Blender

Green Marketing - Slowly but Surely

Interesting study in the most recent edition of Canadian Business magazine -- an article entitled "Green Counting" mentions some research done by packaged goods giant Proctor & Gamble that illustrates the challenges of green marketing initiatives.

The key highlight - only 10% of Canadians would accept a trade-off of some sort when using a product that is more environmentally friendly than their existing brand. In addition, 75% of Canadians would accept no trade off at all.

So, bio-degradeable garbage bags are a great idea, but not if they tear a little more often than plastic ones.

While there's a tremendous interest in green marketing initiatives, it's clear that consumers are not yet willing to embrace truly environmentally friendly products and services if they involve a trade-off in quality or the user experience.

And therein lies the challenge for companies trying to highlight their green marketing initiatives for the market. A vast majority of the people you ask will tell you that they want to see more earth-friendly products on the market, but on an honest day, many will tell you that they aren't that interested in buying them.

Ironically, a company that does nothing to communicate their commitment to the environment is often viewed in a negative light, yet the company that pours themselves into developing products that are 100% eco-friendly may find themselves with no takers.

So how do you approach product development in these market conditions? Carefully. P&G has focused their efforts on reducing packaging and marketing concentrated versions of their existing products such as Tide - and even that took a lengthy advertising effort to convince customers that they were getting the same value for their money in the smaller bottle.

The lesson in P&Gs research is that consumers will embrace meaningful green marketing programs, but they'll do it as true consumers - they want value for their money. Green alternatives need to be as effective as the original.

I believe green marketing will continue to grow - but it will only grow in step with consumers' willingness to consider alternatives to their trusted brands for the sake of the environment. And P&Gs research suggests we aren't there just yet.

Green Marketing Fatigue

Green Marketing is still in its infancy, and yet we’re already seeing headlines citing “green marketing fatigue” among consumers.

The allure of green marketing has proven so powerful that too many companies are making dubious claims about their environmental commitment – and the entire green marketing movement is now met with considerable skepticism as a result.

So what’s a company to do?

In my view there are two green marketing avenues available to marketers:

• The "corporate initiative approach", which usually sees a company promoting the fact that they use 5% less paper at head office or have reduced air conditioning usage

• The "customer experience approach", which enables clients to participate in some way in reducing materials, recycling packaging, and so on

The customer approach is by far the more effective of the two, and much less likely to be viewed suspiciously by your customers. Green marketing initiatives that your customers actually participate in combine a positive customer experience with your green marketing efforts, making both feel more genuine at the end of the day.

For example, would you rather hear that the grocery store you shop at has reduced their lighting by 10% to conserve energy, or that you can now choose recycled paper bags instead of plastic?

Would you rather hear that Toyota has cut emissions from their factories by 10% on average, or that they are offering special lease rates on their most fuel efficient cars to make them even more affordable?

In both cases, the latter option allows customers to make a deliberate decision to do something that’s better for the environment, be it choosing a reusable shopping bag or a more fuel efficient car. The result is a more genuine "green" experience.

Enabling clients to do something green through your company is far more effective than doing something at head office and then telling the world you did it.

Paying too much, by choice (Hey Sales People – Cheer Up!)

The cry of the sales force is often to lower the price, offer a better rate, throw in a bonus etc etc. This is somewhat understandable, as every other client probably throws an objection about price on the table during any negotiation. (“Your competitor can do it for 5% less than you can…). This is especially true during tough economic times when companies are trying to squeeze every dollar they can.

The marketing and product folks protest these requests, because continuously lowering the price erodes margins, undercuts the company’s value proposition, and generally de-values the sales force (if the product is the cheapest on the market, why do I need a sales person to sell it?)

So if you’re a sales person frustrated with the price objections you continuously encounter, just think for a moment about all of the things you readily pay more for every day.

A personal example – I have all kinds of insurance through a full service broker. I could probably find a lower rate on my insurance if I cut out the middleman and purchased my insurance individually online from low cost, no service insurers.

But I don’t want to.

When I call my agent, they know who I am, answer my questions, and generally treat me pretty well. I think that if I ever made a claim, they’d actually be there for me – and that’s the point of insurance, right? That adds value for me. I’m paying too much for insurance, but I’m fine with it. In fact, I do it knowingly and willingly.

Think of all of the things you pay too much for:

• Gilette Fusion Razor Blades – 4 Blades? Do you really need 4 blades? My Dad shaves with a 1 blade Bic. 

• Oil Changes at the Car Dealer – More expensive than independent garages, but who really knows what goes on at Joe’s Garage?

• Tylenol - You can get generic pain killers for half the price, but when you really need your headache to go away, you reach for a Tylenol

• And the list goes on...

Price is the number 1 objection you face when you are trying to make a sale. If it helps, remember that the person making the objection readily overpays for a whole bunch of things in their personal and professional life, because they have a reason to. (Trust, Effectiveness, overall value...)

They’ll overpay you as well, if you’d just give them a reason to do it.

It’s an Incremental World

For all of the big thinking that goes on in some businesses, and for all of the books and experts that tell you to seize a great market opportunity when it comes along by betting big, you see surprisingly little of this kind of aggressive marketing in your day to day life.

In fact, much of the business world measures success in relatively small, incremental gains.

Some corporations delight when revenue moves up 5% vs 2% in the same quarter last year. Or, they throw a party when they drive market share up by 10 basis points.

When a company offers an employee a 6% increase, it’s considered a “big raise” because inflation is only running at 2%.

Measuring Everything

Since we measure absolutely everything we need to know (and many things we don’t) we get fixated on comparing numbers, making relatively small gains seems like real improvements.

Which begs the questions, just what is success anyway? Is it a relative measure, comparing today’s performance against the past?

Or is it a measure of what you could have done had you not set incremental targets – a measure of you vs the world, instead of you vs yourself 12 months ago.

Incremental Thinking Goes Out the Window when things get Bad…

It’s interesting that incremental thinking disappears when things get desperate. Apple was in lousy shape a few years ago, so any incremental measures they had were useless to them. As a brand and a company they were in a downward spiral.

Once the quarter over quarter incremental gains no longer mattered, they had nothing to lose -- so they made some big bets, and they changed the course of music with the iPod as well as reinventing themselves in the computer space.

Do you think when the iPod was launching, Apple was worrying about a 2% increase in revenues? Nope. they had their eyes on a much bigger prize.

The Moral of the Story…

I recognize that companies need to show incremental gains to demonstrate to shareholders that the company is heading in the right direction. But marketing departments (and companies in general) need to take their eyes off the percentages every now and again and think about what they could accomplish if they bet big on the right opportunity.

10 Questions to Ask (...to grow your business)

It's not about having the answers, it's about asking the right questions.

Too often, we don't learn as much as we can about an aspect of our business, because we assume we already know it inside out. Or, we subconciously decide that we don't want any new information on something we already presume to understand.

Good leaders and good marketers are constantly asking questions, not giving answers. In that spirit, here are some questions you should ask to help grow your local business:

• Ask one client what first led them to do business with you

• Ask one ex client what led them to do business elsewhere

• Ask your web team what your conversion rate is, and then ask them how it could be improved by .25% in the next 10 days

• Ask your marketing/advertising agency how much revenue their last campaign for you generated (just to see if they know)

• Ask a fellow business owner/marketer in a related industry what the single most successful tactic they used they in the last few months

• Ask a local journalist if there is anything you can do to help them write a story about a problem that your clients face (and preferably, one that your product or service solves)

• Ask an employee for an idea

• Ask a client for an idea

• Ask about local speaking opportunities

• Ask for a referral

Building your PR Skills

Once upon a time, PR and Marketing were distinct functions.

Today, the lines are blurred.

For marketers, marketing departments, and business owners, PR is becoming an indispensable weapon in the battle for awareness, and ultimately sales. As a result, marketers with PR skills are more valuable to employers and are more effective in promoting their businesses.

Some reasons for the rise of PR as a marketing tool:

• Everybody’s a journalist – there are 112 million blogs online, and the number of reputable news sources that are “online only” has also increased dramatically in recent years.

• TV Ratings are down – your audience is more fragmented than ever, as people turn to their favourite Internet sites for entertainment more than they are tuning in to prime time network TV.

• Nobody trusts advertising – the credibility of advertising has fallen in recent years, as people are increasingly suspicious of the claims they see in paid marketing.

• Nobody sees advertising – well, “nobody” is an overstatement but with the vast number of messages consumers are exposed to every day, it’s getting much much harder to break through the clutter.

PR represents a good solution for some of the challenges noted above:

• If "everyone’s" a journalist, your ability to reach them with good story ideas and positive messages about your brand and your products will determine how much positive coverage you generate in blogs and through traditional news sources

• If TV Ratings are down, go where your target market is by getting stories about your brand in the right online publications

• If nobody trusts advertising, the third party credibility that comes with positive publicity presents a great opportunity to bolster the trust factor that consumers will assign to messages from your company

• While it's true that breaking through the clutter is much harder these days, it's much easier when readers/viewers are finding your message as part of their daily routine of seeking out information on their favourite sites or through trusted news sources         

As PR and Marketing continue to converge, maintaining skills on both sides of the fence is becoming increasingly important for marketers. I would strongly advise marketers who are short on PR experience to get some - it will make you more effective in delivering your message to the market, and can provide a boost to your career/business.

The Cost of Imperfection

How much did it cost you today because you were imperfect?

You know that your website/blog/product/packaging/etc. isn’t perfect. There are a few things you would like to do to make it better. But, there are also competing priorities, and you can’t do everything, so you learn to live with those little imperfections while dealing with bigger, more pressing issues.

Have you ever put anything back on the shelf in the grocery store because it wasn’t perfect?

You know, you pick up a can of soup, but you realize the back half of the label is ripped off, or the can is dented…so you put it back on the shelf and grab another. If it’s the last one, you might forget about buying soup altogether, or perhaps choose a similar product from another brand that isn’t dented.

So...when you’re the consumer, a small imperfection can lead you to abandon a planned purchase.

But...when you’re the marketer, you live with imperfection because you have other pressing issues to deal with.

But what's more pressing than sales?

When the Competition Runs a Marketing Promo for you...

Tim Horton's has once again rolled out their popular “Roll Up the Rim to Win” promotion. But this year, there's a twist - and it's not something the people at Tim's had planned on.

First a quick history lesson for those south of the border. Tim Hortons is the 800 pound gorilla of the coffee business in Canada. It's a cultural icon. Part of its rise to the dominant market position in the market was a clever promo the chain first rolled out in 1986. After drinking your coffee, you could "roll up the rim" for a chance to win a prize, ranging from a free coffee to cars and cash. It was an instant hit and remains the company's number one promotional campaign each year.

Meanwhile, second fiddle Country Style (actually third behind Starbucks)has struggled to chip away at the mighty Tim's empire. They even came up with a promo of their own – called “Turn up a Winner”. It's the very same promo as Tim's – you roll up the rim of the cup to win a prize. The copycat promo hasn't helped Country Style – in fact Tim's handily expanded their lead over rival coffee and donut chains in recent years.

So what do you do when you're the number 3 player in the market, and can't find a winning promo even when you copy a successful promo run by the market leader?

How about hijacking the market leader's promo...literally.

Country Style's latest promotion offers Canadians with a losing Roll up the Rim cup from Tim Horton's the chance to exchange that loser for a free coffee at Country Style. (Imagine a promotion where an empty Coke bottle got you a free bottle of Pepsi.)

I think Country Style made a brilliant move here, for a few reasons:

• - As the number 3 player, Country Style promotes the high quality of their coffee when compared against other coffee chains. This cleverly devised promotion will give many first time customers a chance to sample their product and experience Country Style's higher quality for themselves.

  
  

• Even better, because of the nature of the promotion, they are guaranteed to attract Tim's drinkers and their losing cups. That avoids the common problem of many promotions – offering discounts to your existing customers (coupons, etc) while trying to attract new business.

• The timing is great – in recent years, many Canadians have noticed an appreciable drop off in winning cups at Tim's. By making a losing Tim's cup the centre of the offer, Country Style is taking a subtle jab at their larger competitor.

• The price for the promo is right – direct promotional costs are next to nothing (no promo cups!) outside of some free coffees.

• It's buzzworthy – the promotion has already made news and is getting postive word of mouth.

Will it change the face of the coffee chain wars in Canada? Hardly.

But when you're a number 3 player without the money or resources of the market leader, you've got to pick your spots and concentrate your marketing efforts in areas where you can have an impact.

This is a clever example of taking a competitor's promo and using it to draw attention to your own brand message. We'll see how it goes for Country Style...

Rethinking the 80/20 Rule

A few years ago I wrote an article for MarketingProfs.com aimed at providing readers with a new way of looking at the 80/20 rule when it comes to segmenting clients based on volume.

My main argument was that companies should start looking below the line a little further. While it may be true that 80% of your volume is coming from 20% of your clients, it does not automatically follow that getting more business from the very valuable 20% would drive increased profitability. In fact, the most profitable customers in your database might not be in your top 20% today.

The article was subsequently featured in the Globe and Mail (Canada’s National Business Newspaper, for those reading south of the border).

I think the article is still very relevant today – I’ve pasted it below:

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Here's why tapping your top-volume clients for further growth doesn't always work.

In most marketing circles, the principle behind the 80/20 rule applies to the relationship between your revenue and your customers. That is, 80% of your business results are being driven by 20% of your clients, or pretty close to it.

It's considered easier and more cost effective to grow your business by increasing the business volume your existing clients do with you, as opposed to bearing the higher acquisition costs associated with hitting the open market and trying to grab the attention of clients who don't currently deal with your company.

It is no surprise, then, that many marketers are investing heavily in identifying and segmenting their "top 20%" with the intention of developing marketing campaigns and sales promotions just for this elite group of customers, with an eye to acquiring more of their business. After all, they are clearly heavy users of your company's product or service and are apparently willing to spend money with your company versus your competition.

However, such an approach overlooks the fact that many companies identify their top 20% of clients on a volume basis. This creates a phenomenon that I call the 80/20 Volume Paradox: While your top 20% of clients may be driving a big chunk of your business and displaying all of the signs that they represent a great target audience for your marketing efforts, they may not deliver a strong ROI on further business development efforts. Why? Two possibilities:

1. They're tapped out. There are only so many hotel stays or onsite computer consultants that a client can want or need. As a result, marketing efforts aimed at this group may produce only a minimal incremental lift in volume.
2. They're buying cheap. Of the incremental volume you succeed in generating from this group, it will likely be at a lower margin, as high-volume clients generally buy at a lower price. This is especially true in business-to-business relationships, where contracts are often structured to include significant volume discounts.

To address these shortcomings of some of the traditional approaches to driving business through your top volume clients, here are two fresh approaches to looking at your top clients that put a slightly different spin on the 80/20 rule.

Think margin, not volume

Instead of identifying the top 20% of your client base in terms of volume, use margin instead. Identify the top 20% of your clients as measured by total margin, and cross-reference that list against your previously identified top 20% by volume list. You may be surprised to find that the two lists are not quite the same.

Your top 20% by volume are probably already being rewarded with volume pricing and various discounts. As a result, you might find a gem or two on your top 20% by margin list—clients who are doing moderate volume with your company, but at higher prices and therefore higher margins. Get the same sales lift out of this higher-margin group and you'll add more to the bottom line than by pursuing your volume clients only.

As an added bonus, higher-margin clients doing less volume with you may not be "tapped out" and may have room to increase their demand for a product or service. And, they are still your clients, which means you can approach them with marketing programs and promotional offers while enjoying the low acquisition costs that come with knowing your target audience.

Think 90/30

Instead of identifying your top 20% by volume and targeting them, perhaps you should cast your net wider and target the next 10% of your clients based on volume. Instead of 80/20, shift your thinking to 90/30—driving 90% of your business from 30% of your clients.

Looking below the 20% line will uncover some clients where a great "share of wallet" opportunity may exist. In this group, you are more likely to find clients who are giving at least some of their business to your competition, representing a great opportunity for you to consolidate their purchases with just one company: yours.

You may also uncover clients not as likely to be receiving heavily discounted pricing with competitors, since their purchasing is more fragmented. This gives you the option of using some pricing leverage to build volume. (Of course, building volume at the client's current rate would clearly be preferable.)

This group of clients is also less likely to be tapped out—perhaps they can be encouraged to purchase more of the service you offer, or perhaps you can wrestle a higher share of wallet out of these clients buy getting some portion of their business that is currently going to a competitor.

It is important to understand who the clients are that are driving the majority of your business, and even more important to retain their business. However, growth within your client base is often not as simple as identifying your top-volume clients and milking them for more revenue.

Don't be afraid to put a different spin on the 80/20 rule the next time you analyze your client base. You may find that turning down the volume focus will allow you to identify other good marketing opportunities among your clients.

Selling More to your Existing Customers

One of the golden rules of marketing is that increasing sales among existing customers is more profitable and more likely to be successful than pitching to the mass market.

But you have to know your customer first, and know how much they might be willing to buy. Otherwise you risk making them a lousy offer.

Case in point - last April I went online and bought two tickets to a Jays game. This was probably the first time I'd ever ordered baseball tickets online for a game.

   

About a week after the game, I received a call from a friendly Blue Jays telephone sales rep, who left me a voice mail about a special offer. Evidently they had my name from the original credit card purchase and were prospecting their list, like any good marketer would.

I was intrigued. I wondered if I would be able to get a discount on a future game, or possibly better seats for the same price. It was early in the season after all, and there will still plenty of unsold tickets for those April and May games.

Here's the offer I got when I called back – buy tickets for 10 additional games and get a small discount on the face value of the tickets.

Were they serious?

There was so much wrong with this offer:

• As a one time customer, was I really going to commit to 10 additional games at two tickets per game? They were asking me to go from spending $100 to spending $1,000. That's a massive jump.

• The discount was very modest and the offer was available on their website – I'd hardly call it an “offer”, and it certainly wasn't exclusive.

• There was no alternate offer available. Once the rep knew I wasn't going to commit to 10 games, there should have been an alternate 2 or 3 game offer available. Instead they went with an all or nothing offer – either the guy buys 10 times what he originally bought, or he buys nothing.

Your existing customers are more likely to be interested in buying more of whatever it is you are selling. But getting them to buy more is like climbing a ladder. It is next to impossible to do unless you take one step at a time.

When making offers to your existing customers (especially new ones), consider what the next logical step would be in their relationships with you, and make them a good offer to take that step.

I would have gladly taken the next step and committed to one more Jays game, maybe 2 in response to a good offer.

Not 10.