Implementing Formal Marketing Systems
Management is predictability
One of the best definitions I’ve heard about management is “predictability.” W.E. Demming, the “father” of quality management, said management should be able to predict with a high degree of confidence, based on experience and knowledge, the result of any management decision.
I believe the same holds absolutely true for marketing management. In my opinion, marketing is a science. True marketing professionals can, with a high degree of accuracy, predict the result of any marketing effort.
In this report, I will share with you how powerful marketing can be if you go about it in a systematic and disciplined way. We’ll start by removing some false myths that surround marketing, and I’ll go on to show you the impact of formalizing your overall marketing approach.
My goal is to help you improve your overall marketing effectiveness, and to lay the foundation to implement formal marketing systems and procedures.
PART 1: False Beliefs About Marketing
Marketing Costs Money
Although most people think that marketing costs money, it is quite the opposite. Marketing is the only function in a business that generates money, while all other activities in the business are cost centers. Marketing is a revenue generating center, and the role of marketing is to generate sales – period, end of story.
People who say they cannot afford marketing are really saying they can’t afford to spend money without getting results (generating sales), and I totally agree!
If done correctly, marketing is a license to print money! Marketing done well should give you five to ten times the return over the investment. People pay $20,000 – $40,000 for professional copywriters to write sales letters that can generate a few hundred thousand dollars in sales revenue.
It’s scientifically proven that a simple change in the headline of an ad can change the response rate by as much as twenty times. Changing the body copy can do the same thing.
One quality sales lead from a trade show can result in millions of dollars of sales. I once sold a company based on a lead from a trade show!
One well written sales letter to all your past customers could easily get 25 percent of them to come back! And one well written letter to all your existing customers asking them for referrals could easily double your sales in a matter of months.
Sending reminder post cards or letters to customers (when it’s time for an oil change, service, eye check, dental check, etc.) can easily double or triple sales.
One of the fastest growing companies in America is called Postcardmania. It started business by sending out 1,000 post cards per week, and now sends close to 70,000 per week. Is marketing an expense or a vehicle to generate revenue?
The post cards always bring in leads resulting in sales; the company keeps a staff of about a hundred people employed, and it brings in close to ten million dollars in revenue.
Yes, you do have to spend money on marketing, but your goal is to make a lot more than you spend. The reason many people feel marketing money is wasted is that most of the money is spent on advertising that does not generate any sales revenue.
Remember that customers do not simply appear. Money must be spent to get and maintain customers. In many companies SG&A (Selling, General and Administration) or the cost to get a customer can run up to 30 percent of sales revenue.
Many businesses never track the response they get from an advertisement or promotional campaign, but continue to run it. Why?
Absolutely track all marketing expenditures. if it cannot be tracked to any sales, then stop it!
Marketing is no more than the tool to get the sale. Change the mindset from marketing as a cost center to that of a revenue generating center. Marketing is an investment spend,
Marketing is Advertising
Marketing is not advertising. Advertising is simply a component of marketing. We often link them because marketing as a discipline grew out of the world of advertising. If you look up marketing gurus on the internet, you will see names like Thomas Smith, David Ogilvy, Clyde Badell, Eugene Swartz, Jay Abraham, Jay Conrad Levinson, and John Carlton, among others. All of these people are world class copywriters. Most of them grew up in the world of advertising agencies.
We’ve been trained to think of marketing as advertising.
So why do we struggle?
Many business people struggle with marketing because they assume marketing is advertising, and end up spending a lot of time and money running ads that do not produce results.
1. The ad does not have the right message, or the message is not understood by others.
2. Ads are just one form of promotion; there are other more effective messengers.
No message / Poor Message
Many business owners don’t even know why people buy a product, service or idea. The reason why someone buys from anyone else is called USP or VP (Unique Selling Point or Value Proposition). The USP/VP shows others the value of purchasing your product, service or idea. Marketing consultants will spend a few days with you to help define your unique value to the marketplace.
Conventional advertising is the most expensive promotional vehicle you can use. Unless you have the budget to run your ads over several months, don’t bother. Let me show you why.
Thomas Smith was one of the first so called marketing gurus who studied the impact of advertising on getting people to buy. In his book Successful Advertising, published in 1885, he pointed out that on average, it took consumers 20 consecutive viewings of an ad before they would buy.
The chain of events goes like this:
1. We look at an ad, but don’t see it
2. We see it, but don’t notice it
3. We are conscious of its existence
4. We remember having seen it
5. We read it
6. We turn up our noses at it
7. We read it and say, “Oh brother”
8. We say, “There’s that confounded ad again”
9. We wonder if it amounts to anything
10. We ask our friends and neighbors about it
11. We wonder how the advertiser makes the ad pay
12. We think it might be a good thing
13. We think it might be worth something
14. We remember we wanted such a thing for a long time
15. We are tantalized but cannot afford to buy it
16. We think that someday we will buy it
17. We make a memo of it
18. We swear at our poverty
19. We count our money carefully
20. We finally buy the item
This study was done in 1885, but even today I can relate to this. Even if not 20 exposures, I would say it takes at least ten exposures to get someone to buy your product, service or idea.
Here’s the bottom line: Unless you have deep pockets to sustain a long advertising campaign, just don’t bother.
So What Is Marketing?
I believe marketing is bringing value to the marketplace. It’s done in two ways: Have a compelling and desirable message, and then have the appropriate vehicles or messenger to deliver this message.
Marketing = Message x Messenger
These two components are sometimes likened to a cannonball and the cannon. The message is really the value proposition: How and why your product service or idea will help another solve a problem. The messenger is the medium or delivery mechanism chosen to deliver the message. It could be print, radio, TV,etc.
Both need to work together. To be successful, you need to have a great product, service or idea, and make sure it gets the attention of whoever needs it.
So many businesses focus on the messenger and they forget the real message! How will it help customers, and add value to their day?
Many business people don’t have the full equation in place, so the formula is incomplete, and they can’t solve the problem.
The only reason products, services or ideas fail in the marketplace is they either do not truly add value to customers, or the message has not been conveyed effectively to a large enough audience. I hope you recognize the problem. Truly effective marketing is about having the right mix between the message and the messenger.
Anyone who says they are wasting money on marketing, or says they’ve been burned by spending money on few results did not use the right marketing mix. Two examples should clarify the point.
Dentist: Poor Message, Great Messenger
Most dentists advertise in the yellow pages. This is a good medium or messenger, since it is the place that most people go when they need a dentist.
I recently spoke with a top performing dentist in my area, and asked her where most of her business comes from. She said it comes from referrals, which are normally the number one revenue generating tool for any small business. Then she said the next best vehicle was the yellow pages. When I asked why someone would choose her practice over any other in the Yellow Pages, she pointed out the advantages of the ad.
A USP- Unique Selling Proposition
A reason why people chose her over hundreds of other dentists (she offered emergency care).
Her cell number
She said she’d not been successful with her yellow page ad earlier, but fine tuned it (found the right message) and her phone started to ring.
Poor Message, Poor Messenger
A local company offering termite and pest control asked me for help. They marketed by distributing flyers in the community. They read:
“If you have the bug, give us a call.” Catchy, but not effective, so I changed it.
“If you have a problem with insects and termites, give us a call for a FREE home inspection.”
I changed the message and the messenger. I told them to print a thousand business cards at the local Staples store for $39.99. They printed them up and handed them out. Sales took off: Right message, right messenger.
How to market effectively
If your marketing is not working, look critically at both your message and messenger. Changing the marketing mix can change results dramatically. Depending on the nature, size and maturity of your business, you may need a different marketing mix.
In marketing consulting, I always start by reviewing my client’s sales literature, business cards, web sites, banners, etc., to see how compelling and customer focused they are. Are they written with the customers’ best interests in mind? Then I look at how effective the messenger is, and if it’s right for the type of business.
I asked an insurance broker how he got leads and business. He said most of them came through referrals, but he also spent $1,000 a month to get internet leads. However, he got no quality leads or sales from the internet. When I asked him why he continued to spend money on an activity that did not generate any sales, he could not answer the question.
I told him to change his messenger, I told him to take the $1,000 he spent on the internet, and to re-allocate it to formalizing the way that he got most of his business: through referrals. He used the same money he spent per month as a referral bonus, and his business took off.
Few people have been trained in how to create a compelling message: a protocol used to get people’s attention. It is used in any form of marketing communication, and it’s called AIDA.
A: Attention ————Gets attention
I: Interest ————Generates Interest
D: Desire ———– Creates Desire
A: Action ———– Compels action
If you choose an advertising agency to handle your marketing, ask if there is a professional copywriter on staff, someone who <can write copy that sells, not something that simply creates interest.
The starting point of marketing is internal. Look at yourself, your product, service or idea, and extract the value you think is beneficial to others.
There’s a whole range of ways to deliver the message.
– Trade Magazines
– Trade Shows
– Web Casts
– Public Relations / Press Releases
– Direct Mail
– Bill Boards
– Sales Force
The most important concept is to choose the right mix to make your marketing effective. It means a compelling value proposition, combined with an effective vehicle to deliver the message. Advertising agencies call the list of promotional vehicles a “media plan,” and they select the appropriate ones for you, depending on budget.
For medium to large companies, the best way to get the most out of an advertising agency is to ask them to work on a contingency basis. This means they take a share of the profits resulting from the promotional campaign. This way, you will always ensure you get the best message and messenger. It makes them work harder!
PART 2: Benefits and advantages of implementing formal marketing systems
I wrote this report to help business owners market effectively, to enjoy the lucrative benefits effective marketing offers.
Marketing should be seen as an investment spend. We simply spend money to make a lot more money! The problem is that most people are not trained in marketing, and doing it yourself can be risky. Many advertising agencies will candidly tell you they are not marketers. Their key advantage is promotion. It’s worth repeating:
Marketing = Message x Messenger
Identify the right message and choose your promotional vehicle very carefully. You need both.
Formalize your Marketing Process
Any process can be formalized, and the same applies to marketing. When I ask any business owner where he or she gets most business, referrals are most often mentioned. But when I ask if there is a formal referral system that tracks and measures it in a systematic and disciplined way, the answer is no.
In the same way, if I ask any vice president of sales if their sales people follow a structured, systematic, defined, documented and repeatable sales process the answer will be no. Usually each sales person is following a unique system, or basically acting as independent CEO’s for the business.
The problem with this approach is the company is not sharing the benefits, knowledge and talents within the sales organization. The company is not leveraging the inherent strengths within the it.
In sales, there is a defined approach to attract suspects, to convert these to prospects, to convert these prospects to customers, and finally to get these customers to refer more customers. This process is called the sales cycle. And each step can be formalized, so that each sales person works from the same standardized process, the one best demonstrated practice for each step.
Getting all sales people to follow a standardized process proven to produce positive results can do nothing but make a positive impact on sales.
Let’s look at another under-utilized marketing area that could benefit from formalization and systematization, and that is the area of databases. Most companies have a database, but no formal process in place for regular contact with the people in the database.
The power and impact of formalizing your marketing systems can be very profound in financial terms.
The power and impact of implementing a formal referral system
Are you asking each and every one of your customers for referrals? Most business owners will say yes to this question. But, when I check with the sales force, I usually find it’s perhaps only about 65 percent. Why is it so important?
Number of customers 400
Average Size of Transaction $500
Let’s assume that 65 percent of customers give referrals. Let’s further assume 100 percent of the referrals are converted to sales at an average transaction size of $500. $130,000 would have been generated through referrals.
It sounds great, but what about the remaining 35 percent? That would be worth another $70,000 (0.35 x 400 x $500). That’s how much money was left on the table by simply not asking for referrals. Most business owners assume people will give referrals, but the process needs to be managed and controlled by installing a procedure.
The power of working your customer database
Databases are gold in the world of marketing. But few companies use them effectively. Few companies know how to set up a marketing database, and most small companies don’t even have one.
Any customer database needs to be divided into three parts, what I call the three customer P’s:
Present People who are currently buying
Past People who have bought in the past
Potential People who may purchase in the future
Each of these categories calls for a different strategy.
These need to be managed and grown. Get referrals from all existing customers.
These need to be re-activated. A simple sales letter to all inactive customers followed by a phone call is proven to bring back at least 25 percent.
These need to be converted into paying customers. The standard response rate for a mailing is 1.5 percent. Based on this number, you can reasonably estimate how many more new customers can be obtained over the coming months.
After its people, the single most important asset a business has is its customers. But most companies do not have a procedure or policy to manage a customer database.
In my opinion, marketing simply brings value to the marketplace. Know very clearly what you have to offer, the message or value. Then get this message to the appropriate audience using the right messenger.
First do the marketing right. Have the right marketing mix: the message and the messenger working hand in hand. Then standardize all your marketing policies and procedures so each marketing person in the organization is using the same letters and scripts, etc. Without any formal marketing procedures and systems, there will always be inefficiencies in your efforts.