Rational Marketing

Author: Catherine

  • Word of Mouth Matters

    Word of mouth is the primary factor behind 20 to 50 percent of all purchasing decisions.

    The power of word of mouth is greatest when consumers are buying a product for the first time or when products are relatively expensive, these factors tend to make people conduct more research, seek more trusted opinions, and take longer to think about purchases.

    The Harvard Business Review summarized research from the McKinsey Quarterly that indicates that in developed markets, word of mouth has its biggest impact when consumers decide which products to consider and when they’re actively evaluating products.

  • Create Great Feelings

    BNET featured a post titled “No Budget? No Problem. How to Do More with Less.” The post highlighted an interview with adjunct professor at the Yale School of Management, Nancy Lublin. She retold a story about a time that President Lyndon Johnson visited NASA headquarters. While there, the President had a brief conversation with a custodian, who said, “I helped put a man on the moon.” Ms. Lublin suggested that organizations that want to create that same feeling in employees not underestimate the power of believing in something. She suggested that corporate goals be tied to whatever your company does best, whether it makes the fastest, cheapest, or the only product or service of its kind.

    Is it time to solidify those great feelings about what your company does best with a direct mail piece?

  • Saving Money on Air Conditioning is Good for Productivity Too

    An ergonomics study at Cornell University found that warm workers work better, chilly workers made more errors. When the office temperature increased from 68 to 77 degrees Fahrenheit, typing errors fell by 44 percent and typing output jumped 150 percent.

    This strategy makes sense especially this summer as we all are trying to save wherever we can. Can we show you how we use this sensibility to help you save every possible cent on your direct marketing too.

    Special code: G3RCVE6X8DZH

  • Bombardment Can Hurt Consumer Loyalty Too

    DMNews posted an article about how customer loyalty practices can build brands. American businesses that have the strongest bottom lines right now are those that enjoy the strongest brand loyalty. More and more organizations are searching ways to gain visibility for and engagement with their brands. Marketers have always known the value of brand building. Once consumers begin to trust a brand, their loyalty to it grows – and loyal customers have far higher long-term value than opportunistic customers.

    Consumers have shown that they will defect from brands that bombard them with impersonal and irrelevant information. However, they are more likely to make a purchase after a personalized interaction with a brand.

    First impressions can’t be taken back, so it’s important to interact with interested consumers effectively – not damage your brand for future customers.

    Direct mail has been shown to be a great brand building tool. The piece can be touched and felt and it is not considered to be an intrusive interruption – it is desired communication.

  • Too Much Contact to Businesses Can Hurt

    The Harvard Business Review featured some results from a McKinsey & Company study that found that the “most destructive” failures of business-to-business sales reps are too much contact with customers (35%). Customers want to be contacted, not bombarded. The upside of getting things right is significant: A primary supplier perceived as having a high-performing sales force can boost its share of a customer’s business by 8 to 15 percentage points.

    Chart of Ways Customers Are Turned Off

    The methods of “bombardment” are in person, by phone or via email. Postal mail is not listed. Use direct mail to stay in touch with business customers without making them feel inundated.

  • Study: Most e-mail recipients delete message within seconds

    Wow what a headline! The article was posted by BtoB. The study found that more than 50% of e-mail recipients delete messages within two seconds of opening them, according to Salted Services.

    Do you want to reach a majority of the people on your list or do you just want to your message to be seen by a small percentage because the delivery method is so cheap?

    We have seen some studies that found that using direct mail that leads to relevant information posted on the Internet has increased response rates dramatically. We can help you put together an integrated campaign.

  • Spray and Pray??

    BNET posted an article titled “Spray and Pray: Why Does Anyone Still Buy Advertising?”

    This stirs many controversial thoughts. While we agree with the line of thinking about the problems with many traditional forms of advertising that offer no accountability. We don’t want direct mail to get lumped into being called “spray and pray”, spraying money around and praying it works. Direct mail and direct marketing offer targeting and accountability.

    We profoundly disagree with the author’s total, complete faith in online advertising. The author also stated “Advertisers love to claim that the decline in advertising is due to the recession.” What about the thought that the recovery is taking longer than it should because we are relying on new media to generate new business? Which came first the recession or the absolute dependence on a media that can so easily be deleted, ignored or closed with a click? There is a lot of science that supports the effectiveness of things that can be touched and felt.

    We agree that much of the investment made in email and some other forms of electronic and Internet marketing feel so affordable. The costs are so negligible. Can you build or rebuild your business with such a small receptive audience to your offer?

  • How Much Should You Spend?

    Business Week published an article titled, “What Should You Spend on Advertising?” Instead of seeking a rational answer to the question, many just ignore it and hope it will go away.

    Most emerging companies focus most of their time and talents on meeting the needs of customers, which is a great strategy. If they don’t take care of the customers they already have, everything else will go away. However, many neglect the function of winning customers in the first place. Others naively assume that if they simply provide excellent products or services, their reputation will precede them. Call it the “build a better mousetrap” syndrome. But the world has too many other things to do with its time than beat a path to your door. That means you need to structure your profit-and-loss statement in such a way that you can profitably allocate a reasonable percentage of your revenue to marketing.

    The Big Question: How Much?

    While there is no definitive answer as to how much any business should spend on marketing, there are general guidelines any company can use to develop a formula that works for them.

    Your first step should be to try to find out what the advertising-to-sales ratio typically is in your field. Public companies in your industry may give a figure for their marketing spending in their financial statements (found in their annual reports). With a simple calculation, you can figure out what percentage of their overall revenue that represents. If you can’t find any public companies that seem similar enough to yours, you might want to start at 5% and then adjust your projected spending up or down based on the size of your market, the cost of media, what you can learn about how much your competitors are spending, and the speed at which you’d like to grow.

    You’ll also need to ask yourself if your business is built to leverage volume or to leverage margin. Even within industries, there are differences in the marketing spend of volume-driven companies compared with margin-driven ones. Volume-driven companies tend to spend a tiny percentage of sales on marketing, in part because their large revenues enable small contributions to add up fast, and in part because of the margin pressures they face in having to compete with other high volume companies. By contrast, margin-driven companies tend to spend a larger percentage of sales on marketing: They have room in their margins to afford it, and they’re often working from a smaller revenue base.

    The retail industry provides some good examples. While Wal-Mart might spend a meager 0.4% of sales on advertising, the sheer size of the company turns that tiny percentage into a significant budget. Wal-Mart’s nominally higher-margin competitor, Target, spends closer to 2% of its sales on advertising, while Best Buy, as a specialty retailer, spends upwards of 3%. Finally, more upscale stores like Macy’s typically spend close to 5%.

    The same kind of ratios can be seen in the car industry (automakers’ generally spend 2.5% to 3.5% of revenue on marketing), liquor (5.5% to 7.5%), and packaged goods (4% to 10%).

    If you’re in a services business, you might want to bump your starting point higher than 5%.

    Marketing, Not Just Advertising

    It’s important to make a qualification here. Giant consumer corporations such as automakers, packaged food manufacturers, and retail chains spend a huge percentage of their marketing dollars on paid media advertising, the most visible (and expensive) tool in the marketing toolbox. Depending on the size of your company and the business you’re in, advertising might not be the right (and certainly not the only) tool for you.

    For a variety of reasons, media advertising might not be right for your company either, but direct mail, events, vehicle wraps, point-of-sale displays, or other tactics certainly could be.

    The important thing is intentionally and deliberately to set aside some rational percentage of your sales to get out there. That way, the question you have to answer isn’t “How much should we spend?” but rather, “How do we spend most effectively?”

  • Happiness Depends on Age

    The New York Times reported on a Gallup Poll that found that people start out at age 18 feeling pretty good about themselves, and then, apparently, life begins to get challenging. They feel worse and worse until they hit 50. At that point, there is a sharp reversal, and people keep getting happier as they age. By the time they are 85, they are even more satisfied with themselves than they were at 18.

    We hope you see opportunities and optimism with this information. Not only do you know that life will continue to get better, but you now have great information as you craft your marketing messages. Understanding some of the emotions of your target audience will help you as you write compelling appeals. This is a great complement to marketing to people during life changing events.

  • Interruption Response Depends on Age

    Chart of interruption preferences
    Interruption Preferences

    Retrovo, a seller of consumer electronics, publishes a report titled, “The Retrevo Gadgetology Report”. They found that almost half (49%) of those under 25 years old did not mind being interrupted during a meal with a text or electronic message, but only 27% of those over 25 felt that way. That means that 73% of those over 25 don’t want to be interrupted during a meal. In general only 33% of those under 25 agree with the statement “I don’t like interruptions” while 62% of those over 25 do.

    Clearly, we need to really think about who we are trying to reach as we craft marketing messages and choose communication channels. Direct mail is desired communication, even among younger adults.