Q1 Trends in HR Marketing: Annual Findings

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1 Q1 Trends in HR Marketing: Annual Findings

2 Abstract This research report, sponsored by HRmarketer.com, covers some of the latest trends and best practices for marketing to the Human Resource and Benefits services marketplace. The research data referenced in this report is based on responses from suppliers in the HR/Benefits marketplace, collected during the fourth quarter of The key trends outlined in the report are: By overwhelming majority, marketers are framing their most important objectives in terms of lead and demand generation. Online marketing activities are supplementing and/or replacing more traditional marketing activities like trade show participation. Marketing PR and search engine optimization (SEO) enabled leading HR and employee benefit marketers to take full advantage of the industry trend to align Internet technology, marketing strategies, public relations and sales objectives to make the most of their available marketing budget. In this report, we also offer information on key findings and recommendations, implications and analysis, what the HR/Benefits marketplace has learned and best practices for HR and benefits service marketing in 2006 and beyond. 1

3 Table of Contents Abstract... 1 Introduction...3 The Foremost Challenges in HR Marketing... 3 Challenges and Responses... 3 Key Findings... 4 Key Findings and Recommendations... 4 Figure 1: Importance of qualified buyers as a marketing objective, categorized by industry... 5 Figure 2: Importance of sales and revenue as a marketing objective, categorized by industry... 6 Figure 3: Events budget as a percentage of marketing budget, categorized by company size... 7 Figure 4: Public relations budget as a percentage of marketing budgets, categorized by industry... 8 Figure 5: A self-evaluation of all marketing activities by title... 9 Implications and Analysis... 9 What the HR/Benefits Services Marketplace Has Learned

4 Introduction This research report, sponsored by HRmarketer.com, covers the latest trends and best practices for marketing to the HR/Benefits marketplace the collective activity we refer to as HR marketing (products and/or services sold to HR and/or through benefits brokers and consultants). The research data referenced in this report is based on responses from suppliers in the HR/Benefits marketplace, and the data was collected during the fourth quarter of The HR/Benefits providers represented in this study come from diverse segments, including HRIS and/or ERP solutions, HR consulting, recruitment and staffing, compensation and incentive programs, employee benefits, training and development and outsourcing. The industry segment with the most input was HRIS and/or ERP solutions (29%) followed by HR consulting (13%). The Foremost Challenges in HR Marketing Respondent data to the HRmarketer.com survey tells us that significant gaps exist between what executives say they want (sales, revenue and market demand) and the results produced by marketing departments. This challenge is not new, but it is intensifying. In the HR/Benefits universe, industry experts have widely noted that marketing spending is shifting from traditional (event and print advertising) to online activities (website promotions, Webinars, blogs and direct marketing campaigns). This shift is a reaction to For most HR suppliers surveyed, marketing expenses are between 5 percent and 10 percent of annual revenue. changing macro-level factors that include increased accountability and expectations placed on marketing departments. For most HR suppliers surveyed, the marketing expenditures under discussion can be between 5 percent and 10 percent of the annual revenue. Marketing departments that continue to focus on activities that only serve to generate buzz or create preference in the mind of the prospect, such as trade show events without prompt follow-up or advertisements sent to only one media outlet, are missing opportunities to align their activities with sales to create the revenue executives are looking for. Challenges and Responses This gap between expectations and results has put marketing departments across the country in a quandary. They know they re supposed to adapt to the changing environment and perform according to new and different sets of expectations, but they keep on doing the same activities and using the same tactics they always have. Why? They don t want to admit it, but many marketing professionals simply don t know what to do next. However, industry leaders have emerged. They are balancing traditional and online marketing to reach their target market and using technology that will provide the most benefit and demonstrable ROI. In this 3

5 report, we share insight from these industry leaders, analysis on where the HR/Benefits marketplace resides along the continuum of traditional versus online marketing and an overview of what marketing departments can expect to change in the near future. This report is the first of four studies planned for 2006 that will focus on the trends in HR marketing. The next three research studies in the Trends in HR Marketing series will be released quarterly in 2006: Q2: Trends in HR Marketing: Marketing and PR Activities Q3: Trends in HR Marketing: Online Advertising Q4: Trends in HR Marketing: Budgeting If you are interested in participating in the next survey, us at Key Findings The most important marketing activities in the HR/Benefits marketplace drive lead generation and sales rather than creating brand preference and buzz, the focus of more traditional marketing strategies. Most marketing departments allocate 25 percent or less of their marketing budget to events. Few companies have yet to grasp, let alone execute Marketing PR and SEO and do not yet know how to leverage the demand generation capabilities of online search visibility. Top executives and marketing staff are experiencing a strong disconnect in their levels of satisfaction with marketing activities. Key Findings and Recommendations Recently, the market has shifted. We first noticed this in our contact with our clients throughout the HR/Benefits marketplace when they began asking about SEO and marketing best practices. Industry leaders have adjusted to the macro-level factors causing change in our space (increased accountability and expectations) by mastering the opportunities offered by micro-level innovations (SEO, Marketing PR, online direct marketing) and integrating them with traditional approaches (media visibility and relations, advertising and thought leadership promotion). In this section, we ll offer you our findings, the evidence that supports them and the recommendations for updating your marketing engine to keep pace with the industry. 4

6 The most important marketing activities in the HR/Benefits marketplace drive lead generation and sales in addition to creating brand preference and buzz, which has been the sole focus of marketing strategies in other industries. In terms of marketing objectives, driving sales and revenue was ranked very important by a majority of the respondents (85%) followed by reaching qualified buyers (73%). Many industry segments indicate that sales and revenue is their most important marketing objective. This is not surprising but still a significant observation in that HR marketers clearly tie their success to hard ROI and the effectiveness of their support of sales. Still ranked as very important to our respondents are creating buzz (17%) and media placements (44%). Figure 1: Importance of lead generation as a marketing objective, categorized by industry segment 5

7 Figure 2: Importance of sales and revenue as a marketing objective, categorized by industry segment Recommendation: Successful marketers have appropriated tactics and channels once reserved for the media and buzz machines of the PR department. Marketing PR turns an Internet news release into a lead generation vehicle while also supporting search engine visibility and driving share of voice in the marketplace. Most HR/Benefits services providers have the staff resources in-house to accomplish 2/3 of a Marketing PR plan; it s a matter of combining your resources strategically. 1 Industry leaders already use many Marketing PR tactics, and we predict that it will be an industry-wide best practice by Marketing PR vs. traditional PR and marketing When you transition from two separated departments (PR and marketing) to one united front (Marketing PR), you create the opportunity to use PR tactics to support marketing objectives. This is fairly new to the industry, but those who have crossed this divide have the ability to use press releases to enhance website SEO and to generate sales leads. 1 According to Philip Kotler, distinguished Professor of International Marketing at the Northwestern University Kellogg Graduate School of Management in Chicago, in the June 9, 2005 HRmarketer.com blog entry. 6

8 Most marketing departments allocate 25 percent or less to events. The majority of the market (70%) is spending less than 25 percent of their marketing budget on events, and most respondents (69%) attended fewer than four trade shows a year. Our analyst team has found most companies in this space fall into one of three categories: those that exhibit at up to three events per year, those who exhibit between three and ten and those that annually exhibit at ten and more (often multiple events per month). The middle category has seen a decline in overall event exhibiting. A typical case in point is the HR software and services provider who exhibited at nine events in 2004 and subsequently pared the event calendar down to the critical four or five in Event organizers are constantly refining and retooling their events in an effort to stay relevant and to keep their place on the diminishing short list of this sizable middle category. The persistence to continue allocating funds for events despite continually increasing costs and expectations indicates that trade shows still provide a unique benefit to the marketplace. The SHRM Annual Conference and Exposition, the HR industry s largest event and expo, was not surprisingly named by more respondents than any other when asked at which events they exhibit. The collective responses indicate that a few must attend events form the basis of most event plans. The other most often named events were the American Payroll Association (APA) annual Congress, HRO World, HR Technology, IHRIM and WorldatWork. Figure 3: Events budget as a percentage of marketing budgets, categorized by company size Recommendation: As marketing departments struggle to deliver against executive ROI expectations, event spending will continue to be closely scrutinized. If marketers deliver provable ROI through planned pre-show and at-show activities and a coordinated post-show follow-up supported by sales team members, they will be successful at trade shows, even with the more stringent criteria. 7

9 Few companies have yet to grasp, let alone execute, Marketing PR and SEO and do not yet know how to leverage the demand generation capabilities of online search visibility. From our research, we calculate that about 40 percent of the companies allocate 10 percent or less of their marketing budget to public relations (see Figure 4) while approximately 65 percent of the total is doing some kind of public relations activity (media relations, pitching). Furthermore, 85 percent of respondents currently spend some percentage of their marketing budget on PR activities, but the majority of respondents (63%) creates and distributes 10 or fewer press releases a year. Our own interaction with the marketplace indicates that PR funds are not being spent to forward marketing objectives when even a minimal investment can produce tremendous results. Marketing PR Fundamentals 1. Start with a press release written specifically for journalists. 2. Edit the release s headline so it speaks to your prospective buyers the shorter the better. This version will not be sent to journalists directly like in traditional PR. 3. Turn your targeted keywords and phrases within the release into hyperlinks that lead to your website. 4. Distribute the release over a wire service that allows for embedded hyperlinks (e.g., HRmarketer.com s Direct2Net service). 5. If the release is promoting a free download (e.g., a white paper), simultaneously send out campaigns to house and subscription lists to encourage downloads. 6. Create a website data capture form to intercept all requests for the white paper (and capture leads). 7. Follow up with informative or phone call. Figure 4: Public relations budget as a percentage of marketing budgets, categorized by industry 8

10 Recommendation: The majority of HR suppliers and benefit providers don t have to have a multi-million dollar media budget to reach their audience. Producing content and distributing and promoting it through Internet press releases (see sidebar) creates marketing impressions via prospects finding you through a keyword search, an increasingly common tactic in the Google era. Top executives and marketing staff are experiencing a strong disconnect in their levels of satisfaction with marketing activities. On seven marketing competencies (PR/media visibility, demand generation, website competency, marketing reporting, marketing planning, business intelligence and advertising), few executives (0-8%) rated their company s performance as very successful. The areas of greatest discontent among executives were reporting and advertising, while staff indicated that reporting and planning were their areas of greatest satisfaction. Figure 5: A self-evaluation of all marketing activities by title Recommendation: Rank and file marketers should be careful to constantly demonstrate value. While many may perceive activity as valuable, C-level executives are constantly looking for results, or more specifically revenue. To bridge the gap, marketers must continue to advance the trend of framing marketing plans, key metrics and reporting results in terms of demand generation and revenue (often calculated as weighted pipeline) results, not activity, matter most. Implications and Analysis The macro-trend towards online marketing may prove unsettling to many, but it s leveling the playing field for mid-sized and smaller companies. In the mid-market segment, we can clearly see that best in breed HRIS suppliers are effectively competing with the larger ERP suppliers such as Oracle and SAP. The Internet is a democratizing force, allowing marketing departments to do more with fewer resources and compete based on a differentiated message and market insight. For larger companies nimble enough to adapt to these changes, this shift offers a venue to reach more of their target market more efficiently. 9

11 In the next 12 months, more marketers will take advantage of SEO and information management tools as well as expand and improve their portfolio of online marketing activities to include PR execution tactics such as Marketing PR. These improvements will also support offline activities such as exhibiting and attending industry events and help companies synchronize their marketing engine with their sales team. This environment better caters to the creation of measurable ROI and allows marketers to show the results of their activities, satisfying executive expectations and increasing the perceived value of the marketing function. What the HR/Benefits Services Marketplace Has Learned Managers must do more with less. Marketing managers and their teams must shift their focus from administrative work to strategic execution. A significant portion of marketing and PR department's time is spent on costly administrative activities like creating and maintaining media lists, researching and coordinating trade shows, searching for direct mail lists, and finding speaking and editorial opportunities. Leading suppliers are choosing to outsource these non-mission critical administrative tasks or utilizing HRmarketer.com to gain a competitive advantage. The Internet is the great equalizer and is often under-utilized by small and mid-sized businesses as a marketing tool. Through a coordinated mix of Marketing PR, SEO and keyword lead generation efforts; businesses have the opportunity to substantially increase their leads and, ultimately, their bottom line sales. Knowledge management is easier said than done, but proving to be more crucial than ever. The Internet has created information saturation for many markets; however, the evolution in information services and portals specializing in condensing and synthesizing information allows savvy marketers to cut through the noise. Traditional marketing is still applicable to today s market. HR suppliers and benefits providers are supporting traditional activities with online marketing and are focused on ROI to create the results executives demand. For more information about the future of Human Resource and Benefits services marketing in 2006 and beyond, look for more from the Trends in HR Marketing series. Each quarterly installment will include valuable results from surveys sent to over 5,000 HR suppliers, as well as analysis from HRmarketer.com s leading experts on marketing and media visibility. 10

12 The following reports will address relevant issues such as: Q2: Trends in HR Marketing: Marketing and PR Activities Q3: Trends in HR Marketing: Online Advertising Q4: Trends in HR Marketing: Budgeting To pre-register for additional reports, click here. If you are interested in participating in the next survey, us at About HRmarketer.com HRmarketer.com is the #1 on-demand marketing and media visibility service for companies selling to human resource departments and/or targeting employee benefit brokers and consultants. Founded in 2000, HRmarketer.com is used by hundreds of human resource suppliers. HRmarketer.com combines a database of marketing and public relations (PR) information with press release distribution, campaign management, business intelligence and advisory services. 11

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