Optimizing Your Marketing Communications Mix

money_in_crystalballOn those few occasions when I am in town for a full week or more, I often go through my “archives.” I found this gem tucked away in a folder that was mislabeled. While not earth shattering, it’s worth remembering.

How can you optimize marketing spending in any economy? It depends what you mean by marketing. (Now there’s a typical consultant’s answer.) Since most people who ask that question are referring to the promotion side of marketing, let’s focus there.

To achieve optimum results, you need to be effective and efficient. Effectiveness is doing the right thing. Efficiency is doing things right. An effective message helps the right prospects understand the value of becoming your customer. The wrong message, no matter how efficiently delivered, does no good at its best and damage at its worst. However, if you don’t make your effective marketing messages efficient, you can still spend too much money and suffer a competitive disadvantage.

So, you must first develop an effective message then work on efficiently delivering that message. First do the right thing, then do things right.

Mitch

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Dotcoms, Unicorns, Business Valuation and Dollar Shave Club

dollarshaveclubYesterday Unilever announced the intended purchase of Dollar Shave Club, an online razor and related men’s items merchant, for $1B. A few years ago I wrote about the hype surrounding this company. I would like to say that I am shocked by the purchase, but not really.

Dollar Shave Club has a self-reported 3.4MM members (up from 200,000 a few years ago). Those members are expected to generate a company projected $240MM in revenue in 2016. This represents about $70/customer. And the company has yet to make a profit, even at these revenue rates. Unilever is paying over $290/customer for the acquisition, plus the site and its position in the market. How does this make any sense?

To be fair, Unilever apparently had been a strategic investor in the company for some time, so it really isn’t costing them $1B, but it is still a LOT of money. How does the Board of Unilever justify spending $290/customer to acquire customers who spend on average $70/year? Is the rest of their revenue production system so bad that they can’t do better than this in other ways? Maybe not.

This deal, like many unicorn deals (start-ups with over a $1B valuation), make no sense to me. However, it may be that short-term revenue is critical to Unilever. They likely believe they can lower the costs of serving these customers. They can increase the customer base more rapidly than Dollar Shave Club has done before. Maybe so, but so what? How many more customers would they need to ever earn a decent return on their $1B investment?

Pressure to grow in the short-term drives too many bad decisions in my opinion. All that being said, congrats to Michael Dubin, the founder of Dollar Shave Club, on the over-priced sale and a contract to continue as CEO.

Mitch

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A Little Less Talk And A Lot More Action … Please

49463974 - less talk more action text concept isolated over white background

49463974 – less talk more action text concept isolated over white background

Lyrics from a Country-Western song resonated with me as I was reviewing some old magazine articles from my archives. The content was about the idea that the tipping point construct was not valid and that the idea of Connectors and Influencers was misleading.

Many marketers are still focused on creating buzz or viral whatever to help their product/service succeed. While that activity may be helpful, it does not necessarily correlate to adoption. As someone once said, ” Virality is an outcome, not a channel to be planned.”

The problem with this approach is the mistaken belief that buzz or viral equates to adoption. Just because people (even influential people) are talking about your product or service does necessarily mean they are using it … really.

Do not confuse how viral your message is with whether it is inducing trial. And if it is inducing trial, is that experience creating adoption? It’s not about “likes,” it’s about the action of trial and adoption.

Mitch

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Customer Experience and Process Management: A Dichotomy?

customerexperienceWe find ourselves at Customer Manufacturing Group at the intersection of two trends that are finally becoming mainstream conversations: customer experience and process management. As we discuss these topics with people, we notice their concern that the two may be mutually exclusive. That is, a belief that efficient process implementation precludes a great customer experience. We disagree.

A process is a set of activities designed to produce a particular outcome. Business processes usually are expected to run continually, and to produce the same outcome predictably. So how does great customer experience come at odds with efficient process? Failure to agree on the outcome the process is supposed to produce.

Despite rhetoric to the contrary, most companies still operate from an inside-out mentality. Further, the people who design the processes seek stability within the process. This occurs for at least two reasons: (1) most people prefer a stable environment, (2) it is easier to make a stable process efficient.

This causes most business processes to be rigid. How often have you heard someone tell you they can’t help you because the process doesn’t let them?

In the world of customer experience you have many variables, not the least of which is simply the variability within each customer. Process experts attempt to create a process that will fit all customers, or more realistically to force all customers to fit the standard process that was created.

And, as we have noted for many years, every process is perfectly constructed to produce the results it does. Some customer-facing processes have the ability to deal with “process exceptions.” That would be customers who don’t “fit” into the mainstream process but are either important enough or loud enough to call for “special” treatment. However, this is akin to the old “rework” processes in manufacturing, which did not help improve the process itself, but simply attempted to mask the root cause. And they are usually more expensive since “rework” is inherently costly.

To create and execute processes that offer a valuable customer experience one must recognize that the processes cannot be rigid or inflexible because the gosh darn customer just won’t cooperate (at least not most of them, most of the time). The key is to create flexible, adaptable processes that can accommodate the needs of your customers.

If you accept the Drucker-ism that the purpose of a business is to create and keep customers, then processes that support that are mandatory. Customer experience is now recognized as a key driver of that ability to create and keep them. Further research[1] has found that companies that provide superior customer experience produce better ROI for their shareholders. So what’s the issue?

Creating flexible and adaptable processes is more expensive than rigid processes. This is true, if for no other reason than because the skills required of the people in the process are greater if the process is flexible and adaptable. And people with more skills generally get paid more. So the idea is to great the so-called “Goldilocks process.” Just flexible and adaptable enough … and no more.

Two key requirements to create the so-called “Goldilocks process” are to (1) understand and agree on the outcome desired … from the customers’ perspective; (2) recognize that you cannot serve everyone with this approach. There must be a focus on attracting and retaining the right customer and having a method for helping the “wrong” customer shop elsewhere. If there aren’t enough “right” customers to achieve your business goals, that is a strategy problem not a process problem.

Describing the solution is simple: create customer-centric processes that are effective at delivering the customer experience promised. Once you have done that well, you can look to make the processes more efficient … as long as they continue to be effective.

Mitch

[1] 2015 Watermark Consulting Study

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Will The Return Of The Edsel Be Next?

crystalpepsiFor reasons that are beyond me, Pepsi has announced the return of their 1990s soft drink failure, Crystal Pepsi. For those of you who don’t remember, or never heard, Crystal Pepsi was a “clear cola.” As predicted by my friend Barry Minkin at the time of the original announcement, the product was a complete flop. In a last effort to save it they converted it to a lemon flavored drink, which also failed.

This is not the first time they have considered this action, but this time they are doing it.

The alleged reason for the return is “nostalgia;” and it will only be back for the summer. Unless, of course it is a big hit this time. (Highly unlikely, Barry insists.) Are they so lacking for creative new product ideas that the best they can do is reintroduce a flop? How would the Board of Directors at Ford feel, if Ford execs decided to reintroduce the Edsel?

Seriously, Pepsico, is this the best you can do?

Mitch

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I Was Stupid And They Saved Me

southwest_airlines_logoI bash the airline industry a lot on this blog. Firstly, I fly often so I get lots of opportunity; and secondly, they give me lots of examples. That being said, when they do a good job, I also like to make note of it.

While the heroes in this story were mostly airport people, my favorite US airline, Southwest, also played a key part.

For reasons unknown (though one of our team members suggests it is age related), I left my laptop on the work table at gate 20 at the Indianapolis airport. I did not discover this until I was on the plane and well into the flight. I checked my briefcase five times to make sure it really wasn’t there. I knew exactly where I had left it, but not really sure how.

Anyway, four hours later when we landed in LA, I asked a customer service agent if she could give me the phone number for Southwest at the Indianapolis airport so I could call them to see if anyone had turned in the laptop. It took her a couple of minutes and a phone call but she gave me the number, which I called

The Southwest woman in Indianapolis, after hearing my stupidity, told me that she believed a laptop had been turned in at the gate and if so it would have been turned over to the airport. She also told me she had enough iPads that had been left on planes to start a store, so I should not feel bad. She gave me the number for the people at the airport who handled lost items. I called them next.

Talked to a wonderful woman who went and found the laptop that had been turned in. After a few questions and powering up the laptop she confirmed it was indeed mine. I asked if I could pay to have it sent to me. She said sure, they use FedEx. When did I want it? I said tomorrow if possible. She told me that unless FedEx was late it would not likely go until tomorrow, and she would call me back if it went that night. She gave me my FedEx tracking number. I thanked her and hung up.

Since I did not hear back, I assumed it did not go that night. The next day I checked the FedEx site looking for my tracking number, which did not appear. I called back to confirm it had been picked up and that the tracking number was correct. I called FedEx and they had no record of the tracking number in their system. Our office manager noted that, in his experience, paper based FedEx packages often were not entered into the system by the driver even though they are supposed to be.

On Saturday morning I found the number in the system and the package was in route to me. It arrived as promised and in working condition.

Commendations to Southwest and the staff in lost and found at Indianapolis airport for saving me from myself. Congrats on a seamless process that made finding the solution quick and easy. As to FedEx, while you delivered on time as agreed, you become more like the USPS everyday … and not in a good way.

Mitch

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Great Idea; Too Bad It Tastes Like Its Name

toxicwastecandyAs people who know me know, I like candy. I especially like sour candy. I was therefore  quite attracted to the display of candy in the picture. Great packaging. Excellent potential secondary use. Outstanding come on for us sour candy aficionados. So I bought a “can.”

Too bad it tastes awful. Their challenge to keep it in your mouth for a period of time based on its sourness was irrelevant. It tastes like toxic waste (ok, I’ve never had toxic waste actually, but this candy was really bad. It makes candy that tastes like medicine seem like a great treat.

Anyway, another example of a great idea with poor execution.

Mitch

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