1.Why your marketing sucks
Stop throwing thousand-dollar bills out the window and camouflaging spending as marketing
Your marketing programs are not as successful as you want. Or they are not successful at all (in ways you can measure).
Scrutinize everything you are (and are not) doing. Put it all under a microscope. Be a skeptical SOB about every dollar you are spending. Keep those programs generating the highest returns. Eliminate everything else, no matter what.
Your company will grow--profitably.
Marketing is not about spending money on such things as advertising, direct mail, and P.R. Those are just tools. Marketing is about growing your business--its revenues, profit, and valuation.
If you saw someone open an office window and start tossing out handfuls of thousand-dollar bills, you would have every reason to think that he's nuts. Yet that's what happens in business day in and day out, as company after company wastes millions of dollars on spending camouflaged as marketing.
These three quick examples are representative. Consider:
*Auto and truck companies spend a fortune sending camera crews to exotic locations to film expensive cars going down twisting, scenic roads. Great imagery. Beautiful direction. Stunning visuals. Now, find me one single human being who bought a car or truck as a result of one of those ads. In fact, find me someone who can tell all those ads apart. Or better yet, someone who can link one of the cars being advertised to a particular scenic road.
*The ad agency your company uses is hot. It just won a Clio, the industry's version of the Oscar, for its last campaign, and the very hip, very cool creative director is showing you the storyboards for this season's big ad blitz for your product. You sign off on the idea, which, when it hits, generates all kinds of buzz in the ad community--but not in the marketplace, where it counts. Your sales don't improve. When management starts asking, "Why are we spending all this money and getting so little to show for it?" you start talking about the value of building "mind share" as a key part of your advertising and marketing strategy. What the hell is "mind share"? The only thing that puts dollars in the bank is market share, and Clios don't do that (except for the ad agency that wins them).
*An established, family-owned upscale retailer decides to open a new sales channel by leveraging the power of the Internet. It spends $100,000 to acquire the perfect dot-com name, and it is money well spent. It becomes the first designation that customers think of when they are looking to shop the product category online. But the site is shameful, a disaster. While management was willing to spend $100,000 for the dot-com name, the company spent only $8,000 on the website design--and it shows. The products do not look appealing. It is hard to navigate the site, and worse, you can't find the "hot merchandise" that the company was promoting in its stores and ads. So what appeared to be a powerful sales tool--an industry-leading Web destination--turns out to be the devil in disguise. Instead of spurring sales, it frustrates potential customers.
These three examples are far too typical. Smart people do stupid things all the time when it comes to marketing. Since the art and science of marketing is not their core expertise, not surprisingly, their marketing is far less effective than they dream it will be.
It's a trap that is easy to fall into. Think of it this way. There is a Christmas-morning sense of excitement when you get your company's new brochure with its pretty pictures or see yourself hawking homemade hickory furniture in a cable-TV ad. In the back of your mind, a little voice says, "We're big-time. We're on television. We have a beautiful brochure. We're marketers. Wow!"
But hold it a minute. You know how they say, "Anyone can be a parent. Being a good parent is where the tricky part comes in." Well, a similar dynamic occurs with marketing. All you need to market your business is money. You don't need an iota of creativity, smarts, experience, or savvy. No, all you need is a checkbook. And with that checkbook, you can buy ads up the kazoo, public relations that can make Donald Trump look like a recluse, brochures to fill warehouses, websites that would make Steven Spielberg envious.
The problem is that if you are like most companies, all of that spending will result in a negative return on investment. Your marketing will cost you more profits than it brings in.
Because, in all likelihood, your marketing sucks.
Take the Your Marketing Sucks diagnostic
Before you get all lathered up and start ranting, "How the hell does he know?" ask yourself a few telltale questions.
Do sales rise every time you advertise?
If so, why don't you advertise every day? In more media?
Have you ever performed a cost-benefit analysis to see if your marketing generates more revenue than it costs to produce?
Do people read your brochure? When was the last time someone commented on it favorably? And more important, when was the last time someone was moved to buy something because of it? Can you track one single sale back to your brochure? Why not?
Do people visit your website? How many? Do these visits lead to sales? Do you have a Web strategy (or just an expensive site with all those pretty animations that make you feel soooooo proud every time you visit your own URL)?
Why most marketing sucks
There are seven key reasons marketing sucks at far too many companies.
1. They don't really know what marketing is, but in Kafkaesque fashion, they are going to spend money on it. We had a client, a paint company, that had decided it needed a brochure. We told the managers over and over again that wasn't where they should put their money, but they insisted that brochures were a key part of selling paint. Finally, tired of beating our heads against a wall, we designed a beautiful brochure for them that communicated everything the firm did. They printed 10,000 of them. A year later, when I was visiting the company, I wandered into a storage room and found that 9,850 of the brochures were left. I asked why. "These things cost a dollar-fifty apiece," I was told. "You think we're going to send them out willy-nilly?"
2. They go by generalities.
They've heard, for example, that marketing by e-mail doesn't work, so they don't engage in it. Or they accept popular wisdom, like a 1 percent hit rate for direct mail is terrific, writing off 99 percent of their direct-marketing efforts, blindly accepting that a 99 percent failure rate is a good thing. The truth is that generalities are worthless, because every situation is different. That's why you have to test what works for you. For example, let's say William Rehnquist, chief justice of the United States, unilaterally decides tomorrow that all speed limits are unconstitutional. He sends out an official e-mail, or a notarized direct-mail letter, that says, "Contact me, and I will send you a card that will automatically get you out of every speeding ticket." Do you think the e-mails would work? Do you think he would get better than a 1 percent hit rate from direct mail? He would make the automatons who think a 1 percent hit rate is great look like the fools they are.
3. They do not employ a swarming offense.
Many of these companies do only one form of marketing--print advertising, for example--and write off people who don't read or who do everything online. You need to hit everyone wherever they turn. Coca-Cola does. It's a great marketer. It's omnipresent. You see its trucks, point-of-sale displays, advertisements--you name it. Everywhere you look, you see Coke's marketing. You can do it, too, on a smaller scale. Lillian August is a five-store upscale furniture chain in Connecticut. Its marketing budget is infinitesimal compared to Coke's. Yet with an annual budget of less than $1 million, the company is everywhere its customers might be: in the Connecticut section of the Sunday New York Times. On billboards near its stores. Lillian August gets public-relations placements in the "shelter magazines" like House Beautiful and Architectural Digest, and it is recognized for its charity work with the American Heart Association.
4. They launch expensive programs and campaigns that are devoid of innovative thinking.
Doing what your competitors do, even if you do it better, is not the way to become a market leader. Remember those gorgeous car ads we talked about? It doesn't matter if your car looks prettier than the competition's as it comes down that long, winding road. Consumers can't tell the ads apart. If you watched TV last night, you saw at least five car ads. Can you name all five? Can you name one? Chances are that most of your marketing falls into the same black hole.
5. They ignore readily available research that would allow them to pinpoint ideal prospects.
Databases to reach every conceivable audience are readily available. For example, if you sell annuities, studies show that the most likely buyers of annuities are people who already have at least one, or who have certain demographic (they are sixty-five or older) or psychographic characteristics (they are independent and self-made). Research companies have lists of everyone who owns an annuity and demographic and psychographic lists as well. It's the same for every product or service, and yet the vast majority of marketers don't "profile" the universe of prospects to identify those most likely to buy, even those that glow with neon signs in the various databases. For example, to identify the names of likely buyers of upscale furniture in a given geographical region, we would sort through all of the residents (the universe) by searching for those who live in high-income ZIP codes, are of the thirty-five-to-fifty-five age group, have household incomes of $250,000+, and, to get to the real core prospects, subscribe to three or more home-furnishing magazines. By mixing and matching information from various databases, this profiling can be accomplished. Those with all the right attributes are the ones that "glow." That's where you want to target your marketing first and foremost.
6. Corporate management allows the drivers of the marketing process to remain unaccountable for generating a measurable return on the investment that it takes to produce the marketing programs.
Case in point: When IBM was trying to break into the small-business market, my company created a "mag-a-log" for the giant. It was a magazine-cum-catalog that talked about technology trends--why more small companies were buying servers--and then told you how to buy an IBM server, pointing out what to look for in terms of power, scalability, price, and features. The guy who approved our idea got a raise and a promotion for being innovative. It was innovative. It was also a good idea, poorly executed by IBM. The mag-a-log actually cost IBM money, because it didn't generate enough business to cover its cost. (Why? IBM had no way to sell to consumers directly, and people wouldn't bother to contact an "authorized IBM dealer.") So let's review what happened: The guy who approved an idea without thinking it through got rewarded for costing his company money! Wal-Mart's founder, Sam Walton, would have fired him--not for swinging and missing, but because the guy didn't think! Instead of firing him, IBM gave him a raise.
7. Managers refuse to admit that the only meaningful return on investment is measured by:
(a) the recruitment of new customers and/or (b) the sale of additional products to existing customers. Why are they the sole meaningful measures? They are the key factors that lead to increased growth, profitability, and valuation.
You are trying to move product and/or services. Period.
Most businesspeople who should know better (and do know better in every other aspect of their business) equate "creative marketing" (it wins awards) with "effective marketing" (it brings in more money than it costs). Not drawing that distinction is just dumb.
To eliminate this confusion, I have a simple solution: Every company, and every firm they employ, should be forbidden to enter any marketing or advertising contest. No more submissions for Clios. No more "most creative ad by a Midwest agency" competitions. No more nothing that has to do with ego as opposed to sales. The reason for that is simple: Ad agencies and the companies that hire them have opposite goals. Those creative directors want to win Clios on your budget--to them, their careers come before your company's growth. So before you hire an agency, you have to forbid it from entering any advertising contest.
The only exception I would make is when the agency is competing for an award that is given for producing the greatest return on investment, and even then I am not sure I would have firms entering those contests--filling out the entry forms takes away from productive work. If someone wanted to give them the award, that would be fine.
Forbes gave my company such an award for an ad we created. (See page 30.) The ad drove an unbelievable amount of traffic to the Cognet website, and that is what it was designed to do. We didn't enter a contest to win it--Forbes found us.
Bill Bernbach, one of the guiding lights of the advertising business, once said, "The best way to get clients is to create good advertising, and I mean advertising that sells." Amen! And this gospel applies to all of marketing. That is why infomercials, something we will talk about in detail in Chapter 3, are terrific. (And if your first, second, and third reactions are "We would never do infomercials, because they are so tacky," you are probably more interested in how your advertising looks than how it works.)
To be effective, marketing must produce positive arbitrage--that is, it has to generate more dollars than the dollars you invest in it.
Simple? It would appear that way, but in the real world, something gets lost in the translation. Instead of concentrating on the money that good marketing can generate, that Christmas-morning glow ("Look, Ma, we're marketers") replaces the need to demonstrate a strong return on investment.
But when the return on your investment isn't there, there can be no arguing that your marketing sucks. This book tackles the problem head-on. It will help you
*Rid your company of spending camouflaged as marketing, and redirect your dollars to programs that deliver strong and measurable financial rewards. (If you get the Christmas glow too, that's fine, but keep the ego-gratification stuff to yourself. We're in pursuit of dollars here.)
*Stop overlooking simple but obvious ways of increasing sales and earnings. (For example, you will be amazed to see how easy it is to sell additional products or services to existing clients. We will be talking about that in detail later.)
From the Hardcover edition.