Tag Archives: retention

Documenting your new marketing strategy

Marketing business sales

Over the last few weeks my posts have concentrated on the steps I like to follow in building a marketing strategy. I identified 7 steps initially – the Customer Review.

Once you have completed the Customer Review you need to document your strategy. Remember my guide is not there to be adhered too slavishly. You will have your own processes and procedures and formats to follow, but below is a suggested approach to sharing the outcomes of your customer thinking;

What you should have now is a series of outputs that you can turn from thinking into action. By working through the 7 steps you should have:

  • Engaged your team
  • Identified the key strategic challenges faced by your business
  • Organised your thoughts logically and given yourself some answers to the critical questions posed
  • Identified the areas where you and your business can ‘win’.

What you now need to do is to collate your thoughts and create a coherent plan that can be communicated ‘up the line’.

I suggest this is summarised as follows:

Current State Assessment

  • Current market defined; Customer needs and wants
  • Marketplace trends, alongside clearly articulated segments/sectors of attractiveness to your business
  • Sales, retention, profit KPIs of your current business in the your current market context (and by sector of your marketplace wherever possible)
  • Your current market position in terms of shares and other KPIs
  • The importance of market segments to you
  • Your overall value engineering picture and price position vs costs

Target State Assessment

  • Your desired financial position: costs to target, value of business forecast and your price position
  • Your target customers defined as deeply as you can
  • How the target state fits with your overall long term business strategy
  • How the brand essence articulates and supports your strategy (or in rare cases; conflicts)

Way-finding Guide (for your Exec Team/Board)

  • Say how you plan to move from current state to target state
  • The customer focus / tactics you will employ
  • Articulate coherently the customer proposition or offer – what will drive take-up/use etc
  • Identify what needs to change across your business to allow the strategy to succeed

The Plan

  • Show a short summary of all of your conclusions from the 7 steps
  • Show your objectives – qualitative and quantitative
  • Show how you will measure success or failure – what are your tolerances?
  • Show the strategies you will employ alongside tactics employed at a granular level
  • Show your financial assessments and paint a payback picture over 3 years

Futurology

  • Finally, using Step 7 show how the 3 year strategy is affected by / influences your 5 year strategy – short and sharp – but it lends huge credibility to your thinking.

So the only thing left to do is to agree the media and creative communications strategies and plans to bring this to life. I will, perhaps, share my thoughts on those activities in due course, but at this stage the important thing is to remember to do the following before you go for a congratulatory drink of tea/lovely lager beer/champagne/fruit juice*

*- please chose one or more !

  1. Ask for agreement to the strategy
  2. Draw up your Internal communication plan of the strategy
  3. Start your formal stakeholder engagement around the business, your strategy team can help you, as not everyone will have been fully engaged, end to end, on your journey so you need to tell them the story to get their buy-in. Focus first of all on the Pagans – get them on board and the rest are ‘cheap dates’.
  4. One thing I think that aids this stage is to drive out a mission statement or descriptor for your strategy. This should not disconnect to your wider long term vision for the business, but may describe a stage in achieving it … for example- after a ‘Foundation’ plan to stabilise a business you may enter a ‘growth phase’ – describing that in a simple engaging way for colleagues, which will be a great boon when determining communications strategies in due course.

I hope you have found this series of posts informative – I need to thank my influences again, Davidson, Fisk, McDonald, Kotler (“The Prof”) and all of the teams I have worked with to date. Thank you.

And remember – if in doubt during this process … use a boxy chart – they can be used to explain everything in my view/experience (I’m only half joking by the way !).

Paul
08 May 2013

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Pricing Review: Step 6 in developing a marketing strategy

The final stages of the Customer Review are really important and we have just two to go before we start stitching things together.  If you remember, the first stage in developing a marketing strategy is thinking – which I call the customer review – and then we move into delivery.  We are now up to step 6 – Pricing review.

  1. Customer insight ✓
  2. The marketplace ✓
  3. Critique the current strategy ✓
  4. Identify and critique your enemies ✓
  5. Critique your current/planned offer in detail: Product / Service / Channel ✓
  6. Pricing Review
  7. Futurology

(6) The Pricing Review

pricing

My comments here can only be generic, but I will try to use examples, and forgive my inherent focus on Financial Services, it is what I know best.  There are clear and significant differences between actuarial pricing strategies and pricing an add-on service that is for related goods say.  The principles, process and purpose remain valid cross industry I believe.

Purpose:

  • To bring together your current pricing strategies and establish your position or powerbase in your chosen markets
  • To place you in context of customer and market expectations and reality

Process:

  • You will need to review your Boston matrices to remind yourself of the market and product attractiveness scores
  • You will need your value engineering that we completed in the last step
  • You will then need a clear and concise view of competitors.  You can use the Good Better Best tool and apply that to price if you like.  I find that helpful if using comparative advertising.  On that topic I was at an interesting DMA seminar last week on the improved ability we have as marketers to complete comparative advertising.  An area of legal flux that offers greater opportunities for exploitation than it once did. But only IF your target customers respond to comparative advertising or if one of your enemies is targeting you.
  • Establish answers to the following for the following three timeframes: 1) Now, 2) Go to in 12 months, and 3) desired position in 1-3 years i.e. where do you want to be in the pack?  Use a simple checklist for each of your offers:-
  • Best Market price – designed to drive SoM and place you as ‘new’ or as pack leader or innovative or indeed acquisitive territory.  Hero prices may be a tactic you employ here and of course you can, if your customers think it reasonable, come and go in this quartile e.g. by use of Sale pricing strategies
  • Best to Middle market pricing – compromising the profit of each sale, potentially, for higher than average growth in SoM.  Like best market pricing it may not be sustainable long-term unless you have a cost advantage vs the market – see Value Engineering in step 5
  • Mid Market – where the noise is in the field, you may want to have several competitive offers available rather than be a pack leader with a hero product.  This position is the mainstream and is usually a hard-fought battleground where leaders of the pack will emerge and others will fall back. This mid market price position usually drives long-term sustainable profit, but constraining growth potentially.  You may go here for cash cows to test elasticity of pricing – use your Boston Matrix from earlier
  • Worst in Market Quartile – you may have cost issues or exposure issues that drive this strategy or it may be that you have few strong competitors and no enemies attacking you.  Equally a new product or innovation as well as being keenly priced could be placed here if it truly is unique.
  • I would resist establishing too hard and fast a set of rules for competitive position vs your enemies.  I worked on a brand once that had a stated price position of being ‘the cheapest’ vs a basket of enemies.  The result – we had to move price and therefore profitability irrespective of our cost and performance if one of the enemies moved – not a great strategy I would suggest.
    • But do think about building in new year/summer sales, seasonality lifts in demand, making a new market in a new time period as options to allow you a pricing advantage or to beat your enemies.  One tool I have used in the past is to look at where companies over indexed on one product line e.g. ISAa at a specific time and used a great price in a different product line whilst their attention was diverted.  Your business intelligence of the strategy and performance of your competitors is invaluable here.  I love the HSBC New year sales … very good controlled marketing.
  • In pricing terms the value engineering and financial assessment we did in the last step is crucial but overlaying it with that of your competition is equally important … Try and look at what shifts they make and what their overall matrix of price positions look like – are they the same as yours?
  • Be clear what you can afford to charge/pay and know what your price elasticity is in each of your target customer groups and/or products.  This is critical.
  • Don’t neglect the new customer/existing customer balance either – in elasticity terms most consumers now ‘get’ the idea of an introductory discount, but too high a level of price shock at renewal (especially if there is an annual renewal or maturity) will drive churn and push costs up even higher.  In Insurance this allows the Aggregators to win – especially where prices are easily compared.
  • Finally write down and communicate the lead times it takes to make changes in prices for each offer – this could drive your responsiveness to changes by your enemies and could, at worst, mean you compromise your desired price position.

This process step is short – you have done most of the work earlier, but wide-ranging and it’s absolutely vital that Finance are engaged throughout to help you model your outcomes.

You need strategies for new sales, renewals, add-ons, cross sales and up sell and down sell levels for your customers.  Plus you need to be clear in what part of your Boston matrix is your brand and price offer credible.

  • You may also wish to determine how much first line flexibility in prices you want to give your sales force.  I would contend that unless you have good CRM systems or segmentation this is challenging as you may be discounting to customers whose lifetime profit is low and ignoring those in the opposite position
  • Don’t ignore transfer pricing either – if your organisation cross charges for goods and services, make sure they do not constrain you

Pay-offs:

I appreciate the above process is quite qualitative, but that is only because as a step this is using the outputs from earlier stages and asking you to write down your strategy with pay-offs in the following areas:

  • You will know the price elasticity of your customers
  • You will have a price strategy / actual price that you can then research how best to present to customers
  • This will then inform how you discount your prices and where you do so e.g. front line responsibility
  • It will also, off the back of your value engineering, have identified internal areas to target i.e. low value high cost impacts on your price position
  • You will price according to market attractiveness and in the context of your enemies and your own offer strength

Pricing is a difficult and wide-ranging topic that covers not just core price but also discounts, offers and so on.  In this field more than any other identify your RACI early in the process to define who is doing what.  Your P&L owners will be the ultimate owners and they must have the final say.  This is unlikely to be marketing, so be relentless in trying to get a good deal you can communicate to customers, but acknowledge that in some cases your business costs and performance may constrain you .

I hope you enjoyed this post and found it a prompt for how you may look at pricing differently.

Futurology is the final step in the Customer Review … see you next week !

Paul

25 April 2013

Price Image : Copyright (C) F. J. Cahill & Son Ltd., 2013

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Old School Marketing

Marketing has always had a series of series of simple consistent truths in my view.  What we are about, as Marketers, is to grow the equity of our brands through increasing awareness and consideration of that brand to group(s) of consumers who will be appealed by the promise the brand makes.  Be that promise a product or a service. That is, as a minimum, a good simple starting hypothesis.

Has anything changed in 2012 that makes us question how we deliver that?  Is this old school truism still as valid today as when Gibbs SR ran the first UK TV ad on ITV, or when Pears went into print media with their soap ads?

My world of marketing is Financial Services so I will focus on aspects of that to at least test what has changed.

Looking back we conducted our business differently 57 years ago when that TV ad ran for the first time.  Branches and door to door salesman dominated in the age before the rise of TV and before advertising really took a hold, Mad Men and all !

Lets look at one of those models with a marketing lens;

The idea of an Insurance Agent / Door to Door Insurance salesman calling at your home to collect premiums, assess your contents value / claims and so on, belongs to an era before mobile phones, before computers and before the workforce was mobile.  More contentiously this was not as “equal” a society as we are blessed with now: the decision maker was often the single (male) worker, paid typically in cash.  Media consumption was low and the salesman in this industrial society model, was respected and was a constant across a generation. This was an unsophisticated world … but is that true of the manner by which marketing disciplines drove sales;

Breaking this down, can we see evidence of significant change or of an unsophisticated approach?

  • Awareness – the salesmen themselves were the brand largely … even recently customers, in my practical experience, would consider their relationship to be with the salesman rather than supplier of the service/product.  They became part of the local community by their ubiquity.
  • Geographic targeting was simply defined by the size of your patch …and in some cases, in the early days, how far you wanted to walk or cycle.
  • CRM and ‘Know your Customer’ – The Agents truly knew their customers – they had a 121 relationship that endured, and was entirely personal.
  • Events and Triggers / CVI / NBA direct marketing activity –  The length of the relationship gave them insight, opportunity events were spotted easily; a new baby, a wedding meant the next best activity leapt out at the agent, through actual experience in the home, the Call to Action almost redundant as the Agent was driving the activity itself, 121.
  • Channel of choice and permissions – Contact was made through the channel of customer choice, typically at a time that was of the customers choosing and they were clearly giving permission to the Agent to engage and upsell by allowing them inside.
  • Contact rules – The database management of the day was a clear diary of review dates feeding off the relationship and insight.  This in turn fed into a retention strategy based around constant appropriate contact that demonstrated value to the customer eg personally handling claims.  In a Life Assurance sense the salesman would quite often be invited to the funerals of their clients, the relationship became that close.
  • Advocacy – Was at the core of growing the agents customer base .. the old exit question “would you introduce me to your neighbour” was true WoM 121 marketing, friends and family referrals a given – a simple way of growing both awareness and consideration
  • Engagement and CRM simply meant being friendly to, and with, your customers – the start point of every visit a simple conversation … and we are back to CRM and knowing your customer again.

I guess you would call this old school, but as you can see it is not unsophisticated or inappropriate today.  So, is this model no longer the mass market model because its marketing techniques were flawed ? or is it simply that where and how we carry out the same disciplines simply is reflective of broader changes in society.  I would argue the latter.

  • In 2012, with mass media consumption, growing awareness and consideration has remained a constant and over investing your share of voice will still increase your share of market, however the methodology has changed … broadcast media dominates and constantly evolves.  Think catch up TV and multi device vs B&W terrestrial TV on 1 commercial channel in 1957.  I’ll concede on this point – advertising has matured !
  • Database marketing – still uses transactional data and customer volunteered information to identify the triggers that were so easily spotted 121 in the home.  All we have done is embrace technology to carry out what we used to do 121. Marketing automation simply replacing the visit and diary.
  • Targeting the right customer with the right offer through their channel of choice is still the best way to grow scale, but now our channel of choice is broader – we can select from, among many; Phone, web, or indeed F2F still.  Costs for the supplier may restrict choice offered but the activity remains the same.  Interestingly the F2F in home service is now the premium service and frequently carries a charge or fees reflecting the cost to the supplier in time and length of visit.
  • Retention remains a factor of how engaged your customer is with the brand and how you have deepened that relationship since initial purchase, the channels may have changed but the fact remains that if a brand can upsell or recognise loyalty then the relationship will endure.  One of my own providers has now allocated a personal advisor to me for any claims based purely on my length of tenure … rewarding my loyalty clearly and using a personal touch reminiscent of the old school methods.
  • Conversations remain the best way of ensuring engagement with the brand and services already purchased … today we might have a conversation every day over Facebook or Twitter and never meet each other … it’s simply a  different way of speaking !

I think there is a lot to be said for old school marketing disciplines.  I plan to look at the “process of delivering marketing” to test my hypothesis that old school can still be valid in what it sets out to help with: ie grow the equity of the brand you are marketing, in a future blog.

I have a sneaking suspicion that if I dig out my old text books from 25+ years ago I will find much to inspire me anew and much that the youngest, shiniest faced, marketer in my team would instantly recognise too.  In fact I might just do that tonight !

If you have views please let me know by adding a comment or two ! It’s ok to disagree (nicely though!)

Paul

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