FIVE CHARACTERISTICS OF THE OPTIMUM MARKETING STRATEGY. Destination. Focus. Knowledge. Product. Perception.   Research suggests that some 50% of businesses do not have a documented marketing strategy. Many businesses have no marketing strategy, while others have a strategy that resides in the heads of management, a small section of the business plan or a bunch of notes […]

FIVE CHARACTERISTICS OF THE OPTIMUM MARKETING STRATEGY.

Destination.

Focus.

Knowledge.

Product.

Perception.

 

Research suggests that some 50% of businesses do not have a documented marketing strategy. Many businesses have no marketing strategy, while others have a strategy that resides in the heads of management, a small section of the business plan or a bunch of notes that allows. For me, there are three critical questions here; what is a marketing strategy? why is a marketing strategy necessary? and what are the characteristics of the optimum marketing strategy?

A MARKETING STRATEGY

Investopedia defines a marketing strategy as follows:

• “… a business’s overall game plan for reaching prospective consumers and turning them into customers of their products or services. A marketing strategy contains the company’s value proposition, key brand messaging, data on target customerdemographics, and other high-level elements. A thorough marketing strategy covers “the four Ps” of marketing—product, price, place, and promotion.”

 

I would have thought that this definition was as good as any. The only change I would make relates to my view that marketing should be about maximising the lifetime value of each customer and not just “.. reaching prospective consumers and turning them into customers of their products or services…” In essence, developing a marketing strategy involves developing a plan to maximise the number of customers and their lifetime value.

THE NECESSITY OF MARKETING STRATEGY

Research suggests that businesses with a documented marketing strategy are 313% more likely to succeed. From the definition offered above, it might be concluded that a marketing strategy is important because it is the key to – “maximising the numbers of customers and maximising their lifetime value” – and in so doing, maximising the performance of an individual and or enterprise. More specifically, your marketing strategy is the key to:

• Maximising sales and margins.
• Minimising waste, especially on promotion.

 

These outcomes are achieved by, among other things:

• Setting the optimum direction and monitoring progress to facilitate fine-tuning.
• Identifying and focusing on optimum market and audiences.
• Establishing the optimum offering and how it is packaged.
• Focusing expenditure where the return can be maximised.
• Targeting messaging and maintaining consistency.

 

CHARACTERISTICS OF THE OPTIMUM MARKETING STRATEGY?

The characteristics of the optimum marketing strategy can vary from business to business, time to time and market to market. There are, however, 5 characteristics common to all high-quality marketing strategies. They revolve around:

 

1. DESTINATION

 

It is first essential to define where the strategy will take the business, its brands, or its people. This involves clearly defining the:

• Vison – a clear articulation of what success will look like.
• Mission – a clear articulation of the reason for being or purpose.
• Objectives – a clear and quantifiable articulation of what is to be achieved.

 

By definition, a strategy is a plan for getting to a destination or outcome. It is simply impossible to develop the optimum plan or strategy without first articulating what it must achieve. In addition to providing direction, the objectives offer a benchmark against which progress can be monitored and strategy can be fine-tuned.

The vision and the mission, in addition to defining the destination, are central to the definition of the brand. The objectives provide the specifics required to design the optimum strategy.

It is, of course, not enough to have a vision and mission and a set of objectives. All staff must understand and embrace the vision and mission if the optimum brand is to be established and the objectives achieved or exceeded. In contrast, all marketing staff must understand and embrace the objectives.

When developing a marketing strategy:

• Articulate a clear vision and mission for the business.
• Set quantifiable objectives, the movement to which can be monitored.

 

2. FOCUS

 

I know a business is struggling and will likely not achieve its vision, mission, and vision when management tells me its market is everyone. Indeed, research shows that trying to be all things to all people is a receipt for failure. Mark Cuban, one of the most prominent venture capitalists in the United States, will only invest in a business that can demonstrate it is targeting “the smallest possible sustainable market.” Clearly, the market you target needs to be big enough to deliver the sales required – but it should also be small enough for the business to:

• Understand better than any competitor.
• Personalise or customise its product and customer experience too.
• Personalise or customise its pricing, distribution, and pricing strategies.

Increasingly, research highlights the importance of customisation and personalisation – which becomes more accessible as the market becomes smaller and more homogeneous. To balance the potential ill-effects of focusing on a small market – place the highest possible priority on customer lifetime value.

There is a tendency, especially among smaller businesses, to use multiple promotional tools and multiple social media channels. Many businesses I look at use too broad a combination of traditional advertising, digital advertising, content marketing, native marketing, direct marketing, SEO etc. Equally, in terms of social media, it is all too common the try and master multiple channels all at once. Research and anecdotal evidence suggest, however, that the most effective marketing strategies focus on:

• A small number of promotional tools or avenues.
• One, two or at most three social media channels.

 

Focus is one of the keys to minimising the waste so often associated with marketing and promotion. A lack of focus is perhaps the most common error I see in marketing strategies. While perhaps counterintuitive, the focus is essential to an optimal marketing strategy.

When developing a marketing strategy:

• Identify and focus resources on the smallest possible market.
• Identify and focus on the smallest possible number of promotional tools and channels.

 

There is much popular literature suggesting the benefits of intuition. Research suggests, however, that in so far as marketing is concerned, the intuition of managers and business owners is highly unreliable. Research also points to the increasing importance of data and the wisdom of applying intuition to that data rather than instead of collecting data.

Marketing is the business of managing consumer behaviour and ensuring behaviours that deliver the objectives of the enterprise. It is, in essence, that businesses of driving consumers to display a behaviour:

• For the first time – eg – eat in your restaurant.
• For the last time – eg – smoke.
• More often – eg – buy your technology.
• Less often – eg – drink alcohol.

 

As any psychologist worth their salt will tell you – data is the key to cost-effectively managing human, and therefore consumer, behaviour. The more a business knows the facts, the better placed they are to develop strategies that maximise returns and minimise waste. The required data can be sources by way of:

• Customer tracking and monitoring.
• Market research – both qualitative and quantitative.
• Customer insights – drawn from academic sources.

 

Fortunately, an increasing suite of technologies makes data gathering much less expensive than it once was. Once the technology is in place, data gathering can be inexpensive or free.

 

When developing a marketing strategy:

• Give priority to data – ahead of intuition.
• Engage the technology needed to automate data gathering.

 

4. PRODUCT

 

My research suggests that nothing is more important to success than the product sold. New York University marketing professor – Scott Galloway once asked an audience – “What do Apple, Google, Netflix, Facebook, and Amazon have in common?” Galloway answered his own question: “a fucking great product”. I do not doubt that he was and remains correct. Further, I would add that the product includes:

• The good or service you are selling.
• The customer experience.

 

The customer experience is a critical part of the product – especially if your objective is to maximise the customer LTV – which should be an objective of every business.

To develop the optimum product and customer experience, it is essential to embrace the realities that:

• The customer defines – good and best, quality and value in terms of the product.
• The customer determines the optimum customer experience.

 

I have encountered many cases where the product and customer experience were considered superior by business management – and inferior by the customer – which is important given that it is the customer spending the money.

Research suggests that the key to developing the optimum product includes- understanding the market well enough to develop a product and customer experience that exceeds their expectations.

When developing a marketing strategy:

• Offer a product and customer experience that exceed expectations.
• Know your customer well enough to know how to exceed their expectations.

 

5. PERCEPTION

 

Both parties come to the debate with their own biases and preconceptions – both impacting what they hear and how they interpret it. When a left-leaning person and a right-leaning person listen to a debate involving a candidate from one side or the other, they hear the same words expressed the same way – but they take away a very different message and most often interpret it very differently. Further, there is often challenging to determine which – if either – interpretation is correct.

Human beings make decisions based not so much on reality as they do on perception. Consumers buy not so much on the reality of a product as they do on their perceptions – which are in turn impacted by up to 25 cognitive biases and a host of other inputs. No consumer has ever purchased based on fact. Every purchase ever made was basised on perception – even when the perception is the reality. In marketing – perception is everything.

The importance of perception has two implications for marketing strategy:

• Strategy needs to address perceptions ahead of reality.
• Strategies need to manage perceptions.

 

Many businesses have told me that their product is the best on the market when the target market perception is that it is not. Given that the purchase decision will be based on perception – the customer’s perception is the only one that matters—understanding consumers’ perceptions and what impacts those perceptions is therefore critical. While in an ideal world, the reality will match the perception – this will generally only occur if the strategy causes it.

Perception is most important with branding.

When developing a marketing strategy:

• Embrace the importance of customer perceptions.
• Manage customer perception, regardless of the reality.

 

 INSIGHTS

Observations about marketing strategy.

• A marketing strategy without a vision, mission and objectives will fail.
• A marketing strategy that is not highly absolutely focused will waste money.
• A marketing strategy based on intuition will never achieve optimum results.
• After the customer – nothing is more important than the product.
• In a marketing strategy, reality is much less important than perception.

 

ANOTHER INSIGHT

• https://www.youtube.com/watch?v=LoS8oGOrpoo

 

RECOMMENDED READING

• https://www.booktopia.com.au/good-strategy-bad-strategy-richard-rumelt/book/9781781256176.html

 

 ACTION

To maximise returns and minimise marketing costs:

• Shift your focus from the subsequent sale to customer lifetime value.
• Understand and address each touchpoint on the customer journey.
• Use an online community to reduce costs and maximise customer LTV.
• Target the smallest possible market with a compelling point of difference.
• Market intelligence and agility will determine the success of businesses post COVID.

 

QUESTIONS

Questions all marketers should know the answer to.

• Given that 74%of customers will switch brands if the purchasing process is too difficult for them – what are your customer’s views on the customer experience you offer?
• Given that the probability of converting an existing customer is between 60%-70%– how would you best describe your strategy for maximising customer LTV?

 

• Given that – 55%of branded communities say that the community has contributed to increased sales?
• Given that – 32%of customers “break up” with a favourite brand after one poor customer experience – how do you ensure your customer experience meets expectations?
• Given that – 88%of customers view authenticity as necessary to brand loyalty – how authentic do your customers believe your communication is?

 

STATISTICS

Statistics every marketer should know.

• Goal-setters are 377% more likely to succeed than those who don’t set goals.
• Businesses that document their strategy are 313% more likely to report success.
• Organised marketers are 674% more likely to succeed.
• Marketers using project management software are 426% more likely to succeed.

 

The fact is – marketing strategy, done well, is critical.

FIVE MEGA MARKETING TRENDS BUSINESSES CAN LEVERAGE IN POST-COVID 2022 

Simplicity.

Shopping local.

Sustainability.

Nature.

Doom-scrolling

 

There are many short-term trends and long-term trends of which businesses need to be aware. Both are important and must be understood if the optimum marketing strategy is to be developed and implemented. This missive focuses on five long-term mega-trends – trends that, while exacerbated by COVID 19, started long before the pandemic and are expected to continue long after COVIC is a distant memory. All five trends are relevant to businesses of all shapes and sizes -and all five can be leveraged by businesses for which they are relevant.

SIMPLICITY 

Depending on your source, Bernard Arnault is the second or third wealthiest person on the planet. His net worth is said to be around US$136 billion. Arnault is the CEO and Chair of LVMH, the world’s largest manufacturer and vendor of luxury goods. A feature of luxury goods is simplicity, and the focus on simplicity appears to be getting stronger by the day. To an extent, simplicity is a hallmark of luxury goods, but it is also a broader long-term mega-trend impacting western consumers’ preferences and purchase behaviour.

One industry in which simplicity is driving design is the building industry, with James Hardie building products noting:”.. the house of 2022 is best summed up by the words “beautiful simplicity. Homeowners are inspired by clean lines and pared-back designs with achromatic colour palettes.” Food is another industry in which the move towards simplicity is accelerating. Backeryandnacks.com notes,” This year’s top 10 food trends embrace health and simplicity.” Jeff Hilton notes – “The convergence of food and supplements combined with other factors such as convenience is driving the move towards simplicity, a trend that is not only here to stay, but also represents the future.”

Many, including Steve Jobs, have suggested that the central to Apple’s success has been its dedication to design and specifically the simplicity of its design. Some would suggest that the simplicity of its operating system is central to Apple’s success, resulting in superior ease of use. The planet’s largest furniture store Ikea is world-renowned for its design’s simplicity and stores. Aldi is known for its simple, consistent store layouts, offering affordable, high-quality goods combined with a stress-free customer experience. And so the list goes on and on.

Simplicity is a mega trend for a range of reasons, including;

• It is associated with premium. – 64%of consumers are willing to pay more for simpler experiences.
• It builds loyalty – 61%of consumers are likelier to recommend a brand because it’s simple.
• The costs less than complexity. Brands that don’t provide simple experiences are leaving an estimated share of $86 billionon the table.
• Simplicity inspires. 62%of employees at simple companies are brand champions—versus only 20% of employees at complex companies.

 

This move towards simplicity in design and operation is consistent with a trend towards – voluntary simplicity – a lifestyle that is becoming increasingly common – involving the active reduction in consumption with a conscious effort to live a simpler life:

• Removing clutter.
• Prioritising people over things.
• Reducing anxiety and encouraging calmness.
• Prioritising intrinsic values.

 

My strong recommendation to every business is to place the highest possible priority on simplicity, especially in terms of:

 

For once, there is a correct platitude – “less is more.”

SHOP LOCAL

The growth in e-commerce is beyond question. Online shopping in Australia doubled during the course of the COVID 19 Pandemic. For Australia, the headline statistics are as follows:

• Australians spend AUS$62.3 billionon online physical goods in 2021/22.
• Some 3%share of total retail sales are now online, with that figure continuing to grow.
• Growth in spending on online physical goods was strong, at 4%year on year.
• Australian women spend an average of 4 hoursa week browsing online.

 

While online shopping continues to grow, so is the preference for buying local. While in 2000, 50% of Australian online sales were made on a site outside of Australia, by 2021, only 20% of Australians purchased from stores outside of Australia. While some 40% of online purchases are manufactured in China, purchases from other parts of the world are in decline – and not all the Chinese products are sold outside of Australia. This reflects a growing preference for online and offline shoppers to shop locally.

Research in 2021 found that – 71% of Australians are planning to shop local, preferring to buy from Australian-owned brands whenever possible, with Baby Boomers the most committed to buying Aussie products (82%) during this holiday season. Research by the Commonwealth Bank found that – 50%+ of Australian shoppers want to buy locally sourced and produced products, according to a new study by our finance and banking partners.

There are a number of reasons for the increase in the preference for shopping locally. They include:

• Support local communities and jobs.
• Environmental protection.
• Ideological support for small business.
• Perception that Australia makes quality.
• It has the potential to be more personal.
• It is easier to complain.

 

Consider:

• 38%of shoppers say they want to support their community and local creators.
• 70%of consumers support local businesses by shopping online only, or a mix of online and in-store.
• 76 %of shoppers say they would instead support a local business than a large corporation.
• 28%of shoppers buy local for better service, and 19% to help local non-profits.

 

Whatever the reason, this more to buying local is a significant trend. It is not, however, a trend without its limitations. Research suggests that consumers are less likely to shop local if the only benefits are community support and jobs. There is a limit to how much more consumers will pay to buy local. While consumers say they will pay more to shop local, data suggests that it is not much more. There is no open cheque book.

I highly recommend that businesses:

• Highlight their local credentials.
• Make it as easy as possible to buy local.
• Emphasise their SME status if they have one.
• Don’t use local as an excuse for being more expensive.

 

SUSTAINABILITY

With all the talk about climate change, it is perhaps not surprising that “sustainability” is a solid and persistent mega trend in 2022. That said, the concern about sustainability reaches well beyond a concern about climate change. Consumers are increasingly attracted to environmentally, socially, and economically responsible businesses. To appreciate the importance of “sustainability, consider these statistics:

• 73% of millennialsare willing to pay more for sustainable items
• 66%of worldwide customers are willing to pay more for sustainable commodities.

 

This reflects a growing trend toward consumers taking steps to be more “sustainable.” Consider:

• 49%of consumers are now limiting their use of single-use plastic.
• 45%of consumers are now preferencing seasonable vegetables.
• 39%of consumers are now buying goods more locally.
• 34%of consumers say they are reducing the number of goods they buy.
• 30%of consumers are reducing their consumption of meat/animal products.

 

These are just some of the many trends within the sustainability envelope, which, in addition to demonstrating a concern for sustainability, have the potential to impact consumers’ purchase behaviour. As a result of their commitment to sustainability, consumers are travelling less, eating less meat, avoiding products with excess packaging, avoiding high emitting businesses where possible and buying more locally. The quest for “sustainability impacts most industries.’

In addition to demanding more of business, consumers are demanding more of themselves, and this is directly impacting purchase behaviour – including brand preferences.

In 2022, consumers will be more environmentally conscious than at any time, and they demand that the businesses they deal with act more sustainably. While the use of the word “sustainable” is often inaccurate, consumers are demanding of businesses’ behaviour that is at the very least socially responsible. Socially responsible behaviour is increasingly linked to:

• Attracting and retaining customers.
• Attracting and retaining employees.
• Building value into a brand.

 

While paying more attention to “sustainability” and its impact on consumer behaviour, it is also important to remember the authenticity and dangers associated with greenwashing – or presenting the image of behaving “sustainably” while not doing so. Research suggests that greenwashing has the potential to do more damage than authentic “sustainable behaviour” will ever do good. A significant study of greenwashing and consumer attitudes towards it found that – ‘when greenwashing is identified in the product, it loses the aspects of loyalty, satisfaction and benefits, and becoming a product that confuses. Further, consumer attitudes and beliefs show that they are guided by the aspects of perceived loyalty, satisfaction, and benefits and that the perceived risk aspect is practically ignored.’

I highly recommend:

• Monitoring trends towards “sustainable” behaviour by consumers.
• Develop a strategy for maximising your “sustainability” credentials.
• Strive for authentic “sustainability” – avoiding greenwashing.

 

 NATURE

Adventure sports and adventure tourism have been significant trends for some time and are likely to remain popular for years. Running alongside the demand for adventure is a growing demand for nature, especially getting back to nature. Very different to engaging in adventure sports in nature, the demand for getting back to nature is more related to the popularity of:

• Wellness – a trendy concept involving more than just being healthy.
• Mindfulness – a trendy concept involving living in the present.
• Sustainability – an attraction to greater environmental responsibility.
• Experiences – meaningful experiences, creating more memories and engagement.

 

I have a small farm in the southwest of Western Australia, and many of the farms around me have farm stay accommodation on them. Reflecting the desire to return to nature, these farm stays have an occupancy rate approaching 100%. They are fully occupied most weekends, with occupants getting out and about bushwalking, fishing, eating, cycling, picnicking and enjoying the natural environment and its effect on their state of mind.

The interest in regional areas has increased during the pandemic, especially with the growth in working from home. There has also been a trend for more people moving to the regions, as reflected in a significant increase in real estate prices. Regional property prices have increased as much as 69% in 2022.

Of course, there is also a growing trend to bring the natural world into the suburban home with the increasing use and sophistication of:

• Augmented reality.
• Virtual reality.
• Virtual worlds and the meta-verse.

These technologies offer the opportunity to “experience” nature and “immerse” oneself in the natural environment without leaving home. This is, at least in part, reflected in the following:

• The market for VR and AR is forecast to hit US$297billion by 2024.
• From 2021 to 2028, the compound growth rate in VR will be 18%per annum.
• 52 millionUS citizens used VR technology in 2020.

 

While the attraction of nature has the most significant impact on the tourism and, to a lesser extent, technology sectors, it also has much broader effects in terms of the demand for:

• Natural or organic foods.
• Nature and environmental content. (Including documentaries)
• Natural fabrics and clothing more generally.

 

There is a growing appreciation that humans are from nature and benefit from any connection with nature.

I predict that the:

• Demand for natural experiences will continue to grow.
• Demand for natural content will continue to grow.
• The orientation towards nature will continue to grow.

 

DOOM-SCROLLING

Everywhere consumers look, they are confronted with negative “doom” news. Consumers are increasingly scrolling through negative news on television news, news feeds, and social media feeds. In 2022, that negative news addresses COVID 19, Ukraine, racial injustice, Donald Trump, rising interest rates, rising inflation, and the likelihood of a recession. There is also increasing evidence to suggest that this negative or “doom” news is adversely affecting the mindset and even the mental health of consumers. This has been the case for some time and is likely to continue into the future.

The Webster dictionary defines “doom-scrolling as – “the tendency to continue to surf or scroll through bad news, even though that news is saddening, disheartening, or depressing. “Many scroll through their feed late into the night when they should be sleeping. The negative impacts of this “doom-scrolling” are considered substantial. According to clinical neuropsychologist Judy Ho, the need to scroll is a psychological phenomenon — like being unable to turn away from a train wreck. She notes that:

“It’s a way for your brain to try to maintain control in a very uncontrollable situation in our world,” she adds. “When you feel out of control, the weird thing is. Actually, you’re going to want to read more bad news. It’s like a way for you to basically say, well, ‘At least I knew about it in advance.’ It somehow makes you feel like you are in control… even though we know it’s not going to be anything good, and we always tend to feel horrible afterwards.”

The BBC has recognised that negative news coverage –” (Doom-scrolling) can increase our risk of developing post-traumatic stress, anxiety and depression. Now there’s emerging evidence that the emotional fallout of news coverage can even affect physical health – increasing our chances of having a heart attack or developing health problems years later.”. There is also evidence to suggest that “doom-scrolling” creates a negative mindset that can reduce the effectiveness of adverting and increase the reluctance to make a purchase. Less positive people purchase less.

“Doom-scrolling” is becoming so prevalent and is causing many issues that there is now a range of “anti – doom–scrolling APPs, including.

 

A challenge for advertisers with all of this “doom-scrolling” has been getting consumers to focus on the advertising and do so with a positive mindset that might lead to interest and ultimately a purchase. Such strategies include:

• Delivering good news.
• Using humour.
• Encouraging mindfulness.
• Reminding people that life goes on.

 

The critical point here is that there is much negative news out there, and humans are attracted to negative news and are increasing scrolling that bad news – leading to a less than optimal mindset and a reduced propensity to engage with advertising and make a purchase.

Businesses need to:

• Recognise the existence and impact of “doom-scrolling.”
• Remain mindful of the negative impact it can have on sales.
• Consider developing and implementing strategies to counteract it.

 

INSIGHTS

Consumer mega-trends tell us that:

• Consumers are attracted to simplicity – associating it with quality.
• While buying more online, consumers are also buying more local.
• Consumers are becoming more “sustainable”, and so must business.
• Consumers are getting back to nature and the mindset it creates.
• Dooms-scrolling encourages a negative mindset among consumers.

 

ANOTHER INSIGHT

https://www.youtube.com/watch?v=8pC4oBDaWUE&t=2442s

RECOMMENDED READING

https://www.booktopia.com.au/the-infinite-game-simon-sinek/book/9780241385630.html

ACTION

To leverage long-term mega-trends:

• Simplify product designs, processes, and systems. Less is more.
• Even online, play the local business card as hard as you can.
• Demonstrate and articulate authentic sustainability credentials.
• If you can help consumers get back to nature – do so.
• Embrace and, where possible, counter doom-scrolling.

 

QUESTIONS

Questions for which all marketers should have the answer:

• Given that 64% of consumers are prepared to pay more for a simpler experience – how are you making your customer’s experience simpler?
• Given that 71% of Australians prefer to shop local – what are you doing online and offline to highlight your local presence?
• Given that – 73% of millennials will pay more for a product considered “sustainable”, how are you highlighting your sustainability credentials?
• How are you leveraging the growing attraction of consumers to populist concepts like wellness, mindfulness, sustainability, and natural experiences?
• What are you doing to leverage the opportunity to counter the growing impact of “doom-scrolling,” a phenomenon increasingly impacting purchase behaviour?

 

STATISTICS

Statistics every marketer should know.

• 61%of consumers are likelier to recommend a brand because it’s simple.
• Australian women spend an average of 4 hoursa week browsing online.
• 38%of shoppers say they want to support their community and local creators.
• 66%of customers are willing to pay more for sustainable items.
• The market for VR and AR is forecast to hit US$297billion by 2024.

 

These are just some of the mega-trends impacting marketers by influencing consumers.

 

 FIVE STRATEGIES FOR BRICKS AND MORTAR PROSPERITY IN A DIGITAL WORLD – AND THE LESSONS FOR OTHER BUSINESSES 

 

• Customer lifetime value.
• Customer experience.
• Omnichannel retailing.
• Shopping local.

 

Bricks and mortar retailing has had its barriers to profitability over recent years. This is reflected in growing shopfront vacancies in the centre of cities and towns throughout Australia and the world. In 2021, the Sydney Morning Herald reported that CBD retail vacancy rates had risen 12.9% as a result of COVID 19. The high vacancy rates for CBD retail will remain high and continue to grow. According to Business News, in 2022, retail vacancy rates in the Perth CBD are 18%. There are two observations I would note regarding these numbers:

• The high vacancy rates for CBD retail will remain high and continue to grow.
• The factors impacting on retail in general are relevant to many other industries.

 

Before addressing the solutions to declining retailing and identifying strategies, retailers and other businesses can implement to stem this decline and facilitate growth. There is merit in highlighting the reasons for the current decline. Accepting that the state of the economy is a significant factor (including inflation, interest rates and uncertainty), marketing-related factors include the:

• Decline of consumerism.
• Attraction of experiences.
• Growth of e-commerce.
• Second-hand market.
• Demanding consumer.

 

While the Australian economy depends on consumerism, recent research has found that 80% of Australian consumers recognise that they have been buying more than they need, and 60% believe consumerism is bad for society as a whole. Consumerism is declining, especially among Gen Z, who are increasingly environmentally conscious and attracted to a simpler life with less ‘stuff.’ More consumers are preferring to buy ‘experiences’ instead of goods. Research suggests that some 74% of Americans now prefer buying experiences over goods. The key motivators include:

• Experiences are more sociable – helping people to connect.
• Experiences are more memorable – and a potential topic of conversation.
• Experiences are seen as delivering more happiness.

 

Ecommerce is growing at a phenomenal rate. Some 19.3% share of total retail sales in Australia are now online, with that figure expected to continue to grow, due largely to:

• The larger range online.
• The greater convenience online.
• Cost savings online.
• The avoidance of retail staff online.

My girlfriend is currently renovating a house. This has helped me to notice two things:

• She has saved a small fortune by engaging contractors directly – and I suspect the outcome is better.
• She has saved a small fortune buying building materials (e.g. bricks) and furniture (e.g. office and kitchen furniture) online.

 

I was especially struck by the volume of people now using online marketplaces to buy second-hand – just about anything they may have once purchased new; and the number of people using apps (including Facebook) to purchase food and other consumables. One report suggests that the second-hand goods market in Australia is now worth $3.5 billion and continuing to grow. My prediction is that we have only seen the beginning of this market-driven by the potential for:

• Cost savings.
• Instant delivery.

 

Finally, retailing, and other sectors are negatively impacted by the poor customer service experiences, which many people are very tired of. Consider three of mine over just the last two weeks:

• Waiting on the phone for 45 minutes to talk to the right person.
• Twice failing to deliver at 8.00 am as promised and ringing to apologise after 11.00 am.
• Having to make four visits to a business to ensure an account was correctly set up.

 

My conclusion about most staff in most businesses in 2022 is that they just do not care. This, in turn, reflects poorly on the team and management, who so often reflect a view that:

• Their time is more important than mine (or yours).
• The only thing (you and) I am concerned about is price.
• Returning a call is an option, not a necessity.
• 1800 numbers may be inconvenient for the customer, but they shield the business.
• That the requirements of the business are more important than those of the customer.

 

I believe strongly that this will be the case in most businesses in 2022, and I, like so many customers, am avoiding these businesses for this very reason.

Even in this environment, many strategies can save bricks-and-mortar retailing and many other businesses subject to similar influences. Five of the most important are:

• Customer lifetime value.
• Customer experience.
• Omni-channelling
• Shopping local.

 

CUSTOMER LIFETIME VALUE.

In part encouraged by advertising agencies and other businesses involved in promotion, the focus of most retail businesses is attracting new customers. While new customers are important, existing customers are generally of greater value. Note:

• Repeat customers spend 300 timesmore than first-time customers.
• Referred customers are four timesmore likely to purchase.
• Referral customers spend 25% more than un-referred customers.
• 52% of businesses cite repeat business as the primary driver of profitability.
• 45% of businesses cited new customers as the primary driver of profitability.

 

Many businesses talk about repeat business and referral rates – but few have a strategic approach to either. Many businesses understand conversion rates and margins and the average sale – but fail to address their potential in terms of maximising lifetime value. Many businesses have heard of these issues but are yet to embrace their superior potential to drive profitability. Relevant strategies include:

• Personalisation – arguably the fastest growing trend in marketing.
• CRM – so long as it is addressed strategically and methodically.
• Customised pricing strategies – that reward loyalty.
• Listening – and understanding need to facilitate cross and up-selling.

 

Every business needs to incorporate into its marketing strategy – processes and procedures to maximise the lifetime value of each customer.

CUSTOMER EXPERIENCE.

Many businesses talk about the customer experience – but few address it well – while those that do (apple, Zara, Ikea benefit big-time. The customer experience is important to most consumers. Note:

• 73%of consumers love a brand because of helpful customer service.
• 73%of customers agree that customer experience helps to drive their buying decision
• 86%of customers will pay more to get a better customer experience.

 

Increasingly, businesses would be wise to consider customer experience (including customer service) as part of the product or what the customer is buying. To do this, it is essential to:

• Understand the customer journey and each touchpoint on that journey.
• Understand and address customer expectations at each touchpoint.
• Understand and address the requirements of the business at each touchpoint.

 

In the absence of an excellent customer experience – why not shop online? In the absence of a good customer experience – who wants to buy from a business? (I certainly don’t). Most businesses also focus on what they consider a good customer experience – failing to appreciate that it is the consumer, not the business, that defines what and what is not – good. Research suggests that – 66% of customers expect companies to understand their needs, and most expect greater:

• Respect and empathy.
• Ease of doing business.
• Delivering exactly as promised.
• Consumers are also increasingly attracted to unique and memorable experiences.

 

OMNICHANNEL 

Consumers are increasingly expecting to be able to buy what they want when they want it. It should not be a retailer or any other business that makes the decision as to which channels a consumer has to use. If consumers want to buy online, they can – so not offering that option is counter-productive. I would strongly argue that:

• The first rule of good marketing is having a product that the target market wants to buy.
• The second rule of good marketing is to make it as easy as possible to make a purchase.

 

Addressing the latter of these points requires an integrated approach to omnichannel retailing – ensuring that any member of the target market can purchase by whatever means they choose. All bricks and mortar retailers and businesses have a responsibility to offer their customers the capacity to purchase instore and:

• Through a dedicated website.
• Through several online marketplaces.

 

The optimum omnichannel experience:

• Is seamless and convenient.
• Focuses on customer expectations.
• Makes the best use of technology.

 

E-commerce is a fact of life, and its incidence will only grow, especially for businesses that do not focus on lifetime value and do not offer an excellent customer experience. Furthermore, there is a growing consumer expectation that:

• What is available in-store is also available online.
• There is a consistent and coordinated approach to pricing.
• The online and offline offerings are completely integrated.

 

It is not enough to just have a website – you need a convenient and responsive customer experience.

TARGETTING.

Research suggests that 60% of retail advertising targets people under 50. This is despite the fact that people over 50:

• Are more likely to shop at a brick-and-mortar store.
• Have a significantly greater capacity and propensity to spend.

 

One report on this subject noted – ‘Australian Statistics from 2011 show that seniors hold over 40% of the nation’s assets. Couples between 50 and 70 have the highest median net worth: $900.000, while singles between 30 and 40 have the lowest at $50,000.’ This report goes on to note: ‘Older people shop more frequently, tend to be less price-sensitive and value quality above anything else, buying fewer items but spending more per item.

Increasing numbers of older consumers are technology-friendly. They see technology as an important part of their lives, and a great many are online. This has been taken seriously by global e-retailer Amazon. It launched a sub-site in 2013 dedicated to over 50s. My point is that just as a significant part of the solution to the skills shortage crisis can be found in the ranks of competent older people who want to keep working, older people may well hold part of the solution to the consumption shortfalls.

While there is no good reason to avoid targeting younger people, there is clear evidence to suggest that brick-and-mortar retailers can benefit from developing a marketing strategy that focuses on people over 50 years of age. There is evidence that this represents a significant opportunity in 2022, with another report noting that: ‘New consumer research suggests that high street retailers are currently overlooking the needs of over 50s in their range of homewares, appliances, and fittings, and are missing out on a large and growing market for easier to use products that are also aesthetically pleasing. The report warns that retailers who fail to provide products that appeal to this lucrative market are missing out, with over 50s already spending £319 billion a year (excluding housing costs), equivalent to roughly 54% of total household consumer spending.’

And, if you think that people over 50 do not shop online – consider this quote from yet another report: ‘The online shopping revolution has officially become mainstream among the once tech-resistant generation aged 65 and over, with more than half now saying they shop online.’

SHOPPING LOCAL

The growth in e-commerce is beyond question. Online shopping in Australia doubled during the COVID 19 Pandemic. For Australia, the headline statistics are as follows:

• Some 3%share of total retail sales are now online, with that figure continuing to grow.
• Growth in spending on online physical goods was strong, at 4%year on year.

 

While online shopping continues to grow, so does the preference for buying locally. While in 2000, 50% of Australian online sales were made on a site outside of Australia, by 2021, only 20% of Australians purchased from stores outside of Australia. While some 40% of online purchases are manufactured in China, purchases from other parts of the world are in decline – and not all the Chinese products are sold outside of Australia. This reflects a growing preference for online and offline shoppers to shop locally.

Research in 2021 found that – 71% of Australians are planning to shop local, preferring to buy from Australian-owned brands whenever possible, with Baby Boomers the most committed to buying Aussie products (82%) during this holiday season. Research by the Commonwealth Bank found that – 50%+ of Australian shoppers want to buy locally sourced and produced products, according to a new study by our finance and banking partners.

Consider:

• 38%of shoppers say they want to support their community and local creators.
• 70%of consumers support local businesses by shopping online only, or in-store.
• 76 %of shoppers say they would rather support a local business than a large corporation.
• 28%of shoppers buy local for better service, and 19% to help local non-profits.

 

There are several reasons for the increase in the preference for shopping locally. They include:

• Support local communities and jobs.
• Environmental protection.
• Ideological support for small businesses.
• Perception that Australia makes quality.
• It has the potential to be more personal.
• It is easier to complain.

 

Whatever the reason, this more to buying local is a significant trend. It is not, however, a trend without its limitations. Research suggests that consumers are less likely to shop local if the only benefits are community support and jobs. There is a limit to how much more consumers will pay to buy local. While consumers say they will pay more to shop local, data suggests that it is not much more. There is no open chequebook.

I highly recommend that businesses:

• Highlight their local credentials.
• Make it as easy as possible to buy local.
• Emphasise their SME status if they have one.
• Don’t use local as an excuse for being more expensive.

 

AT THE CORE

At the core of these five strategies for reinvigorating bricks-and-mortar retailers and related businesses, as discussed here, are three factors:

 

Understanding and leveraging the understanding of the primary target market is essential. The more customer responsive a business is, the lower will be its marketing costs and the higher will be its revenue. A clever and inexpensive way of addressing customer focus is:

Co-creation – creating the overall offering WITH the customer.

Nothing will facilitate a positive customer experience and maximise the lifetime value of a customer than building and maintaining strong relationships with customers and potential customers. A great strategy for facilitating this is:

An online community that enables permission marketing.

Innovation, and the agility it requires, are central to developing and maintaining a customer-focused business. Innovation is, in turn, facilitated by co-creation and an online community and using the data to create what the market will respond to most positively. A great approach to addressing innovation is to:

Recognise and conform to all staff, that customers define ‘good’ and ‘great’.

INSIGHTS

Maximising the performance of bricks and mortar business in 2022 requires:

• Embracing and addressing the decline of consumerism.
• Creating a memorable customer experience.
• Embrace rather than fight the growth of e-commerce.
• Understand and address the rapidly growing second-hand market.
• Understand and embrace the increasingly demanding consumer.

 

ANOTHER INSIGHT

• https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/consumer%20packaged%20goods/pdfs/trends%20that%20will%20shape%20the%20consumer%20goods%20industry.ashx

 

 RECOMMENDED READING

• https://www.booktopia.com.au/the-infinite-game-simon-sinek/book/9780241385630.html

 

ACTION

To maximise bricks and mortar returns:

• Refocus your marketing strategy on – customer lifetime value.
• Develop a memorable customer experience that exceeds expectations.
• Embrace omnichannel retailing as essential rather than optional.
• Target mature consumers who have more money and like shops.
• Help your target market shop locally – especially online.

 

QUESTIONS

Questions for which all marketers should have the answer:

• Given that 64% of companies state that the brand community has improved their decision-making – why do you not have one?
• Given that 81% of consumers believe brands collaborating with their customers are more authentic – why don’t you co-create your customer’s experience?
• Given that 70% of consumers support local businesses by shopping online only, or a mix of online and in-store – what are you doing to be seen as local?
• Given that some 19.3% of retail sales are now online – what is your omnichannel retailing strategy?
• Since 86%of customers will pay more if it means getting a better customer experience, how many customers have you involved in developing the optimum experience?

 

STATISTICS

Statistics every marketer should know.

• Repeat customers spend 300 timesmore than first-time customers.
• Referred customers are four timesmore likely to purchase.
• Referral customers spend 25% more than un-referred customers.
• 52% of businesses cite repeat business as the primary driver of profitability.
• 45% of businesses cited new customers as the primary driver of profitability.

 

So – place a higher priority on lifetime value.

 

IVE STRATEGIES FOR ELIMINATING WASTE IN MARKETING. 

 

• Target the smallest possible market.
• Establish a brand community.
• Eliminate direct competition.
• Develop the optimum product.
• Focus on lifetime value.

 

In the late 1800s – businessman- John Wanamaker famously said – ‘Half the money I spend on advertising is wasted; the trouble is I don’t know which half.’ There are four things you should know about this observation:

It is as valid in 2022 as it was in the 1800′.

• Advertising is not the only area of marketing where there is waste.
• The waste has not stopped with the trend toward digital media.
• Waste is not and should not be inevitable.

 

There is no doubt in my mind that waste in marketing is as rampant in 2022 as it was in the 1800s. One researcher suggested that 60% of all tracked advertising is wasted.

I regularly see waste in all areas of marketing – with content marketing high on the list. Research has indicated that up to 60% of marketing budgets are wasted.

The big digital channels propagate a myth that digital advertising has eliminated waste. Experts suggest, however – that between 30% and 60% of digital advertising is indeed wasted.

There is no reason to tolerate waste, and the key to eliminating waste is to reduce the dependency on advertising and other avenues of communication, including content marketing.

ELIMINATING WASTE

Now more than ever, businesses need to be driving down the cost of marketing or, at the very least, expecting a superior return from their expenditure. The following discussion addresses five simple strategies that almost any business can implement to reduce waste in advertising and marketing more generally.

TARGET THE SMALLEST POSSIBLE MARKET

For as long as I can remember, marketers have been saying that trying to be all things to all people is a sure-fired receipt for failure. It is very difficult, if not impossible, to develop a product that meets or exceeds the expectations and demands of all markets. Further, targeting ‘everyone’ is expensive and highly wasteful. Despite this, many businesses still insist on targeting as big a market as they can, thinking that ‘the more people I target, the more sales I will secure,’ when the truth is very different. The truth is – that it is almost always better to target the ‘smallest viable’ market.

When approached about an investment opportunity, venture capitalist Mark Cuban considers three critical questions:

• The market being targeted.
• The strategic competitive advantage.
• The level of customer focus.

In terms of the market, Cuban favours targeting the smallest possible viable market or audience, given that the market or audience is viable. ‘Marketing expert Seth Godin coined the term (minimum viable audience or market). He says that the minimum viable audience is the smallest group that could possibly sustain you in your work (and achieve a commercial level of profitability).

Targeting the smallest possible viable market or audience facilitates:

 

The smaller a market or audience, the easier tr is to understand, and the greater the likelihood a business can understand it very well. The smaller the market, the more targeted the marketing can be and the greater the likelihood of minimising waste. The smaller the market is, the easier it is to customise or personalise the product, the customer experience, the pricing strategy, and promotion.

Targeting the smallest viable market or audience is especially important for a start-up or in any business where resources are limited, and waste is the least affordable. Point to the importance of producing products that are remarkable and superior in terms of customer needs, Godin noted – “If you make something everyone wants, you have to be average,” He goes on to note that average products achieve average sales – at best.

Targeting the smallest viable market has several advantages, including:

• The smaller the market, the more homogeneous it can be.
• The more homogeneous a market, the easier it is to understand.
• The easier it is to understand, the easier a market’s expectations can be met.
• Meeting and exceeding expectations drives sales repeat sales, referrals, and margins.

 

The most cost-effective and profitable approach to marketing involves:

• Identifying the smallest viable market or audience.
• Customising a product that exceeds the expectations of that market.
• Customising the pricing, distribution, and promotional strategies to that market.
• Maximising sales and margins secured from that market.

 

Some marketers question this notion on the basis that it can restrict growth. This need not and should not be the case. Growth can be readily facilitated by:

• Maximising the potential of a brand in its smallest viable market.
• Developing a new brand for a new smallest viable market, or
• Developing new products for your existing market.

 

Many marketers, including Seth Godin, favour developing new products for your existing markets – facilitating relationship marketing and even’ permission marketing.’ Both are legitimate strategies. That said, many businesses also create new brands (with varying levels of real difference from the existing ones) to customise and market to a new market.

The core issue here revolves around customisation of the product, the customer experience, and the marketing—the greater the level of customisation, the greater the likelihood of maximising profitability. Customisation is a significant trend in marketing in 2022.

ESTABLISH A BRAND COMMUNITY.

I have written a great deal about the importance of a brand community. This is because I see them as an inexpensive and indeed cost-saving initiative that almost any business can use to reduce the cost of marketing and maximise return on investment. Consider:

• 86% of businesses report that brand communities provide insights into customer needs.
• 66% of companies say they turn to brand communities for product development.
• 64% of companies state that the brand community has improved their decision-making.

 

‘Brand Community is a series of relationships between customers or consumers and a brand and among the different consumers. It’s a group of people who have or feel they have a relationship with our brand and then develop relationships with each other around their appreciation or like for our brand.’ Providing a forum for discussing all marketing issues, brand communities work well in both the B2C and B2B environments.

Some 60% of Fortune 500 businesses in the United States in 2022 have established an online brand community. A brand community can be online or offline. They seem to work best when they are both. Online discussions are less expensive to facilitate and easier to make ongoing. Offline discussions can be more personal and better encourage trust and authenticity. The benefits of an online community or panel include the capacity to use digital data. In addition to monitoring discussions, it is possible to monitor what community members are most interested in.

In a small business environment, establishing an online brand community involves:

• Identifying the market to be addressed.
• Define a clear purpose and goal.
• Identifying the optimum online platform.
• Establishing a management process.
• Develop rules and protocols.
• Inviting the market to join the community.
• Engaging the market and adding value to their lives.
• Communicating openly and honestly with the market.

 

One of the most successful brand communities was that established to bring Harley Davidson back from the jaws of bankruptcy. Here are some other examples of thriving brand communities – https://blog.smile.io/8-best-brand-communities/.

While brand communities are common worldwide, they are less common in Australia. This needs to change if Australian businesses are going to realise their potential cost-effectively. Research suggests that effective brand communities facilitate:

• More accurate decisions – 54%.
• More cost-effective decisions – 27%.
• More competitive decisions – 14%.

 

Above all else, brand communities facilitate maximising the lifetime value of each customer.

ELIMINATE DIRECT COMPETITION. 

After Elon Musk, Peter Thiel is perhaps the best-known founder of Pay Pal. Working in Silicon Valley as a venture capitalist and author. Peter Thiel authored the book – ‘Zero to One’. A core message in this book is that great businesses have no competitors. Theil is strident in his condemnation of the notion of competition and equally strident in his view that businesses need strategies to limit competition. Quotes attributed to Thiel include:

• ‘Competition is overrated. In practice, it is quite destructive and should be avoided wherever possible. It is much better than fighting for scraps in existing markets to create and own new ones.‘
• As you craft a plan to expand to adjacent markets, don’t disrupt; avoid competition as much as possible.‘
• ‘All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.’

 

As far as the broader community is concerned, high levels of competition may be a good thing, especially if this competition drives innovation and competitive pricing. However, as far as businesses are concerned, competition can damage profitability by putting pressure on prices and the need to invest more in promotion.

The importance of eliminating competition might be the only subject about which Thiel and I will ever reach an agreement. Limiting direct competition is most certainly an important consideration for marketers and an increased focus of great businesses. Working to eliminate or at least minimise the competition should be a key focus of marketers in 2022.

While I am not advocating the systematic execution of the teams working for your competition, I will argue that competition can be a choice in many and perhaps most cases. Indeed, there is no doubt in my mind that every business should strive to limit the number and quality of competition and that most businesses are in a position to reduce and potentially eliminate direct competition.

The point here is that while differentiating a product from its competition might be beneficial – being seen as different is much more important. Differentiation is the business of using a strategic competitive advantage to set a product apart from its competition. It is the business of:

• Positioning a product so unique that it is viewed as having little competition.
• Uniquely categorising a product, it is seen as distinct from the competition.

 

For a time, despite the multitude of brands on the market, there was only one vacuum cleaner – the Hoover. While there were many options, there was effectively only one ballpoint pen on the market – the Biro – by Bick. There was only one smartphone to speak of initially – the I-phone, so much so that mobile phones are often called I-phones – regardless of the brand. These are just some of the many examples of a product having no effective competition – due to effective differentiation.

While a Rolls Royce and a Mini are both cars – they are not competitors. While they have a lot in common, they are very distinct regarding what they offer and target. The same can be said for a Rolls Royce and a Ferrari. These are both high-priced cars, but they are not competitors. They are different classes or categories of vehicles targeting different markets. This is true for so many products. A silver service restaurant does not compete with a takeaway restaurant. Again, they are various categories of products.

The right strategy can effectively set a product apart from would-be competitors and reduce or even eliminate the competition. Such a strategy might involve differentiating based on:

• Product characteristics.
• Pricing
• All of the above.

 

Perhaps one of the best examples of effective differentiating a product is Coke. While the flavour of Pepsi is preferred by up to 80% of consumers in taste tests – Coke well and truly outsells Pepsi. Coke has a 45% market share, while Pepsi has a 26% market share. While Pepsi is a soft drink, competing with other soft drinks – Coke is a lifestyle product, competing with almost no one. Coke owns the lifestyle space.

DEVELOP THE OPTIMUM PRODUCT.

New York University professor Scott Galloway once noted that the one thing that sets Facebook, Apple, Amazon, Netflix and Google apart from their competitors is not great advertising but – a ‘fucking great product.’ This is contrary to the view propagated by most advertising agencies that it is “great creative” or” a great media plan” that sets a great business apart. The fact is that – the starting point of every cost-effective marketing strategy or campaign is a “great product”.

But what is a ‘fucking great product?’ Perhaps, the more important question is – ‘who defines a great product?’

A great product is a product that the target audience believes is a great product. The market determines what products are great, and it is a foolhardy marketer that relies on their intuition to identify or develop a great product. Identifying a great product involves:

• Understanding the expectations of the target market.
• Creating a product that exceeds those expectations.
• Monitoring market views and modifying the product accordingly.

 

Research and empirical evidence suggest that the most cost-effective approach to developing a great product involves using:

• A brand community.
• Co-creation.

 

A brand community provides for relationships that many businesses use, especially in the United States, to determine customer needs and expectations cost-effectively. A brand community can also enable co-creation. Co-creation enables the target audience to work with the business to develop a product they will purchase and repurchase – and design an environment where they will feel comfortable making a purchase. Another strength of co-creation is that it is not expensive or difficult to organise – and can be used just as effectively by small businesses as it can be the largest. Co-creation also fosters empathy through collaboration. It assists with generating ideas, identifying and solving problems, developing implementation plans, product development and fine-tuning, customer experience design and fine-tuning, and creating a pricing strategy. Co-creation involves:

• Understanding the market.
• Establishing interests of that market.
• Leveraging market knowledge to fine-tune the product.
• Maintaining communication to facilitate ongoing development.

 

Two critical points to remember here are:

• Co-creation is as powerful in defining the optimum customer experience as it is the product.
• The product is as much the brand as it is the good or service.

 

Research has highlighted the growing importance of the customer experience. Co-creation can understand the customer journey, identify the touchpoints along that journey, and establish how to exceed expectations and each touchpoint.

Perception is every bit as important as reality. While modifying the product based on the customer’s expectations is an opportunity, it may not always be the best option. In many cases, modifying the brand or perception of the product may be as important and potentially more effective.

Ultimately, the brand and the perceptions it creates will drive sales and margins, etc.

FOCUS ON LIFETIME VALUE.

To appreciate the importance of customer lifetime value, consider the following:

• Repeat customers spend67% more in months 31-36 of a relationship than in months 0-6.
• Repeat customers spend 300 timesmore than first-time customers.
• Referred customers are four timesmore likely to purchase.
• Referred customers have a 37%higher retention rate.
• Referral customers spend 25% more than un-referred customers.
• The probability of selling to an existing customer is 60 – 70%, while the probability of selling to a new customer is just 5 – 20%.
• 92% of consumers respond positively to recommendations or referrals from friends.
• 52% of businesses cite repeat business as the primary driver of profitability.
• 45% of businesses cited new customers as the primary driver of profitability.

 

These numbers highlight the fact that maximising profitability while requiring a level of enquiry is as well served by maximising:

• Conversion rates.
• The average sale per customer.
• Repeat business rates
• Referral rates.

 

Research also suggests that:

• These factors need to be addressed before the enquiry rate – to maximise the return from each enquiry
• These factors are as important as enquiry rates, especially in maximising profitability.

 

Unfortunately, while most businesses I come across have a reasonably strategic and documented advertising or promotional strategy, few such businesses adequately address the conversion rate, average sale, margins, repeat business and referral rates in the marketing strategy. There remains a poor recognition of the importance of documenting a comprehensive marketing strategy focused on maximising the lifetime value of each customer.

 

INSIGHTS

• Some 60% of all marketing expenditure is wasted.
• Some 30% of all digital advertising is wasted.
• The 60% waste in marketing can be eliminated.
• The 30% waste in digital advertising can be eliminated.
• The key to reducing marketing costs is to get closer to the customer.

 

ANOTHER PERSPECTIVE

• https://www.youtube.com/watch?v=8otk3Sm5HP4

 

 RECOMMENDED READING

• https://www.booktopia.com.au/zero-to-one-peter-thiel/book/9780753555200.html

 

 ACTION

To reduce the cost of marketing while improving results:

• Target the smallest viable market.
• Establish and leverage a brand community.
• Eliminate or at least minimise the competition.
• Have your market define a ‘great product’ and then deliver it.
• Focus on the lifetime value of each customer.

 

 QUESTIONS

Questions for which all marketers should have the answer:

• Given that targeting the smallest possible market reduces costs and increases returns, what does your minimum viable market look like?
• Since 86% of businesses report brand communities providing insights into customer needs – why don’t you co-create your customer’s experience?
• Given that your direct competition can be reduced, if not eliminated cost-effectively – what is your strategy for doing just that?
• Given the positive impact of product co-creation on profitability, what processes do you have in place to leverage it, and why not use a brand community to facilitate it?
• Given that 92% of consumers respond positively to recommendations or referrals from friends, what is your strategy for facilitating them and is it embraced by all staff?

 

STATISTICS

Statistics every marketer should know.

• Repeat customers spend67% more in months 31-36 of a relationship than in months 0-6.
• Referred customers are four timesmore likely to purchase.
• 92% of consumers respond positively to recommendations or referrals from friends.
• 52% of businesses cite repeat business as the primary driver of profitability.
• 45% of businesses cited new customers as the primary driver of profitability.

 

So – place a higher priority on lifetime value.

FIVE STRATEGIES FOR DELIVERING A CUSTOMER EXPERIENCE THAT DRIVES PERFORMANCE 

 

• Certainty and simplicity.
• Artificial serendipity.
• Partner in life.

 

CUSTOMER EXPERIENCE PHILOSOPHY

My philosophy on customer experience is simple:

• It is the customer and not the marketers who defines the quality of the customer experience.
• Customer experience is in many cases as important as the product and its price. The customer is buying a package.
• The best way of developing the optimum customer experience is to co-create it with the customer.

 

***

 

There is much talk these days about customer experience or ‘CX.’ But what is customer experience – does it differ from customer service – and how important is it?

I will try answer these two critical questions and highlight five trends in CX that will help most businesses drive sales and margins up while driving marketing costs down.

CUSTOMER EXPERIENCE DEFINED 

The term customer experience is used to address the experience or experiences customers have at each stage of the customer journey. While customer service refers specifically to the standard and nature of the service a customer receives at and around the point of purchase – customer experience refers to the experiences of the customer:

• In the lead-up to the purchase process – perhaps while planning a purchase.
• During the purchase process – including at the points of sale and delivery.
• After the purchase process – including after-sales service and support.

 

The quality of a customer’s experience is reflected in:

• Anticipated utility – the expected benefit of a purchase and experience.
• Experience utility – the actual benefit of a purchase and experience.
• Retrospective utility – the remembered outcome of the purchase experience.

 

Customer experience is most often considered in terms of the experiences of the customer when visiting a business and making a purchase, when in fact, the term is equally relevant to the:

• Offline experience.
• Online experience.
• Omnichannel experience.

 

The customer experience is relevant to all channels. The customer experience is impacted by every aspect of the consumer’s preparation for a purchase, interaction with the business and follow-up to that purchase.

Gartner suggests that the customer experience is – ‘…..the customer’s perceptions and related feelings caused by the one-off and cumulative effect of interactions with a supplier’s employees, systems, channels or products.’

 

 

WHY IS CX IMPORTANT

To understand the importance of customer experience, one need only consider the following statistics:

• Global spending on CX is estimated to reach $640 billion in 2022.
• 74% of customers can switch brands if their purchasing process is too complex.
• 32% of customers “break up” with a favourite brand after one poor customer experience.
• 86% of users are inclined to pay more for a great customer experience.
• 64% of buyers consider customer experience more critical than price.
• 71% of customers recommend a product or service because of a great customer experience.

 

Research and empirical evidence suggest that the customer experience:

• Demonstrates a brand’s commitment to customers
• Reflects how well an organisation’s internal teams work together to deliver on their promise
• It is the customer’s subjective response as they interact with a business.

 

A recent article on customer experience – notes that:

‘Customer experience has fast become a top priority for businesses…… Customers no longer base their loyalty on price or product. Instead, they stay loyal to companies based on the experience they receive. If you cannot keep up with their increasing demands, your customers will leave you.’

Further highlighting the importance of customer experience are these statistics:

• 72% of customers will share a positive experience with six or more people.
• 13% of customers will share their experience with 15 or even more.
• Just 1 in 26 unhappy customers take the time to complain.

 

Customer experience impacts the purchase behaviour of customers and, more broadly, the lifetime value of each customer. Increasingly the customer experience is viewed as part of the product – part of what the customer is paying for.

PRIORITIES AND TRENDS IN CX

Research highlights a host of priorities that are important to customers in terms of customer experience. They include or relate to – privacy, ethics, security, manners, response times, and so much more. Critical trends in terms of creating an optimum customer experience include – certainty and simplicity, artificial serendipity, being a partner in life, personalisation, and delivery.

1. CERTAINTY AND SIMPLICITY

 

When a potential customer goes to your website, they expect it to work, be easy to navigate and provide the information they need without effort or time delays. When a customer goes to your online shop, they want it to be easy to use, easy to get around and straightforward in terms of making a purchase.

Increasingly, customers shy away from websites or e-commerce platforms that are:

• Hard to find.
• Hard to navigate.
• Hard to use.
• Unreliable.

 

Customers are becoming less and less forgiving and tolerant. This reflects the fact that even before a purchase experience occurs, consumers want:

• Certainty in terms of the functioning and delivery of channels.
• Simplicity in terms of ease of use and getting what they want.

 

A positive customer experience involves getting what you are looking for – as easily as possible and with absolute reliability. The more difficult or unreliable the online experience, the more inhibiting the experience.

The same can be said for face-to-face interactions. Customers want it to be as easy as possible to get the information and products they want and finalise the transaction. Every hitch in the process (like having minimum purchase amounts on a credit card or making the customer stand in line) detracts from the customer experience.

Certainty and simplicity are perhaps most potent before the purchase interaction.

1. ARTIFICIAL SERENDIPITY

 

Wikipedia defines artificial serendipity as – ‘… an unplanned fortunate discovery ….. a common occurrence throughout the history of product invention and scientific discovery …. a potential design principle for activities that would present a wide array of information and viewpoints, rather than just re-enforcing a user’s opinion.’

Reinforcing the importance of artificial serendipity –  EXCO 22 – ‘If we’re on the brink of a decision and discover something that surprises and positively influences, this coincidental find can be more satisfying than a decision we would have reached of our own accord.’

The fact is, consumers, while craving certainly, also crave surprises. They like the certainty of getting what they want in terms of information, service, and products – while at the same time finding the unexpected. Consumers like to go to a website or into a business where they can discover the unexpected. They are attracted to the element of surprise and the feeling that fate has brought something unexpected into their lives.

This does not mean that businesses should offer an ever-increasing product range. Indeed, research clearly demonstrates that increasing the product range can reduce purchasing and product satisfaction when a purchase has occurred. Purchases and customer satisfaction are maximised when the product sought is in stock, along with some surprises – perhaps ideas, features, or add-ons.

The surprise can of course be a product or an experience and can most certainly be in the service provided – given that standard of service exceeds the expectations of customers.

Artificial serendipity is perhaps most potent during the purchase process.

1. PARTNER IN LIFE.

 

The primary focus of customer experience strategies has traditionally been the customer journey and the purchase process. It has revolved around the experiences associated with purchasing the product.

Increasingly, however, there is recognition that the customer experience can and should include the relationship with the brand – and more specifically, what the brand can contribute to customers’ lives. ‘Partner in life’ refers to a relationship between a brand and a customer – and the value it adds to the customer’s life.

Examples of ‘partner in life’ customer experiences include:

• Mazda providing free parking at the MCG for Mazda-driving football fans.
• A US insurance company hosting ‘fix your dent for free’ days.
• Bunnings staging ‘how to workshops’ for female customers.
• The RAC providing a lifestyle magazine incorporating life tips and partner discounts.

 

‘Partner in life’ marketing involves the business or brand adding value, not just through the purchase process, but more generally to customers’ lives. Adding value in this way helps to create a bond between the customer and the brand that extends beyond the last purchase.

‘Partner for life’ marketing is most applicable to the post-purchase period.

1. PERSONALISATION.

 

I have written a great deal about the six priorities or factors driving the behaviour of people in the wealthier countries of the world:

• Certainty.
• Variety.
• Significance.
• Connection.
• Growth
• Contribution.

 

Personalisation addresses two of these priorities – significance and connection. All human beings want to feel significant (and even important). That is why most consumers reject slow service or being made to feel like nothing more than a ‘credit card courier.’ It is why most consumers want to be the centre of attention when making a purchase – and not have the process retarded or interrupted by the other priorities of the business – or indeed, its systems and procedures.

Personalisation is about taking customer service and the customer experience to the next level and offering a personalised experience. This might involve:

• Remembering the customer’s name and or membership number.
• Maintaining and leveraging records of previous purchases and preferences.
• Asking as many questions as possible, listening to the answers and acting accordingly.
• Asking the customer’s name at the start of an online purchase and using it.
• Sending customers a personalised letter to thank them for their purchase.
• Ensuring that every customer feels like the only customer.

 

The more personalised the customer experience, the more aligned it will be with the customer’s expectations, and as such, the more likely the customer will be to purchase and repurchase. The more personalised each customer experience, the more likely a strong relationship with the brand will be established and the greater the likelihood of maximising lifetime value.

Personalisation is important before, during and after the purchase interaction.

1. DELIVERY.

 

When I recently purchased blinds for a property, I was told by the manufacturer that they would be installed on an agreed date – at around 8.00 am – and that we would be the first job that day. After I sent someone to the property to let the contractor in at 8.00 am – I received a call at 11.30 am to inform me the installation would occur at about 1.00 pm because the installer had been caught up on other jobs. When I complained, I was told that they would be installed the following day – at 8.00 am – guaranteed as the first job of the day. Again, I send someone to the property at 8.00 am to let the contractor in – and again I received a call at around 11.30 am to say the installation would occur at around 1.00 pm.

I don’t know about you, but to my mind, this customer experience demonstrates that this blind business has made one of the worst marketing or indeed business – mistakes – failing to deliver as promised. When a transaction occurs – there is a promise made by both parties – one to pay and the other to deliver. Failing to deliver is not just a breach of contract but also a breach of trust.

Most people I know have a bad airline to tell. There are websites, social media pages and indeed songs dedicated to criticising airlines. In most cases, the criticism relates to planes running late or in some other way – failing to deliver as promised. There is a common view among the flying public that airlines regularly fail to deliver as promised. This, in turn, highlights a fundamental fact in marketing – delivering as promised is central to maximising the lifetime value of each customer.

Consumers are becoming increasingly demanding in terms of getting not just what they paid for but everything the business promised. In these busy times, however – fewer and fewer contractors and businesses are meeting agreed deadlines. They seem to find it easier to craft a credible excuse – when in reality – no excuse is ever good enough.

A positive customer experience requires consistently delivering on time, budget, and specification. Anything else represents and is seen as shirt changing the customer.

Delivery is important throughout the customer experience.

TWO OTHER ISSUES

Before summarising the discussion to date – I will touch on two critical questions:

• Who defines a good customer experience?
• How do you create the optimum customer experience?

 

The answer to the first question is – the customer. The customer – NOT you – determines the quality of the   customer experience and the customer’s judgement is the ONLY one that matters.

Central to developing the optimum customer experience is understanding customers’ expectations and developing a strategy to exceed them. Asking the customer is a sound approach. Co-creating the customer experience (perhaps using a brand community) is ideal.

The key to developing the optimum customer experience is using a brand community or customer panel to design the experience and monitoring outcomes to facilitate fine-tuning that experience.

INSIGHTS

• The customer experience impacts results as much as the product.

• Global spending on CX is estimated to reach $640 billion in 2022.
• 72% of customers will share a positive experience with six or more people.
• 13% of customers will share their experience with 15 or even more.
• Just 1 in 26 unhappy customers take the time to complain.

 

ANOTHER PERSPECTIVE

• https://www.youtube.com/watch?v=fvr0_jtO_LU

 

RECOMMENDED READING

• https://www.booktopia.com.au/customer-experience-excellence-tim-knight/book/9781398600997.html

 

 ACTION

• Ensure absolute certainty and simplicity.
• Create and offer a serendipitous experience.
• Become your customer’s partner in life.
• Prioritise personalisation of the experience.
• Deliver on time, to budget and specification.

 

QUESTIONS

• Given that just 1 in 26 unhappy customers take the time to complain – what are you doing to ensure that your customer is satisfied and will return?
• Given that 74% of customers can switch brands if the purchasing process is too difficult for them – what are you doing to make purchasing as easy as possible?
• Given that 64% of buyers consider customer experience more important than price what are you doing to ensure your customer experience is optimal?
• Given the customer and NOT you define a good customer experience’ and its key components – how are you determining what they want?
• What are you doing to ensure the six drivers of consumer behaviour – certainty, variety, significance, connection, growth, and contribution – are fully met?

 

STATISTICS

• 74% of customers can switch brands if their purchasing process is too difficult.
• 32% of customers “break up” with a favourite brand after one poor customer experience.
• 86% of users are inclined to pay more for a great customer experience.
• 64% of buyers consider customer experience more important than price.
• 71% of customers recommend a product or service because of a great customer experience.

 

FIVE STRATEGIES FOR USING PRICE TO MAXIMISE RETURNS

 

• Focus on value.
• Focus on context.
• Focus on emotions.
• Prioritise differentiation.
• Embrace psychology.

 

Price is one of the most important issues in marketing. It has a direct impact on short-term, medium-term, and long-term profitability. Arguably, price is also the most misunderstood of the four ‘Ps’ of marketing. Price is rarely approached strategically, and even when approached strategically, price rarely draws on the huge body of science available. All too often, pricing strategies are intuitive.

This missive provides the foundation stones for a more scientific and more strategic (and therefore more profitable) approach to pricing that can be adopted by most and possibly all businesses.

The misunderstanding of pricing often begins with a limited understanding of price and pricing strategy. There is also a poor understanding of how to develop the optimum pricing strategy.

PRICE DEFINED

The price of a product is much more than the amount members of the target market are expected to pay for that good or service. The price of a good or service is, among other things:

• A level of remuneration.
• A market selector.
• A measure of quality.
• A key differentiator.
• A potential anchor.

 

The price is the amount the seller asks for a product. In this regard, it is also the critical determinate of the margin earned by the seller. The price also determines which market can afford to buy or will consider buying a product. In the absence of other tangible measures, consumers also see price as a measure of quality. A truckload of research demonstrates that higher prices are associated with higher quality and that increasing the price of a product can increase the perceived value. Price is a differentiator with consumers on a budget seeking the lowest possible price and consumers prioritising quality and prepared to pay more to get it. Finally, the price of an item can also provide an anchor for judging the price of other products in the category.

This more complex definition highlights the strategic importance of price.

PRICING STRATEGY DEFINED

Pricing strategy is all too often confused with pricing tactics. A pricing strategy sets the initial price of a product and the criteria for changes in that price over time. The optimum pricing strategy requires a long-term view. Common pricing strategies include:

• Cost plus – simply adding a margin to the cost of sale.
• Competitive pricing – pricing at a level just above, below or alongside competitors.
• Price skimming – starting high and lowering the price as demand subsides.
• Penetration pricing – pricing to secure market share.
• Loss leader pricing – offering a low-cost product to drive sales of higher-margin products.
• Dynamic pricing – varying the price for a product to reflect changing market conditions
• Anchor pricing – using one product to establish a baseline or price anchor.
• Value-based pricing – or charging what a product is worth to the consumer.

 

The critical point here is that pricing strategy involves a long-term approach to pricing and recognising its key role in the overall marketing strategy. It is very different to the tactical use of promotions, sales, two-for-one offers, and the like. The pricing strategy is just one element of the marketing strategy and must arise from and contribute to that strategy.

PRINCIPLES OF OPTIMUM PRICING 

Developing the optimum pricing strategy does not, or at least should not, involve intuition. It should involve science and the application of key pricing principles. The optimum pricing strategy needs to address two critical issues:

 

The economics of producing the product is critical. The price must either incorporate a margin that contributes to profitability or play a role in securing a customer to whom higher margin products can be sold (as implemented by Parker pens with their relatively cheap pens and expensive refills). Higher prices have helped Apple remain a market leader and buy one – get one free will almost always outsell – two-for-one offers. But economics and the dynamics of supply and demand are only a relatively small consideration compared to psychology. In 2022, psychological factors, some of which I will address here, are often more important.

Developing the optimum pricing strategy requires:

• Understanding what price is – and that it is much more than remuneration.
• Understanding what a pricing strategy is – much more than a series of tactics.
• Understanding the importance of context – and competitive positioning.
• Embracing the value pricing model – and communicating tangible value.
• Researching and monitoring – the consumers changing perception of value.

 

As noted, price impacts much more than the remuneration for the sale of a product. It also has implications on the market, the perception of quality, differentiation, and anchoring. The pricing strategy will depend, at least partly, on the broader marketing strategy and the priority given to the competition, market share, market penetration and volume. The business circumstances are also important, especially regarding – market leadership, niche marketing, a disruptive positioning, or a monopoly position. While cost-plus pricing makes sense in terms of setting the minimum viable price, value pricing will almost always deliver a more optimum level of profitability. Value can only ever be understood if there is ongoing research. The impact of the strategy also needs to be monitored to facilitate fine-tuning. A set-and-forget strategy is unwise.

Illustrating how price impacts the perception of quality – in a Stanford University study, two groups of people tasted wines at two price points. After being told the price, participants were asked to rate the wines on a scale of 1 to 6. The findings were as follows:

When told that wine 1 was:

• Priced at $5.00 – it received a rating of 2.25 out of 6.
• Priced at $45.00 – it received a rating of 3.5 out of 6.

 

When told that wine 2 was:

• Priced at $10.00 – it received a rating of 2.5 out of 6.
• Priced at $90.00 – it received a rating of 4.1 out of 6.

Price appeared to affect the perception of quality and value significantly.

Also central to developing the optimum pricing strategy involves:

• Focusing on the consumer and that consumer’s perception of value.
• Researching and focusing on perceived value.
• Documenting the pricing strategy as part of an integrated marketing strategy.

 

There is no absolute measure of value, and your perception of value matters little. It is the consumer’s perception of value that matters. Understanding what the consumer values and how they measure value needs to follow research, not intuition.

As will everything else in marketing – perception is everything, and only the consumer’s perception matters.

FIVE STRATEGIES FOR OPTIMUM PRICING

Cost plus is perhaps the most common approach to pricing, and with good reason. At the very least, cost plus pricing helps to set the minimum price that a product can be sold for to ensure a commercial return. Cost plus pricing is not, however, customer-focused and offers little in terms of setting the price that will ultimately maximise returns. Value pricing is the only approach that can maximise returns.

Any number of strategies can be embraced to ensure a business has in place a pricing strategy that will maximise short-term, medium-term, and long-term profitability. Five of the more important strategy involved – focusing on value, focusing on context, focusing on emotions, prioritising differentiation, and embracing psychology.

FOCUS ON VALUE

A recent study by the New York department of consumer affairs looked at 90 brands offering identical products (such as shaving equipment) – but targeting them differentially at men and women. Using subtle colours (pink vs black) and design differences – some products were marketed to men while the others were said to be for women.

The study found that despite a lack of relevant differences between the products, those targeting women were an average of 7% more expensive than those targeting me. Further, it was found that 42% of products targeting women were more expensive than those targeting men—all products sold as expected and continue to be available.

Among other things, this study points out the potential of value pricing over cost-plus pricing. Cost plus pricing would almost certainly have had the male and female versions of the products selling for the same price. Value-based pricing, however, generated a 7% higher return on the women’s options.

Value pricing involves:

• Identifying the target market.
• Understanding what represents value for that target market.
• Basing a strategy on the capacity of the product (with marketing support) to deliver value.

 

Like all good marketing, this involves truly putting the consumer at the centre of the marketing process. It most certainly involves:

• Marketing the product at the ‘value price’ where it is above the ‘cost-plus’ price.
• Not marketing the product at all where the value price is below the cost-plus price.

 

When the value price is above the cost-plus price – the market will deliver additional margin, and the product should be seen as attractive. Why would you ever charge less than the market will pay? Where the value price is below the cost-plus price – a commercial margin would be unattainable, and as such, marketing of the product should cease. There is no point in marketing a product where the perceived value is below an acceptable margin – unless it is a loss-leader.

Determining the value that members of the target market see in a product and, therefore, the optimum price requires:

• Understanding what the target market values.
• Understanding the competitive environment.
• Understanding the extent to which your product and that of the competitors deliver value.
• Never assume that the lowest price is best.

 

Before launching a new generation of its Olay brand, Proctor and Gamble tested three price points

• $12.99
• $15.99
• $18.99

 

At $12.99, the sales were good. At $15.99, sales tanked. Finally, at $18.99, sales peaked, causing P and G to price Olay at $18.99, generating $2.4 billion with ongoing annual growth. It seemed that consumers expected to pay more than $15.99 for a quality product and, as such, purchased more at the higher price of $18.99.

Perhaps the two most effective pathways to achieving these outcomes are:

• Co-creation.
• Brand community.

 

Co-creation involves working with the target market to develop a product that delivers value and determines pricing parameters. A brand community represents the optimum forum for co-creation.

FOCUS ON CONTEXT.

If I told you that my new widget would cost you $100, you would only know if this represented value when you understand what this widget is, what it can do for you and what you need to do to get it. You could only know if my widget represents superior value if you know what competitive products cost, what they do, and what you need to do to get them. While the amount that a member of your target market can afford to pay may be absolute, how much they are prepared to pay will depend on context, and that context involves:

• The value your product offers.
• The price of products providing equivalent or superior value.
• The accessibility of your product and that of the competition.
• The likely levels of supply and demand.
• The value you can add to the product through branding and customer experience.

 

Value pricing requires that the business understand the value its products deliver or are seen to deliver. Competitors seen as comparable in their capacity to deliver value also provide context for your pricing strategy. Differentiation can, of course, limit direct competition. Accessibility will also determine what consumers will pay. This is why used cars can attract a higher price despite thousands of kilometres on the clock in a market where new vehicles are scarce. Availability is also a factor – as demonstrated by the effect that shortages of micro-chips and wheels have made new cars harder to get a hold of – encouraging consumers to buy used cars at a ridiculously high price. One of the main reasons for branding is to add value to a product and differentiate it from its competition. This also creates a context for a pricing strategy.

Consumers rarely consider price in isolation. It is almost always considered in context. That context also includes cognitive biases, including:

• Confirmation – where data is accepted because it confirms a belief.
• Loss aversion- the fear of loss is double the joy of gain.
• Exposure – where high-profile products are seen to offer greater value.
• Endowment – when the market bestows added value due to a sense of ‘ownership.’
• Anchoring – where value is determined by comparison with another product.
• Decoys – where a decoy price drives demand for another option.

 

People find it very difficult to estimate the unknown without anchors – reference points- more often than not, these anchors or reference points influence perceptions. Studying unknown quantities, researchers Tversky and Kahneman asked two samples what percentage of African countries were a member of the ‘United Nations. The first group was primed with the number 65 and reported an average of 45%, while the second group was primed with the number 10 and reported an average of 25%.

The decoy effect was demonstrated by research psychologist Dan Ariely working with The Economist magazine. Subscribers to the magazine were offered two options:

Option 1

• Print and digital – $125.00
• Digital only – $59.00

Option 2

• Print only – $125.00.
• Print and digital – $125.00
• Digital – $59.00.

 

The findings were as follows:

Option 1

• Print and digital – 32% of sales
• Digital-only – 68% of sales

 

 

Option 2

• Print only – nil.
• Print and digital – 84%.
• Digital – 16%

 

By adding a third decoy option (Print Only for $125), the researchers increased the income of the Economist by 43% – without selling any of the decoy options. The decoy made the print plus digital (which cost the Economist no more, to appear to be superior value)

Understanding and leveraging the context is critical.

FOCUS ON EMOTIONS

The previous discussion of ‘context’ and cognitive bias highlights that the perception of value is rarely objective and almost always emotional. There are two categories of emotions involved in pricing:

• Those of the consumer.
• Those of management.

Research consistently demonstrates that:

• Consumers are not rational.
• Businesspeople are consumers.

 

The judgements made by consumers about price and value are rarely made based on hard data. While complex data might be considered, judgements about value (and especially quality and service) are most often based on emotions. That consumers are not rational is well documented and has led to much research that has enabled us to predict irrational behaviour. This point is highlighted by the impact of cognitive biases that have no foundation in rational thinking.

Illustrating the lack of rational thinking among consumers, researcher Dan Ariely found that:

• University students offered $30 cash were significantly less likely to complete projects assigned to them than students offered a slab of beer (valued at $30).
• People lined up in their legion to collect a free ice cream (valued at $4.00) but would not line up for $4.00 in cash.

 

Consumers were irrational in both cases.

However, at least to me, the lack of rational thinking among businesspeople and the arrogance and simple thinking lead many businesspeople to think and act irrationally. Typifying this irrationality is the propensity for businesspeople to:

• Deride experimental research in favour of what they consider common sense.
• Deride academics preferring to rely instead on their infallible intuition.
• Deride any alternative thinking and preferring instead to rely on gut feelings.

 

Now, I am not suggesting that common sense, intuition, and gut feelings are not useful and do not have their place. I am suggesting that, while helpful, they are less reliable than experimentation, objective academics, and structured lateral thinking.

Focusing on emotions means:

• Embracing the fact that consumers are not rational, accounting for their biases and appealing to their emotions.
• Setting aside the application of intuition by management at least until the data has been collated and thoroughly analysed.

 

Consumers buy on emotion first and foremost.

PRIORITISING DIFFERENTIATION

I have highlighted the need to consider the competitive environment when developing and implementing a pricing strategy. If you offer similar value to a competitor, it will be more difficult to charge a higher price, and there will always be the tendency to set a lower or more competitive price. An attractive option, especially if you want to charge a premium price, is eliminating the competition. While it may be impossible to eliminate all competition, it is possible to eliminate or at least significantly reduce direct competition by:

• Differentiating your product within its current category.
• Differentiating your product so much that it is in a new category.

 

Apple has long been skilled at differentiating its computers from its competitors by fusing on ease of use, design, and quality. Apple has also been highly successful; in differentiating its phones from those of Samsung, based on the operating system, design and quality. While Apple products are in the same category as the competitors, they have been differentiated and can command a premium price.

Other brands have gone a step further and differentiated their products so much that they are seen by the target markets and being in a different category. A Citizen watch tells the time, while the Apple watch is a mindset statement, the Swatch is a fashion statement, and the Rolex is a wealth statement. These items are in different categories and therefore do not compete on price. The same can be said about McDonald’s hamburger and a Sheraton wagyu beef meal. The first is fast food, and the latter is a dining experience.

Differentiation is perhaps the most potent tool in pricing and marketing more generally. It is also the hardest to address and the least successfully executed strategy.

EMBRACE PSYCHOLOGY

Most of the science in developing the optimum pricing strategy revolves around psychology. The behaviour of human beings is impacted every day by more than 25 cognitive biases – most of which encourage irrational behaviour. Indeed, the cognitive biases discussed already reflect this. The psychology of pricing is also reflected in the range of psychological tactics that impact the perception of a price. Here is just one example:

Psychological pricing occurs when prices are expressed in a way that appeals more to consumers. It is pricing that appeals to the consumer’s emotions. Psychological pricing strategies recognise the profound effect psychology has on how consumers perceive and respond to prices and how those prices are expressed. Examples of psychological pricing include:

• The comma effect – where $1499 is seen as cheaper than $1,499
• The number 9 effect – where $9.99 is seen as cheaper than $10.00.
• The precision effect – where $325,425 is seen as lower than $325,000
• The restriction effect – where 6 or 8 options trump an unlimited number.
• The timing effect – ‘X for $29.00’ is better value than ‘$29.00 for X”
• The size effect – where $9.99 is considered cheaper than $9.99.

 

These are just some of the many psychological approaches to pricing that might be considered when drafting a pricing strategy and should be addressed in executing that strategy. All of these psychological approaches to pricing and many more like them, can have a significant impact on the consumer response to a price or pricing strategy. All are backed by research and empirical evidence. Here are two examples:

Research by Thomas, Simon and Kadiyali found that for real estate, at least $325,425 may be considered cheaper than $325,00. They concluded that this was because $325,425 was seen as more precise and represented a more ‘considered’ price. Further, the consumer sees less room for negotiation when the price is viewed as more specific.

Research suggests that precision, or the perception of it, is most important with larger numbers.

Research completed by Karmarkar, Shiv and Knutson involved giving participants $40 to spend and using an MRI to monitor brain function during the purchase or decision-making process.

• Option 1 Showing the product and then highlighting the price.
• Option 2 Highlighting the price and then showing the product.

 

The researchers found that when confronted with these options, the participants asked themselves different questions:

• Option 1 Do I like this product?
• Option 2 Is this product worth the price?

 

Option one emphasised the product, while option two emphasised the price. As a result, participants asked very different questions. This is an important finding. Communicating value occurs much more readily when the consumer makes the purchase decision in terms of the quality of the product and not value economics.

This effect holds most strongly for luxury products.

INSIGHTS

1. Price is as much a measure of quality as a level of remuneration.
2. Cost-plus pricing will always be inferior to value pricing.
3. Pricing strategies require a long-term view, not a set of tactics.
4. With pricing – psychology is always more important than economics.
5. An optimal pricing strategy accounts for 25+ consumer biases.

 

 ANOTHER PERSPECTIVE

• https://www.youtube.com/watch?v=xQWUm_eHjGk&t=88s

 

 RECOMMENDED READING

• https://www.booktopia.com.au/pricing-for-profit-peter-hill/book/9780749467678.html

 

 ACTION

1. When developing a pricing strategy – focus on value not costs.
2. When creating a pricing strategy – focus on context.
3. When creating a pricing strategy – focus on emotions.
4. When creating a pricing strategy – prioritise differentiation.
5. When creating a pricing strategy – embrace psychology.

 

QUESTIONS

1. Given that 71% of consumers believe they get a better deal online than in bricks and mortar, what are you doing to offer a comprehensive online offering?
2. Given that 86% of consumers say it is important to consider prices from various vendors, what are you doing to reduce effective competition by tangibly differentiating?
3. Given that some 25 cognitive biases unconsciously impact 100% of consumers, how are you accounting for these biases in your marketing strategy?
4. Given that 26% of businesses consider the competition when developing a pricing strategy, what are you doing to ensure that your customers don’t?
5. Given that 100% of consumers and 0% of businesses define quality and service standards – what are you doing to understand your market’s definitions?

 

STATISTICS

1. 71% of consumers believe they get a better deal online than in bricks and mortar.
2. 86% of consumers say it is important to consider prices from various vendors.
3. Some 25 cognitive biases unconsciously impact 100% of consumers.
4. 26% of businesses consider the competition when developing a pricing strategy.
5. 100% of consumers and 0% of businesses define quality and service standards.

 

FIVE DISTRIBUTION STRATEGIES FOR MAXIMISING RETURNS

 

• Options
• Ease of purchase.
• Innovation

 

DISTRIBUTION PHILOSOPHY

My philosophy on DISTRIBUTION is simple:

• The customer, not the marketer, defines the optimum distribution strategy.
• Distribution has the potential to add value, and the distribution strategy delivers a competitive advantage.
• The best way of developing the optimum distribution strategy is to co-create it with the customer.

***

Distribution is a critical issue for most businesses. Some marketers consider distribution to be a dry subject, and to some extent, it is. Some also view distribution as an issue of secondary importance, which it certainly is not. That is why distribution – or ‘place’ is one of the four ‘Ps’ of marketing. Distribution is as important as price and promotion and can be as important as the product. It is a central part of the customer experience.

Before considering the best approach to developing the optimum distribution strategy, it is important to define “distribution” or “place”, discuss what makes it important and highlight the considerations when designing a distribution strategy.

DISTRIBUTION DEFINED.

In marketing, the terms distribution and place are used interchangeably. They refer to – how the product gets from the hands of the seller into the hands of members of the target market. Developing a distribution strategy is all about determining and documenting the pathway to the consumer that will maximise sales and margins while minimising costs.

The optimum distribution strategy ensures that the right product is available in the right quantities, at the right place, at the right time, to the right person – such that sales and margins can be maximised while costs are minimised.

IMPORTANCE OF DISTRIBUTION 

Distribution is critically important to most businesses because of its role in enabling a sale. If the customer cannot access a product, it is unlikely he or she will buy that product. Further, the easier a customer can access a product, the greater the likelihood of a sale – a point I will touch on again.

Distribution is important for a range of reasons, including:

• Providing customer access to the product.
• The potential to add value to the customer experience.
• The potential for utilising distribution as a competitive advantage, and
• The potential to impact sales and margins.

 

Customer access enables a sale to take place. This should be a priority for all businesses. Access is also central to the customer experience. It is a critical step in the customer journey. Ease of access can add significant value to a customer experience. This helps to explain the growth in omnichannel marketing.

Distribution has significant potential to create a competitive advantage. If, for example, you are the only business offering home delivery – this would make distribution a competitive advantage. Distribution can be expensive and different strategies impact differently on margins. The optimum approach to distribution will maximise margins and minimise costs.

The point here is that in addition to being an issue that needs to be addressed in the marketing strategy – distribution is also a marketing tool that should be considered when seeking to add value to the customer experience and when developing a competitive advantage.

DISTRIBUTION CONSIDERATIONS

Perhaps the most obvious issue to consider when developing a distribution strategy is the channels to be used. I will address these channels in a moment. For now, I will focus on those issues that need to be considered before the channels are decided. Those issues include:

• The customer needs and expectations.
• The customer behaviour and constraints.
• The features and requirements of the product.
• The requirements of the brand.
• The broader requirements of the business.
• The control required over delivery.
• The distribution costs.
• The margins required and achievable.

 

To make it as easy as possible for customers to make purchases, it is important to understand their needs, expectations, behaviour, and constraints. Considerations may include – channels, timing, speed, and convenience. These should be considered with the competitive environment in mind.

The product’s features, including its requirement for refrigeration, its fragility and size, also require consideration. The distribution strategy must make logistical sense. The implications of the brand must also be considered – with:

• Intensive distribution working best for FMCG products (for example).
• Selective distribution working well for speciality products (for example).
• Exclusive distribution working well for premium products (for example).

 

The broader requirements of the business are also important. The distribution strategy should:

• Be a fully integrated component of the marketing strategy.
• Account for strategies pertaining to market segments or the pursuit of market share.
• Address the potential to add value to the customer experience.

 

Consideration must also be given to the level of control the business needs over the distribution, pricing, and overall marketing strategies. Direct distribution provides for greater control than indirect distribution.

Some distribution channels involve more costs than others. Vertical integration involves higher costs that using a retailer. Equally, the channel impacts margins with the use of distributors, wholesalers and retailers, potentially saving money while reducing margins.

These factors must be considered when drafting a distribution strategy and incorporating it into the broader marketing strategy.

FIVE STRATEGIES

There are many approaches to developing the optimum distribution strategy. Five critical strategies for creating the optimum distribution strategy follow.

1. DISTRIBUTION OPTION

 

The options for distribution are many and varied. The best channel options depend on the market, the product, the brand, and the business. Considerations will include:

• Offline – direct
  • Vending machines.
• b) Offline – indirect
• c) Online – Direct
  • Standalone e-commerce site.
  • E-commerce marketplace.
• d) Online – indirect
  • Affiliate marketing.

 

While gradually being replaced by online sales, telemarketing, catalogues, and vending machines remain options for some businesses. For many businesses, distributors, wholesalers, and retailers are still the most common distribution approach.

To secure online sales, businesses can set up their own e-commerce site or join a marketplace such as eBay, Etsy or Amazon – where the margins will be smaller but the reach greater. There is also the option of affiliate marketing – one of the fastest growing marketing channels. Affiliate marketing involves other individuals or businesses marketing your products online on your behalf.

With all of these channels, due consideration also needs to be given to the delivery options, including:

• Home or office delivery.
• Business pick-up.
• Station pick-up.

 

Home or office delivery is becoming increasingly common. It offers the convenience of not having to leave home but, in many cases, the inconvenience of a delay. Pick-up from a business – or click and collect – remains popular among shoppers wanting products now and without paying for delivery. There is also a trend toward online stores, particularly establishing pick-up stations in service stations and public transport hubs. In the UK, some 78% of all online sales are picked up by the purchaser. A similar picture seems to be developing in Australia.

While relevant channels need to be given due consideration, multichannel or omnichannel marketing appears to be the future.

By way of background, consider:

• 95%of marketers say they know how important, multichannel marketing is for targeting.
• 87%of retailers agree that an omnichannel marketing strategy is critical to their success
• 73%say they have a multichannel strategy in place.

 

The message here is – to consider all the options- including omnichannel.

2. CUSTOMER EXPECTATIONS 

 

More than three-quarters of UK shoppers expect they will save time by buying online, and then they save more time by picking up in person – rather than get home or office delivery. This highlights the importance of understanding the expectations of your customers and potential customers.

The number one reason consumers shop online does not price, as many have suggested. Research has shown time and again that the primary reasons for shopping online are range and convenience. Consumers believe that they can more readily get what they want online.

How important is convenience to your customers? Some shoppers want what they want – today or even now. Speed of delivery is also a critical issue that impacts supplier selection – hence Amazon offering same-day delivery and the boom in Uber Eats.

Some customers have clear expectations of where the product they are looking for will be available and how they expect to access it. On the other side of the coin, when buying some products, some customers want and expect personal service and to be made to feel special. Such customers buying these products will often prefer to shop in-store and be treated to an excellent customer experience featuring personalised customer service.

The big questions to be answered before drafting the optimum distribution strategy therefore include:

• Where do the customers want to buy?
• How do customers prefer to buy?
• How can technology assists that buying?

 

The point here is that to develop an optimal distribution strategy for any product and market; you need to understand and embrace target market needs, wants and expectations. One of the best methods for addressing this is – the co-creation of the distribution strategy, perhaps leveraging a brand community.

By way of background, consider:

• 72%of consumers say they would instead connect with brands and businesses through multichannel marketing.
• 82%of shoppers use their smartphones as shopping assistants in stores.
• 98%of shoppers switch between devices and channels on the same day.

 

Understanding your customer and how distribution impacts their behaviour is critical.

3. EASE OF PURCHASE.

 

No consideration in developing the distribution strategy is more important than making it as easy as possible for a target market to get their hands on the product. This involves ensuring:

• Easy access.
• Ready availability.

 

Perhaps the fastest growing distribution strategy and the easiest way of ensuring access for the target market involves using multiple channels seamlessly to make it as easy as possible for consumers to buy the product in the quantities they want when they want. Omni-channel marketing involving the integrated use of both online and offline channels is becoming increasingly common because it makes buying easier. Most retailers and many other businesses will benefit from an omnichannel approach that integrates one or more offline and online options – making it as easy as possible for the target market to purchase.

Also important in terms of access are the avenues for payment. The avenues available should ideally be those expected by the customer. These include:

• Credit card and debit card.
• Buy now – pay late.
• Pay Pal.

 

The more comprehensive the options for purchasing, the greater the likelihood that a purchase will occur.

Availability is also a critical issue. Consumers cannot buy what is not available. Further, the data shows that when a product is unavailable, the purchaser increases the likelihood of going elsewhere. Research suggests that if a product is out of stock, most customers go to a competitor rather than complain. ‘Out of stock’ are words the target market should never hear or read. There is also evidence to suggest that losing a sale often involves losing a customer – or, in other words – customers buying not just the immediate purchase elsewhere but also future purchases from the competitor. Being customer-focused means never being out of stock.

While costs and margins are most certainly important considerations, with few exceptions, the critical issue in distribution must be to make it as easy as possible for the consumer to buy.

By way of background, consider:

• 42%of retail executives spend up to half their marketing budget on omnichannel initiatives.
• 52%of marketers use 3 to 4 marketing channels compared to 44% in 2015.
• 51%of businesses today use at least eight channels to interact with customers.

 

4. STRATEGIC PLANNING

 

Every business needs a distribution strategy, and that distribution strategy needs to be a core element of the broader marketing strategy. Critical issues considered in the distribution strategy include:

• Market priorities.
• Adding value.
• Strategic competitive advantage.

 

A strategy designed to secure market share may differ from one revolving around permission marketing. The business’s priorities can directly affect the distribution strategy and will be directly impacted by the distribution strategy. Efficient distribution can add value to the customer experience, as can range and service standards at the point of sale. With an online marketplace – range and convenience are everything. With high-end luxury watches – customer service is everything.

It is important to use distribution to add as much value as possible to the customer experience and, in so doing, make distribution a marketing tool that can be fine-tuned over time.

Building on the added value concept, distribution can also represent a point of difference or strategic competitive advantage. While continuing to sell online, Apple has turned its 550 plus retail outlets into a strategic competitive advantage – with an offering no technology business has to date replicated.

There is also a requirement to monitor customer needs, wants, and expectations and to be flexible enough to change direction as and when the customer or potential customer does. The distribution strategy that works well today might not work well tomorrow. When the market evolves, so should the business. There is a requirement for a long-term strategy – but there is also a need to be flexible enough to update that strategy as required.

By way of background, consider:

• Only 26%of businesses are yet to take action to develop an omnichannel strategy.
• Only 16%of marketers have marketing technology strategies that align with their business strategies.
• Only 3%of marketers say their different brand functions are integrated well with their marketing technology.

 

Ensure that your distribution strategy adds value and consider making it a competitive advantage.

5. INNOVATE IN DISTRIBUTION

 

Tesla marketing electric vehicles directly to consumers is an important example of innovation that is rare in the automotive industry. Contrary to most other brands, the Tesla distribution strategy involves no dealerships. They instead promote the vehicles in public places and sell them online. When it opened its doors in 1962, Wallmart (the world’s biggest retailer in 2022) famously had a distribution strategy focused on what it considered forgotten rural markets. This allowed it to amass the funds required to address urban markets in subsequent years.

Distribution is a marketing tool and, as such, should always be considered with innovation in mind. That innovation can occur in terms of:

• Reducing costs and building margins – like Tesla going directly to buyers.
• Targeting neglected markets – like Walmart focusing on rural areas.
• Withdrawing from retailing – like vendors of white label products.
• The channels used – like UBER delivering food directly to consumers.
• Speed of delivery – with Amazon now offering same-day delivery.

Omni-channel retailing, when it began, was an example of innovation. Before omnichannel retailing, customers could buy either online or offline – even if both were available, the process was not seamless. Today omnichannel marketing is present and seamless for most larger and many smaller retailers. This was the result of innovation and provided an insight into how innovation is an essential consideration in developing the optimum distribution strategy.

By way of background, consider:

• 60%of millennials expect consistent brand experiences in-store or by phone.
• 46%of shoppers visit a retailer’s own app or website while shopping in-store.
• 80%of consumers say a video showing how a product or service works is important.

 

Extend your focus on innovation to distribution and find better ways to exceed customer expectations.

INSIGHTS

1. Optimum strategy means the right product in the right quantities, available to the right people at the right place and at the right time.
2. Your customer – not your marketing manager – defines the parameters of the optimum distribution strategy.
3. Your distribution strategy is central to maximising your customers’ lifetime value.
4. The optimum distribution strategy is fully integrated into and plays a pivotal role in the broader marketing strategy.
5. Distribution strategies are best developed using a co-creation model, which may involve a brand community.

 

 ANOTHER PERSPECTIVE

• https://www.youtube.com/watch?v=kKLHEnuS__0&t=64s

 

RECOMMENDED READING

• https://www.booktopia.com.au/distribution-strategy-livio-moretti/book/9783319919584.html

 

 ACTION

1. When developing a distribution strategy – first assess all options.
2. Before creating a distribution strategy – establish customer expectations.
3. When creating a distribution strategy – make it as easy as possible to buy.
4. Document your distribution strategy – ensuring it adds value and offers a SCA.
5. When developing a distribution strategy – be sure to prioritise innovation.

 

QUESTIONS

1. What are your customers’ access and availability, needs, wants, and expectations? Can you better tailor your distribution to cater for them?
2. Do you have an omnichannel distribution strategy? If not, why not? What might it look like if you did?
3. Which distribution channels that could boost sales are you not addressing? Why are you not addressing them?
4. Do you have a documented distribution strategy, and how does it use distribution to add value to the customer experience?
5. What priority have you given innovation in developing your distribution strategy? What innovations are available to your business?

 

STATISTICS

1. In the UK – 78% of all online sales are picked up by the purchaser.
2. 95% of marketers say they know how important, multichannel marketing is for targeting.
3. 87% of retailers agree that omnichannel marketing is crucial to their success.
4. 86% of senior marketers agree that creating a cohesive customer journey across all touchpoints and channels is important.
5. 73% say they have a multichannel strategy in place.

 

FIVE STRATEGIES FOR MAXIMISING LIFETIME VALUE. 

• Average sale.
• Repeat business.

 

LIFETIME VALUE PHILOSOPHY.

At the centre of my business philosophy is the conviction that the customer should be at the centre of all marketing strategies and initiatives. Consistent with this:

• For most businesses, few things offer more potential for delivering optimum performance than maximising every customer’s lifetime value.
• While the potential of maximising the lifetime value of each customer is significant – the potential of maximising the lifetime value of each enquiry is even more significant.
• For most businesses, few things will enhance profitability and performance more than maximising the lifetime value of every enquiry and subsequent customer.

 LTV DEFINED

While most authorities refer to CLV or customer lifetime value, I prefer to focus on LTV or lifetime value – recognising that the optimum outcome is achieved when the return per enquiry is also maximised.

CLV is the overall financial value of a customer relationship, based on the present and future net income from that customer. It is a business metric that measures how much a business can plan to earn from a customer over the course of a relationship. It is generally calculated as:

• Estimated average number of potential purchases in a lifetime. Estimated average value of each purchase – multiplied by the …
• Estimated average number of potential purchases in a lifetime.

 

CLV amounts to the likely return from each customer over their potential purchasing period. Some models are more sophisticated than others, accounting for the costs associated with production and marketing. These models look at CLV from a profit perspective.

LTV, in my model, differs from CLV in two ways:

• It recognises the value in maximising the number of enquiries that become customers.
• It recognises the value of each customer beyond simple purchasing potential.

 

LTV addresses the return per enquiry, calculated by applying the abovementioned formula to enquiries rather than customers – accounting for the conversion rate. LTV also addresses the non-monetary value of each customer and, specifically, the potential to influence potential enquirers and refer additional customers. Applied to enquirers, this model recognises the power of referral as follows:

• Estimated average value of each purchase – multiplied by the …
• Estimated average number of potential purchases in a lifetime plus …
• Estimated value of referrals (number by CLV).

 

IMPORTANCE OF LTV

The CLV is important to every business because of its direct impact on profitability and performance. In a general sense maximising CLV maximises the return per customer. In a more specific sense, calculating the CLV facilitates:

• Projecting income over an extended period.
• Identifying and targeting high-value customers.
• Monitoring the impact of strategies designed to maximise returns.

 

The LTV is important because it facilitates accounting for the customer acquisition cost and highlights the importance of maximising conversion rates. Maximising conversion rates, in turn, reduces the average customer acquisition cost. LTV is also important because it recognises the importance of referral as a source of premium business.

Relevant statistics include the following:

• A 5% increase in retention can produce a 25%increase in profits.
• Existing customers spend 67%more on average than new customers.
• 76%of businesses see CLV as an important concept for their organisation.

 

 FIVE STRATEGIES

The best approach to maximising LTV is to focus on the main drivers. Those drivers are – conversion rates, average sale per customer, margins, repeat business rates and referral rates. This missive addresses each driver and the importance of monitoring and fine-tuning the strategy.

CONVERSION RATES 

Traditionally marketers focus a great deal of attention on enquiry rates – the number of enquiries generated by a marketing campaign. While enquiry rates are important, they are arguably no more important than conversion rates. Returns are maximised when both enquiry and conversion rates are maximised. It is also apparent that maximising conversion rates are central to maximising the return on the investment in customer acquisition.

Despite this, few businesses I come across directly address conversion rates in their marketing strategy. What strategies do you have in place to maximise conversion rates? Among the many options for maximising conversion rates are:

• Having a proven process for efficiently closing a sale.
• Personalising the sales pitch and process.
• Addressing each touchpoint in the customer journey.

 

The optimum approach to maximising conversion rates will vary by business, product, market, staff member and time – but there needs to be a process, and staff must have the skills to execute that process well.

Highlighting the importance of having in place a well-considered approach to maximising conversion rates are the following statistics:

• The average conversion rate from a website is 35%.
• Facebook ads have an average conversion rate of 21%.
• Video can increase conversion rates by around 30%.

 

 AVERAGE SALE AND MARGIN

Once you have invested the time and money required to attract enquirers and convert those enquirers into customers – it is important to maximise the return from each transaction. This necessarily involves maximising the average transaction per customer and the average margin per product sold.

Maximising the average margin might involve:

• Implementing a value-pricing model, as discussed in a previous missive.
• Focusing on value ahead of price in the sales process.
• Resisting all forms of discounting – reducing prices only when essential.

 

Maximising the average sale per transaction can involve:

• Establishing a trust-based relationship.
• Selling accessories or add-on services.
• Selling higher value products and services.

 

These points might seem common sense to many, and well may they be, but few businesses I come across apply a value pricing model or have a strategy for maximising the average transaction. It is also apparent that a disturbing number of sales staff are not spending the time with customers required to implement a strategy to maximise the average sale.

Highlighting the importance of adopting a more strategic and supportive approach to maximising the average sale per customer are the following statistics:

• More than 50%of sales staff rely on peers (rather than managers) for advice on maximising the average sale per customer.
• Some 60%of sales staff say that even when they figure out what works for them, they don’t change it.
• Just 30%of the average salesperson’s time is spent interacting with customers.

 

REPEAT BUSINESS

Maximising repeat business rates is central to maximising LTV. Despite its importance, many businesses still lack the technology and systems required to measure repeat business rates. While most businesses appreciate this, few businesses I come across have incorporated – into their marketing strategy – a plan for maximising repeat business rates.

Common strategies for maximising repeat business rates include:

• Loyalty programmes.
• Coupons and freebies.
• Customer follow-up.

 

Research suggests that these types of strategies can work. Research also indicates that they tend to be less effective than more customer-focused strategies. Customer-focused strategies for maximising repeat business rates include:

• Delivering on time, to budget and to specification without fail.
• Understanding and exceeding the expectations of customers without fail.
• Developing and maintaining a relationship through a brand community.

 

Highlighting the value of a strategic approach to driving repeat business are the following statistics:

• 93%of customers are likely to make repeat purchases with businesses that offer excellent customer service.
• 82% of consumerssay they stopped doing business with a firm due to a poor customer experience.
• 68% of customers stoppedbuying from a business because they perceived the business was indifferent to them.

 

 REFERRAL BUSINESS

Research shows that referral business is perhaps the best type of business. It facilitates growth through higher conversion rates and a higher average sale per customer. Despite this, few businesses I come across have incorporated into their marketing strategy – a referral generation plan. Referrals can involve:

• Reviews and references on Google and social media.
• Referrals provided personally by an existing customer.

 

While the latter tends to be more powerful, both are important. Consider:

• 79% of shoppers trust online reviews as much as personal recommendations
• 80% of potential buyers consult online reviews and references before buying.

 

It is therefore important for marketing strategies to:

• Provide forums and make it easy to publish reviews and referrals.
• Provide content that customers will share with a comment.
• Encourage customers to join an online brand community.

 

In terms of referrals more generally, the strategy needs to address, among other things:

• Providing an experience that customers want to talk about.
• Maintaining relationships with high-quality communication.
• Being seen as an authority and source of expertise.

 

These statistics highlight the importance of a strategic approach to referral:

• Referred customers’ LTV is 16%higher than that of non-referred customers.
• Referred leads have a 30%higher conversion rate than leads from other channels.
• Customers referred by other customers have a 37%higher retention rate.

 

MONITORING

 

I have noted the importance of strategy. All factors that drive LTV must be addressed in the marketing strategy. They are central to maximising profitability. Equally important is monitoring the impact of these strategies and fine-tuning the strategy accordingly. If LTV is to be maximised – set and forget is not an option. The strategy needs to be documented, implemented, and continually – monitored and fine-tuned.

In addition to reviewing the LTV annually as part of a marketing audit and strategy review process, it is important to set objectives for and then monitor:

• Conversion rates.
• The average sale per transaction.
• The average margin per transaction.
• Repeat business rates.
• Referral rates.

 

Where one or more of these factors falls below the objective, the strategy needs to be reviewed with due consideration given to customers’ needs, wants and expectations.

Monitoring these metrics will also facilitate:

• Identifying and focusing resources on high-value customers.
• Identifying and excluding unprofitable customers.

 

Fortunately, there is a growing list of automation and machine learning technologies that can facilitate this monitoring and identify these types of opportunities.

INSIGHTS

• Few metrics are more important in marketing than lifetime value.
• Your lifetime value calculation needs to include conversion rates.
• Your lifetime value calculation needs to include referral rates.
• The customer LTV is always lower in the absence of a strategy.
• Adopting value pricing is central to maximising customer LTV.

 

 ANOTHER PERSPECTIVE

• https://www.youtube.com/watch?v=f3ua_dDjTNU&t=461s

 

 RECOMMENDED READING

• https://www.booktopia.com.au/customer-lifetime-value-david-bejou/book/9780789034359.html

 

 ACTION

• To maximise customer LTV – first, maximise conversion rates.
• To maximise customer LTV – adopt a value pricing model.
• To maximise customer LTV – get strategic about repeat business.
• To maximise customer LTV – get strategic about driving referrals.
• To maximise customer LTV – document, monitor and fine-tune the strategy.

 

QUESTIONS

• Given that the average conversion rate for websites is 2.35%, what is your strategy to maximise returns from your website?
• Given the importance of the average sale per customer, what are you doing about the 30%of most salespersons’ time spent with customers?
• Given that 93%of customers are likely to make repeat purchases with companies who offer excellent customer service, what are you doing to ensure they get it?
• Given that referred customers’ LTV is 16%higher than that of non-referred customers, how optimum is your strategy to maximise referrals?
• Given the potential for customer LTV to drive profitability and performance, how well documented is your LTV – strategy, and how well do you monitor and fine-tune it?

 

STATISTICS

• 76%of businesses see CLTV as an important concept for their organisation.
• A video to support conversion rates can increase those rates by 30%.
• 60%of sales staff don’t change their strategy – even when it is not optimum.
• 68% of customers stoppedbuying from a business because it seemed indifferent to them.
• Referral leads have a 30%higher conversion rate than leads from any other channel.

 

FIVE STRATEGIES FOR ELIMINATING THE COMPETITION (AND DRIVING UP MARGINS). 

 

• Value proposition.
• Competitive advantage.
• Sensitivity and flexibility.

 

CUSTOMER ELIMINATION PHILOSOPHY.

On more than one occasion, I have noted that nothing is more important when developing a marketing strategy than a customer focus. The customer lies at the heart of every genuinely cost-effective marketing strategy. Consistent with this view, my philosophy on eliminating the competition might be summarised as follows:

• The closer any organisation gets to exceeding the expectations of a well-defined target market, the closer that organisation will be to optimising performance.
• The elimination of the competition, or at least the minimisation of direct competition, is central to developing a cost-effective marketing strategy.
• Eliminating the competition is best served by exceeding the target market’s expectations in ways that set the organisation apart from its competition.

 

ELIMINATION DEFINED

This could be a relatively short missive. I could just outline the lethal weapons you should use and how to use them when carrying out a hit on your competitors. Recognising the downsides of such an approach, however, I will instead focus on 5 commercial weapons for eliminating competitive forces.

It will not be suggested here that the competition should be exterminated. Instead, it will be suggested here that the impact of competitive forces on any organisation can and should be minimised – ideally to a point where they are virtually irrelevant.

WHY ELIMINATE THE COMPETITION

Advertising agencies talk a great deal about ‘cut through’ and the difficulties associated with ensuring that marketing messages, communicated through advertising, PR and other forms of promotion, are heard and engaged with. However, few advertising agencies talk about how this process would be much easier and cheaper without direct competition. Eliminating the competition can dramatically reduce the cost of marketing.

Marketers more generally recognise the value of brand loyalty – the central driver of repeat business and referrals. As it happens, brand loyalty is best served by having little or no direct competition. The absence of direct competition is tantamount to the consumer perceiving few if any options. In the absence of options, it stands to reason that the target market will buy your product.

Eliminating the competition, especially direct competition, is central to minimising the cost of marketing and maximising both enquiry rates and the lifetime value of each enquiry. To quote Peter Theil (one of the founders of Pay Pal and a leading venture capitalist) – ‘competition is for losers.’

FIVE STRATEGIES

Beyond the use of firearms, there are many strategies that organisations can use to eliminate or dramatically reduce the competition. These strategies include those associated with – differentiation, positioning, value proposition, competitive advantage, and sensitivity. This missive addresses all five of these. It also touches on the critical issues to be considered in addressing them.

DIFFERENTIATION  

If I present you with two shirts made from the same fabric, in the same colour, in the same style and with the same availability, it is almost certain that you would buy the cheaper one. The more similar two products are the more important price becomes – and the higher the cost of marketing the product in a noisy environment. Direct competition drives marketing costs up and margins down.

Conversely, the more different the two shirts, the easier it is to distinguish between the two shirts and the more likely you are to choose based on something other than price. For many audiences, a cotton shirt and a nylon shirt are not the same things, and if your preference is for cotton, you will likely buy the cotton shirt even if it is a little bit more expensive than the nylon option.

Differentiation has the power to separate two products in a way that limits the extent to which the target market views them as competitors. While both a Mini and a Rolls Royce are cars – they are not competitors. Few potential new vehicle purchasers would test drive the Mini and the Rolls Royce. This kind of differentiation involves:

• Identifying the target market to be addressed.
• Understanding the expectations of that market.
• Differentiating the product, based on market expectation.

 

In other words – eliminating the competition can be as simple as understanding and addressing the expectations of the target market – and doing so better than the potential competition.

Such differentiation can be:

 

While it is powerful for consumers to perceive a difference between two otherwise identical products (Deloitte and PWC), it is even more powerful when the difference is both perceived and tangible (Zegna and Banana Republic suits). The more tangible the differentiation, the more credible and sustainable it tends to be.

There are two general levels of differentiation:

• In category.
• Out of category.

 

While differentiation within a product category (as with the I-phone and a Galaxy phone) can be very effective, shifting your product into a different or even new product category (such as eating at Mcdonald’s or dining at Nobu) is stronger. Products deemed to be in their own category will be more strongly differentiated than those in the same category. Certainly, a direct comparison is less likely.

 

 

Differentiation can be:

 

Some brands differentiate on both axes, especially when targeting complex markets. Vertical differentiation (upmarket, middle market or lower end – slow, moderate, or fast) is perhaps the most common form of differentiation. Horizontal differentiation (differences in features, functionality, and deliverables) is also common.

Regardless of the nature or direction of the differentiation, there is no doubt about the power of differentiation in reducing marketing costs and maximising returns. And the more tangible that differentiation and the more it establishes the product in a new category – the less likely a direct comparison will be made.

While few businesses successfully achieve tangible differentiation, most have the potential for establishing and leveraging differentiation that will reduce direct competition.

POSITIONING.

To quote Hub Spot – ‘Brand positioning is the process of positioning your brand in the mind of your customers. More than a tagline or a fancy logo, brand positioning is the strategy used to set your business apart from the rest.’ In essence, positioning is an extension of the concept of differentiation. It involves making differentiation more comprehensive and using it to create a perception that eliminates direct competition.

Effective positioning involves:

• Identifying the target audience.
• Understanding the expectations of the target market.
• Identifying the most critical expectations of the market.
• Developing a comprehensive image built around the most critical expectations.

 

Ultimately the positioning, defined in this way, places all potential competitors on a matrix to identify the opportunities for your brand – to identify and own a unique positioning that not only sets the brand apart from its competitors but makes it the preferred option within the target market. Few businesses have been more effective at brand positioning than Apple. While Apple sells essentially the same product as Samsung – it is positioned very differently, especially in terms of – design, ease of use, functionality, and quality.

Positioning involves a more complete and all-encompassing approach to differentiation and market identification. The objective is to ensure that the target market identifies with the brand as exemplified by the positioning – such that purchase, and brand loyalty is assured.

While most businesses can establish a unique positioning, few businesses I come across address positioning well. The result is often higher marketing costs and lower returns.

VALUE PROPOSITION.

When I meet a new potential client, one of the first questions I ask is – ‘in one sentence – why should I buy your XYZ instead of the XYZ available from ABC (the nearest competitor?’ To me, very few questions are more important in marketing than this one, and in my experience, few businesses can answer the question concisely and convincingly. Rarely are the responses I receive to this question, tangible. Most reactions are vague and indeterminate, like:

• Better quality.
• Better service.
• Better value.

 

What on earth do such statements mean? Define ‘better’ and what makes them better. Such statements are certainly less powerful than more quantifiable and specific answers like:

• Same-day delivery (when all others are three days).
• Lifetime guarantee (when others have two years warranties)
• Free servicing for life (when others charge).

 

The more tangible, concrete, and relevant to the consumer’s needs, wants, and expectations a value proposition is – the more effective it will be in differentiating the brand in a sustainable way.

A ‘value proposition is a market-specific feature that makes a business or product attractive to customers. It is a single point of differentiation, consistent with the overall brand positioning that makes a product or brands the preferred option within a target market. It is a powerful tool in eliminating competition. It is the answer to the question – ‘why should I buy your XYZ instead of the XYZ available from ABC.’

Many businesses attempt to develop a strong value proposition and end up with a vague promise that requires a leap of faith on the part of the target market. Why should I buy your product and not that of your competitor?

STRATEGIC COMPETITIVE ADVANTAGE.

Some people incorrectly use the phrase “strategic competitive advantage’ interchangeably with the term ‘differentiation.’ While a strategic competitive advantage can drive differentiation, they are not the same thing. Investopedia defines differentiation as ‘Distinguishing a company’s products or services from the competition. Successful product differentiation involves identifying and communicating the unique qualities of a product or company while highlighting the distinct differences between that product or company and its competitors. Product differentiation goes hand in hand with developing a strong value proposition so that a product or service is attractive to a target market or audience.’

A strategic competitive advantage, on the other hand; ‘refers to factors that allow a company to produce goods or services better or more cheaply than its rivals. These factors allow the productive entity to generate more sales or superior margins than its market rivals. Competitive advantages are attributed to a variety of factors including cost structure, branding, the quality of product offerings, the distribution network, intellectual property, and customer service.’ While differentiation may only represent a perceived difference, a competitive advantage is a concrete difference that:

• Facilitates differentiation.
• Enables differentiation to be sustainable.

 

The ideal strategic competitive advantage is:

• Tangible – real.
• Strategic – relevant to customer needs.
• Sustainable – durable.

 

In many respects, a strategic competitive advantage is a holy grail for eliminating the competition. A phrase coined by Michael Porter, the Harvard University icon, strategic competitive advantage is often applied to the five forces Porter identified:

• Competition in the industry
• Potential of new entrants into the industry
• Power of suppliers
• Power of customers
• Threat of substitute products

 

Every business should identify and maintain a strategic competitive advantage (SCA). In my experience, however, few do. This is despite the potential for the correct SCA to drive costs down, margins up and overall revenue up.

SENSITIVITY AND FLEXIBILITY. 

Eliminating the competition should not be addressed just once. If the level of differentiation is to be maximised and maintained – set and forget – it is not an option. Once the competition has been eliminated or primarily so, it is an ongoing struggle to ensure it stays eliminated. In this regard, due consideration needs to be given to:

• Changes in competitor strategies.
• New products and new entrants.
• New technologies and solutions.
• Changing consumer expectations.

 

Competitor strategies will change on an ongoing basis. New products can come into the market anytime – sometimes driven by new technologies. Consumer expectations will invariably change over time. All of these factors need to be provided for in an approach to strategy that involves:

• Developing a strategy that differentiates, positions, and leverages an SCA.
• Monitoring the market and competitive landscape.
• Finetuning the strategy as and when indicated by the monitoring.

 

Eliminating the competition requires that changes be accommodated in the evolving marketing strategy. While changes should not occur daily, the strategy to differentiate and position – and the access to a strategic competitive advantage to build on – will change over time. These issues should be reviewed at least annually as part of a comprehensive marketing audit and strategy review.

CRITICAL ISSUES

The critical issues to be considered when eliminating the competition include:

• The market – identifying a market segment that can be dominated.
• The customer – understanding their needs and expectations.
• Tangibility – developing a concrete point of differentiation.
• Quantification – using numbers and evidence to substantiate claims.
• Perception – with or without tangibility, the perceptions in the market.
• Sustainability – the durability of the points of difference.
• Capabilities – the strengths of the business the differentiation is built on.
• Value – using differentiation to add value – at least in the eye of the consumer.

 

Avenues for differentiation include, but are not limited to:

 

Part of the challenge of eliminating the competition involves identifying new and more effective avenues for differentiation, positioning, competitive advantage, and your value proposition.

INSIGHTS

• Tangible product differentiation drives marketing costs down.
• A strategic competitive advantage facilitates sustainable differentiation.
• To maximise returns, a brand must have a credible value proposition.
• Effective brand differentiation ultimately reduces competition.
• Few businesses fully leverage the benefits of brand positioning.

 

ANOTHER PERSPECTIVE

https://www.youtube.com/watch?v=mYF2_FBCvXw&t=327s

RECOMMENDED READING – MUST READ

https://www.booktopia.com.au/zero-to-one-peter-thiel/book/9780753555200.html

ACTION

• To reduce or eliminate competition – differentiate tangibly.
• To reduce or eliminate competition – position your brand strategically.
• To reduce or eliminate competition – develop a credible value proposition.
• To reduce or eliminate competition – establish and build on a competitive advantage.
• To reduce or eliminate competition – remain sensitive, adaptable, and flexible.

 

QUESTIONS

• Given that tangible differentiation can eliminate the competition and drive marketing costs down while revenues increase – how tangible is your point of difference?
• Since strategic positioning can eliminate the competition and drive marketing costs down while revenues increase – how strategic is your positioning?
• Given the importance of a simple and credible value proposition, what is your value proposition, and how simple and credible is it within the target market?
• Given the power of a strategic competitive advantage in underpinning a sustainable point of difference or positioning – what capabilities underpin your SCA?
• If you have not established a strategic positioning, credible value proposition and strategic competitive advantage – why are you avoiding the art of the possible and the necessary?

 

STATISTICS

• 94% of customers are likely to show loyalty to a brand that offers complete transparency.
• 73% of people prefer brands that personalise the shopping experience.
• 59% of shoppers prefer to buy new products from the brands they trust.
• 63% of people pay particular attention to brands when choosing a smartphone.
• 86% of consumers prefer an authentic and honest brand personality on social networks.

 

FIVE STRATEGIES FOR BUILDING A BRAND WITHOUT ADVERTISING. 

 

BRAND PHILOSOPHY

Consistent with my view that great marketing has the customer at the centre, great branding is all about the customer – so much so that it is the customer who defines the brand. Following on from this, my philosophy regarding branding might be summarised as follows:

• Most organisations have two brands – the actual brand, as defined by the customer and the optimum brand, represented by the organisation.
• The actual brand for an individual or organisation directly impacts the performance of that organisation, especially in terms of margins and customer lifetime value.
• The key to great branding is substance, not the fluff created by many advertising agencies or the concept of ‘better,’ – often focused on by many marketing executives.

 

BRAND AND BRANDING DEFINED

There is no better definition of brand than that articulated by Jeff Bezos, the founder of Amazon. He defined a brand as being:

• ‘What people say about you when you are not in the room.’

 

Contrary to what many marketers would like to be the case – what people, or more specifically the target market, say or feel about a product – is the actual brand – the brand determining performance. How an organisation wants to be seen by its target audience is its optimum brand. The optimum brand is the brand the organisation believes is required to maximise performance.

It is rare for the actual and optimum brands to be identical.

Branding is about reducing the gap between the actual and optimum brands. It is all about creating within the target market the brand’s perception that will facilitate maximum performance.

IMPORTANCE OF BRANDING

An individual’s or organisation’s actual brand is important because it directly impacts on:

• The expectations of a brand and, therefore, initial sales.
• The perceived value of a brand and, therefore, margins.
• Loyalty to a brand and, therefore, repeat business rates.
• Experiences of a brand and, therefore, referral rates.

 

Branding is central to maximising the lifetime value of every enquirer and, indeed, attracting new enquirers.

The optimum brand for any individual or organisation is the brand that will ultimately maximise initial sales, margins, repeat business rates, referral rates and ultimately the lifetime value of every customer.

BRANDING OPPORTUNITIES

The opportunities for building a brand occur at each touchpoint in the customer journey and all engagements with members of related audiences. More broadly, every interaction with a customer and the audience impacts the actual brand of an individual or organisation. More specifically, there are three points at which an individual or organisation can influence its actual brand and, in so doing, create an alignment between the actual and optimum brands. They are:

• Before the purchase – the product, the price, distribution, and communication.
• During the purchase – the customer experience, service, and staff conduct.
• After the purchase – service and maintenance, customer follow-up, and warranties.

 

All three opportunities are addressed in this missive.

CASES IN POINT

There is a myth that advertising is essential for businesses to succeed. Indeed, there is a view that advertising is required to build a brand. Well, here is a list of world-leading brands that have no advertising budget:

• Rolls Royce.
• Krispy Kreme.
• Ferraro Rocher.

 

These are just some leading brands that have used means other than a reliance on advertising to build their brand. I am not suggesting that all businesses can achieve their potential without advertising. What I am suggesting is that:

• Advertising and branding are not the same things.
• Advertising is not an essential element of branding.
• Many brands are built and maintained without advertising.
• Many businesses burn money using advertising to build a brand.

 

 STRATEGIES

A range of activities can be addressed to build a brand with or without advertising. Five strategic considerations must be addressed in every branding strategy: product, customer experience, values, culture, and relationships. In terms of communication, there are also alternatives to advertising – many of which can deliver superior results to advertising.

THE PRODUCT

I am a big fan of Scott Galloway, a University of New York marketing professor. Galloway once asked an audience a simple question – ‘what do Facebook, Apple, Amazon, Netflix and Google (the FAANG businesses) have in common?’ Not waiting for the audience to respond, Galloway answered his own question with the words – ‘a fucking-great product.’

This question and the answer point to two things:

• The importance of the product.
• The importance of the consumer.

 

Having a great product is the starting point for every great brand. It is certainly the starting point for developing a tangible, credible, and sustainable brand. But who defines ‘great’ in the search for a ‘great product?’ In my opinion and that of Galloway, the customer determines when a product is a great product. It is the customer who defines ‘great.’ If your target market thinks your product is great, it is great, and if they do not believe it is great, it is not great. To be great, a product must exceed the expectations of customers and potential customers.

Perhaps the best approach to isolating a great product is – co-creation – or working with the customer to determine their requirements and then working with them to develop a product that exceeds those requirements. Co-creation shifts product design from the province of unreliable intuition – putting it firmly in the province of the customer. The value of co-creation is highlighted by the businesses using it, including:

 

The value of co-creation is also highlighted in these statistics:

• 77%of people favour brands that collaborate with their customers.
• 81%of people think brands collaborating with their customers are more authentic.
• 86%of people believe that brands that collaborate with their customers are more trustworthy.

 

The importance of working with customers to develop the optimum brand is also highlighted by this statistic (from recent research):

• 94%of marketers say understanding their customers is ‘extremely’ or ‘very’ important to their overall business performance.

 

That said, while they know it is important – in my experience, most businesses think they understand their customers better than they do. Intuition is not an effective way to understand customers. This is highlighted in the following statistic:

• 60%of people do not think that brands care what they think.

 

CUSTOMER EXPERIENCE

The American author, Seth Godin, wrote a book entitled – ‘Purple Cow.’ In the book, Godin discusses the fact that a brown cow, while useful, is not especially remarkable, while a purple cow would be nothing if not remarkable – and therefore memorable. A good customer experience is important, but a remarkable customer experience is a formidable marketing tool. People confronted with a remarkable customer experience:

• Seek it again.
• Tell others about it.

 

A remarkable customer experience is, therefore, a key to great branding and a powerful marketing tool as it promotes repeat business and referrals.

The customers experience referred to here is, of course, not just the purchase experience. It is the experience at every point along the customer journey. The customer experiences that impact the brand, repeat business and referral – occur before, during, and after the sale. Every experience will ideally:

• Meet or exceed operational customer expectations.
• Provide service and an experience that delights and even surprises the customer.

 

Well-known businesses offering a well-researched customer experience that helps to build the optimum brand that drives repeat purchases and referral include:

 

Much like a great product, the customer defines a great customer experience. As with the product, the best customer experience can be defined using co-creation. Co-creation is a powerful tool for developing the optimum customer experience. Consider these statistics:

• 32%of customers “break up” with a favourite brand after one poor customer experience.
• 73%of people prefer brands that personalise the shopping experience; how personalised is the customer experience
• 74%of customers can switch brands if their purchasing process is too difficult.

 

 VALUES

In his famous speech following his return to Apple (after being sacked), Steve Jobs addressed at length the critical importance of the Apple brand and the fact that ‘values’ lie at the heart of that brand. The truth is – that values should lie at the heart of every brand. Here is the proof:

• 94%of customers are likely to show loyalty to a brand that offers complete transparency.
• Customers will pay 50%more for businesses making an impact
• 64%of consumers say that shared values help them create a relationship with a brand.
• 90%of consumers would switch to brands that share their values and outlooks on life.

 

There is a growing body of evidence supporting the notion that customers care a great deal about what they perceive to be a brand’s values. Consumers want to deal with businesses they believe share their values – believing in the same things and behaving ethically and morally. Consumers care about corporate citizenship and the businesses they deal with, making a positive contribution to the world we all share.

 

Further, a growing body of research shows that consumers are more inclined to be loyal to and more inclined to refer a brand to friends if they believe that the brand is a good corporate citizen. The actual brand incorporates a perception of the values of a business and the optimum brand will highlight values that matter to consumers. This is the central tenant of the book – It is not what you are selling, but what you stand for” by Roy Spence. Nothing in branding is more important than values. Without values – there is no brand.

Well know ‘values-based brands’ include:

• Ben and Jerry’s.
• SpaceX
• Body Shop.
• Zappos

 

These brands have built great businesses on the back of values – or highlighting their principled approach to what they do. Commenting on the importance of values, the CEO of Zappos noted:

• “We believe it’s really important to come up with core values you can commit to. And by commit, we mean that you’re willing to hire and fire based on them. If you’re willing to do that, then you’re well on your way to building a company culture that is in line with the brand you want to build.”

 

 RELATIONSHIPS.

I once asked a respected business associate about his views on doing business with friends. He responded by saying that – ‘I don’t do business with anyone else.’ His point was that he takes the time and puts in the effort required to convert clients into friends – on the basis that as friends, they will be brand loyal. This makes good sense. When pondering which of the big four accounting firms to use, it will become evident that there is little difference between them and, more often than not, determining the firm to work with is all about relationships.

Relationships are a key driver of customer lifetime value. Relationships can drive conversion rates, repeat business rates and referral rates. This partly explains the growing use of customer relationship management (CRM) software and systems. Having a CRM in place can most certainly provide the foundations for relationship development, but while they can include a database of potential customers, a database is never enough. There needs to be a strategy to drive and a commitment to maintaining relationships. It is much easier to be loyal to a person than to a product.

Highlighting the importance of relationships is research suggesting that – 81% of consumers said they want to form a relationship with brands.

Perhaps the most common approach to developing relationships with customers is loyalty programmes. Such programmes are becoming increasingly expected by consumers, as evidenced by this research findings:

• 70%of consumers are more likely to recommend a brand if it has a good loyalty program an
• 72%of US adults belong to at least one loyalty program.
• 95%of loyalty programme members want to engage with the brand.

Good loyalty programmes can and do work. That said, a true relationship involves a level of communication that is uncommon in loyalty programmes. A more effective approach to developing and leveraging relationships is a brand community. A brand community provides an online forum to attract and engage customers. An online brand community offers a range of benefits, as evidenced by these statistics:

• Branded communities are 21%more likely to see an increase in brand SEO than social media communities.
• Branded communities are 16%more likely to foster brand loyalty than social media communities successfully.
• 58%of online communities say that their customers are more loyal to the brand because of their community.

 

Significant brands leveraging the potential of a brand community include:

• Red Bull.
• Harley Davidson.

 

CULTURE

Tony Hsieh was the founder of Zappos, the largest shoe retailer in the world, which he developed over nine years and sold to Amazon for US$1.9 billion. Asked about branding, Hsieh famously commented:

• “At Zappos, we view culture as our No. 1 priority. We decided that if we get the culture right, most of the stuff, like building a brand around delivering the best customer service, will take care of itself.” 

 

Vern Dosch, the author of Wired Differently, noted:

• “I used to believe that culture was ‘soft’ and had little bearing on our bottom line. I believe today that our culture has everything to do with our bottom line, now and into the future.”

 

Culture is the most important aspect of branding, so much so that without the right culture, there is no brand – or at least – no brand of merit. It is the culture that will determine the behaviour of staff, and it is the behaviour of staff that ultimately delivers the brand – or determines the actual brand. Culture determines how staff behave at all levels of the organisation and ultimately delivers the required:

 

No matter what a brand like Myer says about its offering (in advertising), the staff’s behaviour determines how the business will be perceived. It is the staff that delivers the product and the customer experience. In the complete absence of advertising, the Zara brand has been built almost entirely on the back of culture.

Brands built on the back of culture include:

 

Culture is central to building a great brand. Culture is the key to having the people who can deliver the product and experience that is inherent in the brand. The culture will ultimately deliver the product and the customer experience. It is the culture that will give substance to values and relationships.

COMMUNICATION

While this missive talks about branding without advertising, advertising is not the only avenue of communication. Indeed, a purist would legitimately argue that advertising is not communication. Advertising involves information travelling in one direction and, as such, does not qualify as communication.

A brand community does however involve communication – and the two-way flow of information can be very effective, in building a strong brand. There is, for many businesses, no more powerful a tool for building a brand than a strong brand community. Such a community has the added benefit of driving marketing costs down.

Great branding involves communication much more than advertising.

Central to effective communication will be a strong brand story that can communicate the brand efficiently.

INSIGHTS

• Your HR team has a bigger role in your branding than your advertising agency.
• No one ever purchased anything based on a business’s optimum brand.
• No amount of advertising will create a brand – certainly not cost-effectively.
• Your actual brand is nothing more than what your audience says about you.
• A brand community involves communication – advertising does not!

 

ANOTHER PERSPECTIVE

https://www.youtube.com/watch?v=9gkVeDRzRhk

RECOMMENDED READING

https://www.booktopia.com.au/defending-your-brand-t-calkins/book/9781137278753.html

ACTION

• To create a great brand – start with a product the consumer will love.
• To create a great brand – start with a customer experience the customer will love.
• To create a great brand – develop the relationships that drive brand loyalty.
• To create a great brand – exhibit values your target market will embrace.
• To create a great brand, build a culture capable of delivering that brand.

 

QUESTIONS

• Given that 77% of people favour brands that collaborate with their customers – what are you doing to collaborate with them?
• Given that 73% of people prefer brands that personalise the shopping experience, how personalised is the shopping experience you offer?
• Given that 64% of consumers say that shared values help them create a relationship with a brand, how closely do the values of your brand align with those of your customers?
• Given that 70% of consumers are more likely to recommend a brand if it has a good loyalty program, what does your loyalty programme look like?
• Given that for 58% of online communities, the customers are more loyal to the brand because of the community – when are you launching your brand community?

 

STATISTICS

• 81% of people think brands collaborating with their customers are more authentic.
• 94% of marketers say understanding their customers is ‘extremely’ or ‘very’ important to business performance.
• 94% of customers are likely to show loyalty to a brand that offers complete transparency.
• 91% of consumers would switch to brands that share their values and outlooks on life.
• 74% of customers can switch brands if their purchasing process is too difficult.

 

FIVE STRATEGIES FOR DEVELOPING THE OPTIMUM CULTURE. 

• Commitment
• Definition
• Strategy
• People
• Communication

 

MY PHILOSOPHY ON CULTURE

Few in business would not have heard of the management guru and academic Peter Drucker, and still, fewer would not have heard his observation – ‘Culture eats strategy for breakfast.’ I find this observation compelling. I write strategy for a living, but I understand that a strategy is of little value without the right culture. I also understand that – and given the right culture – the likelihood that the optimum strategy will be developed and implemented is higher. Both culture and strategy are important, but culture is the priority.

My philosophy on culture, for just about any organisation, can be summarised as follows:

• Very few things are more important to effective and cost-efficient marketing than defining and creating the optimum brand that drives the perception of value.
• Nothing is more important for creating the optimum brand than developing the culture that can and will bring the brand to life – and make it a reality.
• Just as the brand must have the consumer at its centre, so must the culture. The optimum culture will be the one the consumer relates to and engages with.

 

 CULTURE DEFINED

An organisation’s culture reflects the underlying beliefs, assumptions, values, and ways of interacting that contribute to an organisation’s social and psychological environment – and ultimately determines how staff within the organisation will behave.

Just as there is an actual brand (as perceived by the market) and an optimal brand (as defined by the organisation), so there is actual culture (as defined by staff) and the optimal culture (the one that will bring the brand to life and maximise performance. The optimum culture of an organisation ultimately:

• Defines how all staff within an organisation should behave if the return on investment is to be maximised.

 

Every organisation, big and small, has an actual and optimum culture.

WHY IS CULTURE IMPORTANT

Much has been written about creating a ‘performance culture’ – a culture that maximises the performance of individuals and the organisation they work for. Research highlights and most businesspeople recognise the importance of culture in creating a high-performance organisation that:

• Offers a common purpose.
• Empowers staff to perform.
• Creates a growth mindset.
• Delivers open communication.
• Ensures consistent teamwork.
• Commits to performance.

 

Culture is also critical to:

• Attracting the best staff
• Retaining the best staff.
• Getting the best out of the staff.

 

Indeed, nothing is more important than culture, not even money, in attracting and retaining the best people.

All these outcomes of a high-performance culture are important. But creating a high-performance culture is not enough. Creating a culture that brings the optimum brand to life is also important. Indeed, it is often the optimum brand and the culture that delivers it (rather than a high-performance culture) that attracts and retains staff.

Broadly speaking, there are four stages to branding:

• Defining the brand.
• Bringing the brand to life.
• Communicating the brand.
• Monitoring and fine-tuning.

 

Creating the optimum culture involves – bringing the brand to life. Neither advertising nor communication, more generally, will ever get a brand to life. Only your culture will bring your brand to life, and in doing:

• Establish a brand that will maximise the perception of value.
• Establish the credibility of the business and its brand.
• Minimise the gap between the optimum and actual brand.

 

Here are some statistics confirming the importance of culture for any organisation:

• 81%of workers feel that corporate culture is important in deciding whether to apply for a job.
• 38%of employees want to quit their jobs because of a toxic work environment or one where they don’t feel they fit in
• 90%of employers believe finding candidates who are a good cultural fit is critical.
• 71%of C-suite executives and board members believe culture is more important to performance than the organisation’s strategy or operating model.
• 85%of senior managers report that their culture helps successful change initiatives.

 

 BRAND AND CULTURE STRATEGIES

There are many strategies for building the optimum culture – a high-performance culture where the brand is brought to life. The five addressed here are – commitment to branding and culture, defining the brand and the culture, developing the brand and culture strategy, employing and retaining the right people, and communicating effectively internally and externally. Each of these subjects is addressed here, along with a list of critical issues in creating the optimum culture.

COMMITMENT TO BRAND AND CULTURE

Like my readers, I have seen much advertising for Myer department stores. Many of these advertisements have articulated the virtues of Myer and, in so doing, tried to communicate the Myer brand. These advertisements have often communicated the optimum brand, which should appeal to the target market. Only once, however (my most recent experience) has my experience of Myer approximated the brand as articulated in the advertising. In my experience, the culture at Myer is such that the organisation will struggle to bring its optimum brand to life without significant changes to the culture – although my most recent experience may indicate change.

It seems that the commitment of Myer to marketing is absolute, but the commitment to creating a culture that brings the brand to life is very limited at best.

Zara, on the other hand, is a brand built on culture. Zara has no advertising budget; the culture and its manifestations are all the organisation have to communicate its brand and drive performance. Unlike Myer, which sells the products of others (with a few home brands thrown in), Zara is vertically integrated and only sells products that it manufactures. For Zara, the commitment to culture goes well beyond the shop floor. While culture is most certainly important on the shop floor, in all interactions with customers, it is also important:

• The design of products customers want to buy is determined by the design department.
• In the production centre, the quality of the products required by customers will be determined.
• The shop fitting department determines the customer experiences in its stores worldwide.
• In the transport areas, delivery times and the capacity to ensure the required stock is always available in-store are determined.

 

Zara, like an extraordinary brand, understands that culture is important throughout the business and that the behaviour of all staff in all departments has the capacity to impact the organisation’s brand. The commitment to branding and culture must flow through to all business areas. The interrelationship between culture and brand needs to be understood and addressed in all business areas.

The mission of Zara is to – “give customers what they want and get it to them faster than anyone else.” This highlights the customer focus of the business. The core values of Zara are – ‘beauty, clarity, functionality, and sustainability.” These values help to define the culture and are reflected in the behaviour of staff in all areas of the business.

DEFINING THE BRAND AND THE CULTURE.

As has been discussed in previous missives, most organisations have two brands:

 

Branding is all about eliminating the gap between the actual and optimum brand. The actual brand represents ‘what the target market says about you when you are not in the room’, while the optimum brand is the one that will lead to the best possible outcomes. There are many formulas for defining the optimum brand. The one I favour involves six components:

• Mission – the purpose or reason for being.
• Vision – what ultimate success looks like.
• Values – what the team must believe in.
• Capabilities – skills and abilities- and especially unique ones.
• Personality – what the organisation is like to deal with.
• Positioning – the image of the organisation vis-a-vis the competition.

 

Given that the primary purpose of the culture is to bring the brand to life, these brand-related considerations are also cultural considerations. Indeed, defining the optimum culture flows directly from the brand definition. In the optimum culture – staff understand, embrace, and behave in a way consistent with the brand-defining flowing from each of these factors.

Cost-effective marketing requires a focus on the consumer. The brand is developed to address the needs, wants, and expectations of the target market to define a brand that the target audience will:

• Engage with.
• Be attracted to.

 

The culture simply brings that brand to life, ensuring that all staff and the business, more generally – behave in a manner consistent with the brand – this consistently communicates the brand through behaviour. Zappos founder Tony Hsieh summed this perspective up in his observation:

• “At Zappos, we view culture as our No. 1 priority. We decided that if we get the culture right, most of the stuff, like building a brand around delivering the best customer service, will take care of itself.”

 

 Defining your brand and defining the culture will be relatively straightforward. The cultural requirements will flow naturally from the brand. That said – the actual and optimum culture needs to be defined, along with the strategy to eliminate the gap.

BRAND AND CULTURE STRATEGY

Every business requires both a branding strategy and a culture strategy. The branding strategy will engage audiences, while the culture strategy aims to engage internal audiences – bringing the brand to life. Developing the optimum culture therefore involves:

• Defining the optimum brand.
• Defining the optimum culture based on the brand definition.
• Understanding the actual culture and establishing the baseline.
• Implementing a strategy to eliminate the gap between the actual and optimum culture.

 

As the gap between the actual and optimum culture is eliminated, the brand will come to life.

Critical considerations in both strategies are:

• Addressing the needs, wants and expectations of the audience.
• Differentiating the brand from its competitors.
• Being authentic and in so doing, facilitating sustainability.
• Collaboration and even co-creation involving all stakeholders.
• Monitoring and fine-tuning the strategy.
• Placing the highest possible priority on mission and values.

 

The culture strategy also requires:

• Open and transparent communication between parties.
• Education and training to ensure staff have the skills.

 

The mission (or purpose) and values of the brand and the people working within it are especially important. The mission or purpose facilitates:

• Goal setting.

 

Values are important because they:

• Set parameters for employment.
• Help differentiate the business. Help staff identify with the business.
• Facilitate better decision-making.
• Make recruitment easier.
• Make retention easier.

 

To create the optimum brand and culture, the mission and values must be understood, embraced and lived by staff. To achieve this, a list on the wall will never be enough. Equally a presentation to staff will never be enough. The strategy must include a strategy for ensuring understanding, engagement, and behaviour. That strategy needs to address:

• Employing the right people.
• Ensuring all team members understand the requirements and why they are important.
• Ensuring all team members understand their role and why it is important.
• Ensuring all staff have the skills and mindset.
• Monitoring and fine-tuning the strategy as required.

 

In my experience, while most businesspeople have an optimal culture, very few have the documented strategy required to create it.

EMPLOY ONLY THE RIGHT PEOPLE

Jim Collins, the celebrated author of ‘Good to Great, made famous the notion – avoid employing the best person available and only ever employ the right person for the job. Collins notes that the cost of employing no one is almost always lower than the cost of employing the best available (who still falls short of requirements). I would argue that Collins was 100% right then, and the point is 100% valid today.

Research suggests that businesses are increasingly embracing the point being made here by Collins:

• 81%of hiring managers believe that candidates are less likely to leave when working for an organisation where they are a good cultural fit.
• 97%of employees and executives believe the lack of alignment within a team impacts the outcome of a task or project
• 90%of employers say employing based on cultural fit is important.

 

There is an ongoing debate as to whether it is more important to employ based on skills or cultural fit. Most experts believe it is not one or the other, but both. The people you employ need to have the skills and be a good cultural fit for the brand you have created or are creating. If they lack the skills required, they should not be employed. If there is anything less than a good cultural fit, you should not employ them. Near enough is NEVER good enough. Having a vacancy is almost ALWAYS more rewarding than having a less-than-ideal person in a role.

Employ for skills and capabilities – but also employ for cultural fit. It is a mistake to EVER employ ANYONE that is not a good cultural fit! At a push, you can develop skills, but you will never change a person who does not share your values or embrace your mission or purpose.

COMMUNICATE WITH TRANSPARENCY

The optimum brand is defined with a reason in mind. That reason is clear to management and needs to be clear to all staff. Staff need to understand what a brand is, why it is important, their role in creating it, its benefits, and the organisation of bringing the brand to life. It is essential that staff understand:

• The behaviours they need to display to create the culture and brand.
• The behaviours they should not display to create the culture and brand.

 

In my experience, it helps to workshop these two issues, providing staff with the facts and empowering them to define optimum behaviours. Given the required understanding of the brand, most teams can define the behaviours they should and should not display.

Ideally, the staff will also be aware of the actual and optimum brands, the importance of both, their role in eliminating the gap and how they need to behave if the gap is to be eliminated such that the organisation can realise its potential. Important here are:

• The actual brand and its drivers.
• The optimum brand and its requirements.

 

Collaboration between management and staff is one of the keys to creating the optimum culture. Collaboration will be facilitated by frank and transparent communication. It is in the best interests of all stakeholders to create a culture that brings the brand to life. This cannot occur without open and transparent communication. Alas – open and honest communication is not ubiquitous. Note:

• 33%of employees cited a lack of open and honest communication and the negative impact on morale.
• 34%of employees are dissatisfied or extremely dissatisfied with the communication they are experiencing in the workplace.
• Only 40%of professionals believe that employees understand their contribution to the organisation’s culture.
• 92%of executives see a direct link between workplace culture and the financial performance of their business.

 

Richard Branson highlighted the importance of collaboration between management and staff: “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”

 

 

INSIGHTS

1. There is no optimum brand without first creating the optimum culture.
2. The organisation’s culture, not just at the POS, impacts the brand.
3. It is only ever the culture that can and will bring a brand to life for the customer.
4. Creating the optimum brand requires employing the right staff or no one.
5. Great cultures are created when management and staff collaborate.

 

 ANOTHER PERSPECTIVE

• https://www.youtube.com/watch?v=lzWtFAU0P8I

 

 RECOMMENDED READING

• https://www.booktopia.com.au/brand-culture-and-identity-information-reso-management-association/book/9781668430392.html

 

TIPS

1. To create a great brand – first, commit to creating a customer-focused culture.
2. To create a great brand – first, define the culture that will bring that brand to life.
3. To create a great brand – first, develop a culture strategy to bring it to life.
4. To create a great brand – only ever employ people who share your values.
5. To create a great brand – communicate with all staff openly and transparently.

 

QUESTIONS

1. With 90%of employers believing it is critical to find candidates who are a good cultural fit, what is your system for only employing good cultural fits?
2. With 71%of C-suite executives and board members believing culture is more important to performance than the organisation’s strategy, what is your culture strategy?
3. With 34%of employees being dissatisfied with the communication in their workplace, what is your strategy for attracting and retaining the best people?
4. With 97%of employees and executives believing the lack of alignment within a team impacts the outcome of a task or project – what is your alignment strategy?
5. With only 40%of professionals believing that employees understand their contribution to the organisation’s culture, what is your internal communication strategy?

 

STATISTICS

1. 81%of workers feel that corporate culture is important in deciding whether to apply for a job.
2. 38%of employees want to quit their jobs because of a toxic work environment or one where they don’t feel they fit in
3. 85%of senior managers report that their culture helps successful change initiatives to happen
4. 33%of employees cited a lack of open and honest communication and the negative impact on morale.
5. 92%of executives see a direct link between workplace culture and the financial performance of their business.

 

FIVE STRATEGIES FOR DEVELOPING A BRAND STORY. 

 

• Hero and guide.
• Problem and solution.
• Success and celebration.
• Beliefs and values.
• Emotion and connection.

 

PHILOSOPHY ON STORY TELLING

I have never been a consistent exponent of story-telling. That said, I understand its importance and have drafted brand stories for many organisations over the last 20 tears. Readers of this newsletter and listers of my podcasts we notice more stories in the months and years ahead. My philosophy on brand stories can be summarised as follows:

• Stories lie at the heart of what it is to be human.
• Effective brand stories are all about the customer – not the brand.
• A brand story is central to connecting with consumers, staff, and other stakeholders.

 

The latter two of these statements are addressed in some detail later in this missive. The first, I will comment on here.

Yuval Noah Harari (one of the great thinkers of our time), in his book Sapiens observes that human stories are among the few things that set human beings apart from other animals. All human civilisations are built on stories. Stories have been used since the beginning of mankind to pass on critical information from generation to generation. Stories determine how we live today and govern our behaviour. Harari notes that money without the story behind it has no value. Stories are in effect part of the human DNA. They are reflected in every aspect of life.

BRAND STORY DEFINED

A brand story has been defined as:

• A cohesive narrative that encompasses the facts and feelings that are created by your brand or business.

 

Brand story telling has been defined as:

• using narratives to create an emotional, value-driven connection between your customers and your brand.

 

Here is an example of a great brand story for one of the world’s leading brands – told in a short video: https://www.sutter-group.com/brand-storytelling-by-google/ . In just 60 seconds it communicated the essence of the Google brand – just as a brand story should be communicated.

RATIONALE FOR A BRAND STORY

When developing a brand, few things are more important than the brand story. It is the key to engaging, connecting, relating to and influencing:

 

Human beings are hardwired to listen to, engage with and remember stories, and here is just some of the evidence:

• Storytelling can boost conversion rates by 30%.
• Facts are approximately 22 times more likely to be remembered if they are part of a story
• If people love a brand story, 55% are more likely to buy the product in future,
• 44% of consumers will share the brand story, and 15% will buy the product immediately
• 62% of B2B marketers regard storytelling as an effective contentmarketing tactic

 

Every brand should have a short, easy to communicate, relatable and inspiring brand story.In the words of Plato:

• ‘Those who tell stories rule society.’

 

A more contemporary and marketing commentator Seth Godin said:

• “Marketing is no longer about the stuff that you make, but about the stories you tell.”

 

Godin is right!

APPLICATIONS OF A BRAND STORY

There is absolutely no merit in listing your values on your website.

• Five key points
• Philosophy
• Definition
• Importance
• Strategies
• Point
• Evidence
• Conclusion
• Issues
• Insights
• Action
• Questions
• Statistics

 

FIVE STRATEGIES FOR DEVELOPING A BRAND STORY. 

 

• Hero and guide.
• Problem and solution.
• Success and celebration.
• Beliefs and values.
• Emotion and connection.

 

PHILOSOPHY ON STORYTELLING

I have never been a consistent exponent of storytelling. I understand its importance and have drafted brand stories for many organisations over the last 20 years. Readers of this newsletter and listers of my podcasts we notice more stories in the months and years ahead. My philosophy on brand stories can be summarised as follows:

• Stories lie at the heart of what it is to be human.
• Effective brand stories are all about the customer – not the brand.
• A brand story is central to connecting with consumers, staff, and other stakeholders.

 

The latter two of these statements are addressed in some detail later in this missive. The first, I will comment on here. On this subject, Jimmy Neil Smith notes:

• ‘We are all storytellers. We all live in a network of stories. There isn’t a stronger connection between people than storytelling.’

In his book Sapiens, Yuval Noah Harari (one of the great thinkers of our time) observes that human stories are among the few things that set human beings apart from other animals. All human civilisations are built on stories. Stories have been used since the beginning of humanity to pass on critical information from generation to generation.

Stories determine how we live today and govern our behaviour. Stories are, in effect, part of the human DNA. They are reflected in every aspect of life. Harari notes that money without the story behind it has no value. Jacob Moss notes:

• ‘Whatever you do and whatever story you’re writing, make it human – make sure the human element is at the centre of it and shapes it.’

 

BRAND STORY DEFINED

A brand story has been defined as:

• A cohesive narrative encompasses the facts and feelings created by your brand or business.

 

Brand storytelling has been defined as:

• Using narratives creates an emotional, value-driven connection between your customers and your brand.

 

Here is an example of a great brand story for one of the world’s leading brands – told in a short video: https://www.sutter-group.com/brand-storytelling-by-google/ . In just 60 seconds, it communicated the essence of the Google brand – just as a brand story should be communicated.

RATIONALE FOR A BRAND STORY

When developing a brand, few things are more important than the brand story. It is the key to engaging, connecting, relating to, and influencing:

 

Human beings are hardwired to listen to, engage with and remember stories, and here is just some of the evidence:

• Storytelling can boost conversion rates by 30%.
• Facts are approximately 22 timesmore likely to be remembered if they are part of a story
• If people love a brand story, 55%are more likely to buy the product in future,
• 44%of consumers will share the brand story, and 15% will buy the product immediately
• 62%of B2B marketers regard storytelling as an effective content marketing tactic.
• Brand storytelling in a content marketing strategy can increase the value of a product by 20%+.

 

Every brand should have a short, easy-to-communicate, relatable and inspiring brand story. In the words of Plato:

• ‘Those who tell stories rule society.’

 

A more contemporary marketing commentator Seth Godin said:

• “Marketing is no longer about the stuff you make, but about the stories you tell.”

 

Author Chris Brogan notes:

• ‘Stories are how we learn best. We absorb numbers, facts, and details but keep them all glued into our heads with stories.’

 

History suggests that Plato, Godin, and Brogan are most certainly correct.

A GREAT BRAND STORY

According to Brand Insider Group – a great brand story:

• Clearly establishes what your brand is all about – its purpose, core values, and mission.
• Offers the consumer more than just a product or service, but rather an experience that transcends mundane reality
• Motivates the reader or viewer to step into that experience by crafting content so that your audience feels as though they’d risk losing access to this sublime experience of being a part of your brand if they don’t buy, follow, or sign up right now.

 

APPLICATIONS OF A BRAND STORY

There is absolutely no merit in listing your values on your website. Indeed, doing so is more harmful than helpful. If you have to list your values – it can appear that you are not living them – because if you are living them, you should not have to list them – and no one believes you anyway. However, your brand story should be on your website – which may well reflect your values. A brand story can and should be communicated:

• On your website.
• In your annual report.
• In your commercials.
• In your social media.
• In your corporate video.
• In your speeches.
• Wherever you communicate.

 

The words may vary from application to application – but the story should remain consistent. The brand story needs to be consistently embedded in all communication.

Highlighting the importance of a brand story in all of these applications, Donald Miller notes:

• ‘Story brand will help you build a brand that connects with your customers and helps them understand what makes you different.’

 

 STRATEGIES FOR YOUR BRAND STORY

The optimum brand story – includes a hero and a guide, a problem and a solution, success and celebration; beliefs and values; emotions and connection. Each of these issues is addressed here:

HERO AND A GUIDE

Every great story needs a hero – but in the optimum brand story – that hero is NOT the brand or the business. The hero in every great brand story is a personification of the target market. To quote Ken Okonek:

• ‘Story brand marketing is showing our customers that we also believe they are the most important character in the story.’

 

Ultimately the goal is to have members of the target market identify as the hero in a similar way that when we read the symptoms of a disease online – we often feel we have the disease. This draws the hero – the target market into the brand’s orbit and helps them to identify with it.

Every great story also needs a guide. Just as Edmund Hillary (the hero of Mount Everest) needed Tenzing Norgay to guide him to the summit, the hero in your brand story needs a guide to identify and find the optimum solution to their problem. To quote Donald Miller:

• ‘Everybody wants to be taken somewhere. If we don’t tell people where we’re taking them, they’ll engage another brand.’
• ‘Nearly every human being is looking for a guide (or guides) to help them win the day.’

 

Your brand story needs to establish your brand as the one best equipped to help the customer identify their problem, find a solution, solve the problem, and live happily ever after – delivering to the customer each of their expectations and more.

PROBLEM AND A SOLUTION

The optimum brand story identifies the problem that confronts the hero. Just as when we are ill, we need a diagnostician or GP to identify our ailment, so a consumer needs a guide to locate or, at the very least, identify with their problem. Customers or potential customers seek a guide to identify with their inner problems and empathise with them. Again, to quote Donald Miller:

• ‘Almost all companies try to sell solutions to external problems, but customers are much more motivated to resolve their inner frustrations.’
• ‘When we empathise with our customers’ dilemma, we create a bond of trust. People trust those who understand them and brands that understand them too.’

 

Having identified the problem, the brand story needs to identify the solution – positioning its own solution as the optimum solution. It is, after all, the solution that the target market is being asked to buy. The best solutions tend to be those that are authentic and credible. Michael Margolis suggested:

• ‘Storytelling is about connecting to other people and helping people to see what you see.’

 

Once again, Donald Miller notes:

• ‘The key is to make your company’s message about something that helps the customer survive and to do so in such a way that they can understand it without burning too many calories.’

 

It is essential to identify the problem the consumer wants to solve and the solution the customer will relate to. Again, this requires a thorough and in-depth understanding of the target market.

SUCCESS AND CELEBRATION.

A great brand story paints a picture of what success looks like – or in other words – what life or a specific situation looks like when the solution solves the problem. Some brand stories identify both the positive and negative outcomes:

• What happens if the customer does not buy the solution.
• What happens if the customer does buy the solution.

 

Both can contribute to the brand story – but the second – what success looks like – is the most important. On the first, Donald Miller suggests:

• ‘Simply put, we must show people the cost of not doing business with us.’

 

On the second point, Miller notes:

• ‘The goal for our branding should be that every potential customer knows exactly where we want to take them.’
• ‘Brands that help customers avoid some kind of negativity in life (and let their customers know what that negativity is) engage customers for the same reason good stories captivate an audience: they define what’s at stake.’

 

Once success has been delivered, many people want to celebrate that success. The brand story often celebrates success. Brand stories often illustrate how consumers feel when they experience success. Many brands demonstrate this by illustrating how others will see the customer after making a purchase. Johan Sachs notes:

• ‘The stories that spread today empower us and give us belief in our heroic potential.’

 

Tell your customer what success looks like and inspire them to purchase by highlighting how it might be celebrated. ‘Things go better with Coke’ – remember the young people celebrating on the beach after buying a Coke.

BELIEFS AND VALUES

Research highlights the importance of beliefs and values in a brand. Consumers in 2022 want to do business with brands that share their beliefs and values. Consider:

• 71% of consumers prefer buying from companies aligned with their values.
• 64% of consumers will buy or boycott a brand solely because of its position on a social or political issue.

 

To quote Edelman:

• ‘Belief-driven buyers are now the majority across markets, including the US (59 per cent, up 12 points), Japan (60 per cent, up 21), the UK (57 per cent, up 20) and Germany (54 per cent, up 17); age groups, 18-34 (69 per cent), 35-54 (67 per cent) and 55+ (56 per cent); and income levels, low (62 per cent), middle (62 per cent) and high (69 per cent).’

 

Given the importance of beliefs and values, the ideal brand story incorporates, or at the very least reflects, the core beliefs and values of the brand. Beliefs and values are the starting point for a customer to identify with and establish a brand’s relationship. That said – it is naff in the extreme to list values and beliefs in a brand story – or in any promotion. These beliefs and values must be reflected – not articulated – in the brand story.

EMOTIONS AND CONNECTION

While facts and figures are important, emotions are essential for establishing a connection between the brand and members of its target market. An emotional connection is central to establishing a solid brand and central to developing a compelling brand story. Without emotion – there is no connection, and without a connection, there is no brand loyalty. To quote Gayatri Jhaveri Patel:

• ‘Creative storytelling and emotional connection are the most important elements in keeping brands alive.’
• ‘Because 90% of purchasing choices are done unconsciously, and 89% of customers have no personal connection to the companies they purchase. This implies that attempting to develop an emotional connection is a great way to set your company apart from its competitors.’
• ‘Compared to rivals that do not have an emotional component to their brand, brands with an emotional component are more likely to be seen favourably by their customers. Using emotions in your branding and marketing can help you create loyal, life-long brand ambassadors.’

 

Perhaps there is no better way to communicate emotions and create a brand than a brand story.

 CRITICAL ISSUES 

The critical issues to be addressed in developing the optimum brand story include:

• Structure – a beginning, middle and end.
• Context – a perspective the market understands.
• Relevance – relatable for the target market.
• Inspiration – causing the target market to act.
• Empathy – demonstrating an understanding of the market.
• Emotion – is the essential element of a true connection.

 

A great brand story will inevitably be:

• Customised – to the brand and the audience.
• Researched – reflecting an understanding of the customer.
• Authentic – an accurate reflection of reality.
• Meaningful – rather than a list of buzzwords.
• Understandable – in language, the market understands.
• Short – absent of platitudes and taciturn.

 

Creating the optimum brand story is not easy – but it is important.

WELL-KNOWN BRAND STORIES

Perhaps the best-known brand story is that developed by Steve Jobs and Chiat Day for APPLE in 1984:

• https://www.youtube.com/watch?v=CNEyE9IJdBg

 

Here is an account of the strategy behind it – CLICK HERE

Another brand that has mastered the art of storytelling is IKEA:

• https://www.youtube.com/watch?v=AsN0SDVpS8M

 

A third brand that uses storytelling very effectively is NIKE:

• https://www.youtube.com/watch?v=WYP9AGtLvRg

 

My brand story is as follows:

Return on investment in marketing is maximised when the customer is at the centre of the strategic planning process. Many businesses claim to be customer focused, but few are – resulting in higher marketing costs and a lower average customer lifetime value. 

A customer-focused business has risen above intuition to understand why consumers do what they do and how to cause them to do what is needed to realise the brand’s potential. I work with clients to leverage the power of consumer behaviour to maximise their ROI in marketing. 

INSIGHTS

1. The optimum brand story has a hero (the customer) and a guide (the brand).
2. The optimum brand story has a problem (driver) and a solution (the brand).
3. The optimum brand story highlights and celebrates success.
4. The optimum brand story communicated core beliefs and values.
5. The optimum brand story engages the emotion and establishes a connection.

 

ANOTHER PERSPECTIVE

• https://www.youtube.com/watch?v=FkCMhhJaSSk

 

RECOMMENDED READING

• https://www.booktopia.com.au/telling-your-story-building-your-brand-henry-wong/book/9781637422854.html

 

TIPS

1. To create a great brand story – make the customer the story’s hero.
2. To create a great brand story – identify the problem and the solution.
3. To create a great brand story – define success and celebrate it.
4. To create a great brand story – communicate your beliefs and values.
5. To create a great brand story – establish a strong emotional connection.

 

QUESTIONS

1. Given that – 80% of consumers are interested in a brand’s story, what is yours?
2. Given that – 44% of consumers will share a brand story, how well is yours being shared?
3. Given that – storytelling can boost conversion rates by 30%, how does your brand story feature in your strategy to maximise conversion rates?
4. Given that – 53% of consumers are happy to read or view a brand-sponsored story, how are you using brand stories in your social media?
5. Given that – 62%of B2B marketers regard storytelling as an effective content marketing tactic – how does your communication strategy leverage your brand story?

 

STATISTICS

• 55% of consumers hearing a brand story are likely to buy the product in future.
• 15% of consumers hearing a brand story are likely to buy immediately.
• 44% of consumers will share a brand story.
• 62%of B2B marketers regard storytelling as an effective content marketing tactic.
• 80% of consumers are interested in a brand’s story.

 

FIVE COMMUNICATION STRATEGIES THAT WILL REDUCE WASTE 

• Communication and community.
• Objectives and measurement.
• Understand and embrace.
• Target and personalise.
• Messaging and consistency.

PHILOSOPHY ON COMMUNICATION

In my experience, few businesses communicate as cost-effectively as they might. They are in far greater number than those who communicate effectively. I don’t know anyone who would not claim to recognise the value of effective communication. My philosophy on communication, in a marketing context, might be summarised as follows:

• Cost-effective communication, although not necessarily advertising, is central to influencing the behaviour of members of any target market.
• Communication can take many forms, and behaviour is very often the most effective form of communication, highlighting the importance of culture.
• Cost-effective communication involves the two-way flow of information. Telling the market something without listening to the response is not communication.

DEFINITION

Strictly speaking, communication is the:

• Exchanging information by speaking, writing, or using some other medium.

Thus, by definition, communication involves both:

• Articulating and
• Listening.

While some now consider communication to also include – sending OR receiving information, there is no doubt that communication is more cost-effective when it involves BOTH sending and receiving. That said, an alarming proportion of communicating in the marketing context involves articulating or sending, with little or no receiving and listening.

ROLE OF COMMUNICATION

For me, the role of communication in the marketing context is a contentious question. For many in marketing, it is all about:

• Awareness and
• Understanding.

I would argue that effective communication in the marketing context is all about:

• Engagement and
• Behaviour.

Awareness and understanding, while important, are nothing more than a means to an end. They can both exist in spades without any sales being forthcoming. For sales to occur, the customer must be engaged and must then behave in a manner consistent with your objectives.

Cost-effective communication is the process of causing a required behaviour to occur as often as possible within a predetermined target market. Furthermore, if the behaviour does not occur – the communication has failed.

MODES OF COMMUNICATION

There are numerous modes of communication, including those which are:

• Offline or traditional and
• Online or digital.

Traditional modes of communication include advertising, media relations, direct marketing, personal conversations (face to face or by phone) etc. The traditional and enduring modes of communication less talked about in marketing textbooks are:

• Behaviour.

Very few things communicate more to customers than how staff interact with customers. As the old saying goes – ‘actions speak louder than words.’ We judge a brand far more on how representatives of that brand behave than what they say. Our trust in people is certainly more influenced by their behaviour than their words – no matter how those words are conveyed.

Digital modes of communication include advertising, SEO, e-marketing, content marketing and remarketing etc. The least understood aspect of digital communication relates to the fact that:

The rules of effective communication do not change.

While digital communication has many benefits, and indeed too many to articulate here, it is still subject to the parameters required for effective communication. Central parameters of communication, traditional or digital, are the focus of this missive. Understanding and applying those parameters will reduce communication waste–this missive’s primary subject.

WASTE IN COMMUNICATION

The area of marketing attracting the greatest level of waste is almost always communication and, more specifically, advertising. What is more, waste is found in all forms of communication and all forms of advertising, including digital. Indeed, research suggests that waste in digital advertising is much greater than many in business appreciate.

Consider these research findings:

• 70 – 80% of consumers ignore sponsored search results (AdWords).
• 40% of online Australian consumers agree that the growth of fake news has made them less trusting of the ads they see on their social feeds.
• 51% of Australian consumers believe that the personal content of social media makes them more aware of inappropriate ads on social platforms.
• Between 30% and 60% of digital advertising is indeed wasted.
• Overall, up to 60% of marketing budgets are wasted.

Statistics like these are everywhere. More generally, waste in advertising and communication is enormous and costing business and other advertisers a fortune. The real problem is, however, that many businesses do not know what is working and delivering value – and what is not working and delivering value. Among other things, there is far too great a reliance on intuition. The words of John Wanamaker back in the 1800s – “Half the money I spend on advertising is wasted; the trouble is I don’t know which half’ is as relevant today as they were then.

FIVE STRATEGIES.

There is a very long list of strategies that businesses and other organisations involved in marketing-related communication can apply to minimise and, perhaps even eliminate, waste in communication. Five such strategies relating to – communication and community, objectives and measurement, understanding and embracing, targeting and personalising, messaging and consistency – are addressed here.

COMMUNICATION AND COMMUNITY

The most critical strategy to make communication cost-effective involves believing the ridiculous metaphor that – ‘humans have two ears and one mouth for a reason – that listening is twice as important as talking.’ While humans have the anatomy, they have it for very different reasons. While most metaphors of this type are inaccurate – there is little doubt that in marketing, listening is much more important than articulating. It is listening that enables:

• Understanding of comprehension.
• Understanding of perceived relevance.
• Insights into demand and likelihood of purchase.
• Ideas the brand can consider and engage with.

As important as any of these – listening facilitates:

• Customising or personalising the message.

To appreciate the importance of customisation and personalised communication, consider these statistics:

• 75% of consumers agreed they are keen on buying from brands offering personalised digital experiences.
• 72% of consumers claim that they respond to marketing messages that are exclusively crafted to their choices.
• 97% of marketers witnessed a rise in business outcomes as a result of personalisation

The more personalised marketing and communication, the better, especially if your objectives are to maximise sales while minimising waste. An increasingly common strategy for facilitating true communication, with a large component of listening, involves establishing a brand community. An online brand community facilitates not only two-way communication but more in-depth conversation and customer engagement – while reducing the cost of communication. Consider:

• 66% of community members say that communities have impacted brand loyalty.
• 68% of branded communities report that the community has helped them generate new leads.
• 55% of branded communities report that the community contributed to a boost in sales.

A brand community also offers the benefit of providing user-generated content that:

• Provides an insight into the thinking of the target market.
• Provides third-party references that can generate referral business.
• The sharing of information between members.
• Facilitates permission marketing.

Fortunately, while establishing a brand community takes time, it need not be expensive.

Other than by way of a brand community, listening can be facilitated by way of:

• Engaging with prospects and asking them directly.
• Undertaking qualitative and quantitative research.
• Monitoring social media content and responses.

Perhaps the most underestimated of these is monitoring social media content and responses. Closely and systematically monitoring social media can provide compelling insights into the market’s thoughts, awareness, understanding, engagement, misconceptions, and concerns.

OBJECTIVES AND MEASUREMENT

It is very difficult to minimise waste and maximise cost efficiency without having clear objectives and a means of measuring progress towards achieving those objectives. Further, it is important to have the right objectives and method of measurement. Awareness, an all-too-common objective, is very often not the right objective. Consider this example:

• 97% of consumers are aware that texting while driving is dangerous.
• 60% of drivers admit to using a mobile phone that isn’t hands-free while driving.

 

While drivers are aware of the dangers of texting while driving, many do not change their behaviour. Equally, while many people may be aware of your brand – how many actually engage within. The points are that awareness is rarely the best objective, and having the right one is critical. To know what that objective might be, it is essential to understand:

• The customer-journey.
• The critical touch points on that journey.
• How to influence the target at crucial points of touch.

There may be different objectives at each touch point, and these actions must drive the ultimate objective, which is almost always a behaviour.

There is a common view that measuring the impact of traditional communication is more difficult than measuring the effectiveness of digital communication. While measuring both is important, measuring the effectiveness of digital advertising is also not without its difficulties. Consider:

•  43% of marketers say they still don’t know what digital advertising works.
• 70% of marketing executives would be more willing to increase their spending on mobile, digital and social platforms if there were better ways to measure return on investment.

 

The problems with measuring the effectiveness of online advertising include:

• The data, while plentiful, is much less reliable and precise than many think, especially in terms of measuring effectiveness.
• The data, in many instances, does not truly indicate what many think. Viewing an advertisement, for example, does not imply engagement.
• There is no allowance made for the negative impacts of digital advertising. I refuse to buy from any brand that uses cookies to badger me with advertising.
• Click fraud is when a person or a bot pretends to be a legitimate visitor on a webpage and clicks on an ad, a button, or some other type of hyperlink is more common than many think.

 

In the main, digital advertising is a lot more accountable than traditional advertising. Still, both have their issues, and care needs to be taken to ensure effectiveness is being accurately measured. Each campaign needs a measurement or accountability strategy that monitors effectiveness.

UNDERSTAND AND EMBRACE.

It is very difficult to communicate effectively with anyone if you do not understand the customer journey, the critical touch points, and the best approach to addressing each critical touch point. Furthermore, if you really understand these things, developing and implementing a cost-effective communication strategy becomes much easier.

Gartner defines the customer journey as – ‘… a tool that helps marketers understand the series of connected experiences that customers desire and needs — whether that be completing a desired task or traversing the end-to-end journey from prospect to customer to loyal advocate.’ In essence, the customer journey is the journey the customer takes from recognising a need to satisfying that need. Along that journey are several touch points – or points at which the potential customer can be influenced by information, emotional triggers, and marketing nudges. At each touch point, there may be actions that can be taken to influence decision-making. Further, influencing the journey at the right points has the potential to shorten the journey and or make it turn out well.

Cost-effective communication strategies identify and leverage touchpoints. Cost-effective communication strategies also embrace and reflect an understanding of the consumer’s stages in determining what to buy. This varies by product category as follows:

• With technology, stages tend to be – think – feel – do.
• With food, the stages tend to be – do – feel – think.
• With perfume, the stages tend to be – feel – do – think.
• With beer, the stages tend to be – feel – think – do.

 

The more the marketer understands and embraces the customer journey, the more he or she can:

• Target the right message at the right point in the journey.
• Utilise the right media at the right point in the journey.
• Target the emotions and intellect at the optimum point.

Get in touch with and embrace the customer journey in order to intervene with the right message through the right media at the right time.

TARGET AND PERSONALISE.

One of the most important factors in minimising the wasted communication is to ensure the right market is being communicated with. It is essential to accurately identify the target market and customise the communication strategy to the requirements of that market. Few businesses I come across have adopted a formal approach to identifying their primary target market. Instead, they use their intuition – a skill I question and will continue to question until such a stage as they can present evidence that it produces results anywhere near as good as science.

There is, in 2022, an increasing trend toward more customised marketing strategies:

• Developing different brands for different segments.
• Customising the messaging and media by segment.
• Customising the broader strategy by segment.

At the same time, in 2022, fewer businesses are:

• Engaging in line extension.
• Treating customers as homogenous.
• Addressing multiple segments with similar messages.

Before a product is launched, and annually (at least) after that, the target market needs to be reviewed and, where necessary, revised using a formal process. That process needs to involve a consideration of:

• Demographic factors.
• Psychographics factors.
• Behavioural insights.

In addition to segmenting the market, the process must confirm the needs, wants and expectations of the target market. The better the understanding of the target market – the more targeted the communication can be and, therefore, the more cost-effective it will be. Using science to ensure you are saying the right thing to the right people at the right time will always be more cost-effective than relying on intuition.

Just as getting the market, messaging and media right is central to maximising cost-effective communication, so too are:

• Having the optimum product.
• Having the optimum pricing strategy.
• Having the optimum approach to distribution.

It almost always costs a great deal to overcome shortcomings in any of these areas using communication.

MESSAGING AND CONSISTENCY. 

I have already addressed the importance of identifying the optimum market, media, and message. Cost-effective communication depends very much on the message, which in turn depends on:

• The current levels of awareness and understanding in the market.
• The stage in the customer journey and the touchpoints involved.
• The product and the nature of the purchase – cognitive or emotive etc.

The message needs to be customised to the situation and context if communication costs are minimised. It is important that the message:

• Use language the market understands and engages with.
• Uses a tone the market engages with and will respond to.
• Avoids jargon that the market may not be familiar with.
• Is as short and to the point as possible. Single ideas are generally best.
• Adds value, rather than stealing the time of the consumer.
• Is 100% consistent with the brand and brand story.
• Is 100% consistent over time and between communication pieces.

 

There is no point in using language that the market is not comfortable with or a tone of voice the market will not respond to. In the interests of communication, it is important to avoid trying to look clever by using jargon the market may not engage with. The point of communication is to communicate; in most cases, the shorter and sharper the message, the better. Take up as little of the consumer’s time as you can.

There is an increasing recognition that giving something to the audience – perhaps in the form of useful information – is a powerful route to initiating a relationship. NYU marketing Professor Scott Galloway has frequently pointed out that advertising amounts to stealing the consumer’s time, and in a sense, it often is. A notable exception is where the communication adds value – as can be the case with content marketing – or sharing useful information that creates a sense of reciprocity.

Consistency is also important. While the business sees an advertisement all the time – the market does not – and as such, the market is slow to get tired of a communication piece. I would be a much wealthier person today if, during my years in advertising, I produced a new campaign every time the client told me that the old one was tired. Campaigns are rarely as tired as marketers might think, and there is no merit in change for the sake of change. Consistent messaging over time and the consistent reflection of the brand in ALL communication will improve its effectiveness.

Craft the right message and communicate it consistently. Resist frequent change and resists putting more than one message in each communication piece.

INSIGHTS

1. If you are not listening and embracing – communication is cost-effective.
2. Few things facilitate effective communication more than an online community.
3. Cost-effective communication requires clear objectives and reliable measurement.
4. The digital advertising metrics are much less reliable than many think.
5. The key to cost-effective communication is the customisation of the elements.

ANOTHER PERSPECTIVE

• https://www.youtube.com/watch?v=zvcbn6WtJvQ

RECOMMENDED READING

• https://www.booktopia.com.au/creating-images-and-the-psychology-of-marketing-communication-lynn-r-kahle/book/9780805852165.html

TIPS

• To communicate cost-effectively – establish a brand community.
• To communicate cost-effectively – stop talking and start listening.
• To communicate cost-effectively – set quantifiable objectives.
• To communicate cost-effectively – be sceptical about digital metrics.
• To communicate cost-effectively – be consistent but customise.

 

QUESTIONS

1. Given that – 75% of consumers agreed that they are keen on buying from brands that offer personalised digital experiences – how do you personalise your marketing?
2. Given that – 43% of marketers say they still don’t know what digital advertising works, despite the metrics available – how confident are you in your digital metrics?
3. Given that – 55% of branded communities report that the community contributed to a boost in sales – what are you doing to establish a brand community?
4. Given that – Between 30% and 60% of digital advertising is indeed wasted – what are you doing to eliminate that waste?
5. Given that – 40% of online consumers agree that the growth of fake news has made them less trusting of the ads they see on their social feeds – how are you establishing trust?

 

STATISTICS

1. 75% of consumers agreed they are keen on buying from brands offering personalised digital experiences.
2. 70% – 80% of consumers ignore sponsored search results (Ad-words).
3. 97% of marketers witnessed a rise in business outcomes as a result of personalisation
4. 43% of marketers say they still don’t know what digital advertising works.
5. 70% of marketing executives would be more willing to increase their spending on mobile, digital and social platforms if there were better ways to measure return on investment.

 

Return on investment in marketing is maximised when the customer is at the centre of the strategic planning process. Many businesses claim to be customer focused, but few are – resulting in higher marketing costs and a lower average customer lifetime value.

A customer-focused business has risen above intuition to understand why consumers do what they do and how to cause them to do what is needed to realise the brand’s potential. I work with clients to leverage the power of consumer behaviour to maximise their ROI in marketing.