Are your competitors simplifying their product lines? And thereby providing an opening for your products and/or services? Changes in offerings force buyers to think more about their choices and provide a possible opening for you. Conversely, is your firm changing its line-up allowing competitors to gain business?
Simple, actually, the ones that are using the Internet wisely are earning more than $100k annually while their competition, agents that are depending on traditional means to generate leads, are earning much less, according to "The Online Marketing Difference: Traditional Agents Earn $36,700 Annually; Internet Agents Earn $100,000+ Annually | RISMedia" by Mike Parker - http://rismedia.com/2009-05-21/the-online-marketing-difference-traditional-agents-earn-36700-annually-internet-agents-earn-100000-annually/#ixzz0Ge7CZBHx&A.
Prospect has behavior shifted dramatically; 80% of home buyers start with an Internet search so the agents that adapted to this change are found more easily by people actually ready to buy.
Mike Parker reveals what an agent needs to do to succeed using the Internet:
“All Internet real estate agents know these things:
You must be able to be found online by people searching for homes in your neighborhood. That means you must either maintain your own website, or you must let someone manage a site built just for you that produces these leads, and that site must employ the best in REAL SEO to make it found on the first pages of the major search engines by Internet buyers. As more people find your site, more people visit it; your traffic goes up.
Once people find your site, they must be incented to sign in. When they find your site, they are anonymous; you can’t call them back or answer their questions if you don’t know who they are. When 5-15% of visitors to your site sign in, you will receive enough leads to achieve consistent success.
In order to consistently succeed, however, you have to hold up your end: you must call all inquiries immediately and you must respond to their emails as fast as you possibly can. No less a great institution of learning than the Massachusetts Institute of Technology (MIT) says that all leads degrade substantially over time-even if not responded to in one hour. Contrast that to NAR’s finding that 50% of all agents call leads back within 54 hours, but that 50% of all agents never call them back and you’ll have no trouble understanding why so many fail at Internet Marketing.
It’s that simple, really.”
The movement of home buyers from traditional approaches to finding a house and a real estate agent to starting with the Internet was swift. Not all customer shifts are that fast and that dramatic. However, fast or slow, you must monitor your customers’ needs and buying behavior. You must change to adapt to their changes. If you do not, your competition will and you will lose.
Leading indicators are signaling economy may have hit bottom and be turning around. Are your competitors acting as if they believe the economy has turned around and changing their behavior from cutback to growth (or at least stable) mode? Your future market share may depend on countering any moves on their part quickly and effectively.
Following up on my last blog post, “Cut Now, Lose Later,” here are additional suggestions from Harvard Business School professor John Quelch on producing quality market results during troubled times. (http://hbswk.hbs.edu/item/6183.html, “Improving Market Research in a Recession” on HBS Working Knowledge 5/26/09 newsletter)
Leverage trusted external partners and expertise within the organization. Does your firm work with distributors or suppliers that also perform market research? Combining your data could lead to additional insights for all parties. In addition, Quelch says, “CMOs who trim costs by consolidating their budgets with an integrated research supplier should insist that the supplier aggressively explore synergies across its various component agencies as well as eliminate research redundancies.”
The expertise of fellow executives at your company should be used more than ever. “CMOs should tap the knowledge and intuitions of managers and researchers who've lived through previous recessions. In setting prices, for example, such insight can help calibrate the optimal level of price promotion offers. Experience also reveals proxies: in tough times, some marketers use research results from Sweden as a proxy for Scandinavia, rather than conducting the same research in all Scandinavian countries.”
Multinational firms should switch some research funds to Asia and Latin America where preferences tend to be more fluid and market research costs less. The payoff can therefore be greater than in the US and Europe.
But Quelch warms “Go online with a dash of skepticism.” An online panel may not be representative of all buyers. And he reminds us to devote some of the tighter budgets to new consumers and new consumer behavior. This will help determine if the recession-driven changes in purchase patterns endure when the economy picks up.
You have to work harder and smarter in a recession to survive and position yourself for the upside that is coming. Carefully thought out research projects can make you smarter about major marketing expenditures.
Companies, unsurprisingly, are slashing budgets for market research and competitive intelligence even though the insight from research can dramatically improve the return from larger expenditures on new products or services and marketing programs.
According to Harvard Business School professor John Quelch,
“Yet, to conserve cash, most firms are reducing spending on the market research that would help manage that uncertainty. In the United States, spending on market research has dipped for four consecutive quarters, and chief marketing officers don't expect the situation to turn around soon. Most big consumer marketers are seeking to shave 10 to 20 percent off of research budgets.” (http://hbswk.hbs.edu/item/6183.html, “Improving Market Research in a Recession” on HBS Working Knowledge 5/26/09 newsletter)
Unfortunately, many firms are attempting to respond quickly instead of intelligently to the sudden downturn in the economy. They adopt a “peanut butter” approach to reducing costs; they spread cuts evenly across the organization.
Instead, Quelch says they should, “Stay focused. Savvy marketers focus their research on the products, brands, and markets that are key to their marketing strategy. In a recession, it's essential to get a clear read on existing core customers, including those who are most loyal to the brand and those who are most profitable, rather than fritter away research resources on potential or peripheral consumers.”
He adds, “Don’t cut across the Board.” He suggests adding a few questions to a standard tracking study and making pretesting more rigorous. “For key products, running conjoint studies to check on shifts in price elasticities of demand and price-attribute tradeoffs can usefully improve the profitability of pricing decisions at a time when cash is king.”
Larry King was interviewed on CNN this morning promoting his new book, The Remarkable Journey. He said that he always wanted to be a radio announcer because he liked asking questions. He recounted that when he and other boys went to see a baseball game, the other kids wanted autographs. He wanted to ask questions about how the players got into playing baseball, how they developed their skills, etc. Asking questions was almost inborn for him as it is for many journalists.
This instinct for asking questions and a real desire to know the answers is also extremely useful in competitive intelligence and is why some journalists move into CI.
Another background for CI professionals is growing up with college professors in the family. I am one of them; my father and one grandfather were college professors. Professors enjoy analysis and value information for its own sake. I always feel personal satisfaction when I can put the pieces of the puzzle together to provide insight for a client. Actually I enjoy it in general, but CI allows me to get paid for doing it—not as much as Larry King earns, but enough.
So if you are wondering if CI is the right profession for you, or you are hiring an analyst or a contractor, think about these behaviors. Many people can learn to ask questions or analyze data to create information, but those individuals who have these characteristics will be better at CI and enjoy the job more.
I received an email today to ask for my vote to support a merger of the Society of Competitive Intelligence Professionals (SCIP).
“SCIP Board of Directors has unanimously approved a merger with Frost & Sullivan Institute, another non-profit organization.”
“SCIP’s merger with the Frost & Sullivan Institute is in line with our organizational strategy, and will create financial security, maintain and grow membership value, and expand the visibility of competitive intelligence to a wider range of corporate senior management. This merger will not change any services you currently receive as a member and will allow you to gain additional membership benefits in the future. SCIP, as an institution and brand, will remain an autonomous, member-driven society.”
Why is this happening?
SCIP has been highly dependent on current revenue to pay for its expenses; it does not have a reserve fund or endowment. Its financial health has varied with the economy and the recent annual meeting did not meet projected revenue targets. SCIP had to merge to stay alive; it was running out of funds.
Frost & Sullivan Institute appeared to be somewhat inactive based on a quick web search. The announcement states that SCIP will continue in its current direction, but certain comments stand out:
"-Implementing a shared services structure to reduce the overall cost of operations.
-Establishing financial stability that provides for membership growth and builds financial reserves.
-Developing new revenue streams from related service opportunities, which would be unavailable without this merger.”
So are the existing SCIP staff to be re-deployed to develop these new revenue streams or will they be laid off? How much will our membership and conference fees go up? Frost & Sullivan targets high level executives and prices accordingly.
Frost & Sullivan offers a wide variety of conferences and training so expanding CI-related activities will provide real benefits to it and, no surprise, conferences and training will be incrased.:
“Implement and deliver SCIP certification courses to improve the identification of competitive intelligence as a valuable discipline in corporations. This process will be accelerated immediately after the merger is finalized.”
“Expanding current educational offerings in North America, Europe and in 2010 Asia. This includes additional opportunities for face-to-face meetings and electronic delivery of education and information on more efficient platforms with a dramatically larger base of network participants.”
Economic downturns force serious changes at many organizations. In some cases, the new mode of operation is superior to the old model. Whatever happens with this merger, I hope that CI will continue to be recognized and fostered as a profession. Understanding and planning for competitive activity should be an essential part of the thinking of every executive.
Tough times force tough decisions. Your organization and your competitors should be using the current economic environment to closely examine the profitability and prospects of your products and/or services. Watch carefully to where and how your competitors cut back as their cast-offs could be attractive for you.
The 2009 annual conference of the Society of Competitive Intelligence Professionals reflected the economy in the smaller size of the attendance list, fewer sponsored items, and comments from the attendees.
Attendance is down from last year, but the number of companies sending staff dipped less than the overall attendance, showing that companies still value the conference, but they are not hiring new staff which traditionally makes up a significant number of attendees. So one person attended from a firm which normally sends two or three.
Many of the consultants commented that they are busy, but less busy than before. A few are very busy with assignments; these consultants focus on scenario planning so this service is viewed as immediately valuable by clients.
Fewer items were sponsored such as the lunches and breaks. And no boxes of coffee mugs appeared Friday morning as they had in previous years.
But overall people were positive about the economy turning around. CI seems to be valued more in this downturn than in previous ones so that is the good news from chicago. See you next year in DC!
Some of you were lucky enough to hear Harvard Business School professor Clay Christensen speak about Disruptive Innovation at the 2006 SCIP conference. He has applied the theory to healthcare in his newest book, The Innovator's Prescription: A Disruptive Solution for Health Care (McGraw-Hill, 2009) written with the late Jerome H. Grossman, M.D and Jason Hwang, M.D. (HBS MBA '06).
For those of you who were not at Orlando (or who were off discussing CI with Mickey and Minnie), a disruptive innovation involves a simpler approach to solving a need which ends up disrupting existing technology or business practices.
Disruptive innovation has three key elements: -First a simpler technology is developed to address the low end or straightforward needs of an existing industry. As the technology is applied more broadly, it becomes more mature and sophisticated, allowing it to address more complex applications. -Secondly, a new business model accompanies the new technology, usually uncomplicated in nature. -Lastly, a new value networks arise to support the disruptive technology and new business models.
Christensen cites innovations in the treatment of coronary artery disease as examples of disruptive innovation. Open heart surgery was the accepted standard for seriously blocked arteries when less invasive angioplasty surgery to insert stents was developed to treat partially blocked arteries. Bypass surgeries declined as angioplasties were used to treat a higher percentage of heart problems. Meanwhile statins, a class of drugs were developed to lower the blockage causing lipids and have disrupted angioplasty. While each step in this treatment pattern was clearly simpler for the patient and the medical system, the costs may not track as cleanly, according to Christensen, because our payment system is seriously flawed.
In industry after industry, the winners in disruptive technologies are new entrants as the existing participants are too busy protecting their existing technologies and business models. But Christensen urges the existing healthcare industry participants to adopt disruptive technologies themselves because these innovations are forced upon them.
“Doctors and hospitals, regulators, and policymakers need to convert to this religion because it isn't myth: it is true. The fact that cost-lowering, accessibility—enhancing disruptive enablers can address only the simplest of problems at the outset is indeed a gospel of good news. It frees physicians and hospitals to focus their energies on what they do best-tackling complex medical problems and moving more and more problems along the spectrum from intuitive toward precision medicine. However, in the history of health care, industry leaders have repeatedly lobbied for legislation and regulation that block disruptive approaches from being used anywhere until they are certifiably good enough to used everywhere. This traps the industry where it began, in the expertise-intensive world of high costs.”
“Generally, the leading practitioners of the old order become the victims of disruption, not the initiators of it. But properly educated, the leaders of the existing systems can take the lead in disrupting themselves—because while leaders instinctively view disruption as a threat, it always proves to be an extraordinary growth opportunity.”
Even you are not in healthcare; disruptive technologies have and will happen to all industries. Watch out for them, and get on the bandwagon before it rolls over you.
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