The Marketing of New Year’s

Last night I was witness to an amazing case study in marketing:

- The product has a shelf life of just one second.

- It has no value.

- Yet it has millions (billions?) of followers worldwide and generates hundreds of billions of dollars each year.

This miracle product? New Year’s Eve.

John Oliver described it in his typical crude and painfully genuine way: “New Year’s Eve is like the death of a pet. You know it’s going to happen, yet somehow you are never really prepared for how truly awful it is.”

Marketing has the power to influence. We can use this power pry on people’s weaknesses, or we can make the world a better place. The two ends of the spectrum were on primetime display as I was watching the New Year’s celebrations on TV.

Google's ad

Coke’s ad

I know Google is not all good and Coke is (maybe?) not all bad. But as marketers, we have choices to make in how we use our power to influence.

Something to think about in the new year… We only have 364 days 3 hours and 44 minutes until the next New Year!

The most important question you should ask in 2013

Many organizations get caught up in a “sell at all cost” mentality. Desperate to close a deal, they chase every suspect whether the opportunity is real or not. The result is a pipeline clogged with phantom opportunities that suck your resources and go nowhere.

You can appreciate how dire the problem is when you realize that most opportunities end up with no action rather than a win or loss. By the time you figure out the deal is dead, you have expanded considerable resources that could have been used to work better-qualified prospects. As one successful VP of Sales said to me: “I don’t mind losing a deal, but I want to lose quickly!”

Always Be Qualifying

How do you avoid this situation? It goes back to the basics of qualifying the prospect. The “Always Be Closing” mantra is out; “Always Be Qualifying” is the new paradigm for success. 

I have never been a fan of the BANT approach (Budget, Authority, Need, Time). I think it is too generic and I believe the budget question is out of place in most situations until the value of the solution has been proven. 

With that said, I think the ONE question that can help you qualify the opportunity is the timing question. But how you ask the question and how you react to the answer will vary based on the type of solution you sell.

If your solution is in a well-known (post-chasm) category:

For a mature solution category, you definitely want to look for a decision timeframe. If a timeframe has been defined, it means a buying process has been initiated by the buyer. Even if the budget is not yet allocated, the need and the authority are likely well-defined, which should make the sale easier to navigate. If the timing has not been defined, you should continue nurturing the prospect through marketing activities, but you probably don’t want to expand valuable sales resources.

If your solution is in a new (pre-chasm) category:

For a new solution category, you are probably not going to see a defined purchase timeframe. This is going to be a seller-initiated process, which is by far more challenging.

Since the issue is not yet on the agenda, you would have to go high enough in the organization to force a change of priorities. Once you get there, you’d have to prove there is a real need that your solution can satisfy. 

Figuring out the need and getting access to authority require a considerable investment, so you would need to allocate your resources wisely. That’s where the timing question comes to play. It can help you prioritize which prospects may justify the investment. 

The tricky part: how do you define timing for a new solution category?

In most cases, you will not find a predefined timeline for the purchase of a new solution category. Instead, you need to identify a compelling event that would serve as a catalyst for the buyer to take action (e.g., moving to a virtualized environment, launching a new product, expanding to a new territory). Once you identified the compelling event, you need to find out when this event will take place.

One way or the other, the timing question is THE key to qualification.

That’s why regardless of what you sell, the most important question you can ask in order to qualify your prospects is the timing question—whether it’s the decision timeframe for a mature solution or the timing of the compelling event for a new solution.

Happy qualifying!

How Earnix Doubled Its Sales on the Heels of the Financial Crisis

Let’s start with the numbers. Since the financial crisis hit in 2008, Earnix has doubled its sales, doubled the number of customers, and turned profitable.

That’s impressive for any company. It’s even more impressive when you consider that Earnix sells to the world’s largest financial services companies, some of the same companies that have just been battered during the latest financial meltdown.

I asked Earnix CEO David Schapiro to share with us some of the reasons the company has been able to pull off this impressive feat.

Key to success #1: Focus on value to the customer

“From the very beginning of the company we have been intently focused on delivering value to our customers. I realize this is the goal of every company. The unique thing about the Earnix solution is that the value is proven in the very first customer engagement. You can actually see the money coming in to the customer’s bottom line.

We sell our solutions as a subscription, which forces us to continually deliver value. As a matter of fact, we even prove the success before the customer ever pays the subscription. There is no gray area, either it works or it doesn’t.

Our renewal rate is exceptionally high. Customers that have been working with the software have continued to renew their subscriptions even during the most intense period of the financial meltdown.

When the crisis hit, it forced us to be even more focused on customer success. Our people come from the financial services market, so it’s easy for them to align with the goals of the customer. The first thing I did was to get on a plane and go visit our customers. I wanted to hear firsthand what they had to say, and I wanted to make sure we were doing whatever it took to help them out. The good news for Earnix was that what our customers needed the most was a quick way to boost profitability, which is exactly what our solution was able to offer them.”

Key to success #2: Focus on core competencies

“Until 2007-2008 pricing optimization for insurers and banks was evangelistic sales to early adopters, primarily in Europe. Today it has become a mainstream solution in many places. We see it in the number of RFPs that land in our inboxes. We also see it in the number of customers that are willing to be vocal references and the number of partners that are looking to embed Earnix in their enterprise-class solution.

But you have to pay your dues in the financial services marketplace. You are not going to be taken seriously if you haven’t been around for 4-5 years . In the years preceding the crisis, we stayed focused on our core competencies, delivering pricing and customer value optimization solutions to the world’s largest insurance companies and banks. This worked out very well for us, unlike some of our competitors which spread themselves thin and did not survive the crisis.

With the onset of the crisis, some of the ways in which insurers and banks traditionally used to generate profits in the financial markets were no longer available to them. In turn, they were forced to focus on optimizing the value realized from their customer operations, which is exactly what we were able to offer them. Since we remained focused on these core competencies, we were ready with the solutions they needed and poised to capitalize on this growing demand.”

Additional lessons learned (or re-learned) in 2010

Here are a few additional lessons learned from our recent work and conversations with some very smart marketers (see previous post).

1. Nail it before you scale it

This age-old phrase is one of those things that we all need to be reminded of from time to time. Since we have already invested blood, sweat, and our egos in our idea, there is a great temptation to just run with it, especially if we just raised some money. So here are the key questions we should ask very early on:

• Do we know who will buy our product?
• Are these people jumping up and down when they hear about it?
• More importantly, how much will they be willing to pay for it?

The answers have to come from real buyers, not our own “make wish” personas. If the answer to any of the above is unclear, we need to go back to the drawing board before we spend any additional time or money on product development, marketing, or sales.

Elementary, but so hard to do…

For more about it, read Early Stage Marketing.


2. Get sales and marketing on the same page (literally)

Salespeople love to complain about the leads they get from marketing. Just as much, marketing people love to complain that sales don’t follow up on the leads they pass to them. The problem is they are both right.

Panaya is addressing the problem head-on with a written contract between marketing and sales that defines what constitutes a qualified lead. The contract is revisited each quarter to ensure that everybody is still on the same page.

There are three functions that help make it work:

• Lead qualification criteria and rules that reflect the contract are built into the company’s salesforce.com system
• Automated lead scoring (using Marketo) is helping everybody focus on the more qualified leads
• But not everything can be automated. Most important in my mind is the sales development function, which identifies real decision makers and opportunities, then passes them to sales.

See here for more ideas on marketing and sales alignment.


3. Use content to fuel the marketing machine

All the companies we know that are doing a great job generating a consistent stream of sales leads have one thing in common: they all invest in generating quality content.

The content is used to engage potential buyers and keep the conversation with them alive, through both outbound and inbound marketing. It doesn’t have to be related to the solution; but it does have to provide value to the reader.

The concept is simple: offer high-quality, broad-interest content to attract new leads and re-engage existing contacts, then feed these inquiries into the “lead machine” described above (lead scoring + a lead development team) to qualify and convert into sales opportunities.

According to SAManage CEO Doron Gordon, the importance of having lots of content is evident from the path visitors take on the company’s website. Visitors usually start with the blog and can visit as many as ten different pages before they register for a free trial or another offer (SAManage provides SaaS-based IT Service and Asset Management).

Some good content offer examples:

• Smart Questions For Your SaaS Vendor offered by SAManage
• SAP Salary Survey offered by Panaya
• Real Estate Investment Operational Challenges Survey by Resolve Technology

Any lessons you can share? Feel free to comment or send me a note.

Lessons learned from our clients: When is it time to change your demand generation strategy?

Panaya is a great success story. The company’s SaaS solutions help SAP customers automate their ERP upgrades and save thousands of hours in the process.

When Panaya first started marketing its solution, the challenge was to get the word out as quickly as possible, says Chief Marketing Officer Amit Bendov.

Amit and his team orchestrated an aggressive direct marketing program, using rental email lists that targeted SAP directors. A highly qualified phone sales team was hired to follow up on the leads generated.

Panaya’s value proposition is extremely compelling. Not less important, it is really easy to prove, and the solution requires near-zero implementation effort. With these assets in place, the number of deals closed kept growing at a double-digit pace quarter after quarter.

By the beginning of 2010, the company had several hundreds of customers. Despite these impressive results, Amit knew that sustaining this growth would require a different approach.

Realizing that going after the low hanging fruit could not support Panaya’s growth targets forever, Amit has refocused his team on a new strategy. With a well-defined target of SAP customers, the Panaya team has reoriented itself to methodically reach the 30,000 companies that make up this universe.

Instead of working on Leads, the Panaya sales development people now work on Accounts and Contacts. Within each account, contacts are classified into three categories—decision makers, influencers, and irrelevant.

“We had so many leads we couldn’t see the forest from the trees,” says Amit. “Once the list was reorganized into accounts and contacts, we could see which accounts we were missing or where we didn’t have the right level contacts.” A research team is now focused on identifying the missing accounts and contacts so they could be added to the house list and targeted by the sales team.

“With this systematic process in place, we can clearly see how many accounts we are touching each week and what is our level of engagement at each account,” says Amit. “We have much better visibility into our entire sales and marketing funnel from the very early stages. We can have 20 different leads from one account, and each one on its own may not be qualified enough. Now we can see that 20 people from the same company are showing interest, so we can take action on that.”

What Panaya is doing makes a lot of sense. They are not the first company to employ an account-based strategy. What I find notable is that they didn’t wait for things to get bad. They had the insight to recognize that their success had brought them to a new growth stage that required a different approach, and they acted on it. Way to go!

Related article: Reverse Engineer Your Marketing

Lessons from the Obama Campaign

Just heard a great presentation given by David Plouffe, Obama's Campaign Manager at the Digital Marketing World virtual conference. Here are the keys to success based on his presentation:

1. Keep a consistent message
2. Repeat the message
3. Reach out to people through multiple channels (web, e-mail, text, twitter, etc.)
4. Use “real people” (i.e. not your standard company spokespeople) to deliver your message
5. Make information available: there is no such thing as too much information
6. Don’t be afraid to innovate
7. Measure everything you can

Simple, well-known, but it works!

Top 13 Marketing Budget Wastes—and How to Avoid Them

This article was recently published in MarketingProfs.com.

Once again, it is that time of year... when marketing departments are busily preparing next year's budget. As we all know, chances are you won't be able to get everything you're asking for. But, believe it or not, this may actually be a good thing.

Take it as an opportunity to re-evaluate what you have been doing and how you have been investing your marketing dollars. There is always a way to do more with less.

To help you get started, here are some common marketing budget drainers to avoid.

Marketing Waste No. 1: Spending money to reach the wrong people

The biggest waste in marketing is spending money on activities that reach the wrong audience. This is especially an issue for B2B companies that have a limited target market (how many Global 2000 companies are there?). Advertising and large tradeshows tend to be the biggest budget items, yet much of the audience is often off target. You will get much higher return for your marketing dollars by going directly to the companies and individuals that can purchase your product.

Building a database of your target market prospects is not an overnight proposition, but it will be the best marketing investment you've ever made. See more about it in "Reverse-Engineer Your Marketing."

Marketing Waste No. 2: Generating leads that Sales doesn't want

The second-largest waste is generating leads that Sales will never follow up on. It is way too common to hear Marketing complain that Sales doesn't follow up on its leads, while Sales complains that Marketing leads are a waste of time. Both have to agree on what constitutes a good lead, and both sides have to be accountable for their share of the equation: Marketing for generating "good" leads, Sales for following up on them.

It's the CEO's job to make sure that Marketing and Sales are in synch, and lead follow-up is where the rubber meets the road.

Marketing Waste No. 3: Failing to follow up on leads

Invest in lead-development personnel. Some call them Inside Sales, others call them Telemarketing, but both fail to describe the role that will give you the most for your money. The lead-development function is the guardian of the agreement between Marketing and Sales. Its role is to make sure that every good lead generated by Marketing is passed to Sales, and save Sales from wasting time chasing leads that are not a good fit for the company.

Marketing Waste No. 4: Killing the conversation

Provide Sales with follow-up tools and templates. Even when Sales is willing to follow up on the leads it gets, the conversation often dies once the lead is handed over to the salesperson. The easiest thing for salespersons to do is copy an old email or use the same opening sentence they always use when calling on a prospect. This is like starting all over with a new pickup line rather than continuing the conversation that has already begun.

So don't leave it to chance: If you're putting together a campaign, make sure you provide Sales with the follow-up scripts and email templates they can use when the leads start coming their way.

Marketing Waste No. 5: Overemphasizing new leads

While Sales might dismiss some leads as "old," those are actually the best leads you can give them. Software buyers require multiple touches before they are ready to engage in a serious sales conversation, so your best chance to make a sale is to someone who has already been in touch with your company.

If you continue pursuing only new leads, you will soon find yourself out of companies to go after, and even sooner out of budget.

Marketing Waste No. 6: Targeting new leads with late-stage offers

While lead nurturing is crucial, you still need to acquire new leads that have not heard from your company yet. Since you have to buy access to these leads (in the form of list rental, newsletter sponsorships, tradeshow booth, etc.), lead acquisition is expensive.

Good lead-acquisition activities are those that appeal to a broad audience of early-stage prospects, such as whitepapers and webinars that are focused on industry issues, not on your product.

Marketing Waste No. 7: Direct mail and rental lists

Email promotions to your permission-based list will usually generate response rates that are 5-10 times higher than email to rental lists and 10-15 times higher than direct mail, at a fraction of the cost. As a result, cost per response from your email list can be over a hundred times lower than for any other method. In addition, turnaround time for email promotions is shorter, which means you can communicate in a more timely fashion.

A good permission-based email list is your company's biggest marketing asset and your best lead-nurturing vehicle. At the same time, if your email is not permission-based, you run the risk of breaking the law and alienating your audience.

Marketing Waste No. 8: Failing to use your permission-based list

You don't want to inundate your prospects with too much communication, but most software companies fail to communicate enough. Newsletters and blogs are great vehicles to keep the communication flowing.

Your customers are eager for knowledge; so, as long as you keep your content relevant to your audience and tone down the sales pitch, most of them will welcome your emails. For those who don't, offer ways to opt out of specific items so they don't have to remove themselves entirely from your list.

Marketing Waste No. 9: Failing to get the most out of your email marketing

A well-designed message (not necessarily a pretty one) can increase response to your emails by up to 50%! That's a huge difference in the return on your marketing dollars.

There is no magic formula for a good email message. To make sure your message is well designed, you have to test every element of the message—from the subject line to the placement of the links and the call to action.

Marketing Waste No. 10: In-person seminars

Webinars are much more effective than in-person seminars. They cost less—and you can draw a national and even an international audience to a single event. The typical seminar will draw 25-50 people, but it is not uncommon for a webinar to draw hundreds.

A webinar can also be easily recorded for future use as an on-demand presentation, extending the lifespan of the event months or even years beyond the initial take and generating up to twice the responses of the live broadcast.

Marketing Waste No. 11: Losing people on your Web site

All roads lead to your Web site. Any serious prospect will be looking at your Web site multiple times throughout the interaction with your company—before, during, and after the purchase decision.

The first thing you need to make sure is that your Web site content is of interest to your prospects. The second thing is to have calls to action that will get your Web site visitors to engage—view a webinar, download a whitepaper, fill out a survey.

Last, you need to make sure that you can track these interactions. With this information in hand, you can fine-tune your follow up to match your prospects' interests and avoid wasting valuable marketing and sales resources.

Marketing Waste No. 12: Failing to double (and triple) dip

Creating new content is often the bottleneck to new marketing initiatives. Once you have created some good content that will engage your customers, don't let it go to waste. Your prospects process information in different ways, so you can take the same content and repurpose it in multiple ways.

For example, turn your webinar into an article, post it in your newsletter and blog, pitch it as a PR placement, or offer it as a podcast.

Marketing Waste No. 13: Not knowing what you get for your money

Every marketing activity should be attached to a measurable goal. If it's not, you probably shouldn't be doing it. A measurable goal could be number of leads, number of new contacts, number of meetings, opportunities, deals, and all the way to revenue dollars. See more about it in "How to Measure Your Marketing" and "Measuring Marketing ROI—How Low Can You Go?"

The key to marketing optimization is continually weeding out the budget drainers while seeking new ways to deliver greater market impact at lower cost. If you're looking to do more with less, you must be willing to embrace change. As the saying goes, "You cannot continue doing the same things and expect different results."

Three Approaches to Your 2006 Marketing Plan

With the start of the New Year, marketing executives are busy crafting new plans. The easy way out is to copy last year’s plan, move some dates around, and call it a day. However, this approach will not work if you operate in a dynamic environment, as most software companies do.

Here are three approaches you can use to come up with new and improved marketing initiatives for your 2006 plan:

1. Analyze and Repeat Success

A clear-cut strategy for generating more leads is to do more of what you have already been doing. This does not necessarily mean that you have to spend more money. By analyzing the results of your past activities, you can focus on those that worked best and fine tune your marketing mix moving forward.

There are three things to keep in mind for this strategy to be successful:

• Define your metrics to reflect your marketing goals. Whether your main objective is to generate more leads, achieve the lowest cost per qualified response, or something else altogether, use the corresponding metrics to measure the success of your past marketing activities and the return on your investment.
  
• Focus on measurable activities. The more measurable activities you have in your marketing mix, the better you can optimize your results based on your previous track record. E-mail and web-based marketing vehicles provide you with almost immediate feedback, allowing you to alter the message, design, or concept to maximize the results of every campaign.
  
• Use measurable tools. Make sure your e-mail tools, website infrastructure, and campaign management systems provide easy-to-use tracking of click-through and response rates that are granular enough to decipher the most beneficial sources for success, such as a specific list or message.

For more information on measurements and marketing metrics, you may be interested in reading Marketing by the Numbers and How Low Can You Go.


2. Find a Shortcut

If the first strategy for leveraging past success utilizes quantitative metrics, a second strategy applies a more qualitative approach. The idea is to find out what makes your customers tick and emphasize the factors that made them buy from you in the past in order to increase your success moving forward.

The first step is to establish a profile of those who became your customers in the past year or two: Do they come from a certain industry or segment? Are the companies of a certain size? Who were you competing against? Most importantly, what were the reasons they chose your solution over the competition?

Once you uncover some common threads, you can incorporate them into your marketing mix. Use the reasons people chose your solution to fine tune your messages. If your message resonates better with specific vertical markets, focus on these verticals. If you have more success against a certain competitor, go after their customers and expose their weaknesses.

Your customers will be happy to share this information with you, but listening to your customers requires a proactive approach. Strangely enough, while many companies claim to be "customer-driven", very few use this strategy-- all the more reason why you should!


3. Become a Knowledge Beacon

Many industries still lack efficient media for knowledge exchange. This vacuum is your opportunity to become the facilitator of such a community – a place to share knowledge with industry peers. In doing so, you position your company as the “go to” place for industry knowledge. This is probably the most effective form of branding you can do.

Here are three examples of knowledge-based communication vehicles that you can employ, even with the limited resources of a small company:

Best Practices Survey
Putting together a benchmark survey allows you to provide the industry with useful, relevant, and current information. At the same time, it gives you insight into market needs, industry challenges, current practices, and future plans. As a valuable byproduct, it can also generate new leads, which can be easily qualified by their responses to certain survey questions.

A web-based survey requires little effort and cost, and it can be used in multiple ways. You can use it in e-mail campaigns, banner advertising, and at tradeshows. See an example of such a survey, the results, and the subsequent publicity.

Newsletter
Publishing an industry-focused newsletter is an easy way to start gathering an audience for your knowledge-based communication. A company that started a newsletter two years ago has since seen its subscription list grow 200%. The newsletter has also helped the company position itself as an industry thought-leader. Stories published in the newsletter have generated interest from industry publications and led to ten articles published in the past year—all with no PR agency, no PR budget, and little to no advertising.

Blog
Blogs provide a new channel for customer interaction. They allow executives and other employees to communicate directly with customers without the confines of PR formalities (although I am not sure how long this freedom will prevail). You can turn your blog from a monolog into a dialogue by inviting comments and responses from your customers. Companies such as Microsoft and Sun have hundreds of such blogs, but even smaller companies are starting to experiment. Ex Libris, for example, started a blog by getting employees involved as a grassroots movement, with the hope that it will eventually take off to engage its customer community.

For your knowledge-based marketing to be successful, it has to be credible, so keep your sales pitch out. If the effort to create the content seems daunting, it doesn’t have to be. There are many creative ways to reuse existing content and generate new material with a reasonable amount of effort.

For example, you can take a web seminar and turn it into an article to be published on your website, newsletter, or in an industry publication. Since your customers have different preferences of how they like to process information, reformatting and repackaging the material may generate new interest. One company that tested this concept sent an e-mail campaign to their house list, announcing a collection of recent webinar recordings. Since no new content was created, it took little time and virtually no cost. By merely remarketing their existing content, the campaign generated 45 “free” new leads.



These three strategies are not mutually exclusive, and I am also sure they are not the only strategies you can apply. Post a comment or drop me an e-mail and let me know what you’re doing in 2006.

David and Goliath: The Enterprise Software Version

Annraí O'Toole, Chief Executive Officer of the small Cape Clear Software is taking on IBM in a battle for the future of SOA.

O’Toole is joining the ranks of other CEO’s of software startups anticipating the demise of Big Blue and other industry giants. Another example that comes to mind is Salesforce.com’s outspoken Marc Benioff, who has taken on the established enterprise software regime with his “end of software” rally cry (check out Benioff’s latest response to Bill Gates’s memo on Internet Software Services and the Microsoft Live announcement).

So far, Benioff has been able to marshal the success to back his rhetoric, but for every successful modern-day David like Benioff, there are hundreds of software CEO’s that lost their battles against industry Goliaths, burning through many millions of VC dollars in the process.

What makes one successful and others fail? Had I known the answer, I would probably be as rich as Benioff, so I am still hoping you can help me figure it out… One thing that separates Benioff from many others is that Salesforce.com presented a real paradigm shift in the way software is used.

Perhaps even more importantly, Salesforce.com made it easy for users to test out this new paradigm. While Benioff presented a grand vision for his “no software” approach, Salesforce.com started out with a small and simple SFA application. It kept expanding the solution in small increments with quarterly updates of the software. This was a brilliant way of taking advantage of the Software-as-Service model to add new functionality in an incremental, non-intrusive, and easy-to-digest fashion.

I am a firm believer that ease-of-adoption and ease-of-use could either propel your software to greatness or spell its doom. You may point to SAP as an example of successful yet tough-to-use product, but let’s not forget that SAP made its big market push as a replacement to IBM and other legacy systems, which were even more difficult to use, implement, and maintain.

The push for small, simple, and modular software grows as computing becomes more and more distributed, decentralized, participatory, and collaborative.

I don’t know enough about SOA to tell whether Cape Clear provides such a solution, but if you asked me to bet on the success of a newcomer taking on the reigning gorilla, these are the questions I would ask:

First, I would ask, is it a real paradigm shift or just a slightly better product that does the same thing as IBM? Second, and not less important, is the solution easy to try and adopt?

If it’s not a real breakthrough, you’re going to run into the “why bother” roadblock; if it’s not easy to try, you will hit the “who has the time” roadblock. There are additional roadblocks that must be conquered on the path to beating Goliath, but if you cannot get past the first two, I would suggest you find yourself a weaker target to take on.

Good luck!

Service: the Free Prize Inside

There is a good article in Harvard’s Working Knowledge, describing how companies such as Progressive Insurance, Commerce Bank, and Intuit use customer service as a competitive differentiator. These companies made service the “free prize inside” their product. I like it!

Early Stage Marketing

I love startups. There is nothing more exciting than this early stage when so little is defined yet everything seems possible. So whenever a startup approaches me to help them with marketing, I get really excited. Unfortunately, I don’t get to enjoy it for long. Having been in these situations many times over, it doesn’t take long before reality sets in.

“We need you to help us generate leads,” says the founder. “We have a great idea, the ROI is less than 3 months. We just need to let the world know about it.” I agree the idea is great. I am not so sure about the ROI. “Tell me who is using the product,” I ask. “We are talking to some companies about using it,” says the founder. “We are going to close the first pilot by the end of this month.”

I am still excited, but by now, my responsible self takes over. There is so much to do, and generating leads is NOT one of them. But how do you tell it to a proud father (that is founder, I mean…)? How do you tell one that the company is not ready for this type of marketing yet?

I usually end up telling the founder that they should wait until they have a few success stories to prove they are for real. When you have these stories, marketing can be effective. You can generate leads. You can spend money and get a return. Until then, save your marketing dollars.

It doesn’t mean you do nothing. You need to get these first customers somehow, and you need them quickly before you run out of money. What you need is a leverage point. Something that will get a buyer to trust you can deliver an unproven solution.

Maybe it’s someone you know. Maybe it’s someone your VC knows. First and foremost, though, your solution has to solve a clear and well-defined problem, and your offer has to be compelling and carry low risk. This is, for example, how Impress Software was able to land six major corporations to be in the pilot group when they were developing a new product. It didn’t hurt that they had the support of SAP. That’s a leverage point.

In the meantime, you can also learn more about your market, build your target market database, and establish a thought-leadership position in the industry. One company that has done a remarkable job at cultivating a thought-leadership position in an early market is WebLayers.

While the company was still in stealth mode and working with its pilot customers, WebLayers founder Motti Vaknin started the Service Oriented Architecture (SOA) Forum, an exclusive Fortune 500 roundtable of enterprise architects who are mandated with the challenging mission of creating a Service Oriented Architecture (SOA) in their enterprises. Forum members include senior architects and IT executives from companies such as AIG, Bank of America, DaimlerChrysler, eBay, Intel, JP Morgan, Northrop Grumman, P&G, and many other leading corporations.

Vaknin is very careful not to abuse the forum as a sales channel for WebLayers. At the same time, the forum provides him with access to top-level, relevant industry contacts. It’s a way for WebLayers to learn about industry needs. It also positions WebLayers, the small startup, as a thought-leader in SOA. All this is done with very little financial investment (although the attention of Vaknin is required, but well worth it). Could you ask for anything more at this stage?!

Do you have any other ideas for early stage marketing? Let me know how you go about it!