSTER WITH
QR CODE FOR
in practice
TRIAL
A new health club is launched
using a tradigital approach to PRINTED AD QR code is
marketing. TV ads are aired with WITH TRIAL scanned
a call to action to visit the gym’s with cell
website and schedule a free COUPON phone
workout with a fitness trainer.
Print ads feature a coupon or $ POSTER IN GYM Directs customer to
a QR (quick response) code to ADVERTISING
scan and present at the health
club for a free trial. At the club, FREE WI-FI
members get free Wi-Fi access.
The Wi-Fi landing page has a TV ADS AIRED Directs viewer to
link to the gym’s free app. The DURING TENNIS
club may also use pop-up ads, TOURNAMENT
podcasts, email, and text messaging
to attract or retain members. T

202 203HOW SALES AND MARKETING WORKS
Marketing approaches

FREE Digital marketi % SHARE OF GLOBAL
APP AD SPEND BY MEDIUM

The internet is the fastest-growing
channel for global ad spending,
while TV continues to dominate
the current spend.

1%

Directs Wi-Fi user to ng 6% 40%
7%
Feevdibaascokciias lgmiveednia
9%
2012

$

19%

18%

WI-FI LANDING PAGE Feedback is given 1%
via social media

6%
7%

Directs Wi-Fi Wi-Fi landing page links 7% 2015 40%
user to to a workout clip on 16%
video sharing site $

@

GYM WEBSITE neuCwpsuflsoettroteemrmeraisligns 23% radio
web billboards
KEY movie theaters
TV
internet
newspapers
magazines

a

Pot seentairaclhcfuosrt tohmeegrydmoes the percentage

23% of the global
e-commerce
market forecast
to be held by
China by 2016

Engagement marketing

By involving customers directly in the development of a brand,
marketers hope to build a strong two-way relationship with
customers and win long-term loyalty.

How it works Start with a “wow”
experience
Engagement marketing harnesses
several online and offline strategies Provide interesting, informative, or
to draw a customer’s interest and entertaining content to draw potential
get them talking about products
and services. This contrasts with customers to a web page.
the more traditional style of
marketing in which a brand Sale $
concept and product proposal are $
presented to the customer as fixed, Once customer makes $
to be either accepted or rejected. purchase, follow up with PURCHASE
Engagement marketing, on the after-sale call, full of feel-good
other hand, encourages customer
input so that they feel closer to the reinforcement.
brand. The goal is to lure potential
customers to the website with New prospects
an initial experience, and then
work hard to keep them there. Offer incentives to existing
customers for recommending
NEED TO KNOW product or sharing content.

❯ “Sticky” customers Consumers COMMENTS Social visibility
who are loyal to a company and AND SHARES
return to make more purchases Post interesting and relevant
content on social media, and
❯ Decision simplicity Ease
with which consumers can encourage dialogue.
find trustworthy information
about a product

❯ Churn rate Percentage of
customers that cut ties with the
company in any given time period

❯ WOM Word-of-mouth
marketing, which relies
on satisfied customers
recommending products
to others

204 205HOW SALES AND MARKETING WORKS
Marketing approaches

71%of UK business leaders believe that

customer experience is the next corporate battleground

ATTRACT Entice to stay
in touch

Offer incentives to visitors
when they sign up for email

updates and newsletters.

EMAIL

@

Virtual engagement

Design every aspect of a
website to maintain visitor
interest so people return for

new content.

IN-STORE PROMOTION

SOCIAL MEDIA

Events Actual engagement

Use previous customer Encourage customers in the
feedback to decide on best real world to use product, meet
content for publicity events. and speak with sales staff, and
interact with other customers.

Sensory marketing

Sensory marketing targets multiple senses to sway purchasing
decisions. Based on research showing how the brain responds to
sensory input, this type of marketing acts covertly on the customer.

How it works Sight

Sensory marketing is most obviously Technology is making advances
used by the food and drinks with this, the most stimulated
industries, but its use extends sense in marketing, by using
to diverse products and services: optical illusions, digital effects,
computers designed with tactile 3-D, and 360-degree photography.
materials, hotels scented to relax
customers, and even fireworks
displays featuring edible confetti.

Typical channels for sensory
marketing include field marketing
(in-store events, samples, and
person-to-person sales), direct mail,
and product delivery. For online
businesses, however, finding a
way to use it remains a challenge.

Touch Smell

Marketers use 2-D and 3-D Customers are willing to
textural print techniques for pay more for a product
promotional materials and sold in an environment
packaging, as well as to sell that is scented appealingly.
products with tactile appeal.
Taste
81%
Taste sensations
of consumers can be enhanced
born from 1980 or subtly altered by
to 2000 value combining them with
experience over touch, sight, and especially the
material items closely linked sense of smell.

206 207HOW SALES AND MARKETING WORKS
Marketing approaches

NEED TO KNOW Attitude, memory,
behavior, and mood
❯ Sensory testing Assessment of
products by panel members with The sensory input results in a short- or long-
exceptional sensory perception term effect on attitude, memory, behavior,
and mood. This can be influenced by the
❯ Haptic technology Invention intensity of sensory data and by using it to
that simulates touch through
vibrations on computers stimulate more than one sense at the
same time.
❯ 3-D marketing
An immersive form of Emotion
consumer marketing
Sensory stimuli tap
Perception into the store of

The brain receives emotional memories, as
stimuli from one both are processed by the
or more senses.
same area of the brain.
Cognition

After processing
sensory stimuli, the brain

embeds memory,
regulates emotion, and

makes decisions.

Hearing

Sound is more
effective than sight
in triggering the
brain areas that
process emotions.

Relationship
marketing

The strategy of relationship marketing is to develop and
manage a trusting, long-term association with customers
and other markets that have links with the company.

How it works corporations have now changed Supplier markets
their focus from making the
Relationship marketing aims to sale to relationships, and from Building a relationship
replicate the type of interaction short-term reward to long-term of collaboration with
that village stores once had with gain. The marketer can extend suppliers makes good
their customers, offering a high the network beyond the engaged
level of personalized service customer to include employees, commercial sense.
to win them over for a lifetime. suppliers, and others.
While small, local businesses
naturally work this way, large

Six markets model

Relationship marketing has established a strategy for communicating with the
customer. This strategy defines six markets—not just traditional customer
markets—where companies should direct their marketing efforts.

CASE STUDY

Starbucks Marketing internally Influence markets
❯ Barista training
The strategy of coffee-shop chain ❯ Tech development opportunities To maintain good public
Starbucks exemplifies effective Marketing via referrals relations, the company works
relationship marketing. Centered on ❯ Word of mouth with regulators and consumer
core customer and internal markets, ❯ Social media shares
it also involves suppliers, referrals, Marketing to employees or environmental groups.
and recruitment (employee) markets. ❯ Stock options
❯ Medical insurance
Marketing to customers ❯ Partnership
❯ Social media Marketing to suppliers
❯ Business crowdsourcing ❯ Fairtrade programs
❯ Familiarity with customers ❯ Quality control
❯ Loyalty program
❯ Reward card app
❯ Mobile payments

208 209HOW SALES AND MARKETING WORKS
Marketing approaches

Referral markets “Ignore the human
element of marketing
Customers can be word-of-
mouth advocates for a company. at your own peril.”

Related businesses may also Bob Garfield
refer trade.

Customer markets Internal markets

The main marketing focus is on A company’s employees are its
customers, but activities are based internal customers, working
more on building long-term
customer relationships than together to represent its goals,
on acquiring new customers. mission, and strategy.

CV CV CV NEED TO KNOW

Recruitment markets ❯ Key account management (KAM) System
that coordinates departments in a business-
To attract the best to-business (B2B) company to serve big clients
employees, a company may
❯ Frequency marketing Promotion aimed
market itself by offering at increasing repeat sales by rewarding
incentives to staff. customers for repeat purchases

❯ Direct response (DR) Marketing that
invites consumers to respond directly to
the advertiser, by mail, telephone, or email

❯ Transaction marketing Strategy that aims
to persuade customers to make additional
one-time purchases at the point of sale

Outbound
marketing

Also called interruption marketing, outbound marketing involves a marketer
pushing a message to consumers. With this type of marketing, businesses
typically reach out to a wide audience by paying for advertisements on various
media channels. Although the audience may have no interest in the advertisement,
outbound strategy relies on delivering a high-impact message and generating
a response by creating familiarity through repetition.

Outbound marketing process

Outbound marketing takes Broadcast Convert
a traditional approach to
grabbing consumers’ attention, Marketers select a media Marketers link offline
but may use both non-digital channel with proven outbound campaigns
and digital media platforms. reach to the target audience, then with digital channels as part of
There are two stages to the communicate the message about an overall strategy to persuade
outbound process. First, the brand or product to that audience. potential customers to respond.
company broadcasts a message
to an audience and tries to Broadcast channels Means of conversion
convert them into customers;
second, it analyzes the results ❯ Ads on prime time TV to find ❯ Radio advertisement that repeats
to identify the channels and widest possible audience—ideal easy-to-recall phone number to
campaigns that have generated for raising brand awareness. elicit immediate action.
the most sales.
❯ Direct mail sent to a general ❯ Direct mail that makes high-
audience using mailing lists, or impact call for customer response;
to existing customers who have includes postage-paid reply form
previously bought by mail order. and customer service contacts.
See pp.212–213.
❯ Online advertisement that has
❯ Print advertisements in prominent position on web page
special interest, hobby, or trade and clear click-through point that
magazines with proven circulation invites customers to click, find out
to find a defined target market. more about product, and buy.

❯ Presence at trade events for ❯ Flyer distributed door to door
increasing corporate visibility that includes an appealing
and to reach a business audience. introductory offer on the product
for a limited period of time.

210 211HOW SALES AND MARKETING WORKS
Outbound marketing

32% TYPES OF OUTBOUND MARKETING

of UK brands cut Offline
outbound marketing
spend in favour of ❯ Cold calling Campaign can be more effective
spending more on if conducted at the right time of day to suit target
content marketing, audience; message should be scripted carefully and
in 2013 delivered in a genuine tone. See pp.218–219.

Analyze ❯ TV commercials Although many consumers now
switch off TV advertisements, they are familiar with
Marketers monitor the and open to this type of media, and repetition gets
progress of outbound the message across. See pp.212–213.
campaign and adjust the mix of
media or other paid-for channels, ❯ Radio This medium is the world’s most popular
then measure campaign results. mass communication channel with a global reach,
and is ideal for outbound messages aimed at an
Actions international market. See pp.212–213.
❯ Run control and test streams to
❯ Guerrilla marketing The use of a creative
compare the success of different and unconventional approach in high-traffic
media or campaign strategies. public places can be a cost-effective way to raise
❯ Examine click-through-rate brand awareness. This is a form of engagement
analytics, which look at how many marketing. See pp.204–205.
customers have clicked through to
find out about or buy product, Online
to determine online ad success.
❯ Measure direct mail response ❯ Social media The types of advertising on social
rates, including breakdown media sites are increasing and include sponsored
of different mailing lists or posts, promoted pins, and direct forms, such as
target demographics. banner ads. See pp.228–229.
❯ Analyze sales by outbound
spend to establish which channels ❯ Mobile technology Advertising that is tailored for
offer the best return on marketing mobile devices takes the form of text and images, or
investment (ROMI). both, to offer special deals to users; promotions are
also made via apps. See pp.214–215.

❯ Social lead targeting This strategy taps into
individual profiles from social media and tailors
messages, which are sent via online networks, such
as Twitter and LinkedIn.

❯ Search engine optimization (SEO) keywords
Paying for popular SEO keywords relevant to a brand
can improve exposure by raising them in internet
search engine listings pages. See pp.230–231.

Traditional offline
advertising

Offline advertising uses traditional media channels, such as magazines,
TV, radio, and billboards, to market a product or service. Although online
advertising is growing fast, globally most advertising is still offline.

How it works Marketers choose different 83%
channels according to the target
The common criteria for both market defined for the product of all advertising
online and offline advertising or service being advertised. The in India in 2013
is that businesses pay for ads choice may also be based on the was via television
that are intended to catch a ROI that a company has previously or print; digital
consumer’s attention with experienced for that channel. comprised just
a brand or product message. However, tracking the response 6.5% of the total
rate of offline advertising is more
Businesses calculate the difficult and less accurate than
success of their advertisement tracking online advertising
by looking at the return on (see pp.214–215).
investment (ROI) for every ad
dollar spent. And to maximize
the ROI, they must make sure
they choose the right channel
for their target audience.

OFFLINE ADVERTISING AND RETURN ON INVESTMENT (ROI)

44.3% One of the most important set of figures for a marketing KEY
department is return on investment (ROI) for advertising Share of
spend, which indicates the success of its campaigns. Data overall offline
compiled by the Radio Advertising Bureau, UK, in 2013 ad budget
showed that TV and radio boasted the best ROI.
Average return
on investment
per $ spent

$14.15 18.1% 11.7% $12.53
5.8%
TELEVISION $9.44 $3.25
RADIO
PRESS OUTDOOR

212 213HOW SALES AND MARKETING WORKS
Outbound marketing

Offline advertising channels NEED TO KNOW

Pros Cons ❯ Television rating point (TVR)
Indicates percentage of target
Television Offers local, national, and Expensive; ad repetition viewers in program audience
global reach; mix of sound may cause viewer fatigue;
and vision creates viewers likely to skip ads ❯ Cost per thousand (CPT) Figure
high-impact message on recorded shows used to measure outlay to reach a
thousand people via any channel
Radio Inexpensive; quick and Competition for prime
easy production process; “commute” slots; radio ❯ Advertising to sales ratio (A/S)
most stations play to on as background noise Method of measuring money
specific demographic renders ad ineffective spent on advertising and
sales generated

❯ Share of voice Percentage
of total activity claimed by one
advertiser for a product sector

Newspapers Fast publication process; Ads compete for attention
themed newspaper with other material on
NEWS sections allow for more page; usually black and
targeted advertising white, and text only

Magazines May remain in circulation Real circulation figures 58%
Direct mail for months; niche trade hard to source; securing
Billboards and special-interest titles ad slot requires planning of marketers’ ad
allow focused advertising months in advance budget globally
was spent on
Cost-effective; delivered May be perceived as junk TV advertising
straight to people’s homes mail and instantly thrown in 2010, although
and offices; targets away; response rate 86% of people
specific markets usually low skip television ads

High reach makes channel Heavy competition
cost-effective; advertiser’s for prime sites; format
message visible 24 hours limits message length
a day and complexity

Movies Potential to impress with Audience numbers
sophisticated, creative limited; members may
production; it has captive choose to enter theater
audience members after ads are shown

Online advertising

Marketers are increasingly advertising online to push marketing
messages to consumers. Online channels include display and mobile
technologies, email, search engines, and social media marketing.

How it works engine queries. While display 210%
advertising is likely to get more
When marketers advertise on the views overall, search advertising the growth
internet, they have to choose both has a better chance of reaching rate of mobile
the form of the ad and a location the target audience. advertising
that has an audience matching in China,
their target market. There are Other forms of digital advertising between 2013
several advertising channels, but include mobile advertising, which and 2014
the two most often used are display embeds advertisements in mobile
advertising and search advertising. content viewed on smartphones
and tablets, or sends text messages;
Display advertising includes email, which delivers ad copy
banners with text and images, directly to an email address; and
which appear on websites known social media advertising, which a
to be used frequently by target company uses to promote products
consumers, such as news, social via its social media profile.
media, or video content sites.
A major advantage of online over
Search advertising is a method offline advertising is that response
of placing ads in the web pages rates can be tracked effectively.
that appear in the results of search

RESPONSES TO DIGITAL ADVERTISING OVERLOAD KEY
US
70% 66% 65% Consumers who feel bombarded by digital UK
promotions from a brand are likely to be put off.
11% 10%
60% Here is a sample of how consumers would respond
if they felt a brand’s promotions were too frequent. Would protest on
social media sites
50%

40%

32%
30% 28% 27%

20% 20%

10%

0% Would respond Would stop using
Would unsubscribe from the brand’s product

a brand’s promotions negatively to future or service

brand messages

214 215HOW SALES AND MARKETING WORKS
Outbound marketing

Online advertising channels NEED TO KNOW

Display Pros Cons ❯ Clickstream User activity
advertising profile that summarizes what
Attention-grabbing; if ad Hard to target consumer an individual has clicked on
is clicked on, success can precisely; internet users
be tracked with pay-per- suffer ad fatigue and ❯ Behavioral targeting Process
click system ignore advertisements whereby websites capture data
from landing page visitors and
Search Good for targeting Potentially expensive use it to improve ad effectiveness
advertising consumers, as search user if using premium
keywords are matched keywords; can take ❯ Interstitials Ads that precede
xxxx to advertiser keywords time to see results the content page a user expects
(see pp.230–231) to land on, or appear right after it

Mobile Cheaper to develop Different screen sizes and CASE STUDY
content for mobiles than systems can distort ad
for computers; easy layout; user may feel Click fraud and botnets
to track ad effectiveness annoyed by interruption
With pay-per-click (PPC) advertising,
Email Offers opportunity to Recipient may delete a business pays a website for every
reach millions of potential email without reading it, click made on one of its ads, but click
@ customers, especially and is more likely to do so fraud has become a serious issue.
with bulk emailing if feeling bombarded Fraudsters set up a website and sell
(see pp.216–217) PPC advertising, then infiltrate the
computers of unsuspecting users
Social media Easy to target specific Continual posts and with a computer virus known as
audience; offers chance updates can easily distract a “botnet” to generate fake traffic
of ad going viral and user’s attention away to the website. Advertisers on the
achieving many views from placed ad site end up paying the fraudsters for
(see pp.228–229) the large number of clicks received.
In 2013, one London company
uncovered a botnet that was
generating nine billion fake clicks
per month.

46%

of e-commerce sales in 2014
came from the Asia–Pacific region

Direct mail

By targeting a large number of potential customers via mail or email,
marketers hope to convert some into actual customers. This is
achieved through the timing, design, and wording of the message.

How it works company to a corporation, may NEED TO KNOW
use direct mail to sell. Typical
Direct mail is one of the oldest companies that sell through direct ❯ Cleaning Correcting name and
forms of marketing. It works on mail include mail-order companies, address details on mailing lists
the basis of sending a product financial institutions, and nonprofit
offer to a large group of consumers organizations seeking donations. ❯ Lettershop Company that
in the knowledge that at least The percentage of people who specializes in printing and mailing
some will take up the offer and respond to direct mail, take up out letters and catalogs
become customers. Direct mail the offer, make a purchase, and
relies on lists of names and become customers—a category ❯ Merge/purge Software system
addresses, which could be a known as the conversion rate—is that pulls together different
company’s existing clients or a extremely low, but nevertheless mailing lists, searches for
list bought from a specialist agency. proves to be profitable. duplicates, and makes corrections
Almost any business, from a small

Direct mail and email—A/B testing

A/B testing compares the effectiveness of two versions of a marketing email
or direct mail copy. The two versions are sent to different groups of potential
customers, and the response to each is measured.

APPROACH A WEEKDAY Group A
MAILING
See response Responds with two clicks
from email hit on the company’s
on Monday website

@ Group B

Acquire names Send mail WEEKEND Responds with
MAILING 20 clicks on the
Set size of sample and APPROACH B See response company’s website
split in half from email hit
on Saturday

3.42%
was the average response rate to
direct-mail marketing in the US in 2010

216 217HOW SALES AND MARKETING WORKS
Outbound marketing

HOW TO SEND DIRECT MAIL
12 3 4 5

AB

Acquire Prepare direct- Send letters or Work out Evaluate
names mail copy emails response rate effectiveness

Buy in mailing lists Write offer/response Send mail (staggered Calculate responses Assess performance
or trade with other instructions; include dispatch controls as percentage of campaign
companies. prepaid envelope. flow of response). of mail sent out. compared to others.

Data analysis Campaign B AB

Comparison of results shows Send emails to remainder Evaluate effectiveness
that Saturday time slot is of the group on Saturday
more effective Full email blast reveals that
approach B yields the
best response

Telemarketing

Businesses use telemarketing to initiate direct contact with existing and
potential customers. Customers can also contact the company directly.
Telemarketing offers businesses a way to retain and acquire customers.

How it works makes an outbound call, 60%
it is to sell additional products or
Telemarketing works in services to an existing customer, or of all call centre
two directions: inbound and to entice a new customer to make a staff in France
outbound. A customer making a purchase. Telemarketing sales can and India have
call to a business (with a question be monitored in orders per hour; college degrees
or complaint, for example) is for example, agent A may make
referred to as an inbound call. 140 calls per hour and generate
It gives the business a chance $400. A more effective measure is
to retain a customer who may revenue per call—if agent B makes
be dissatisfied with a product 60 calls per hour but $450 worth of
or service, or to win over a new sales, the conversion rate per call is
customer contacting the company higher for agent B than agent A.
for the first time. When a business

Outbound and inbound Call center
telemarketing process
Agents in the call center receive
Telemarketers usually refer to a list of telephone numbers inbound calls and make
retrieved from a database to contact new or existing customers. outbound calls.
Call center agents have access to product information to help
them deal with questions and complaints.

Customer inquiry INBOUND WARM OUTBOUND
Customer Call made to promote
The customer may have a telephones new products/offers
question about service call center to existing customer
or billing.
COLD OUTBOUND
Call made to establish
first-time contact with
prospective customer

218 219HOW SALES AND MARKETING WORKS
Outbound marketing

TOP FIVE CALL CENTER LOCATIONS NEED TO KNOW

The Philippines is the top call center location for US firms, followed by India. ❯ After-call work (ACW) Tasks
This is because of the high number of Filipinos who have a US education and the agent has to complete after
knowledge of American culture. making a call, such as processing
sales forms
Ireland Poland
India ❯ Average handling time (AHT)
China Typical length of calls made
Philippines to customers

❯ Automatic call distributor (ACD)
Computerized telephone system
that connects each call to the
correct agent

❯ Average speed of answer (ASA)
Measure of the time it takes
to answer inbound calls

AB

Evaluate effectiveness

Telemarketers constantly evaluate the
effectiveness of calls.

Customer Agent A Agent B

The person who decides May adopt a May use a different
whether to buy particular sales communication or
a product. strategy or have a selling technique.
personal approach.
Gatekeeper
AGENT A Outcome
AGENT B The person who answers
the call and decides to At the conclusion of a marketing drive,
pass it on. telemarketers appraise strategies and styles
to help them decide on future campaigns.

Inbound
marketing

Inbound marketing lures customers by offering them appealing content, and
engaging with them. The approach pulls customers into a relationship with a
brand rather than “pushing” them into making a purchase, which is how
advertising works. Inbound marketing is also known as permission marketing as
potential customers are giving a business permission to communicate with them.
In other words, they are actively interacting with the company or brand.

Inbound marketing process Top types of content marketing

Content forms the core of inbound marketing. It 1. Blogs 8. Internet memes
includes text, images, and video that consumers seek 2. How-to guides 9. Email newsletters
out online, especially on social media sites, or in person 3. Images 10. E-books
at events, such as trade fairs, and share with their
network of friends, family, and colleagues. Potential 4. Infographics 11. Podcasts
customers respond to inbound marketing because the
business or brand is offering interesting and relevant 5. Videos 12. Twitter chat
information, entertainment, or content with emotional
value. Businesses expect this interaction to culminate in 6. Testimonials/reviews 13. Newsjacking (giving
a sale, or create brand recognition that leads to a sale.
7. Case studies content to news media)

Exploration

Publish and actively promote content; use search engine
optimization (SEO) to attract consumers online

NEED TO KNOW Decision-making

❯ Top of funnel marketing (TOFU) Ensure that content captivates potential customers or solves
Offers content to grab the initial problems for them; encourage two-way communication
attention of potential customer
Purchase
❯ Middle of funnel marketing
MOFU Offers more detail and Entice interested site visitors to become customers;
encourages participation make shopping online an easy and positive experience

❯ Bottom of funnel marketing Advocacy
(BOFU) Attempts to win a
sale with low pricing, offers, or Provide excellent customer service; spur customers to make
via customer recommendations recommendations and share on social media

220 221HOW SALES AND MARKETING WORKS
Inbound marketing

41% INBOUND MARKETING
STRATEGIES
of marketers surveyed in
2013 believed inbound Offline
marketing produced
measurable return on ❯ Optimize retail space
investment (ROI) Provide a well-designed physical
environment that will both draw
@ customers in and encourage them
to come back.
Search engines, social media networks,
web publishers, and third-party blogs ❯ Engage media Generate press
releases to gain media coverage.
Company website, blog, podcast, Focus on topics of real interest,
community, and interactive tools especially ones that can be backed
up by statistics and research.
E-commerce process, product,
price, discount, and promotion ❯ Interact face to face
Conduct events in stores that
Customer championing provide a new experience/benefit
of product or service to customers; rent a stand at a trade
event and offer key information.

Online

❯ Post blogs Update company blog
with appealing content to attract
visitors. See pp.224–225.

❯ Create podcasts Produce content
relevant to customers searching for
information; engage experts to add
value. See pp.226–227.

❯ Produce other content Post
articles, photos, and videos
on social media sites; target
influential users to encourage
viral sharing. See pp.228–229.

❯ Apply search engine optimization
(SEO) Fill search engine listings with
key phrases that answer specific
questions; add inbound links from
popular sites. See pp.230–231.

Outbound vs.
inbound marketing

Outbound marketing interrupts consumers to promote a product or
brand, but inbound marketing needs consumers’ permission—they
have to seek out information that leads to the marketing message.

How it works interrupting the content the NEED TO KNOW
consumer wishes to access.
Before the rise of the internet However, because consumers ❯ Push or interruption-based
and the phenomenon of social from all over the world now use Alternative marketing terms used
media, most marketing strategies the internet to search for information to describe outbound marketing
were outbound. In other words, and entertainment, marketers have
marketers pushed messages at adopted inbound strategies instead, ❯ Pull or permission-based
consumers by interrupting them providing content that draws the Alternative marketing terms used
with advertisements or direct mail. consumer to the brand or product, to describe inbound marketing
The same principle applies to rather than pushing marketing
outbound marketing that appears messages at them.
on the internet, with pop-up ads

Pros and cons

Marketers interrupt consumers with hundreds of outbound marketing
messages every day, but they also use subtle inbound marketing tactics
to attract consumers. Each strategy has its advantages and drawbacks.

Inb Ou tbound Pros Cons ADVERTISING
BLOGGING
❯ Campaign results can ❯ Customer conversion
be forecast and measured rates are low

❯ Marketing material is ❯ Marketing campaigns
easier to create are expensive to create

❯ Campaigns can be ❯ Effects of campaign are
tightly controlled often short-lived

COMPANY

ound Pros Cons

❯ More likely to draw ❯ Response from market
customers with long-term may take longer
interest in the brand
❯ New content must be
❯ Non-intrusive approach generated regularly to
preferred by customers keep customer interested

❯ Cost-effective compared ❯ Campaign results can
with outbound campaigns be difficult to measure

222 223HOW SALES AND MARKETING WORKS
Inbound marketing

AVERAGE COST PER LEAD OF INBOUND 60%
VS. OUTBOUND MARKETING
of marketers
A report compiled have added
inbound
by HubSpot in 2012 per$l3e4a6d 61% marketing to
discovered that their existing
companies with lower cost outbound
per lead strategies
inbound-dominant
p$e1r3l5ead
marketing strategies

reported a 61 percent OUTBOUND
MARKETING
lower average cost per

lead. The study highlighted

the cost-effectiveness

of social media, SEO,

and email marketing.

INBOUND
MARKETING

2012

TRADE SHOWS TELEMARKETING PAID SEARCH DIRECT MAIL

$

Integration of channels

By coordinating the message on all
channels, businesses can optimize
the impact of a marketing campaign.

PODCASTING SEO WEBSITE SOCIAL MEDIA

Blogging

Businesses post information articles on web logs, or blogs, as a way
to attract consumers to their websites. They may blog on their own
website or rely on independent bloggers to achieve this goal.

How it works to publish material online. This type of web content
has since become one of the most common sources
Unlike a conventional website, a blog is a site that of information and opinion on the internet. Although
consists purely of informational posts or entries that it was once only individuals who published blogs,
appear in chronological order, starting with the most many are now commissioned or professionally edited
recent. Blogs first started appearing in the mid-1990s, and produced by the company’s marketing department.
when new web tools made it possible for non-experts

Blogging process Post

Marketers may use SEO tools (see pp.230–231) to gain insight into what’s being Publish blog entry on
talked about online, which helps them to determine the most suitable topics internet using web software
for blogs. Many companies have the in-house talent to create blog content. or specialized corporate
blogging platforms.
Select key word Create content
or question Add links
Base content on key word/
Determine key word, phrase, question, and ensure that it Cite industry experts and
or question that appeals gives readers valuable insight research reports; add photos
to the target audience. into the chosen topic. or videos, and provide links
to the original sources.
KEY WORD

RISE OF BLOGGING: THE FIRST 20 YEARS

First blog Term Open Diary Boing Boing Blogads
(links.net) “weblog” is blog launches tech blog (ads on blog)
appears launches
coined founded

1994 1995 1996 1997 1998 1999 2000 2001 2002

224 225HOW SALES AND MARKETING WORKS
Inbound marketing

85.2% NEED TO KNOW

of internet users ❯ Disclosure Statement of whether
in Brazil visited blog is sponsored, or if reviewed
blog sites in 2011 products are given to blogger or
were independently bought

❯ Splog Spam blog containing
fake articles designed to increase
the search engine rankings of
specific websites

Syndicate/share BLO GGING VITAL STATIS TICS

Submit blog to syndication Top five statistics to track Three blogging mistakes
sites and share with social
media networks, such as ❯ Number of visitors Potential ❯ Obsession with SEO Although
Facebook, Twitter, Instagram. customers visiting blog and their SEO is important, focus should
route in—via links or direct entry be on publishing quality content
Track and measure
❯ Bounce rate Share of visitors ❯ Omitting facts Posts should
Monitor key blog statistics, who leave site within 10 seconds offer factual information, not just
such as the number of unique opinion or repackaged content
visitors and the number that ❯ Pages per visit Number of
sign up for RSS feed and email. pages viewed by visitor ❯ Lack of legibility Poorly
designed blogs with unclear
❯ Conversions Proportion of typography will discourage
visitors who subscribe to blog customers from reading content

❯ Keywords Common words
visitors use to find blog site

Google “Blog” is Weblogs Inc. Microblog Bloggers’ code AOL buys Over 75m Blogging
launches word of sold for $25m Tumblr of conduct HuffPo blog WordPress turns 20
AdSense the year launches proposed
and news blogs
website

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

BLOGGING

Podcasting/vidcasting engage with podcasts or vidcasts, NEED TO KNOW
companies try to sell products either
Businesses may post audio or video through advertising on the podcast ❯ Vodcast Alternative term for
files on the internet to attract and or the podcast download page, or by vidcast (both short for video-
engage website users; the goal sponsoring the podcast or vidcast to on-demand broadcasts)
is to convert first-time users into create brand reinforcement.
subscribers. Once consumers ❯ Rich site summary (RSS) Format
used for frequently updating text,
Podcasting/vidcasting process audio, and video content online

In order to get commercial results from a podcast or vidcast, a company ❯ Mobcast Podcast that is created
needs to create and publish interesting and informative content. and published on a cell phone

Capture content

Decide on topic, and create an outline,
then film video for vidcasts or record
audio material for podcasts.

Process content

Edit video footage or audio track for
background noise, mistakes, repetitions;
test and edit further, if necessary.

Select correct format

Save podcasts in MP3 format; save video
in small-screen format; compress file size
for optimal download speed.

Publish content

Embed and publish content on new
post. Use app to generate feed address;
submit to iTunes or other platform.

Tracking

Count number of subscribers; use web
feed services to access user location, level
of interaction, and other statistics.

1billion+ users subscribe to
Apple’s podcast app

226 227HOW SALES AND MARKETING WORKS
Inbound marketing

BUSINESS BLOGGING AND PODCASTING ETHICS

Independent online reviewers often collaborate with businesses, which is
beneficial to both. However, business promotion on blogs/podcasts is not regulated
like advertising, and ethical boundaries can become blurred.

Other Blog /podcast reviews include products
content such as apparel, hotels and restaurants,
NO and technology.

YES

Business gives free sample of product
or service to blogger/podcaster for testing
NO and reviewing. YES

Business provides support to reviewer Business provides support to reviewer by
through paid content and advertisements. offering further free products and services.

NO YES YES NO

Reviewer writes Possible conflict Possible conflict Reviewer tries
consumer report. of interest of interest to be neutral.

$$

Blog/podcast helps generate revenue
for both parties.

NO YES

Reviewer site builds own reputation Reviewer site depends on revenue
and has its own agenda. that business provides.

KEY Blog generates revenue
Business potentially for blogger/business
influences blogger

Blogger operates
independently of business

Social media
marketing

By posting content on social media, marketers try to attract website
traffic and draw attention to their products and services. Occasionally,
interest in the posted content can multiply rapidly across these channels.

How it works compelling enough it will attract followers, who will
share it with their audiences. As the content continues
Social media marketers are responsible for generating to be shared, liked, and commented upon, it will
engaging content. Typically, the content provides eventually get picked up by Google and other search
entertainment or offers useful information that social engines, helping to generate more interest.
media users actively look for. If the content is

Social media marketing in practice Content is posted on YouTube as
“new anti-aging skin care.”
The makers of a new health supplement for repairing
sun-damaged skin generate video content showing
the dramatic results of the product, and launch it across
two social media channels. Video footage, an image, or
a story that is spread quickly and widely via the internet
is said to have gone “viral.”

360 YouTube users
share the content.

CONVERTING SEEKERS
TO JOINERS

The goal of content marketers is to One major
convert “seekers,” who have arrived on beauty blogger
a website, blog, or social media page, links to YouTube
into “joiners,” who subscribe and allow
two-way communication. post.

Stage 1 Marketers post content, such 12 smaller blogs
as a video, article, or special offer, to follow the link and
draw consumers (seekers and joiners).
post about it.
Stage 2 They rely on “amplifiers”—social
media users who share content with their Blog followers see
friends—to spread their post to a wider the post and blog
audience. and visit the link.

Stage 3 They monitor response rates
from seekers, joiners, and amplifiers,
and audit their posts.

228 229HOW SALES AND MARKETING WORKS
Inbound marketing

Content 37% NEED TO KNOW
created
of businesses ❯ Social graph Internet graph that
in Germany maps connections between user
used social groups, such as Facebook friends
media in 2013
❯ Social media optimization
(SMO) Use of online communities
to maximize social media coverage
of product or event

❯ Social media monitoring
Process of tracking the number
of mentions a brand or company
receives on social media sites

Content is tweeted ##
to 460 followers #
of the company.
##
# #

## ## Content is
# retweeted
to 750 other
## followers.
#
#
##
#

##
#

Content is posted
on Facebook by
one Twitter user.

Each social media Content is
mention of the shared among
content moves the 520 Facebook
company’s website friends.
higher up the listings
of search engine
results.

Search engine
optimization (SEO)

SEO is a process marketers use to acquire traffic from search results on
search engine sites. SEO software tools are available to help the user
create web pages that will appear at the top of search engine listings.

How it works coming up with the right keywords, 92%
linking to other websites, and
Companies that have a web generating content that includes of all Google traffic
presence must ensure that their frequently searched keywords or goes to entries on
website has a high ranking on phrases, so that their website the first page
search engine listings. To achieve remains relevant to a wide variety of results
this, they frequently use SEO of search queries.
tools to monitor where their
website appears when keywords Search engines offer pay-per-click,
are searched for, and take steps a service that places a company’s
to keep it moving up the search listing at the top of a search results
results page. Some of the important page. Every click generates a fee
measures marketers take include payable to the search engine.

SEO process Keyword selection

These tools can be used regularly in a Use a combination of intuition
continuous attempt to move a website and analysis to choose words.
higher up the listings.
❯ Think of key phrases
Keyword research ❯ Avoid overused words
❯ Try variations of a word
Use SEO tools to research the
most popular keywords. Competition analysis
❯ Brainstorm keywords
Check competitors’ rankings to
❯ Find words in top engines ascertain how to rise above them.
❯ Test traffic using words
❯ See ranking with SEO tool
❯ View rival web links

❯ Find top-ranked domain

230 231HOW SALES AND MARKETING WORKS
Inbound marketing

NEED TO KNOW SEO TIPS Monitor search
statistics using
❯ Robot.txt Text file that stops Avoid single Google Keyword
web crawler software, such as words because Tool, for example.
Googlebot, from crawling certain multiple-word
web pages phrases rank Prioritize
higher. good content
❯ Search algorithm Step-by-step and update it
calculation that looks for clues to Add blog to offer regularly with
decide on search rankings content that keywords.
search engines
❯ Metadata Information that will pick up. Give headings
describes stored data – data keywords that
about data Use reputable relate to content
sites with relevant on page.
❯ Cloaking Technique for content to link
improving SEO by making back to your site.
some web content invisible

❯ Panda and Penguin Two
updates to how Google calculates
its website rankings, preventing
unfair rankings from SEO tools

Link-building Reporting and Keyword revision
tracking
Add links from related websites Monitor search results from
to point back to own site. Use tools to track traffic and current keyword selection
report on website ranking.
❯ Link to high-profile sites and make adjustments.
❯ Contribute to forums ❯ Focus on quality of visits
❯ Ask partners to link ❯ Check server reports ❯ Make sure terms aren’t broad
❯ Tally sales from ❯ Avoid specialized words
searches ❯ Alter word order

SEO spider
Software that crawls
the internet, adding

content to search
engine databases

Business
development

The overall goal of sales and marketing teams is to generate customer contact and
convert it into revenue. This is the core of business development, and it involves
a continual process of drawing in potential customers, enticing them to purchase,
and keeping them engaged. During this process, marketers and sales people use
a range of strategies and channels to attract customers and to earn their long-term
commitment to a brand and product.

Collaborative process Live events Face-to-face
communication
Marketing departments generate Social
brand identity while sales teams do media Convert leads
the selling. Working together, they into sales
aim to take potential customers on
a journey from brand awareness Once potential
to repeat sales, communicating the customers are
message through various channels. interested, entice
them to buy
Build brand Generate leads with targeted
awareness messages, offers,
Use a combination of and well-designed
Target customer groups inbound and outbound e-commerce sites.
with content and/or ad marketing strategies See pp.238-239.
campaigns to inform to entice potential
them about the brand customers to seek
and its values. This will out the brand
lay the foundation for a or product.
long-term relationship. See pp.236-237.
See pp.234-235.

Public Email blasts Telemarketing
relations

Advertising

232 233HOW SALES AND MARKETING WORKS
Business development

15% BUSINESS DEVELOPMENT
STRATEGIES
of companies have
specialized business Business development is reliant on growth. Sales and
development staff who marketing teams can increase long-term profitability by
are not involved in sales building up a customer base and then trying to retain it.
There are several ways to ensure that the customer base
remains buoyant.

❯ Chart customer journey from before to after sale

❯ Think of ways to reduce cost of sale and increase
customer satisfaction

❯ Integrate sales processes with marketing to gain and
retain customers; think about ideal customer

❯ Monitor and evaluate these processes regularly

Loyalty Call center Analytics Know-how Databases
programs tools

Retain customers Review Develop $ REVENUE $
effectiveness intellectual $
Follow up sales with capital
efficient delivery, Track marketing $
excellent customer spend on each Nurture talent
service, and channel and analyze and foster
personal contact results to gauge creativity in
to reinforce return on marketing order to
positive customer investment (ROMI). optimize ongoing
relationships. See See pp.242-243. marketing efforts.
pp.240-241. See pp.244-245.

Special Return on Traffic- Innovation
offers and investment driving
updates to website
(ROI)

Branding and
rebranding

A brand is defined by the characteristics that mark a particular
product. Branding is used to communicate a product’s qualities to
a consumer, and create a lasting bond between supplier and customer.

How it works works for both the supplier and the customer, aiming
to eliminate uncertainty and risk and to convey key
When a supplier develops a brand, it creates a defined attributes. Social media helps to promote brands—for
set of values, expressed in product imagery, colors, logo, example, 29 percent of Facebook users follow a brand
slogan, jingles, promotional imagery, and association and 58 percent have “liked” a brand.
with high-profile individuals or characters. The brand

The branding cycle Choose brand personality

There are typical stages to branding
a product. In order to rebrand
(redevelop) a product, the supplier
starts over at the beginning.

Develop the Sincere Down to Rugged Tough, Sophisticated
concept earth, honest, kind, strong, outdoorsy, Exclusive, romantic,
thoughtful masculine elegant
Marketer focuses on
positioning (where brand
sits among competition
in terms of function and
look) and building a
consistent and clear
personality.

Bold Competent
Carefree, Reliable,
spirited, intelligent,
youthful authentic,
successful

234 235HOW SALES AND MARKETING WORKS
Business development

Apply marketing mix

Product Price Promotion Place NEED TO KNOW

❯ Brand equity Power of
a well-respected brand to generate
more sales than the competition

❯ Brandwidth Measure of the
effectiveness with which a brand
connects across a wide range
of consumers

❯ Brand architecture Overarching
plan to develop one or more
brands and create a hierarchy

Apply promotion mix

Brand name Tagline Design and Audiovisual
packaging elements
Psychological needs
Make brand alluring

$

Physical needs Buying power
Assert product’s Use brand values
to optimize sales
usefulness

The consumer

Research Brand au

Is it time for a dit Audit
rebrand to make passed

product more
appealing?

Rebrand

REDEVELOPMENT: RETURN TO THE BEGINNING OF THE PROCESS

Lead generation

For a business to grow, one of its basic goals is to acquire new
customers. Lead generation is the strategy it uses to locate, target,
and nurture leads (potential customers).

How it works inclined to become actual customers—known as
high-quality leads. To generate leads, marketing and
The purpose of generating leads is to find consumers sales departments typically collaborate on a campaign,
who may need or want to buy the product a business is offline or online, designed to identify and recruit
selling. Sales teams do not want to waste resources on promising customer prospects. Acquiring contact
people who have no interest in the product in the first information is the first part of the process. Converting
place, so the process of lead generation helps to define leads into sales is the next step (see pp.238–239).
and capture the potential customers who seem most

Lead-generation process

Generating leads is a multi-step process that involves sales,
marketing, and customer service teams working together
to plan, design, produce, test, and refine a campaign.

Produce campaign

RESEARCH Create and deliver materials
Ascertain which for each medium involved in
media and customer the campaign.
touchpoints are
Plan the approach SEO/PPC EMAIL BLASTS
most effective. Integrate search Include a benefit
Set goals and parameters, including engine optimization for the recipient
expected return on investment (ROI) (SEO) efforts and and a call to action
and number and quality of leads. pay-per-click spend (see pp.216–217).
(see pp.230–231).
BIG IDEA
REVIEW PLANNING Devise a compelling
OBJECTIVES Ensure that sales, message to engage
Check that they marketing, and
are realistic; customer service are and entice leads.
compare with working together.
previous efforts. TRADE SHOW TELEMARKETING
SYSTEMATIZE Invite potential leads Review key
AUDIT Integrate customer to visit the company’s message and
Assess current relationship management stand and meet face call script
lead generation. (CRM) software to with customer
manage the leads. to face. service team.

Identify target customer Design campaign ADVERTISING
Generate broad
interest with ads
on selected media.

Define the characteristics of the Craft a multi-channel message to
customer the business is aiming to entice the lead to opt in and give
capture in as much detail as possible. contact information.

236 237HOW SALES AND MARKETING WORKS
Business development

TOP FIVE STRATEGIES FOR LEAD GENERATION NEED TO KNOW

❯ Create content such as a viral video product—before, during, and after ❯ Owned media Channel owned
or a newsworthy business report purchase. Touchpoints may range by a business, such as a website,
that takes leads to a sign-up page. from online reviews to billing. blog, or social media profile

❯ Use both online and offline ❯ Tailor the call to action to the ❯ Attention, interest, desire,
channels, as most customers channel, such as inviting trade show action (AIDA) Model for
will respond to just one channel. visitors to enter a competition. effective marketing messages

❯ Trace the customer touchpoint— ❯ Design effective opt-in web forms ❯ Cost per lead (CPL) Amount
the point at which a customer to capture data, such as asking it costs the company to acquire
comes into contact with the customers to sign up for updates. one potential customer

QUALIFIED LEADS ANALYZE
Determine percentage PERFORMANCE
of initial contacts with Identify adjustments
purchase capability. needed to keep campaign
on track.

RESPONSE RATES ONLINE Refine
Tally how many CONVERSION RATES
leads have been Calculate percentage of web Fine-tune the filtering process to
generated so far. visitors converted to leads. ensure that leads being generated are
high quality and likely to buy.

B2B LEAD GENERATION

Measure Most businesses selling to other businesses (B2B) identify lead

Track and measure the response generation as one of their most important digital marketing
from the various campaign activities priorities. But which tactics do they find most effective?
to gauge effectiveness.
10% % 5%
Test campaign
Traditional of B2B companies Social media
Monitor the initial hours and advertising that say each tactic
days of the campaign and make (radio, TV, print) 2%
any corrections that are needed. is most effective
17% at generating Other
leads
Online marketing 39%
(web content, SEO)
Outbound
27% marketing
(direct sales,
Live events (trade telemarketing)
shows, webinars)

Lead conversion

The process of turning a customer’s interest into a sale is called lead
conversion. The task requires not only a sales pitch to promote the
product or service, but also an approach tailored to the customer.

How it works Raw lead Pitch Find precise needs
of suspect; show product’s
Sales and marketing departments Potential customer— qualities and unique values
are responsible for generating sales perhaps a website visitor, or to counter objections.
income for a company. The first a suitable person who can
step is to locate or identify potential Pitch Reinforce product’s
customers—lead generation. The be approached by value to prospect; offer
second step is to make contact cold-calling payment options; highlight
with those potential customers customer satisfaction policy.
and entice or persuade them to Prospect
buy—lead conversion.
One step away from becoming
A sales pitch is used to convert a customer, prospects need a final
leads into customers. However, enticement to convince them to
nowadays the stereotypical spiel buy the product.
delivered by an overzealous
salesperson has been largely
replaced by more sophisticated
tactics, such as live chat on
shopping websites, which inform
customers and invite them to
participate in a dialogue, rather
than simply pestering them.

NEED TO KNOW Pitch Suggest keeping
in touch with updates,
❯ Lead scoring System used to offers, product add-ons,
measure the readiness of leads or discounts.
for conversion
Customer 3.3%
❯ Sales pipeline Visual tracking
of the number of leads, suspects, Raw lead has committed to buy; the average lead
and prospects at each stage in focus is now on retaining the conversion rate via
order to monitor sales process customer and enticing them online e-commerce
to make repeat purchases. in 2012
❯ Lead nurturing Informal contact
with a lead designed to gradually
win them over as a customer

❯ Cost per touch Measurement of
the cost of sales labor each time a
lead is “touched” (contacted)

Pitch Involve raw lead 238 239HOW SALES AND MARKETING WORKS
in website experience or Business development
conversation; identify need
for product; show benefits. Online lead conversion

A strategy is required for steering website visitors through every step of the
lead-converting process. It is often presented as a funnel. Once visitors have
arrived at a website, they are enticed to click on a “call to action” (CTA) button,
which takes them farther into the funnel.

Suspect Visitors to
website 3,000
Raw leads show their interest
by remaining on website or by Leads click on
not ending phone conversation call to action 600
with cold-caller.
Leads interact
with company 150
Leads qualified

by company 50

Sales closed 10

Inactive THREE CLASSIC SALES PITCHES

Prospect isn’t ready to buy High concept
immediately, but shows enough Catchy introduction that captures the vision or key idea of a
interest to suggest they might product or business; intended to grab attention and interest
buy in the future.
Elevator
Dead lead Short summary (under a minute long) that explains the
why, what, and how of a business or product
Lead will not convert, but may be
worth trying to revive in future. 20-minute deck
Presentation that explains the product or business in detail;
how it can serve the need a prospective customer may have

Customer retention

Existing customers help businesses generate the majority of profit
and growth through making additional sales and referrals, and so
retaining these customers is a high priority for marketers.

+ Identify satisfied Introduce retention Monitor and measure
– customers improvement strategy by analyzing
Customer referral
Measure customer retention level Early warning Customer satisfaction
Measure the number systems
Track how many customers repeat purchase or buy more products. of referrals an individual Anticipate any Assess rate of customer complaints
customer generates. problems and and recommendations.
Loyalty alert customers
Pinpoint customers in advance. EXISTING EXITING
who are active in CUSTOMERS CUSTOMERS
the brand’s loyalty Recovery
program. programs Attrition rate
Apologize for
Identify the any mistakes and Calculate the number of customers
dissatisfied make amends to retained (existing), lost (exiting), or
Defection woo dissatisfied gained in a given period.
customers back.
Find out why certain $$ $
customers have left Customer feed-
and which competitor back surveys Revenue targets
they have gone to. Listen to Measure revenue targets against
Complaint analysis customers and cost of customer retention efforts.
Examine written identify people at
customer complaints risk of defecting.
and call-center records.
Loyalty
programs
Reward customers
with improved
incentives for
staying loyal.

Boost customer
service
Offer employees
incentives to build
customer relations.

240 241HOW SALES AND MARKETING WORKS
Business development

How it works Practices include identifying the most valuable
customers and nurturing relationships with them.
There are two stages to the process of customer The least valuable or most costly customers may be
retention: measuring the current rate of retention, dropped if they show little development potential.
and applying strategies to manage and improve it.

Upsell and cross-sell leads TOP FIVE REASONS FOR NEED TO KNOW
Identify customers who may buy LOSING A CUSTOMER
larger products, or related items. ❯ Customer lifetime value (CLV)
Senses Measure of the amount customer
1-2 3-4 5-6 indifference will contribute to company
from provider revenue in the long term
7-8 9-10
Dissatisfied ❯ Customer retention rate (CRR)
Net promoter score ® with product The number of customers
Use management tool to gauge or service retained over a given period,
how likely a customer is to expressed as a percentage
recommend company to others. 1-2 3-4 5-6
❯ Customer acquisition
Customer retention savings cost (CAC) The amount
Calculate savings made in company spends to gain a
marketing spend by retaining customer; also called cost
existing customers. of customer acquisition (COCA)

Unhappy 5% $
with price
reduction
Lured by in customer
competition defection
rate can
Natural increase
attrition (death, profits by
relocation) 25–125% $

Return on marketing
investment (ROMI)

Many organizations gauge the effectiveness of the amount they
spend on marketing campaigns by measuring the return they make
on marketing investment, which is commonly known as ROMI.

How it works such as the word-of-mouth effect NEED TO KNOW
on social media, which is more
A subset of ROI (return on difficult to quantify than the more ❯ 4P3C1E framework Method
investment), ROMI is one of the clear-cut response received from that uses several variables
key calculations businesses use to advertising or direct mail. to calculate effectiveness
work out the effectiveness of the of marketing campaign
money they spend on marketing. As a result, many digital
marketers now factor lag time or ❯ Success metrics Use of
ROMI is measured by comparing brand awareness into their ROMI standard measure (metric) to
the revenue gained against the calculations in order to quantify help manage marketing process
investment made in marketing, less tangible benefits and target and to assess its performance
and is used to assess online future campaigns more effectively.
campaigns, in particular. This
calculation, however, only
reflects the direct impact
of marketing investment on
a business’s revenue and fails
to take into account other gains,

ROMI in practice @

The diagram shows how a commercial air-conditioning
company might use ROMI to measure the performance
of a marketing campaign. The company spends $2,100
on a direct-mail promotion, which it aims at offices in three
major cities to generate sales leads and secure new contracts.
The direct-mail brochure contains a contact form offering
a 10 percent discount to new clients who respond to the
promotion within a specified period of time.

Marketing sends 120 leads
4,000 direct mails respond to

offer

TOTAL REVENUE
= ROMI

MARKETING BUDGET

242 243HOW SALES AND MARKETING WORKS
Business development

63% LONG-TERM BENEFITS OF MARKETING INVESTMENTCost of market investment

of chief Some aspects of marketing investment are difficult to measure immediately. The benefits
marketing of providing excellent customer service, for example, or investing in research to help
officers marketers retain customers, may not be evident right away but will reap long-term profits.
believe ROI
will become MARKETING INVESTMENTS
the leading
measure $ Run marketing campaigns
of success
during IMPROVED CUSTOMER VALUE AND SATISFACTION
2011–2016
Increased customer attraction Increased customer retention

INCREASED CUSTOMER LIFETIME
VALUES AND CUSTOMER LOYALTY

RETURN ON MARKETING INVESTMENT

14 qualified leads 3 of these Results
(who are become
Total new customers = 3
a good fit for the customers Average customer spend = $6,500 (after 10% discount
product) become deducted from average $7,222 total spend)
sales opportunities Revenue from marketing = $19,500 (3 x $6,500)
Campaign spend = $2,100 + $2,167 (3 x $722) cost to
company of promotional discount = $4,267 total
ROMI = $4.57 per customer / per $ spent on campaign

$19,500 = $4.57
$4,267

Intellectual capital

The knowledge within a company that is TOP TALENT
used to improve business performance
is known as its intellectual capital.

How it works No. 1

Every business has capital, UMAN INTELLECT
which refers to the physical, H
tangible assets that appear ERIENCE Difficulty

on the balance sheet of its

financial statements. Human capital
A business also has

intellectual capital—the VOLUMEOF PRACTICAL EXP The combined talents of the staff and
knowledge and skills inside the executives employed by the business.
company. This collective know- It includes skills and abilities, drive,
how is hard to quantify and creativity, and innovativeness, all of
measure, but it is essential to which can be quite hard to measure.
a company’s ability to generate
revenue. For instance, management

must provide training and a

handover period for new staff

so that human capital does not Difficulty
go down when people leave the

company, taking their expertise

with them. Management academics EXTERNAL LINKS Customer capital
have identified three main kinds
of intellectual capital: human, Goodwill developed between a company
structural, and customer. and its customers, reflected in customer
loyalty to the business and its products.
This relational capital can be extended to
suppliers, but is very hard to quantify.

NEED TO KNOW S LAST KET RELATIONSHI
PSMAR
❯ Strategic capital A company’s L
knowledge of its market and the
business model needed for success HOW

❯ Intellectual property Creations
or inventions that are legally
recognized as belonging to
a particular entity or individual
on a balance sheet

❯ Intangible capital All ONG RELATIONSHIP
knowledge assets belonging
to a business or organization; can
be audited under various systems
(see far right)

244 245HOW SALES AND MARKETING WORKS
Business development

INTERNAL LINKS MEASURING INTELLECTUAL
CAPITAL
ORGA NIZATIONAL ROUTINES
Various different methods have been
8am developed to quantify and measure a
9am company’s intellectual capital.
10am
Watson Wyatt
Difficulty index

Structural INNOVATION A survey conducted
capital every two years in
public companies
The support structures developed to assess the value
and held by the company, including of human capital
its own software, databases and and HR practices.
other information systems, patents,
copyrights, and trademarks. Intellectual capital
Structural capital is non-physical, monitor
so it can be hard to assess.
Matrix that measures
the past effects,
present power, and
future potential of the
intellectual capital in
a company.

“The only irreplaceable FIVA
capital an organization
possesses is Framework of
the knowledge intangible value areas
and ability of (FIVA): an eight-step
its people.” system used to
calculate the worth
Andrew Carnegie of a company’s
intellectual capital.

Knowledge capital
scorecard

Method developed
by New York University
professor Baruch Lev
to rate a company’s
intellectual capital and
assess its contribution
to a company’s success.

Information
management

Monitoring the marketplace and making sense of the vast quantities of data
available has become a priority for businesses; the data is crucial for digital
marketing, which is taking on increasingly sophisticated forms. Most businesses
have a system in place for managing information—and the most successful ones
use data not only to monitor day-to-day performance at every level, but to predict
future outcomes and plan accordingly.

External Internal

Outside the business, data flows in Within the business
from production, supply chain, sales itself, data feeds into
outlets, partners, and customers. the marketing and IT
teams from operations,
finance, and human Executives
resources.
Production

Forecast Analysis

n
Supply chai
Marketing and IT DATA

DATA

DATA DATA

Sales outlet

The marketing and IT departments are at

DATA the center of information management. DATA
They are responsible for collecting and DATA
analyzing data, and then reporting their

findings to executives. See pp.252–253.

246 247HOW SALES AND MARKETING WORKS
Information management

7% TRANSFORMING DATA
INTO DECISIONS
of organizations
employ a chief With relevant data easily accessible (see pp.262–263)
digital officer a business can identify its strengths and weaknesses
in order to improve its processes and operations, as
LEGAL COMPLIANCE well as its customer relationships (see pp.264–265).

Operations Leg

al system Source raw data Store information
Gather customer data. Store data via data
See pp.254–255 and warehousing.
pp.258–261. See pp.256–257.

Finance The legal system Gain insight Access knowledge
ensures the use of Examine data using Retrieve data with
$ data adheres to business analytics. business intelligence tool.
$ privacy and other See pp.250–251. See pp.248–249.
laws. See pp.266–267.

Par

tners

Human Resources tomers

Cus

Make decisions
Plan and budget
for future outcome

Business intelligence

Business intelligence (BI) is an umbrella term referring to the variety
of software applications companies use to access and analyze the
massive amounts of raw data they have at their fingertips.

How it works from the company database. NEED TO KNOW
The marketer then views the
BI relies on software programs and information on a computer ❯ Star schema Simplest format
computerized systems for collecting screen using a data visualization of online analytical processing
and integrating data in order that a tool known as a dashboard, which (OLAP) in data warehouse
business can report on its activities, can also be used for real-time
both past and present. The tools monitoring of business operations. ❯ Data quality (DQ) Condition
allow staff to pull relevant data of company’s master data, which
should be complete and accurate
Business intelligence process
❯ Slice and dice Process in which
BI tools allow retrieval of specific relevant data by specifying the terms of the large amounts of data are broken
intelligence they need (such as real-time sales compared to previous year’s sales). down to help analysis

Collect source data Extract, transform, load: Store data
ETL process
Company gathers raw data via Business uses data warehousing
several operation systems. ETL system pulls raw data from to integrate and bank data in a
the source, formats it, and loads readily accessible form.
SUPPLY CHAIN it for use.
MANAGEMENT DATA WAREHOUSE
ETL SYSTEM Flexible access to data
(SCM) Migrates raw
data to data Data from across
Data from SCM warehouse organization
sources
Translates data codes Data from outside
ENTERPRISE WEB LOGS organization
RESOURCE Data relating Transposes data
PLANNING (ERP) to activity on columns and rows Current data
Manages corporate or
company data e-commerce sites Splits and separates Historical data
information
TRANSACTIONAL
DATABASE Creates data archives

Data of current
commercial
transactions

CUSTOMER EXTERNAL
RELATIONSHIP DATABASE
MANAGEMENT Information
gathered from
(CRM) sources outside
the company
Data from CRM
sources