Reduce you advertising spend and Build the Business!
© Roger La Salle 2011
Innovation and Marketing!
Constantly revitalising paid advertisements is one way of maintaining audience attention, but perhaps there are other ways, that may be far more cost effective, if we apply some innovation to our strategic marketing approach.
These days the classic four “P’s” of marketing are a “bit old hat” since the latter “Promotion” once seen in effect as advertising, can now be conducted in many different cost fee ways, courtesy of the internet, the ubiquitous cell phone and of course the social media.
Perhaps these days the 4 P’s should be 3 P’s and an “A” for “Awareness”
Building your market
Few would argue with the proposition that advertising is a somewhat hit and miss business. No doubt the reader would be aware of the old adage that 50% of your advertising spend is wasted. The problem is which 50%?
Without doubt the best way to win customers is by referral or creating a Word of Mouth (WoM) message. This approach will lead to huge customer churn to your business, indeed approaching 100%, far more than the 8% often attributed to advertising.
Developing a WoM Message
As will most things, the fundamentals are simple once you break them down to the basics.
When you service a customer request there are only three possible take away messages that can be delivered:
• Bad News – “I won’t do that again, better tell my friends”
• Indifference – neither a memorable or forgettable experience. No WoM message is created
• Good News – “I loved it and must tell my friends.”
Win your customers – don’t punish them
What is quite amazing is the multimillion dollars businesses spend on television and print media advertising. More amazing is that these companies do not devote a single cent to providing a gift or forgiving a customer error. Sometimes even an error on the part of the business itself. Banks are a great example of companies that run multi-million dollar advertising campaigns to inform people of how wonderful they are yet banks are almost universally hated because they usually punish you with a penalty payment if you make the slightest mistake. I wonder what might happen if banks actually rewarded their customers from time to time?
But let’s not single out banks, many large organisations have become too remote from their customers and perhaps too wedded to the concept of mass advertising to consider the low cost alternative, WoM and winning customers by referral, as a formal business growth strategy.
A Systematic Approach
One of the Matrix Thinking Seeds is called Comparison, and two of the thinking catalysts are “Tracking” and “Transfer”.
Comparison means to compare yourself with others in a similar business, ideally the best; the ones people talk about. The catalysts then ask you to “track” the people using that business to learn why it is talked about. Once you have learned that, can you “transfer” it to your business?
Some examples that have generated great WoM:
1. A local supermarket has attracted a huge WoM following.
In a case when a customer has purchased a large basket of good and an item does not scan properly, rather than holding you up whilst they do a price check, they simply ask you to take it as their gift. The approach has developed a huge positive WoM message and the word is spreading. This is a unique talked about and rare customer experience, and the cost to the supermarket is trivial, especially when compared with their advertising spend.
2. A local caravan park that also have lovely two bedroom units always welcomes
their guests with fresh flowers within minutes of their arrival. On departure they always provide a small gift and thank you for staying. The cost of this is insignificant, the message it sends is overwhelming.
3. The local electrician when called always goes the extra mile when he does a job, maybe puts in a new power outlet, then says, whilst I’m here, maybe I should check your smoke detectors, as a courtesy. This costs nothing, but what a message it sends. You can be sure he will be recommended.
Divert just a small percentage of your advertising spend to a strategic WoM campaign and watch the result, the business will grow as advertising spend plummets. Further, if you are a business with a restricted budget for advertising, then there is little alternative.
Where to Now?
Workshop your business with your staff and perhaps your customers, track your customers, learn what delights them and devote some promotional spend to fulfilling that delight and watch the word spread and the business grow.
Develop and implement a systematic WoM strategy. The results may surprise you.
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Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Roger also chairs two Syndicates of the National organisation, “The CEO Institute”. Matrix Thinking is now used in more than 26 countries and licensed to Deloitte, one of the world’s largest consulting firms. www.matrixthinking.com