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?
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.
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.
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:
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.
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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Before interactive marketing, there was Lester Wunderman.
He is an advertising legend who pioneered direct marketing. He defined it, named it and launched it into a new marketing discipline that transformed modern advertising. For that, he is recognized as the father of direct marketing.
His accomplishments and contributions to the marketing industry cannot be overstated. In the decades that preceded the Internet, he envisioned a degree of consumer engagement and interactivity we are realizing today.
Defining a new marketing
In the early 1960s, Wunderman conceived a new approach to what was then known as mail order marketing, or direct mail marketing. He observed a shift in consumer preference for having a personal, direct contact with the manufacturer of products, and a shift away from intermediary channels of distribution. He described this as a “system of interactive transactions that would restore a measure of dialog and human scale to the way we made, sold and bought things.”
He viewed this system as more than a direct mail channel. He began calling it direct marketing.
In a historic speech at MIT in 1967, he outlined his ideas and gave birth to a new industry. He tells the fascinating story of preparing and delivering the presentation in his book Being Direct. He made the case for a new direct marketing that is comprised of several broad-based characteristics:
- It is a strategy, not a tactic
- It is where advertising and buying become a single affair
- It eliminates intermediaries in distribution and communication channels
- It creates dialogs between buyer and seller
- It builds dialogs into enduring relationships
- It is personal, relevant, interactive and measurable
In the decades that followed, he oversaw the advent of the direct marketing industry and put these principles into practice.
Inventing new media
While working with clients whose appetite for media couldn’t be satisfied by conventional direct mail alone, Wunderman pioneered new media to reach consumers directly. Some of these innovations include:
- The now-ubiquitous magazine subscription card
- Preprinted newspaper inserts
- Inbound 800 phone numbers to sell magazine subscriptions on TV and radio
- Introduction of the ‘virtual store’
All of these were revolutionary approaches for interacting with consumers directly as they moved further upstream in the buying process. These ideas were limited only by the technology of the time. However, the concepts hold true for interactive marketing today. In his book, Wunderman said of that time:
I was certain that consumer-initiated advertising was going to work in the future as more interactive media became available.
Technology has caught up with his vision. We can now interact on the Web in many ways: websites, social media, email and mobile. In anticipation of these new media platforms, Wunderman created “The Consumer’s Communication Bill of Rights” for the second edition of his book. It offers his time-tested wisdom for online engagement.
The vision for digital marketing
Wunderman’s vision is still aspirational for interactive marketers. We have powerful new media to reach customers and prospects, but continue to work through the challenges to deliver on their expectations. His “Bill of Rights” points to many of those challenges:
- Being transparent and authentic, and letting go of controlling the message
- Capturing data that enables more relevant, valuable exchanges without invading privacy
- Understanding the acceptable frequency of communications
- Telling relevant brand stories that inform, not self-promote
- Having conversations with consumers that establish respect and likeability
- Building relationships through meaningful engagement, not wasted activities
- Making it easy for consumers to interact and buy
- Keeping communications succinct
These are worthy pursuits rooted in the fundamentals learned in the decades that came before. As he has throughout his professional life, Lester Wunderman has provided a blueprint. His vision for creating the direct marketing industry extends all the way into today’s digital world.