Total Marketing Solutions

Like a London bus, you wait ages for blog posts from Total Marketing Solutions and then 2 come along in a day!

I came across some statistics today that put some substance behind the oft heard claim that companies who continue to invest in marketing throughout a downturn out perform those that don’t. I myself am quick to use this argument although I confess to always being a little uncomfortable in saying it without some hard facts to back up the statement as I fear that it can come across as self-serving - i.e “as a marketing consultant he would say that wouldn’t he?”

Anyway today I read some of these hard facts on the Go-To-Market Strategies website - apparently the facts reveal that in past recessions, companies who continued to aggressively market themselves realized an average sales growth of 275 percent over the next five years, versus a 19 percent growth rate of those who significantly cut marketing expenses. If the past is any predictor of the future then these figures speak for themselves.

As we are currently advising our clients as marketing consultants, the trick is to make sure that your continued strategic marketing investment is very well targeted and focused on delivering a demonstrable return on investment.

Just found another article with an interesting slant on what to do when the going gets tough, courtesy of an American marketing guru – Jim Novo.

His take on how to act in a downturn is rather unique, suggesting that customers “use this downturn to prepare for the next one.” Investigate, learn and understand what happens this time, so you know what to do next time.  In terms of action items, he comes up with a few suggestions, which focus on the customer. Much of this thinking is not new and when we are advising our clients as Marketing Consultants we always start by helping them to develop a real understanding of their customers using many of the same principles articulated by Jim Novo, the difference being perhaps that the economic downturn throws the need to do this into an even sharper relief. Anyway, here are some of his ideas:

1. Analyse your customer base, understand the source of your customer value.  Who are the best customers, where do they come from? Which media, sales persons, product lines, services, geographies, etc. create the “best  customers” for your business?
2. Analyse these best customers and understand their behaviour.  Identify any warning signs that these best customers - who are probably responsible for the lion’s share of your profits - are cracking into the downturn. Look out for a slowdown in orders per month, average order size, number of contracts etc.
3. Track a handful of these customer metrics and see how they change as the economy slows.  These metrics will be a map for predicting actual trouble the next time - predicting trouble even before everyone is already talking about “a downturn”.  This gives you the extraordinary advantage of lead time over your competition in reacting to the downturn in business.
4. Complete the same 3 steps above for medium value customers and low value customers, if you have the resources.
5. Now, fully understanding what you have to work with (perhaps for the 1st time?), what is the strategy for a downturn?  Generally, it would consist of a reallocation of resources away from lower productivity to higher productivity activity, in order of importance:

a. For best customers, how do we keep them? 


b. For mid value customers, how do we grow them?


c. For low value customers, how do we reduce costs to acquire or service them? 

For each group, have a specific (and probably different) strategy and set of tactics.  For example, we know that marketing spend generally softens in a downturn.  Companies cut back on marketing, they cancel or don’t buy advertising, they fire salespeople.  This is the wrong move.  Buying more marketing into a downturn to “grab share” can also be the wrong move, though has some “accidental” positive effects.

The company should invest in more marketing, but not across the board.  They should buy the right marketing, the marketing that generates the best quality customers.

They should reallocate marketing resources away from generating “c” customers towards generating “a” customers.  If you know trade shows generate leads which turn into “a ” customers and online ads generate leads that turn into “c” customers, you take the money you spend online and book more trade shows.  You let go of salespeople that generate “c” customers and use that salary to bonus salespeople generating “a” customers.

Of course, this analysis and planning is an exercise that should be done all the time, not just into a downturn.  A business should always be trying to understand where customer value comes from and how it is created.  But unfortunately, this issue most often comes up going into a downturn.

It seems that you can’t avoid emails or blog posts on how to survive in a downturn at the moment. Now I’m a positive person so all this ‘noise’ on this subject to me can come across as just more negative sentiment that is having the effect of becoming a self-fulfilling prophecy. I am a realist so I am not denying that it is tough out there but there is opportunity as well as threat so I believe that you must stay positive particularly if you believe in your business and you have a strong value proposition that adds real value for your customers. Anyway on the subject of these articles and blog posts I do take time to read quite a few of them and when I see something that makes sense or resonates with me I’ll let you know.

One such blog post dropped into my inbox this morning from Geoffrey James, see  http://blogs.bnet.com/salesmachine/?p=616&tag=nl.e808 Now it is an American post so all you cynical Brits approach with caution but there are some real nuggets in there. The 2 things that I most strongly agree with are (1) Be aggressive, now is not the time to ‘hunker down’ and (2) Get you boss out in front of customers - who better to ’sell’ than the company owner?

If I see more posts that make sense to me as a strategic marketing consultant trying to help business owners and managers then I’ll sign post them for you here.

Following on from the previous post (Time for marketing to drive growth?) which shows that marketing becomes even more important in difficult times, it’s interesting to see how businesses are reacting in different ways. Marks & Spencer have announced that they’re cutting their marketing spend by 20% following a huge drop in profits. Elsewhere it appears that many companies are shifting the focus of their marketing even if budgets aren’t being cut; according to this report by Gyro International, 83% of Marketing Directors are focusing on their current customers more than ever in the weaker economic climate and 51% are focusing on loyalty marketing.

Now this might seem like common sense - it’s a lots less risky to invest in marketing to customers who have already bought from you that to attempt to acquire new customers - but for many the ‘glamour’ of marketing is in the exciting advertising campaigns that they often generate.

It looks to me that what Marks and Spencer are actually announcing a cut in their advertising spend; we will surely find that the opportunities that Sir Stuart Rose is talking about - such as growing M&S Direct and investing in international business - will lead to increases in marketing in these areas.

One of the never-ending jobs of a marketing consultant is to reassure clients that marketing is more that just advertising. Given that so many marketing directors are investing in customer marketing and loyalty marketing, the message is clearly getting through to business. All that’s left is to get through to the headline writers.