The Marketing Blender

It’s the Little Things…

The genuinely good attitude of the call centre rep when you call with a
routine question, that makes you feel that they actually care about their
job and their brand.   

Or the consistently good advice and treatment you get in a particular store,
that makes you feel that you really are a “valued customer”.

These are examples of the silent, unseen events that drive brand loyalty and
have the potential to turn clients into advocates for your brand.   

So why are many companies managing these activities out of their organizations?

Modern day brand management, especially on a mass scale, doesn’t do very well with these creative little variances. We like to put policies and procedures in place to keep the customer experience as consistent as possible. We want the phone answered with a specific phrase, or a standardized greeting used in our stores.   

But in driving this kind of “regulation” into the brand, we’re also stamping out some of those creative, silent, often unseen behaviours that make a huge difference in brand loyalty.

We time call centre employees to the point that they rush through calls to land on the top of some scoresheet somewhere that ranks employee performance by call times. Only, clients aren’t even aware of call times – they just want the phone answered, to be treated well, and not to be hurried.

We standardize service down to a scoresheet that asks whether the employee greeted you in a specific way or offered you a receipt. I’m sure some of the brands I deal with greet me in a standard way – but I haven’t noticed it and it sure hasn’t made a difference in my loyalty to the brand.

The next time you survey your customers, how about asking them one simple question -- The last time you called or visited us, did we meet your expectations and treat you like a real person?

Managing brands and brand image is not always about instituting rules and regulations. Its about establishing parameters for behaviour, and then giving your people some room to go the extra mile.

You’d be surprised how many of your employees will.

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

Leveraging Brand Equity in Tough Times

  When the tough times arrive (some would say they’re already here), your brand equity is your greatest asset. But how do you leverage it when your entire industry might be feeling the pinch of slower economic times?

Here are 3 keys to making the most of the credibility that you’ve built for your business:

Communicate! – Talk to your clients when times get tough.

I know that marketing budgets get squeezed when times are tight, and it can be tougher to get your message out to the market. But at the very least, you should be communicating with your existing clients – frequently.

Don’t disappear when the going gets tough. Reinforce your brand message and offer ideas and strategies for clients to prosper in slower times.

Your competitors are more prone than ever to doing irrational things as they face pressures of their own. For example, they may sell their product or service at a deep discount that you dare not match. At times like this, your brand message needs to come through loud and clear so that you have a leg to stand on when others get desperate.

Inform – This is critical in “high trust” businesses (think real estate agents, financial or insurance advisors, lawyers, marketing consultants, and so on).

Change creates an insatiable appetite for information among clients, and the brand that provides it will be afforded expert status in the market, potentially gaining a huge advantage in the short term, and establishing a solid foundation for long term success.

For example, homeowners are carefully watching the value of their property right now, and are looking for guidance and information more than ever. As a real estate agent, be the one to give it to them, good or bad. Ditch the “friendly service” message in your ads and be the local expert who’s on top of the situation, the one who really knows what’s going on. Get in the local media, and talk to community leaders. You’ll only add to your brand equity, and if you’re a mid-pack player right now this shakeup could be the opening you need to become a top-tier agent. This applies in a variety of industries.

Deliver – It’s tempting to cut corners or trim costs when business slows, but you absolutely must preserve your brand experience.

When looking for a 10% cost reduction, businesses often cut the one thing out of their business model that makes them standout, and that their existing clients consider a key element of the brand experience. The logic for the cut is that none of the competition are doing it, so why not cut it. Of course, the fact that none of your competitors are doing it is the reason you shouldn't cut it when "it" is a unique part of your brand experience!

When the market around you slows down, your strength is in your brand. Leverage it, and whatever you do, don't damage your brand by seeking short term cost reductions in the worst possible place - your brand experience.

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?

Is it Time to Stop Growing?

Laura Ries has an interesting post over at her blog, The Origin of Brands.

In a nutshell, her post suggests that “backwards is the new forwards” when it comes to branding. In other words, it’s a back to basics approach that often rescues companies who lose their brand focus in their quest for growth.

In my view, it usually plays out something like this:

- Well defined brand enters market with awesome marketing strategy

- Customers flock to the brand and rapid growth ensues

- Brand gets really big and is celebrated as a success

- Company goes public, or if already public, they start to attract serious attention from analysts

- To meet the constant, quarter-by-quarter demand for growth in revenues, company branches out into products or services that it wouldn’t have originally considered part of its brand experience

- Company delivers revenue growth over the short term

- Customers who made the brand big in the first place become somewhat alienated by the lack of focus in the brand

- Some of these customers stop buying

- Growth slows

- Analysts write that growth is slowing

- Company gets worried that growth is slowing

- The quick fixes put in place to drive short term revenues are now weighing the brand down

- Company makes “gutsy” call to get back to what made it successful in the first place – recapturing the original brand experience that has been lost

- Customers return to the “revitalized” brand

- Everyone’s happy, for now.

Laura’s post tells the story of Starbucks, a company that found itself going through a version of the above.

Here’s a question I’ve asked myself about this cycle that seems to perpetuate itself with brands (especially those that go public):

When is it time to stop growing?

Some would say growth is the ultimate goal of all businesses, but as you can see, growth at all costs tends to be pretty costly.

Your company should always be focused on growth, but overextending or overexpanding your brand may end up being counterproductive. 

Your brand may reach a point where growth slows, and you shouldn’t ruin the brand for the sake of trying to achieve the growth rates you enjoyed during the growth phase of the brand.

Maybe your company needs to launch a new brand, or maybe it’s time to sell high and move on.

Brand Equity is often your biggest asset. Wrecking it to please the street for a few quarters isn’t a good long term business proposition.

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:

------------------------------------------------------

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.

Niche Marketing Tips – Top Down or Bottom Up?

Niche marketing is all the rage these days. Sometimes, I think it’s misunderstood.

You could look at niche marketing as a staircase. The top step is the mass market. The steps below are niche marketing opportunities, and they get smaller as you go down the stairs.

In the coffee market, Starbucks made a killing by taking just one step down from the mass market. They focused on the niche for premium coffee served in a “premium” environment.

Part of their success can be attributed to how they looked at the coffee market. They took a top down approach to finding a niche, versus a bottom up approach.

Top-Down Niche Marketing -- look at a big market and drill down to find the largest possible market for a niche offering. In my view, Starbucks didn’t have to look far. Because Starbucks took just one step beyond the mass market, the niche was big enough to support consistent growth.

Bottom-Up Niche Marketing -- race to the bottom of the staircase with the smallest imaginable niche and then get to work on meeting their needs. To carry on the coffee example, bottom up niche marketing might start with 12 oz, organic, fair trade coffee, served in 100% biodegradable cups in cafe’s using only renewable energy sources.

There’s nothing wrong with the “bottom up” example, but it’s a (fictional) example of starting at the bottom and finding a very small niche. Maybe it’s sustainable, maybe it’s not. But it’s certainly small.

My observation is that some companies start about 9 steps down the staircase and try to work their way up. But in their haste to find the next hot niche, they blow right past a bunch of empty stairs on the way down.

Starbucks stopped on the first step beyond the mass market and built a strong brand.

The next time you are evaluating a niche marketing opportunity, ask yourself how many steps beyond the mass market you’ve taken, and before you commit, figure out who’s standing on the steps above you.

The Diaper Store that Died

A few years ago, my wife and I lived in a small town north of the city. Our daughter was still in diapers, so when a small diaper store opened in town I was intrigued (from a business perspective).

Why?....because there are no "diaper stores". People buy diapers at Wal-Mart or the drug store when they are buying other items. They generally don't go to the "diaper store" any more than they would go to the "Tylenol store".

I dropped in, and met the very, very nice owner. He gave me an enthusiastic (and well rehearsed) sales pitch about the diapers they sold (not a national brand), and how I could save money if I bought them in bulk from his store. In surveying the merchandise, I determined that most of it could be found at any major discount retailer.

As a marketer, I had a bad feeling. You know the feeling you get when you meet someone very well intentioned who seems headed down a slippery slope. My concerns:

* There was no point of differentiation in the product mix

* People generally don't buy in bulk from a small local store. If they are bulk buyers, they get a membership at Costco and buy everything in bulk, not just diapers.   

* There were four stores within a 5 minute drive where customers could buy any of merchandise for less.

A few weeks later, I saw a half page display ad in the local newspaper - a sure sign the business was close to failure. Short of traffic after just a few weeks, the owner turned to expensive advertising to drive revenue. But the ad mirrored the in-store experience - promoting diapers and products that were readily available anywhere else.

I wondered why the owner didn't push the environmental angle of cloth diapers - or some other aspect of his service that would change the way local residents looked at diapers.

A few weeks after that, the store was closed.

A hard working, dedicated owner committed to a great service experience + no point of difference + readily available substitutes = a bad outcome.

Service and effort are usually not enough. Customers need a reason to buy from you.