Meanwhile Back at the Ranch

This Power Point was presented as part of a Business Ethics Workshop held prior to the 2007 Kansas City Business Ethics Award Luncheon on November 16, 2007.  Click the link and direct your computer to open the file in Microsoft Power Point.  I welcome your comments and/or questions on the topic.

Any money manager will tell you that holding a balanced portfolio is the key to maximizing returns on your investment over time. Your marketing portfolio should be similarly balanced in order to ensure your highest return on investment.

And while most corporate executives are aware of the relative risk and rewards of the holdings in their own investment portfolios, many don’t know how to balance their marketing portfolios to generate the highest return on their marketing investments (ROMI).

Marketing is an investment—just like equipment or employees—that should generate a measurable return for your business.  Knowing when and why to invest in a particular strategy can make a tremendous difference on your bottom line.

Like all investment options, each marketing strategy—advertising, public relations, direct marketing, web-based marketing, etc.—carries its own risks and rewards.  Properly balancing these strategies within your “marketing portfolio” can have a very real impact on your bottom line.

When considering different marketing communications investment strategies, begin by determining the virtual age of your brand.

At Nation Ranch, when we speak of virtual age, we generally are talking about the size of your marketing budget, level of awareness you have among target markets and your brand position and market share relative to your competitors.

We characterize brands as being in one of six stages: birth, infancy, childhood, adulthood and old age.

For example, a new product hitting the market would be considered at its birth and entering infancy.  Baby brands typically have small marketing budgets, little or no awareness and therefore no clear identity versus the competition.

These young brands, like younger investors, are better able to tolerate risk and an infant brand’s marketing portfolio should be more heavily weighted toward public relations, viral and guerilla marketing than that of a more established brand.

Each of these strategies is “high risk” in that you cannot guarantee that the news media will pick up your story or that word about your product will catch on in the blogosphere or in trendy Manhattan nightclubs.  

Properly executed, however, these strategies can pay big dividends for young brands that you can reinvest in “more secure” strategies such as advertising and database marketing.

Balanced with PR and Web-based marketing, a portfolio that includes advertising and database marketing can help a brand in its childhood grow into maturity, collecting loyal customers and growing market share along the way.

A brand in its adulthood can also engage in “adult” activities such as marriage and childbearing, in the form of mergers and spinning off subsidiary companies or brands.  Such activities bring their own unique marketing communications challenges and can require a complete rebalancing of your marketing portfolio.

Interestingly, as brands enter old age, marketers have the opportunity to tap the fountain of youth by re-introducing themselves to new audiences or by shaking up their marketing portfolios to encourage customers to experience their products and services in new ways.

There are exceptions to every rule of course.  Just as there are no shortage of established investors willing to take big risks in search of even greater wealth and fame, there are marketers who will invest in lavish advertising campaigns in order to drive sales of new products.

More often than not, however, such gambits fail to generate the return on investment the marketer had hoped for.  

The smart money is always focused on maximizing returns while minimizing risks over the long haul.  Protect your investment by acting your age when investing your marketing resources.

Back when Shakespeare was writing sonnets and tragedies, scientists had reduced all the earth’s matter into four elements: earth, air, fire and water.  

In these enlightened times of course, we know of more than 100 elements (a few of which are man-made) that make up all known matter.

And while marketing communications types would seem to subscribe to theory that having more moving parts makes their campaigns more advanced, in reality marketers today would be better served by focusing on four key elements — strategy, technology, content and service — to ensure their success.

By keeping campaigns simple and focused, today’s marketers can maximize their return on investment.

Marketing strategy should hinge on driving customer advocacy.

The typical consumer will go through four distinct stages in his interaction with your company: suspect, prospect, customer and (hopefully) advocate.  In developing marketing strategy, your objective should be to help consumers migrate through these four stages as quickly and cost-effectively as possible.

At Nation Ranch, we typically depict these four stages as a pyramid, with your most valuable customers, the advocates, at the very top.  These customers are not only loyal, but they also actively endorse your products and services to their friends—or even to strangers via blogs, chatrooms and message boards.

But before they can become customers and advocates, you must first generate awareness among suspects and prospects for who you are, what you sell and why they should purchase your products and services and not your competitions’.

Depending on the size of your budget, the general level of public awareness for your products and services and the nature of your competition, most marketers will invest in mass market advertising and public relations to cast the largest net.  In either case, the goal should be to persuade suspects to either seek more information about your products and services (at which point they become prospects) or to make a purchase decision in your favor (converting them into customers).

Technology should play a key role in helping you solidify your relationships to convert prospects into customers and customers into loyalists and advocates.

Technology affects marketing and sales in three ways:

First, today’s technology enables marketers and customers to exchange information faster than ever before.  Through highly targeted media websites, search engine optimization, video e-mail and database tracking systems, marketers today can zero in on prospective customers, tailor messages to suit the specific tastes of individuals and track each customer’s value (in sales revenues and/or loyalty).

Customers are similarly empowered.  By conducting online research, a prospective customer can compare many different products and services very quickly and even consult fellow consumers through blogs, message boards and chatrooms to find the best product at the best possible price.  Such filters make traditional advertising messages subject to greater scrutiny than ever before.

Media technologies themselves have converged in recent years.  It’s now possible to watch your favorite television show on a cell phone or your laptop computer, anytime from anywhere in the world.  Commercial messages are now transmitted to individuals, who can respond to these messages at the touch of a button.

Smart marketers recognize that when used properly, technology is merely a means through which they can make their products more relevant and easier to purchase.  Technology should facilitate the human experience of buying and selling.

Content matters more than ever.

In 1960, a single commercial message airing simultaneously on NBC, CBS and ABC reached nearly 100 percent of adult Americans.  Today, it would take more than 10,000 commercials to accomplish the same feat.

Your marketing message is just one of thousands a consumer will see today, and she has the upper hand when it comes to accessing information about the price, availability and reliability of the products and services you offer.

The information you publish, whether it be in the form of an ad, a press release, a speech from your CEO or on your web site, is subject to greater scrutiny than ever, meaning that traditional advertising copy and imagery are less effective than before.

One trend we have seen in recent years is an increase in the amount of research a consumer will conduct before forming an opinion about a product or service or in making a purchase decision.

Because public relations professionals are disciplined in the art of creating messages designed to survive the scrutiny of third parties, such as reporters and editors, marketers are relying more and more on PR types to develop copy and imagery for many forms of marketing communication including Web sites, online video and even traditional advertising.

Living up to your promises through service.

Service is the key to translating marketing into sales revenues.  Even the most persuasive marketing message will generate only a single sale.  Repeat sales require excellent service at and after the point of sale.

Marketers spend large sums of money making promises to the marketplace.  If these promises are unfulfilled at the point of sale, customers may never return to make a second purchase, and worse, they may tell all their friends about their disappointment.  And bad news can spread like wildfire in the Internet age.

Investing in the appropriate internal communications, training and database management systems can mean the difference between establishing long-lasting mutually beneficial customer relationships and alienating prospects before they ever become customers in the first place.

Simplicity rules in a complicated world.

Today, chances are your 17-year-old child knows more about marketing and communication than you do.

Young people today are accustomed to receiving news and information via cell phone and communicate with friends through Web sites such as MySpace, usually while doing homework and watching television at the same time.

As consumers, today’s younger generations are accustomed to sorting through large volumes of information when making decisions, and rely heavily on social networks when seeking advice on what’s hip and cool—habits that will someday evolve into a quest for the highest quality products and services.

They also will expect to be treated as individuals and will respond only to solicitations that are permission-based, customized and personalized.

While the consumer herself will become ever more complicated, the four elements of strategy, technology, content and service will remain fundamental in securing her attention, her business and her longtime loyalty and advocacy.

By investing in an integrated strategy to efficiently convert suspects into prospects and prospects into customers; creating marketing messages designed to survive the scrutiny of the “objective” news media and subjective blogosphere; investing in the technologies that allow you to deliver customized information and offers; and by delivering personal service to back up your promises, you can compete successfully both now and well into the future.