The death of marketing and what it means for your startup

In August this year, the Harvard Business Review pronounced, somewhat dramatically, that marketing was dead. It argued that buyers had tuned out; no longer interested in traditional advertising. Instead, they relied, more than ever on feedback from friends and family before making purchases. People prefer to be involved in a conversation with a company, rather than be marketed to.

Mashable published a great infographic demonstrating just how much we’ve tuned out: 86% of people now skip TV ads, 91% of people have unsubscribed from a mailing list they’d previously joined, 44% of direct mail is never opened. This data at least, shows people no longer respond to traditional advertising.

Speaking this week at the Funnel conference in Sydney, Ray Kloss, Head of Marketing at SAP, the international enterprise software company, reinforced this change, highlighting the SAP experience. Kloss outlined the company’s current marketing strategy, which is all about pull marketing; trying to find ways of motivating customers to come to the company themselves, rather than be directly targeted by a sales team.

Inbound vs outbound

SAP has found inbound marketing to be much more effective than outbound marketing for generating leads. A customer who comes looking for a solution is much more likely to turn into a sale than someone who has been directly targeted.

“Our marketing goal is to create inbound demand,” says Kloss. “Inbound at SAP is three times as fast (at resulting in a sale) as outbound, a 300% improvement.”

One of Steve Jobs’ guiding principles was the view that “you’ve got to start with the customer experience and work backwards for the technology.” The same is as true for a customers’ marketing experience as it is for the product.

Customers don’t want brand relationships

Another study by HBR debunked some deeply-ingrained marketing myths: customers don’t want a relationship with your brand, and more interactions are not necessarily better. The 23% of customers which said they had a relationship with a brand, said they did so because they shared values with a company.

The Wall Street Journal reported research by market research firm Responsys showing that the top 100 retailers in the U.S. sent an average of 177 emails to each customer in 2011. According to the research, open-rates dropped from 19% in 2007 to 12.5% in 2011. Getting more messages to someone’s inbox doesn’t mean they’ll read them.

As a result, more companies are starting to use content marketing, producing material that’s more relevant to their customers, but doesn’t feel like a direct sales pitch. They might post content on blogs, create podcasts, release research papers etc. A great example that appeared on my twitter feed while writing this, is a post on recruitment startup Recruitloop’s blog, with 10 no-brainers for businesses using LinkedIn. It doesn’t feel spammy, yet gets me to the company’s website. As Forbes posted, it’s no longer good enough to promote a airbrushed version of your company’s reality.

According to Mashable, inbound marketing also costs 62% less than outbound marketing per lead generated. As the SAP example shows, it is a much quicker way to achieve a conversion.

Focus on the customer experience

The HBR piece refers to a campaign run in the U.S. state of Florida, to reduce the percentage of teen smokers. Unsurprisingly, the dire warnings about the health consequences no longer worked, as these teens had been exposed to the campaigns throughout their childhood, and the shook value no longer stood.

What ended up working best was involving the students in the problem solving: 600 students gathered at a summit and after being shocked by documents showing the tobacco companies were recruiting younger customers to replace an older demographic which was now dying, formed a group to campaign other students. Smoking dropped by half between 1998 and 2007. What worked was engaging the user to help solve the problem.

SAP has established a number of user groups, which provide ongoing feedback through the product development lifecycle for new software. As the Australian group explains on its website, users can register to become part of testing groups, where they receive information on new products being developed, and can participate in workshops and help shape the software the company produces.

“We are designing all around the customer and are customer focussed. We’ve adopted design-thinking where the main premise is you get buy-in before you build.”