The triage marketing death trap

The road to extinction is paved with shortsighted thinking that neglects your customers.

One of the greatest marketing challenges for businesses large and small is to balance short-term tactics with a long range strategy. If you’re not mindful, you can get permanently stuck on shortsighted priorities.

I call this triage marketing.

It’s like triage in the television program M*A*S*H. Many a calm moment was cut short by the sound of approaching helicopters and Radar O’Reilly announcing, “In coming.”

What followed was managed chaos.

Outside the operating room was a doctor in triage, whose role was to examine the wounded to determine which needed immediate surgery. The rest were patched up temporarily and helped later. It was the epitome of a short-term strategy.

The marketing equivalent is to focus on quick hits: generating immediate leads for the sales team, running a promotion to spike direct orders, or other scattered activities. The trap is sprung when short-term strategy becomes the constant mode of operation.

Marketers walk a fine line here. To win at content marketing and online customer responsiveness requires real-time execution or you miss opportunities. Who wouldn’t want to be the next viral marketing or newsjacking success story?

Related: The case for getting a journalist on your content marketing team

However, in the heat of battling day-to-day priorities, it is easy to lose sight of the important long range vision for growing the business. In many cases short-term thinking is ingrained in the corporate culture.

A triage culture

I first observed this as a front line marketer in a large company years ago. There were two aspects of the culture that perpetuated a short-term mindset and shortsighted behaviors.

The first was the budgeting process and learning to game the system.

See if this sounds familiar. Your marketing budget was set in January, after a month long planning process. In April, senior management and the finance wizards would make the first of quarterly adjustments. This meant they were looking for unspent money to take back. This evolved from quarterly to monthly exercises.

How did marketers adapt? You spend or lock in everything you could in Q1. If you phased your budget to customer purchase preferences – in this case, they spent most of their budgets in the last quarter – you lose large parts of your marketing budget. It fostered a mindset that said ‘Responsible planning be damned; use it or lose it.’

A second, equally powerful culture driver was the compensation plan.

Like most companies, bonuses were paid out for reaching ever more aggressive revenue targets. The targets were based largely on new sales revenue. Since compensation drives behavior, this resulted in activity focused on acquiring new customers and new product sales.

I’m not opposed to bonus incentives or driving growth. Not at all. In my time, I made the company tens of millions of dollars and earned some great bonus checks. I also witnessed some chaotic, shortsighted and nonstrategic behaviors in the race for revenue.

Related: Don’t think about innovation like a CEO

One example was the pricing policy behind some of the year-end automatic shipments to subscription customers. All products were sold on subscription with the agreement that updates would be automatically shipped and billed. Want to guess where this is going?

Pricing for updates were set by the finance wizards based on the revenue needed to make revenue goals. That meant some customers where charged an exorbitant amount for very little value. In the process of meeting the short-term goal, we incurred high cancellation rates. This alienated customers and set us back for the upcoming year.

Remember me? I’m your customer

It’s too easy to forget the customer when in triage marketing mode. In the short-term, there is no incentive to invest in customer relationships critical to sustained business growth. You give short shrift to:

CUSTOMER RETENTION
Triage marketing focuses on acquisition over retention. One study at St. Joseph’s University in Philadelphia found that retention pays dividends. If your business has a 70 percent customer retention rate, every revenue dollar today will be worth $4 in ten years. And an 80 percent retention rate will increase today’s revenue dollar to $6 in ten years.

CUSTOMER LOYALTY
Triage marketing focuses on promotions over customer loyalty. Promotions sell a product trial, but not ongoing brand loyalty. They may even attract the wrong customers, who never become loyal. It costs six-to-ten times as much to acquire a new customer as it does to keep an existing one. Conversely, a Harvard Business School study found that an increase of five percent in customer loyalty can increase overall profitability from 25-80 percent.

CUSTOMER LIFETIME VALUE
Triage marketing allows little time to create deep relationships with your best customers. Relationships continue to grow, encounters do not. For example, an automobile dealer once calculated that a lifetime of cars sold to one customer would be worth $322,000. The 80/20 principle, where 80 percent of your business comes from 20 percent of your market (i.e. your loyal customers), literally takes a lifetime.

In the past 10 years, there has been a fundamental shift in the balance of power in the marketplace from seller to buyer. Customers have greater access to reliable information on the Internet. Social networks give them unprecedented power to talk about your product and service. They don’t care about your short-term objectives.

Marketing strategies based on short-term thinking won’t win you customers or sustain your business in the long run. Back in 1973, Peter Drucker said the purpose of business is to create a customer. If you’re in triage, you need to get back to the basics. Your survival depends on it.

What are you doing to combat the perils of short-term thinking in your organization?

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