Spend Money to Save Money

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Some experts in the marketing space seem to think that you have to spend money to save money. Sounds like a bit of double speak that is used to get companies to say yes to proposals and campaigns that cost more than they might otherwise spend. Sounds like “experts” conning you out of your fought-for marketing budget.

But on closer inspection, some of this actually makes a little sense.

To identify the good spending from the bad spending, we have to approach our marketing budget from both a short term and a long term perspective.

Short Term

In the short term, the money you spend today should have immediate impact on results. Companies that rely on direct response advertising measure the return on every dollar they spend. Did that campaign bring in new sales? How many? And what does that mean for our revenue?

From that perspective, a company should only increase their budget if we can guarantee the same results. Because spending money now that won’t generate new sales is a waste. It hurts the bottom line in the short term.

Long Term

But if we take a longer-term mindset, the advantages of certain kinds of new advertising spend make more sense. Companies that spend money on branding are not concerned as much about the immediate return on that investment. Instead, they know that by spending money in the right ways now, they’ll be able to more effectively generate sales growth later, over time.

There are a lot of different marketing initiatives that fall into this second bucket.

  • Website redesigns

  • Most traditional advertising – billboards, television, radio, print

  • Content marketing

  • Digital branding – banners, videos, etc.

Companies don’t necessarily expect that money spent in these areas will lead immediately to an increase in sales. Rather, over time, they expect that these activities will expose new potential customers to their brand. In this way, they can increase their brand awareness.

When more consumers know who you are, more often they will come to you, instead of the other way around. Brand mentions go up. Brand searches go up. Word of mouth improves.

And over the long term, you experience significant sales growth.

You spend money now so that you don’t have to spend so much money chasing sales later.

What Happens When Amazon or Facebook Comes After Your Business?

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It can be scary at times looking over your shoulder at a larger company that seems to have the intention of swallowing you whole. There are sharks in the tank that are gobbling up the rest of the fish, growing ever larger, taking over new terrain, all in the hopes of being the biggest and most powerful.

These sharks have names. They are called Google, and Amazon, and Facebook, and to a lesser extent Apple and Microsoft. They are tech giants, born to do one thing, grow.

They cross different industries and seem each to have economy-dominating aspirations at times.

And so you, with your little business, which is quite successful now, is constantly at risk of being pushed aside by one of these giants. Should they decide to enter your market and compete for your customers, what should you do?

1. Don’t Panic

I know they’re big and scary and as soon as they announce a new product or service it makes waves. But you are not in trouble just yet. The worst thing you can do – for your business and your health – is overreact and do something that doesn’t make sense. The best thing for you and your team to do is be patient. It’s business as usual until you have a clearly defined strategy for how to proceed.

2. Do Your Research

Get to the bottom of the threat. Make sure it is a threat. In the initial hype or announcement, a lot can get lost in translation. Do your best to look under the hood and find out exactly what you will be up against. It is only by knowing the details about their plans that you can develop your response.

3. Determine How You Win

There is a reason why you have been successful to this point. You are doing something right. Do you know what that is?

Your unique value proposition is the reason why customers do business with you in the first place. One of the sharks might go after your business, but they might not understand the real reason your customers chose you. So identify what you do well, and focus all your energies there.

4. Focus on Making Customers Happy

Your existing customers are your best defense against any impending threat. So long as they are happy, you won’t lose them. And with a customer base, you have an attentive audience and an army of potential sellers.

Continue to put your efforts into delivering on your promises and turn your customers into advocates on your behalf.

5. Consider Reaching Out

Often, when one of these tech giants first enters a new market, they may be looking for an easy win. And that might mean they are looking for existing companies to buy out.

Maybe you have no interest in selling. But then again, maybe you do. And if that’s the case, it never hurts to get in touch via a lawyer or experience sales agent.

What Your Discounts Say to Customers

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Discounts work. If you are a regular reader of this blog you will know that I often write about the value of special pricing, promotions, offers, and sales to drive interest and boost purchases.

However, there is an opposing view. And it would be unfair of us to ignore it entirely. Because as much as it’s true that discounts can work to increase revenue over certain time periods, over the long term they can (not always but in some cases) also have a negative impact on your business.

The following is an attempt to explain why – not to advise against the practice, but to spread awareness about the potential dangers of discounting strategies so that you know what to look for and when to change course.

Discounts and Your Brand

Use of discounts can affect your brand – that is, the impression that consumers have of your company. Some companies use discounts quite frequently. Others can afford never to offer discounted pricing.

Whether or not you use discounts does not determine what people think of your brand. However, when you use discounts often, you are signaling two things:

  1. The value your products or services provide may be less than one would assume at full price
  2. Consumers should never buy at full price because they can always wait for a bigger discount

Apple Never Discounts

When we think of consumer brands that do not discount, Apple is the first one that comes to mind. Apple has been able to build their success as more of a luxury brand. They have sustained a higher price point in the marketplace than most of their competitors.

One might argues that Apple would grow their dominance if they started offering lower prices. They might bring in more customers, and generate more revenue, with discounts and other promotions.

But Apple has made the active decision not to do this. Most likely, that is because they are afraid what that strategy might do to the brand that they have spent so long crafting. Price is not a part of the Apple value proposition. Instead, they are focused on creating quality products that are easy to use.

Walmart vs. JC Penney

Walmart and JC Penney are two brands that consumers will generally associate with low prices. Unlike Apple, these two retailers have actively chosen to compete on price. Price is a key part of each of their value proposition.

But, they each have a different strategy for offering lower prices. JC Penney uses a discount strategy, offering frequent sales to drive people into stores. Whereas Walmart offers what they call “Everyday Low Prices” – a way to distinguish themselves as offering the lowest prices, all the time.

In fact, in 2017 JC Penney’s new CEO chose to deploy a new pricing model which more resembled Walmart’s. Rather than offering frequent sales, they told their customers that they would now be offering the lowest prices available, all the time.

What happened? Consumers revolted, sales slumped, and the CEO was fired. And they have since gone back to the original, sales-driven model.

This demonstrates points #1 and 2 up top – when you use discounts to meet your sales goals, consumers will associate your brand with discounted pricing. This creates an expectation that will be difficult to break from.

Should You Offer Discounts?

To repeat, all of the above is not a reason not to offer discounts. But it is something that you have to consider when you start making discounting a part of your pricing strategy.

Discounts and other promotions can drive increased interest, traffic, and sales. But just like anything else, if you become too reliant on discounted pricing to grow your business, you run the risk of negative brand impact in the long term.

Is Your Brand Making the Right First Impression?

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As marketers, we have to care about the way potential customers experience our company. These are the consumers in the marketplace who are not necessarily aware yet of our brand, so they don’t know what we do, or how good our products are.

Just like in our daily lives as human beings, where we only get one chance to make a first impression, so it is with our brands. Potential customers only ever become aware of you once. And once they form an impression, it is going to be expensive to get them to change it. So it’s critical that the first impression is the best one.

But what do most first impressions look like?

There are two big ways that consumers come into contact with brands for the first time.

  1. Advertising – consumers see an ad. It could be a billboard or an only banner, a newspaper or magazine ad, a radio or tv spot, or one of a thousand other advertising channels. But before they ever visit your website or walk into your store, they are responding to that advertisement.
     
  2. Word of Mouth – consumers hear about your company from someone in their lives, friends, family, coworkers, relatives. They might be customers of yours or just familiar with your products. They might have good things to say or bad, and they’re in complete control of the first impression your brand makes on this new consumer.

People may argue that there are a million other ways consumers encounter brands for the first time. However, most are variations of the two above. 99.999% of consumers are not visiting your website or walking into your store if they’ve never heard of you before.

So what does this tell marketers?

If you care about the impression that your brand is making, these are the areas you need to focus. You need to devote the time and energy required to making sure all of your advertising creative meets your high expectations. Nothing goes out that does not send the right signal. We should never be half-hearted about our advertising.

Second, you need to devote just as much time and energy to ensuring that your company lives up to the promises it makes to customers. Why? Because that’s how you control word of mouth.

Your customers are talking about you. What are they going to say?

One Final Consideration

The second half of any first impression may be as important as the first, and so deserves a mention here. If the first half of the first impression is any good, the second half is a visit (to your store or to your website).

You can still lose them at the visit stage if you don’t live up to their expectations. Whether it was an advertisement or word of mouth that this person is responding to, they will come with a sense of the promises your company makes. Again, it becomes critical to keep them.

Wow people once, and you will win their business. Wow them again and again, and you will win their loyalty.

Getting Your Team to Market Themselves

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As an individual marketer, the desire to market oneself is obvious. The benefits for you are clear. The same way a brand or company would market themselves to potential customers in order to generate sales, you will market yourself to potential employers and clients in order to generate future income.

There are a number of ways you can market yourself:

  1. A blog
  2. Writing articles for established outlets
  3. Speaking engagements
  4. Getting your work featured online
  5. A large network
  6. LinkedIn references

And while the benefits for the individual marketer may need no further explanations, there is one benefit that does. But it’s not necessarily something that benefits the individual. Instead, it’s a benefit that the company they work for gets.

You see, the more a person establishes their own personal brand, the more valuable they become to the organization that employs them. The all press is good press concept. And if you are in charge of marketing your organization, it is incredibly helpful if members of the team market themselves effectively.

How can you get them to do that?

  1. Offer them guidance. Not everyone knows how to market themselves, so it is a good idea to offer personal and career development sessions for employees that focus on how to grow their personal brand (refer to the list above).
     
  2. Offer them an outlet. Create a space for your employees to self-publish, with your brand behind them. It could be an outwardly facing employee blog or a section of your website for articles that the team can submit to.
     
  3. Become their booking agent. Get people to go out for speaking gigs at live events across the country. Help them by out researching opportunities and crafting their pitches.
     
  4. Incentivize them. After you do everything you can to make it easy for them, make it a win-win. Offer them perks – like paid time off, free food, money or promotions. Create a special “Employee Engagement” program and reward the people that are most effective at building up their personal brands.

When your employees become experts in their field, you win twice. First, you get a team full of experts helping to pursue your mission. Then, you get the benefit of outsiders looking to your brand for guidance.