Category: Managed Services

Digital marketing with pay per click or search engine optimization provides highly targeted traffic at a lower cost than traditional media. Determining the percentage of profit dedicated to marketing is an essential first step. Working backwards from a percentage of profit margin dedicated to marketing allows an online marketer to determine the value of each visitor, and the value of actions the visitor takes while onsite. The following case study provides a hypothetical example.

What percentage of profit is allocated for online marketing?

A landscaping company charges their commercial clients $10,000 per season for a large account and is willing to dedicate 10% ($1,000) to acquire each new account. In this case $1,000 worth of online marketing is allocated to bring in $10,000 worth of new business.

What percentage of actions results in a sale?

Based on prior sales and conversion data gained from testing it is determined that 10% of contact forms or phone calls turn in to a commercial account valued at $10,000.

What percentage of visitors takes action (contact form, download, phone call, etc)?

Using web site statistical tracking like Google Analytics we can determine the ratio of visitors to contact form submissions. In this case 5% of all visitors to the site fill out a contact form requesting more information or a price quote. Based on the 5% contact form conversion ratio we determine the target cost per acquisition (CPA) is $50. How much should you pay for each visitor?

The target CPA for a contact form submission at $50 and it is determined that 5% of all visitors result in a contact form conversion. Based on this data we deduce that each new visitor to the website has a value of $2.50. This value really translates to the cost you can pay for each visitor and still remain profitable.

Knowing how much a visitor is worth to your business, conversion ratios, and potential profit from a sale allows you to determine if your digital marketing dollars are being spent effectively and how to allocate your marketing budget for the highest return.

Our company purchased and implemented FrontRange Goldmine ® at the end of 2005. This is a 3 year lookback at its strengths and weaknesses and whether we would choose to go down the same road again if we had the choice today.

At the beginning of 2005 we were a 6-man shop with less than 100 clients so it was easy for us to keep up with contact information and share client details with our team. However, by the end of 2005 we were eyeing our first acquisition and we new we would need a more efficient way to manage information. Through the recommendation of a trusted consultant we began exploring Goldmine®. Of the features that attracted our attention, the most important were that it was based on SQL Server and attached all inbound and outbound e-mail to a contact record automatically.

We soon installed the software and were off and running. Aside from the very un-2005 interface (more like 1990) and annoying mannerisms (such as random screen refreshes and the exclusion of Windows standards like “undo” and floating windows) I suppose we were somewhat happy. We were after-all still in the throws of an interesting acquisition that brought much more load to our team then we were expecting, so Goldmine® wasn’t at the top of our list.

Maintenance

After the first year we received our first note from FrontRange to renew our product maintenance. Of course having tried using their support a few times in the first year and not seeing a single worthwhile maintenance upgrade I opted not to renew the maintenance.  However, being a growing company we soon needed new licenses and I was informed that we couldn’t purchase new Goldmine® licenses without renewing maintenance. WOW! Now that’s a zinger… overnight the TCO doubles in price (or I suppose becomes infinite if you continue indefinitely), which isn’t cheap to begin with. I believe we had 15k in our initial first year software costs (not including hardware, and labor).  At no time in our purchase process was this made clear. Not wanting to rip everything out, we bit the bullet and we have been buying maintenance ever since.

Data Structure

Goldmine® reuses tables for different purposes so a column called “Email” might actually be a street address in one row and a date stamp in another. These are fictitious examples but I assure you the point is real. Additionally there is no such thing as a one-to-many relationship between company data and contacts. So every contact creates a new company and they have a really hacked together way of joining additional contacts together in an org chart. The data mess associated with the org chart stuff would make your head spin. We needed to integrate Goldmine ® with our own software for managing other parts of the business, and this single issue has created a very lousy connection and will probably ultimately precipitate a move to something else.

“New Version”

So after 2 years of the clunky 1990’s style interface and no undo function (this is a really important feature in goldmine after the screen refreshes and you accidentally wipe out the text of the e-mail you were working on) we find out there is a big new release that has a nice looking interface and new features. Of course we are on product maintenance so we expect it to be included. WRONG! We have to pay to upgrade to the new version because they have changed the name to Goldmine ® Premium.  They added 1 or 2 new features and called it a new program. For legal reasons I won’t say that’s a rip-off, but you can draw your own conclusions.

Poor Support

We originally installed Goldmine® onto Windows 2000 server with SQL 2000 db. Of course we now want to get it off that old server and onto 05 or 08. We contacted support for the procedure and were informed that there isn’t an official procedure and we need to work with a partner. We are paying $4,000 a year for support and maintenance and we want to do something as simple as rehosting the application to a new server and we need to involve a partner. Perfect.

We have asked for support on a variety of other issues and haven’t faired much better than the example above. In one case one of our techs waited on hold for 30 minutes and then they wanted a credit card before they would help. I suppose that was some glitch where they didn’t understand we were on maintenance but all the same..

We pay maintenance on other products such as BackBone’s Netvault® backup software. I don’t like the fees there either, but their support is prompt and helpful so its worth the money.

Conclusion

Despite the commentary this isn’t designed to be a bash of FrontRange Goldmine ®. We have used it for 3 years and it certainly has its ups and downs. We wouldn’t have been able to keep organized as we have grown from 6 to near 30 people in 3 years without some kind of CRM and Goldmine ® does some things well. If some other CRM vendors would provide an integrated e-mail conduit and a good one-to-many relationship between companies and contacts we would be very likely to switch. So far, unless we roll our own software I haven’t seen any viable options so for now we’ll grumble and stick around. Here are some summary strengths and weaknesses for Goldmine® if you are considering a purchase.

Strengths:

• Integrated e-mail client
• Desktop-based system. Power users will find it faster than a web-based sytem
• Full-featured. There are gobs of features built in
• SQL Server based (vs. a proprietary or non TCP/IP accessible RDMS)

Weaknesses:

• Database structure
• FrontRange corporation (a customer-centric management style would take this product far)
• Desktop-based system.
• Deployment to remote locations is going to be a hassle.

With Yahoo’s stock hovering at $10 (compared to the $35 a share price offered by Microsoft), it can only be a matter of time now before the shareholders shake up the board of directors and  makes another exit as Yahoo’s CEO.

So what ultimately lead to Yahoo’s fall from grace? After all it was only about 3 years ago that Google and Yahoo had at least a comparable share of the search market (~30% for Yahoo and ~35% for Google) and their revenue was at least in the same ballpark as Google’s (5.2 Billion vs. 6.1 Billion).

1. Poor focus/trying to do it all –

   Where Google first focused on search and kept working on it until they were clearly the winner, Yahoo dabbled in everything. They became a complex content portal with massive amounts of content they had to keep current. I have never really dived into the makeup of their workforce but they had to have a ton of staff dedicated to customer service and content management. When you compare that to a lean business model like delivering search results and selling pay-per-click ad space there’s no comparison. Of course since the cash started rolling in Google has diversified by creating compelling software offerings such as Google Maps, Gmail, and Google Docs but despite the intense development requirement they don’t require massive manpower to continue delivering the content.

2. Too Complicated –

   The #1 driver of revenue for Google (in fact almost their entire revenue) is AdWords. When Yahoo was still floundering around with the Overture platform Google delivered a simple easy to use console for creating and tracking PPC ads. As the ultimate show of flattery for Google’s (and possibly more so their traffic) platform Yahoo recently announced a partnership with Google to display Adwords on Yahoo sites. This deal was of course was ultimately backed out of by Google due to potentially lengthy anti-trust problems.

The mistake of trying to do it all was probably ultimately the most costly. Where Google’s strategy assumed correctly that the web would generate enough of its own content, Yahoo felt a mandate to develop and deliver content on its own. Google it seems, will only develop a new add-on if it feels it can provide something new and innovative that requires only software and hardware to succeed. Google maps is a bit different but because something like “street view” is so groundbreaking I think they make an exception when they can gain a competitive advantage by being first and being so large that others are unlikely to follow.