Well, here we are again. Another recession. Everybody knows what happens: the easiest line item to erase is generally associated with branding and marketing. Industry pundits exhort us to do the opposite: spend more on marketing instead of less. Few have the courage to do it, because that means you have to take the money from somewhere else. So the marketing and branding budgets get cut first.
I’m not whining. After living through three of these things, it’s just that it’s easy to see the patterns. It happens the same way every time. A bubble is a bubble. And yet we repeat the same mistakes over and over, as if the previous bubble had never burst.
Things are not likely to change this time around, so maybe we should just accept the inevitable and figure out how to get the most out of the least.
If we can’t spend as much, how can we leverage what’s left on the table? Is there something below the line that we can do to maximize the impact of our diminished marketing dollar? What about brand experience, the subject that has been addressed by this column for the past four years?
Experience work is detail work, much of it done well below the line in the form of training, change management, service level upgrades and process improvement. It’s ultimately a form of quality management. But although process improvement was originally conceived as a quality enhancer, it has devolved into an exercise in ‘operational efficiency’ and downsizing. Not the sort of stuff that makes customers happy, generally.
Another thing: experience work is cross-functional and in times like these, the silos tend to harden rather than become more porous. Brand experience initiatives compete with other more important or familiar line items – the things that generate immediate revenue or are easier to quantify.
The irony is that never is it more important to focus on customer experience than in a downturn. Experience is a loyalty initiative rather than one focused on acquisition. Everyone is familiar with the difference between the cost of acquisition and the cost of retention. The latter is five times cheaper than the former. And the best way to keep customers is to treat them well. In other words, a positive customer experience creates cost-efficiency.
Let’s go below the line to see what that looks like. Years ago, the global wireless brand Vodafone simplified its customer segmentation to focus on a few
high-priority groups. The top two were young, active, fun users and occasional users. There were only a handful of others. It then created experience-focused value propositions for each group. The ‘young, active, fun’ group was offered Vodafone live!, which provided games, pop tune ringtones, news, sports and information (something everyone offers these days). The occasional users were offered Vodafone Simply, which provided an ‘uncomplicated and straightforward mobile experience.’
That created efficiency and cost control, because such clearly delineated offerings allowed everyone in the organization to understand the strategic trade-offs and focus on what would better serve each target group.
The same goes for suppliers. Retail giants Wal-Mart and T.J. Maxx have a simple policy: pay suppliers within 30 days. Sounds mundane, until you realize that most retailers string them along for 60 or more. That creates higher preference among suppliers, which means the shelves at Wal-Mart and T.J. Maxx are stocked with fresh merchandise earlier and more often than those of their competitors. Which ultimately means happier customers.
In both cases, positive emotional experiences can turn customers and suppliers into promoters. In a bold reinterpretation of the design principle ‘less is more,’ loyalty expert Fred Reichheld made this point clearly in his 2006 book The Ultimate Question, in which he reduces the often complex metrics of customer loyalty to one simple question: ‘Would you recommend this brand to friends?’ That’s far better than advertising, because the message comes from someone you trust. Given the control customers have over the reputation of your brand in a globalized, networked economy, positive referral is golden – and very cost-efficient.
So as we walk into the jaws of this recession with knives poised to cut deep into the marketing budget, let’s step back and focus on creating the kinds of experiences that will deliver the most bang for that marketing buck. Don’t just cut marketing spend: create an experiential path that will optimize every department’s value to customers, employees, suppliers and shareholders.
Will Novosedlik is a partner at Chemistry, a brand management consultancy that bridges the gap between management consulting and creative consulting to drive competitive advantage for clients in North America, Europe and emerging markets. He can be reached at will@chemistrybranding.com.
