How much money was wasted last year on marketing campaigns that didn’t deliver tangible results? If the truth were told, it was probably the most wasteful year in marketing history. New channels created a competitive frenzy of one-upmanship to see who could deliver the most viral content with little regard to bottom line management. Proven strategies were left behind in the search for the most fans, followers, and views. In theory the increased exposure would deliver more results at less cost, but it didn’t work for most companies because their marketing team forgot the fundamentals.

The purpose of marketing is to motivate people to spend their money with your company. It’s that simple. If your marketing isn’t moving your customers and prospects closer to buying your products and services it is a waste of resources. When new channels and opportunities appear, it is hard to know if they will work for your business. Creating well-defined tests to measure cause and effect is part of an effective strategy. Asking the following questions before running any campaign will significantly reduce risk and insure success.

1. Does it benefit our customers?

   The best campaigns have customer benefits that are easy to understand. Itemize the benefits so your marketing and customer care teams have a clear understanding of them. This makes it easier for them to share the information with customers and partners.

2. Will it make money, reduce costs, and/or improve service?

   Notice that this question doesn’t include “increase sales”. More revenue doesn’t always translate into bigger profits. Anticipating the return increases the likelihood you’ll receive it.

3. Are the corporate benefits long-term, short-term, or non-existent?

   Too many campaigns are planned today with fingers crossed hoping for a miracle. Requiring tangible corporate benefits is good business. Creating a timeline is solid planning.

4. How do our success metrics affect the bottom line?

   Fans, followers, and video views make great cocktail conversation but how do they really affect your business? If the people participating in your community come from your customer database, social activity will work for your company. But, if they are from the general population, odds are against a profitable outcome.

5. What happens if we don’t run the campaign?

   Asking this question removes the stardust from most marketers’ eyes. If there isn’t a significant reason to run the campaign, why do it? Your resources would be better spent creating one that will make a difference.

Test campaigns are the exception. There may be so many unknowns that the questions can’t be answered well enough to justify running them. Failing to include testing in your marketing strategy reduces innovation. The best strategies find the right balance between proven tactics and new opportunities.

Anyone can grow a business in a thriving economy. Separating people from their money is easy when there is a steady flow of income and every economic news story promising more. Implementing successful growth strategies is more challenging when the economic environment includes the threat of lost income and little hope for new opportunities.

Continuous news coverage of failing businesses, lost jobs, corrupt management, and devastating wars is terrifying. Fear paralyzes people even when they haven’t lost their job, been affected by management corruption, and are not near a war zone. All they want to do is bunker down and hold on to their belongings. If your business includes bunker construction or survival kits, this is your economy. For the rest of us, we have to find new ways to grow our companies.

It’s challenging, but growing a business in a down economy is not an impossible task. Successful companies like Walt Disney, Hewlett-Packard, and Microsoft were launched during a recession. If you have an established business with a customer base, you already have a foundation. Building on it is easier than starting from nothing.

The growth tactics that work in a down economy will continue to produce sales as conditions improve. The investment you make to turn your business around will continue to generate a return for years to come. It’s hard to think about long term returns when facing short term disaster but knowing that the things you do now create a sustainable foundation makes it easier to justify the effort and expense.

The first steps to turning your business around are:

Stop the bleeding

When disaster strikes a community the first responders use a process called triage to sort injured people into groups based on their need for medical treatment. This allows them to maximize the effectiveness of limited resources. Businesses in trouble need triage. Management has to take an objective look at where the money is going and how well it is working for the company. Expenditures that don’t improve customer relationships, increase sales, or reduce costs have to be eliminated.

Improve your service

Keeping the customers you have is a top priority. Review processes and policies to insure that you are providing top notch service. The easier you make it for your current customers to buy from you, the more likely they will remain loyal. Streamlining processes to improve the customer experience has the added bonus of reducing costs. Fewer steps mean less handling is involved. This is a win-win step. It increases customer retention and saves money.

Challenge your team

If your business fails, your employees lose their jobs. They know this, but most people don’t think about how the company’s health affects their livelihood until it is too late. Ask your team to share ideas on how to improve service, acquire customers, and reduce costs. The people doing the work often have the best ideas for making it better.

Reactivate old customers

Sometimes people stop buying from a company before their customer life span is complete. Reaching out to good customers with a history of purchases can provide insight into why they stopped buying, re-engage them, or both. Doing this well requires strategic planning because it can be expensive. Start with the ones who spent the most money before leaving and work your way down the list until it stops being effective.

Engage current customers

Your best sales team is the people who love your products and services. Contrary to social media lore they will not aggressively promote your business without encouragement from you. Give them a reason (or ten reasons) to share their experiences with friends and family. When you reward their efforts, they are much more aggressive in their sharing.

Expand your business

Increasing products, services, or territory is counter intuitive when sales are down and costs are increasing. Even so, this step can create a turning point for your company. Look for opportunities to repurpose products or services, add accessories to best sellers, and opportunities to attract new customers. Assess the costs and risks but don’t let fear drive your decisions.

Growing your business requires customer acquisition. If you aren’t continuously bringing in new people to replace the ones who are completing their buying life cycle, your company is dying. Newly acquired customers fit one of three types. Adapting your marketing strategy to maximize your return is the best way to move your company forward. The three types are:

Active: Moves into the buying cycle and stays until the lifespan is complete.

Discount: Only purchases sale or discounted items.

Hit-&-Run: Purchases once or twice and never returns.

Watch the video for tips on how to market smarter.

For tools to help measure customer acquisition, retention and costs, check out our Customer Loyalty Toolkit.

In 1999, the marketing world was in the midst of change. A few visionaries had already seen the future and grabbed for the Internet golden ring. Amazon was heading towards the World Wide Web Hall of Fame while Barnes & Noble was struggling to find the sweet spot between ecommerce and bricks & mortar.

A niche retailer in Atlanta caught the Internet wave early in 1996. They used it to quickly expand their business. New customer acquisition was at an all time high. Initial average orders were 22% higher than normal. Promotions were attracting people from different demographics. Everything was wonderful except for the decreasing bottom line. Their profits were declining as sales were increasing.

A review of the RFM (recency, frequency, monetary value) analysis didn’t show any oddities. There weren’t any service issues that would affect profitability or loyalty. Product and marketing costs were holding steady. None of the normal issues that affect profitability were present. We had to dig deeper.

Analyzing acquisition and retention gave us the first glimpse of the problem. New customers stopped buying after one or two purchases. Typically, the normal life span for a new customer was approximately ten years for this company. Now, two months was a long life for a growing segment of the database.

The normal attrition suspects were rounded up and eliminated. Prices hadn’t increased. Service was top notch. Marketing was spot on. The only obvious candidate was increased competition from the Internet.

Not willing to accept the obvious as the right answer, we continued to dig and found some similarities between the people who stopped buying:

- Their first orders were placed on the Internet
- They had never received a catalog prior to the first order
- 67% of the orders were shipped to alternate addresses
- 43% of the orders were seasonal

It was our first formal introduction to hit-&-run customers. They are people who place orders but don’t match your customer profile. The items they order may be for gifts or a one-time special event, but this market segment will never become life-long customers. The best customer relationship management strategy won’t have an effect.

There have always been customers like this, but prior to the Internet, they were too few to have a significant effect on profitability. Companies were protected from this phenomenon because it wasn’t easy for people outside their target market to find them. Google changed that.

The easy access to companies around the world has increased the number of hit-&-run shoppers for every company with an Internet presence. Eventually, they transition out of the marketing cycle, but every marketing dollar invested in customers who have completed there lifespan is wasted. The sooner you can identify them, the less they affect your bottom line.

If your customer relationship management (CRM) strategy isn’t working as well as it should or used to, you most likely have a hit-&-run customer issue. It is impossible for CRM to work with people who have zero interest in your products or services. The first step to finding the answer is to conduct a customer acquisition and retention audit. It shows you how well your acquired customers are retained.

Note: Everything you need for a comprehensive customer acquisition and retention audit is in the Customer Loyalty Toolkit. All you have to add is the data.

Wouldn’t it be nice to have a single marketing tool that allowed you to reach all of your customers and prospects? Think about how it would affect your marketing efforts. You could invest your time in optimizing every aspect of the tool instead of searching for new ways to connect with the people most likely to buy your products and services.

There have been times that we have come close to finding this holy grail of the marketing world. When Montgomery Ward decided to mail catalogs to rural residents, he expanded his reach and created a new industry. He found a magic bullet that opened stores in individual’s mailboxes. It took over a hundred years for another magic bullet to appear.

The Internet was the next magic bullet. It expanded marketing’s reach from the mailbox into the home. More importantly, it changed the functionality of marketing from targeting to attracting. Successful advertising and direct mail campaigns were the result of extensive research to find the people most likely to buy specific products or services. The Internet was a game changer because it provided the opportunity for those people to find the companies. Instead of searching for the proverbial needle in the haystack, marketers could focus on making their website easy for the people looking for their products or services to find.

When social media emerged the magic bullet cry was heard around the world. The new game changer was supposed to replace traditional marketing, but it was missing a key component – the ability to stand alone. It turns out that social media doesn’t replace other marketing tools, it simply makes them better. Adding a good social networking strategy to a solid marketing program improves customer retention, increases sales, and reduces costs.

Marketing is continuing to evolve. Searching for the magic bullet that forever changes the way we do business is a waste of time. There are two many options available to confine a marketing strategy to one channel. The time people spend in one place is fractured. They shift from home to work to play to television to Internet to social networking platforms. There are multiple options within each of those places. Finding customers and prospects is much more challenging and expensive than it was five years ago.

Micro-marketing is the future. We have to implement strategies that economically create a presence for the company in every channel the customers and prospects visit. Doing it well requires vision, planning, and discipline. Doing it well also binds customer to company increasing sales and reducing costs.

Direct mail, ecommerce, bricks-and-mortar stores, and mobile are the most important channels today. Integrating them so customers have a seamless experience is a top priority. Adding social to the mix is next. If the foundation is solid with flexibility built in, creating a presence on new channels and platforms is simple. Customer acquisition and retention is natural. If the foundation has cracks in customer care, inventory management, employee morale, and any other aspect of managing the business, it will fail.

What are you doing to solidify your foundation?