Stop Working For Your Vendors

christopherskinner“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Christopher Skinner, CEO at MakeBuzz.

I spend a lot of time traveling the country and meeting with big marketers to understand how they get new customers. Most of their internal marketing conversations quickly get bogged down with things like numbers, tactics, vendor selection criteria and KPI goals.

It’s understandable. Today’s marketing landscape is highly complex, and the ever-expanding roster of ad technology has marketers spending a lot of time simply trying to understand if they are missing something. Marketing leaders at larger companies hold up the Lumascape and wonder what they lack, while the expense and complexity of solutions terrifies smaller, resource-constrained firms.

The rise in chatter and intricacies in the system make me think about working for my father as a young man in his heavy machinery business. I helped him with duties like organizing projects and handling logistics. It was an incredibly thankless job. The right parts had to make it to the right part of the job site at certain times, confirmations made and invoices matched with purchase orders. There was always a screw-up of some kind. The best you could reasonably hope for was not messing up too badly. A job well done never received kudos.

That’s what I am seeing from marketers as they try to unpack an increasingly complicated digital marketing landscape. It’s an ecosystem in which it is very hard to succeed. The typical operating procedure for digital marketing seems to be as follows: test, learn, fail and repeat. Is there the occasional success? Yes, but in the midst of constant vendor evaluations, marketers lose traction because so much time gets wasted trying to find the right shiny object.

Marketers spend too much time trying to satisfy vendors, rather than themselves. Instead of stepping back from the technological maze, they seem to embrace it, as if adding layers of digital “intelligence” will insure that they don’t miss the next big thing. Unfortunately, the extra technology and associated costs simply add layers of non-working budget that makes it harder to profit.

So how do you put the focus back on your business without missing new opportunities? The answer is to evaluate each new partner opportunity against a more universal metric.

My suggestion: net new customers.

Think about it. All businesses have a natural size. The local flower shop may max out at 500 local customers. Facebook might max out at 2 billion unique registered users. There are only so many customers of value, and a company can only grow so large to support them and still remain profitable. Most businesses operate well below their right size, beneath the intersection where maximum profitability is sustained.

What is the engine of growth? When everything else is optimized, such as pricing, materials and labor, the only engine fueling business growth is net new customers. These are not retargeted customers already in your funnel. They are net new customers, and should be the lens through which your vendor evaluations are viewed. How many net new customers can your technology or service bring me, and at what cost?

Oddly, most companies have a fairly good idea of how much it costs to create a new customer, but they don’t apply this key data point when evaluating new technology. Over the last few years we have seen many large marketers turn to retargeting in order to pull potential customers through the bottom of the funnel. Despite the fact that 90% of the work and investment has gone into pushing that customer through the top and middle of the funnel, our inability to measure those activities ends up making retargeting look a lot more effective than it really is.

What if you viewed success as growing your customer base from 100 customers in Baton Rouge to 150? When viewed against the framework of net new customer creation, retargeting—like all other tactics—becomes a small piece of the overall puzzle.

It’s time to stop working so hard to understand the vendor landscape, and let vendors work to answer the most important question you should have: What can your technology do to help me create net new customers?

The right answers are worth hearing.

Follow MakeBuzz (@MakeBuzz) and AdExchanger (@adexchanger) on Twitter.

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