Adopt a Growth Mindset for 2019

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For this topic, I can think of nowhere better to start than with a story I recently learned. The following comes from Avinash Kaushnik, via his excellent Marketing <> Analytics Intersect Newsletter (subscribe here):

One day a group of Google engineers walked into Larry Page, co-founder of Google and current CEO of Alphabet. The group wanted to show off their latest idea.

“It’s a time machine,” they told him.

The thing they brought in was roughly the size of a small refrigerator, about one foot wide, with a sleek metallic exterior. One of the engineers looked for a place to plug it in.

“Why does it need electricity?” Larry asked.

What I love about this story is how well it illustrates Larry Page’s mindset. He wasn’t thrown by the fact that his team was working on a time machine. What he wanted to know was why they hadn’t created a time machine that ran without electricity.

And although you are not likely to be working on anything quite so ambitious, it is the mindset that all of can set out to adopt.

What is a Growth Mindset?

Growth mindset is a psychology term coined by Carol Dweck to describe the difference in outlook between groups of people. Those with a growth mindset see things as changeable over time, whereas those with a fixed mindset believe in the inherent nature of things.

When we apply that concept to our businesses, one can see how Larry Page’s mindset might be different from other people. He wants his team to push the limits on what they think is possible. He wants them to ask “why not?” rather than “why?”

A growth mindset is critical for success as a marketer, because growth is our responsibility.

How to Adopt a Growth Mindset for 2019

The business as usual approach would say you should measure your growth in 2018 and forecast 2019 accordingly. Perhaps your revenue grew 5% this year. Okay, so let’s aim for another 5% next year. If the business grows 5% every year, things are pretty good. Right?

Enough with the business as usual approach. If your business grew 5% last year, the Larry Page mindset would ask, “why not 50%?”

And yes, 50% growth might seem unreasonable. But it’s not as crazy as you might think. Because if you aim for 50%, while you might not get there, you might get somewhere closer to 20% or 30%.

So force yourself to be unreasonable. Setting unreasonable goals forces you to adopt a growth mindset. If forces you to think about your business in new ways. And only when we think about things in this way will we be able to see the strategies and opportunities available that we might otherwise miss.

Business as usual is boring. Don’t be boring.

The Marketer’s Guide to Cannibalization

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When marketers and businesses talk about cannibalization, they are talking about taking a bite out of their own sales with new or competing products. A good example of this is the story of Diet Coke.

Diet Coke was the pet project of a senior manager at the Coca Cola Company for many years. At the time, Coca-Cola was far and away the number one soda on the market. And the company already had a diet soda, called Tab, which was moderately successful.

Diet Coke was developed somewhat in secret because of the strong opposition to it within the company. Executives, salespeople, and marketers all believed that launching a diet soda with the Coke name would hurt sales of both Tab and Coca-Cola. They were worried about cannibalization.

Of course, those fears didn’t come to fruition in the case of Diet Coke. When it finally launched it was a huge success, and continues to be the number one diet cola on the market.

Why Fear Cannibalization?

Fears of cannibalization are often legitimate. When a company’s growth strategy involves launching new products, there is a fine line between products that are truly new and products that directly compete.

A truly new product is responding to an unmet need in the marketplace. It either targets a new group of consumers that are not already purchasing your existing product in that category, or it targets an additional need observed in the same group of consumers you already sell to.

If consumers view the new product as an alternative to the old, then cannibalization may occur. Consumers will simply shift from one product to the other.

Is Cannibalization Bad?

Cannibalization sounds bad, but that’s not always the case. It depends on a number of different factors. To illustrate this, let’s look at three different cases where cannibalization can actually be a good thing:

  1. Versioning – if you are replacing an older product with a newer version, something that is truly better, cannibalization might be good. By getting you customers to switch from the old to the new, you are better serving their needs. Although this may not directly increase sales, it does two things. First, it keeps them from switching to your competitor’s product, which is an increase in sales from what would have been. And second, it builds brand strength by creating happier customers.

  2. Upselling – if your new product is more expensive than the old product, then the value of each sale increases. In this case, successfully getting your existing customers to switch from the lower value product to the new, higher value product, will lead directly to an increase in revenue. Therefore, without adding new customers, you can still grow your business.

  3. Growing Overall Market Share – this last case is one where we can, again, look at the case of Diet Coke. Sure, some Tab drinkers switched to Diet Coke. And some Coca-Cola drinkers also switched to Diet Coke. But Diet Coke also brought in new customers that previously may have avoided soda or drank one of the competitor’s drinks. And if the losses to your old products are more than offset by the gains of the new, then the overall business grows.

How to Judge Cannibalization in Your Business

It won’t always be obvious whether a new product will cannibalize the old. But those kinds of questions and decisions may be yours to make. So how do you make them?

First, understand the costs associated with developing the new product. Second, understand the competitive landscape. What else is on offer? Are other companies aiming to steal market share with a new/better product? And third, prepare some realistic expectations of performance.

If the cost of developing and selling the new product is more than the overall gains expected by its release, you probably shouldn’t move forward. If the losses to your existing products are higher than the expected new business generated, also not the smartest decision. But if you risk losing business to a competitor and the only way to keep customers is by releasing a new product, then sometimes it’s worth the added cost.

Develop a Sure-Fire Referral Program

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Successful referral programs are like a winning lottery ticket. When you have one, its guaranteed money for life. Except there is one main difference:

Winning the lottery is luck. A successful referral program is the result of a lot of careful planning and strategy.

Every company talks about how to get more referrals, but very few are able to develop and launch a referral program that scales their business. Here’s why.

  • They only see things from the company’s perspective. By ignoring the customer or user experience, not enough thought goes into how useful the program is.
  • They set it and forget it. Companies rush to put a referral program in place and simply assume that because they have one, people will use it. They ignore the need to measure the program’s effectiveness and optimize it over time.

To develop a sure-fire referral program, companies need to do three things well.

1) Build the referral process into the experience itself

Too often, the refer-a-friend option takes people out of the normal flow of the customer experience. But the most successful referral programs are designed within the day-to-day experience of your user base.

Ecommerce and subscription models make this even easier, by providing ready access to the referral process in the checkout or deliver process. Dropbox allows you to share files with friends who might not already have an account. Spotify allows you to invite friends to a shared playlist or to share an album who might not already have an account.

When the referral options feel like part of everyday use of the product or service, they are more likely to get used.

2) Give your customers a reason to refer people

Incentives work wonders for any referral program. Customers want to know, “what’s in it for me?”

Some of the most successful referral programs have a monetary incentive. One of the earliest programs to go viral was a deposit program from ING Direct. The bank’s customers would receive deposits of $25 or $50 for everyone they referred who opened an account.

By offering special discounts or other perks, you are giving your customers a reason to refer people beyond the simple joy of telling your friends about a great product. You are tying your own success to their interests.

3) Automate the referral program for scale

Let’s face it, in order for your referral program to really drive growth today, it needs to be automated. A process that relies on manual oversight or execution is fine, but it is not going to efficiently scale your business.

When you automate the process, relying on software and other tools to manage who is referred, the delivery of the referral, the tracking and delivery of the reward or incentive, you create a system that works without human intervention. When this is done right, you truly can set it and forget it. It will work for one person, or ten, or a hundred.

Are You Leaving Money on the Table?

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Earlier this week we wrote about scale. Specifically, we wrote about scaling those marketing programs that you know are working.

Too often, marketers leave money on the table. And they don’t even know that they’re doing this.

Why? Because they aren’t scaling. They aren’t even trying. And there are a few reasons for that.

1. Next Big Thing Syndrome

Whether this says something about the type of people who wind up in the marketing field or the way technology has hurt our collective attention span, there is a tendency in many marketing departments to spend far too much time chasing the latest and greatest solution.

You might think that this is a good thing, that we should be moving forward and staying on the cutting edge. Unfortunately, most companies don’t have the budget or the bandwidth to operate this way. And what happens too often is that we sacrifice those programs and channels that are proven and reliable, ignoring opportunities to grow.

Before moving onto the next big thing, make sure you’re getting as much as you can out of your existing campaigns.

2. Budget Mismanagement

A common issue in companies of all sizes occurs during the budgeting process. When we put together the marketing budget for the upcoming month, quarter, or year, we do it backwards. We start with at the top, picking a number of dollars to spend, and then work our way down to individual campaigns and programs to determine what percentage of our money we should spend where.

The proper way to build a marketing budget is to start at the bottom and build up. Create line items for each channel or program that ensure you are maximizing those opportunities before moving on to the next one and adding them all up. If you are limited by budget, the things that get cut should be the ones that don’t have the ROI or the scale to support your business.

To avoid leaving money on the table, get smarter about how you budget.

3. Lack of C-suite Buy In

It’s not the CEO’s or CFO’s responsibility to make sure your marketing is optimized. It’s the marketing department’s job to convince them that what you’re doing is working. If you are able to do that effectively, there will be no hesitation to spending the money.

What often happens when there is opportunity to double-down on efficient marketing programs is that marketing stands there with their hands out, but those in control of the finances say no. It’s not because they don’t want to grow. It’s because we didn’t do our job to sell them on the potential of our plans.

To get C-suite buy in for those marketing programs that are working best, it is important to learn how to develop detailed plans and presentations. You want to show them exactly what value you can provide the business if they invest in your ideas.

4. Poor Execution

The last, and, unfortunately, most common reason marketers leave money on the table is simple lack of execution. In this case, the marketing team gets the buy-in they need, correctly measure ROI and chooses to invest in the right areas. But they go about growing their budgets in the wrong way.

To effectively scale, it is important to recognize what has succeeded to this point. Simply spending more money isn’t enough. You have to spend it in the right way. This means identifying the specific reasons for success – whether it’s the proper targeting, the right creative, or offers.

If all you end up doing is spending more to get the same results, you will have failed in your efforts to grow the business. So learn how to execute at scale if you want to succeed.

Scale Your Marketing

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What’s working and can you do more of it?

Those are the questions that you need to know the answers to if you want to create marketing campaigns that scale.

What’s Working?

A simple ROI analysis should tell you which marketing programs are outperforming the rest. The companies that are able to grow effectively year in and year out have figured out how to do this consistently. They know what metrics they need to watch and when to pull the plug on a marketing campaign that’s not working for them.

When you find a campaign that is working, that means it’s making you money. It is bringing in more in sales than it is costing you to advertise. And when you find those campaigns, you have to determine whether or not you can grow them.

Can You Do More of It?

Not all marketing programs are scalable. Some channels are just too small to make a significant difference for your business over the long term. Others may work on a small scale, but as soon as you pump more money into them, all you see is your costs go up.

For example, your company might be working toward a social media advertising program. You might test the waters with ads on Twitter and LinkedIn, Facebook or Pinterest. And you might find some early success there, based on your targeting and creative assets. But just because it’s working at that level, does not mean it will work when you start adding to the budget.

The only way to know for sure is to test. Identify those channels or campaigns that are working, and slowly add to the budget over time. If you see that your acquisition costs are relatively steady, that means you have found something scalable.

Scalability is the Key to Growth

The companies that succeed in a growing market are the ones that are quick to identify opportunities to scale their existing programs. It’s too hard – taking up too much time and money – to continue to find small pockets of growth here and there. So it becomes critical to your success as a marketer to seek out and execute the biggest opportunities.

Whether it’s search or display, social or content, television or outdoor, discounts or referrals, or any of so many other marketing efforts, the key to growth is to find out what works and scale it up as quickly as you can.