Your Marketing System

August 23rd, 2009

Marketing is exciting.  It is the part of our business that allows us to let our creative juices to flow and brings us hope about all of the new sales we will receive from our efforts.  But as energizing and exciting as marketing is, just like anything else, marketing is most successful when it follows a systematized process.

Many of us try the newest latest and greatest in hopes that a new marketing tactic will be the answer, but marketing usually isn’t about one tactic or idea that becomes a smash hit.  On average, a customer must hear, see, or experience your product seven times before they make a purchase.  In order to get the most out of your marketing efforts, it must consist of regular, consistent communication over time.  In other words, you must create a system that delivers to your target market on a regular basis.

Here are some ideas to get started:

  1. Team. Gather your team in a room and reevaluate your target market and where they spend their time.  Who is buying your product or service?  What websites do they visit?  What periodicals do they read?  What blogs do they follow?  Include recent surveys from customers that ask how they learned about your company.
  2. Whiteboard. Write out each of the ways you can think of that prospects and customers have heard about you.  Are there other ways they could learn more about your company that you haven’t explored?  Brainstorm new ideas based on the information you learned about your target market.
  3. Strategy. Pick the ideas that will give you the most bang for your buck.  Note that you may not know what those are yet!  You will want to be sure that you complete the activities for a specified amount of time (more than once!) and track their success.  Start by using a marketing calendar.  Take your variety of ideas and put them into regular intervals on the calendar.  Here’s a link to a free one you can download for 2009:  http://www.brandeo.com/node/1135.
  4. Document. Don’t reinvent the wheel each time you complete a marketing tactic.  Write down the steps it takes to complete it and, if you can, delegate it to someone else to continue the activity regularly.  This allows you to focus on other high value efforts.
  5. Track! This is the most important part of the process.  You cannot know the success of your efforts unless you track them.  E-mail marketing makes this easy as you can watch open and click-through rates.  Set up a system where your salespeople consistently ask each new prospect how they heard about your company.  Track the information on a spreadsheet (or other method such as your CRM) and evaluate the marketing efforts with the highest success.  Then add and delete tactics based on this evaluation.

By looking at marketing as a process, you will stop wasting money on hit or miss activities and start spending your valuable time and money where it matters most.  Good luck!

Disney is NOT the Happiest Place on Earth

August 15th, 2009

My friend and colleague, Howard Cox, of Somerset CPAs wrote the following blog post recently.  I loved it and wanted to share!

Disney is NOT the Happiest Place on Earth

August 1, 2009

What is the formula for creating the happiest place on earth?

Charge a competitive but fair price for your main product or service, charge prices that are noticeably less than your competitors on most items that are necessary to maintain your original sale and give the rest of your products and services away for free.

Where in the world does someone employ this type of philosophy?

Holiday World in Santa Claus, Indiana

How can such a model work to create sustainable enduring success?

First of all, Holiday World understands the difference between optimizing the lifetime value of a customer vs. maximizing an individual customer transaction.

Secondly, they understand the marketing buzz that is generated by the power of free.

I just got back from taking my family on our annual trip to Holiday World.  I spent one day sitting in the sun and the water park and did absolutely nothing for an entire day accept eat, bake in the sun and take several naps.

During this much needed day of rest, I was reminded of a great story from Randy Pausch’s Last Lecture book. It was a story of how Disney created a magic trick when he was a child and turned $10 into over $100,000. He and his sister had purchased a $10 gift for their parents at one of the souvenir shops in the Magic Kingdom. As they walked from the shop back to meet his parents, the gift slipped out of the package, hit the ground and broke. Randy’s sister convinced him to return to the shop and at least ask for an exchange. Reluctantly he agreed to try even though he was pessimistic with their chance of success since the breakage was clearly his fault.

When they arrived back at the shop and explained what happened, the clerk accepted full responsibility for improper packaging, gave them a replacement free and was much more careful about how she wrapped and packed the gift the second time around. When Randy and his sister relayed the story to their parents, the Pausch family was so impressed that during the rest of Randy’s life, he estimated that he and his extended family spent in excess of $100,000 at Disney World.

As Randy retold the story in the book, he knew he was relaying a lesson about great customer service. As a computer scientist as opposed to a business consultant, he might not have known that he was telling a classic story illustrating the power of focusing on optimizing the lifetime value of a customer vs. maximizing an individual profit per customer transaction.

Randy shared this story with a group of modern day Disney executives as an adult and asked them if their current business practices would allow a store clerk to make that type of decision today. Their silence told them everything he needed to know. Disney has become a corporate machine obsessed with maximizing profit per visit. They make sure you leave their compound without a penny in your pocket to spare. You have a great time, but you feel a little cheap and used as you return home.

A visit to Holiday World (HW) takes you back in time when Walt Disney’s original legacy and magic was still alive at Disney World. HW charges a fair and competitive price for their tickets. Where you really start to feel the difference is once you get inside the gates. For most theme parks, the ticket price is just the start.  The real expense begins once you start buying food. At HW, you would have to work really hard to spend very much money once you get in. The food prices are fair and the food quality is good.

This is where the remainder the formula for sustainable success kicks in. Step 1: Charge a fair price for your main product–tickets in the case of HW.  Step 2: Charge a noticeably lower price than your competitors for subsequent purchases that are necessary to maintain your original purchase–food in the case of HW.  Step 3: Give the rest away for free.

Step 3 is the one that will drive your competitors completely crazy. HW provides free drinks and sunscreen all day, every day. This amounts to a substantial savings and increased enjoyment for their customers over any of their competitors. It is also very unlikely that your competition will every try to match a move this bold. Most businesses are obsessed with maximizing the profit per customer transaction. Only truly great and enduringly successful companies are obsessed with optimizing the lifetime value of a customer; the magic trick of turning $10 into over $100,000.

The second dimension of free is that it is the highest ROI marketing expenditure you could ever make. You can actually justify a price of free in terms of marketing ROI alone without even considering its effect on lifetime customer value. If you take the cost of the free sodas and sunscreen that HW incurs every year and divide by the word of mouth marketing that comes from people like me telling every one they meet about their experience, you would find that it is the most effective and cost justified part of their extensive overall marketing campaign.

As a sidebar, this is why Somerset CPAs provides our Practical MBA series for free.

http://www.somersetcpas.com/PracticalMBA.HTM