The BV Blog

We’ve talked before about how to grow your business by selling more to your existing customers. And during these economically challenging times, it seems like that advice is more important than ever, according to the top marketing mind at the nation’s biggest electronics retailer. From a marketingprofs.com interview with Barry Judge, Chief Marketing Officer at Best Buy:

Identify and focus [your marketing] investment on your highest-value customers. These customers are your most identifiable and reliable source of revenue and profit across your business; and because they are enthusiasts for your products or services, they will be most likely to continue spending in your categories during a down economy.

Smart businesses know they can’t afford to slash their marketing efforts just because sales are down. Smarter ones will go one step further and put their marketing dollars into efforts to expand their base by growing their sales to customers who are already sold on them.

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In the marketing industry, we’re frequently presented with the task of achieving more bang for less buck, especially in slow economy.

And whether we’re actually in a recession or not, in our current economic state, it’s only natural that business owners are concerned about their bottom lines.

But a slow economy is no reason to slash your marketing budget. It’s time to attack.

In a post at the Stopwatch Marketing blog John Rosen lays out a plan for burying your competition, a helpful do’s and don’ts list ripe with successful and not-so-successful examples from previous economic slowdowns, and sage advice to live by.

While slowdowns can be scary and painful, they also have salutary effects. They force companies to refocus efforts on strategies that genuinely build businesses and powerful brands. For those who accept this challenge and make the right choices, slowdowns can be a period of growth and success.

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I was inspired by this piece from Jacquelyn Ottman. She’s the founder of J. Ottman Consulting, “a marketing and new products firm committed to meeting consumer needs sustainability.”

It seems that, sometimes, we Americans can forget what we’re capable of doing. During presidential election season, for instance, we invest so much hope in our candidate, as if he or she is the lone messiah capable of leading us to the promised land. But, the fact is, the solutions to our problems are in all of us, not just one leader.

In her article, Ottman writes that we, as marketers, can have a huge effect not only on how people perceive our environmental issues, but how they will be addressed. She shows that we don’t need to wait for a single scientist to come up with the big answers to our climate and energy questions, but that you and other marketers - yes, marketers - can make a difference in a million different ways. Please read it, then apply your imagination to your own sustainability questions.

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I love subs. Those five-dollar footlong subs. But the last time I went to the nearby five-dollar-footlong-sub store (the one named for an underground train), they were all out of tuna fish. The last TWO times I stopped in they were out of green peppers. And during my last THREE visits there were no onions in the joint.

Frustrating? You bet! Especially when you’re a tuna / green pepper / onions sorta’ fella like yours truly. But what really toasted my bread was that, each time, the “sandwich artists” who broke the bad news to me could not have demonstrated less concern over my customer experience. In fact, they were borderline rude about it.

Now, I understand that on the list of the world’s real problems, my onion-free subs barely crack the top five. Okay, maybe the top four. But if you own a sub shop — or any other business, for that matter — it should be mighty important to you that your employees not only empathize with your customers when things go wrong, but that they’re empowered to take a step toward making things right, even if that step is merely offering a sincere apology.

This latest brush with employee apathy - and the resulting damage to the sub chain’s brand equity - reminded me of a recent blog post from Drew McLellan. The subject was “Where should business owners invest their money in 2009?”

Drew writes:

As business owners and leaders look back on ‘08 and either shudder at the memory or exhale a sigh of relief that they survived it, it’s easy to assume that the plan going forward should be to lower prices or cut the marketing budget.

The reality is, both of those are the wrong answer. Cutting prices and slashing your marketing budget will only put you deeper in the hole as the economy rights itself. So what should you do with your money for ‘09?

Spend it on your employees. Make sure they understand your brand, your brand promise and how you want them to treat your customers. Don’t hold an annual meeting where you devote 5 minutes and a PowerPoint slide to your brand.

I’m talking make an investment. A real investment.

Talk about how you want your brand to come alive every week. In managers’ meetings, on all staff retreats, in your HR reviews. Make it a part of your interview process, your exit interviews and everything in between. How much time do you spend on how each and every employee delivers on the brand promise in your new employee orientation?

At Disney, no matter what position you are hired for, from street sweeper to a manager of a division, the first thing you’d do is attend a 3-day orientation that talks about absolutely nothing except the Disney brand and how you, the new recruit, are expected to carry on that tradition.

Think about it. Who interacts with your customers? When your customer has a concern or a complaint, who deals with them?

Especially in an economic time when every client matters and you can’t afford to lose any ground, isn’t this the year you should earmark some of your marketing dollars for the very people who deliver your brand every day?”

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In a recent article and marketing tip we cautioned against greenwashing, the practice of overstating a product’s or company’s positive impact on the environment. Here’s more on the subject from a piece in the New York Times:

“With everyone from oil companies to dishwasher makers to banks trotting out their environmental credentials, complaints about greenwashing, or misleading consumers about a product’s environmental benefits, have risen.

The Advertising Standards Authority, an industry-financed group that monitors ad content in Britain, said it had received 561 complaints from consumers about green claims in 410 ads in 2007, up from 117 complaints about 83 ads the year before.

As regulators work out their response, bloggers and other Internet critics have already started to expose what they see as greenwash advertising.

According to Mike Lawrence, executive vice president for corporate responsibility at Cone, a brand strategy agency in Boston, the problem occurs when marketers make exaggerated claims about a product’s attributes, which may be fine when selling toothpaste or vacations. Most people probably know that the toothpaste will not actually make their teeth sparkle or help them get a date.

But when a company says its product will improve the environment, consumers can sense if the claim is puffed up, Mr. Lawrence said. “This can really backfire with environmental advertising,” he said.

To address this problem, agencies are advising marketers to avoid vague and unsubstantiated claims — the kind that bloggers and other critics are quick to pounce on. Instead, they suggest pointing to a specific step the advertiser has taken or asking consumers to take a small but concrete action.

For example, Procter & Gamble, which makes laundry detergent, has been running a campaign in Britain that urges consumers to conserve energy by washing clothing at 86 degrees Fahrenheit rather than at higher temperatures.”

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In the movie “It’s a Wonderful Life,” Mr. Potter - the local Scrooge - reminds the main character, George Bailey, that, during the depression, he and George were the only people in town to keep their heads. When everybody else was panicking and selling off assets at a loss, the two of them were calmly riding out the storm…and they emerged from the depression better off for it.

That same logic also applies to marketing during today’s tough times. You could panic, lay off your company’s marketing staff, and hide your money under the mattress. Or you can look beyond the next few quarters and see that smarter marketing is actually what’s called for. This is a topic we’ve covered before, and in her latest e-newsletter, Marcia Yudkin adds to the conversation. She writes:

“During a recession, scared businesses tend to cut back on marketing expenses. This appears to be the smart bet. After all, most customers have become more cautious about spending. So why not conserve your resources, wait out the downturn and have funds to spend when the economy picks up?

In fact, smart businesses expand during a recession because they know there will be a shakeout caused by the scared businesses shrinking.

During any recession, there are always more than enough clients out there to keep you busy if you continue to market, and market smartly. Capitalize on your strengths.

Make the most of your business relationships. Create or revive programs that enable customers to move ahead.

Above all, stay upbeat, putting the dynamics of self-fulfilling prophecies in your favor.

If you behave like the scared businesses, or target them, you will contract. If you market to the smart businesses during a recession, you will continue to prosper.”

Just as George Bailey did.

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In times of economic struggle, business slows down. For some companies, hard times lead to budget cuts, lay-offs, even closure. When the economy rebounds, the companies left standing are stronger for the struggle. 

In times like these, it’s important to position your business to be on the top of the heap when the economy turns.

But how?

Shift your strategy.
Instead of growing your customer base, which is tough to do in a slow economy, concentrate on customer service and penetrating your existing customers. New customers are expensive to court, and the ROI isn’t apparent until they become regulars. Your current customers will generally spend more with you, and they’ll appreciate the attention.

Shore up your marketing.
Prepare your company for the eventual turn-around. Spruce up your website and prepare it for new visitors. Develop an innovative product or service. Create an email campaign to re-introduce your business to your customers. Companies who prepare won’t get caught with their pants down when business picks up.

Hone your processes.
Can you think of 1 process you have in place that’s a complete waste of everyone’s time? Evaluate your internal systems and trim the fat. Get rid of antiquated processes and implement more effective tools. You’ll find yourself more productive in no time.

Focus on your team.
It may smack of cheesy corporate retreats, but you don’t have to do the “trust” exercise to achieve team unity. Promote open communication on all levels. Encourage your staff to job-shadow each other to foster understanding and cooperation. Organize a company outing. (Business is slow, so you’re not losing much by closing the doors for a day and heading to the beach or to your neighborhood bar for a little co-worker camaraderie.)

Whatever you do, don’t put your head in the sand and wait for things to get better. With ingenuity and passion, all things are possible.

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People who own DVRs (Digital Video Recorders) and access television programming online watch fewer commercials. A lot fewer, according to an Adweek article by Brian Morrissey:

“The TV industry often touts the fact that DVR owners watch more TV than those with only ‘live’ programming. Yet DVR viewers frequently skip the commercials. Over 50 percent of respondents said they ‘always’ fast-forward through commercials, and another 36 percent said they skip them at least three-quarters of the time. Fully 85 percent of respondents said they watch fewer commercials since they got their DVRs.”

Traditional radio is struggling with the same problem. Satellite radio and music services, along with the iPod and similar devices, have made it much easier for listeners to actively avoid, not just radio advertising, but its programming as well.

These examples serve as another argument for intensifying the focus of your marketing messages on existing customers. Concentrate your marketing efforts on an audience that’s more open to what you have to say, not those trying to avoid your message. Those folks already in your database don’t need to be convinced that you’re a fine, upstanding company. They already know it.

Chances are good, though, they don’t know everything you can do for them. So work to educate them about all that you offer with the intent of increasing customer share, not market share. You can do this easily with On Hold Marketing, TeleGreeting and Point-Of-Purchase Audio. These tools allow you to communicate cost-effectively with your captive audiences - those that can’t change channels or fast forward: your callers on hold and the shoppers in your store.

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Seems we can’t get through the day lately without hearing all about how the American economy is goin’ to hell in a hand basket. I’m certainly no economist so I can’t address whether it is or not, but in light of the current headlines I thought it important to reiterate a simple truth: when business slows down, it’s not a good idea to cut activity that drives sales - like marketing.

As support, I offer this excerpt from Jay Lipe’s “10 Commandments of Marketing.”

“Thou Shalt Not Cut Marketing Spending During Slow Times

From 1980 to 1985, McGraw-Hill Research analyzed 600 companies and their marketing spending. After 1985, McGraw-Hill concluded that those firms which had maintained or increased their advertising during the recession in 1981-82 boasted an average sales growth of 275% over the next five years. But those companies who cut their advertising saw paltry sales growth over the next five years of just 19%. When is the right time to market your business? All the time.”

And here’s a piece from Advertising Age on how Kraft and Kellog’s are responding to lower 4th quarter earnings.

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In 2007, we thought we’d seen it all. Skyrocketing oil prices, toys with lead-based paint, the Western wildfires, senators in bathroom stalls, and of course Sanjaya. And just when you thought things couldn’t get any worse, there they were: Precious Moments coffins.

According to the TippingSprung Brand Extension Survey, deeming the best and worst brand extensions for the second year in a row, the heart-warming keepsake-maker was one of the numerous brands that just œdidn’t know where to draw the line”when it came to line extensions.

In a poll of 785 Brandweek readers, the coffin was voted the most inappropriate extension followed closely by the Humane Society Dog Lovers Wine Club, and Girls Gone Wild apparel.

Since the œNew Coke debacle of the 80s, marketers have become more cautious with product extensions. But brand extensions? As time marches on, it seems all sense has gone out the door. Usually new developments are used to increase add-on sales to an already powerful portfolio. But too often, these new endeavors result in a straying from the core values of the brand, along with the associations consumers have tied to it.

It’s been proven”one mistake and a company can dilute or even severely damage the brand they have spent years building. When you raise eyebrows, you raise doubts.

Brands that did it right, however, proved that you can capitalize on the core values that make you strong, but still can differentiate in a positive way. PetSmart PetsHotel was voted best brand extension overall; Curves Cereal finished a strong first in the food extension category; and The Food Network was tops with its kitchenware line. Innovative, successful”these brands know how to play their hand.

And as America’s preoccupation with celebrities continues to climb, it seems that a classic will still win over the audience. Newman’s Own released a new wine line that was to the liking of 75% of the respondents. On the other hand, The Jeff Gordon Collection of Fine Wines bombed, with an over 90% disapproval rate. I’m not going to touch that one.

It seems that certain companies may need a call back to the basics; a reminder to “Keep It Simple, Stupid.” When designing a brand hierarchy, think commonality. Think relevance. And above all, think simplicity. And if none of that helps, think about what your brand would look like in a Precious Moments coffin.

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