Building teamwork between marketing and sales

It goes without saying (at least I hope it does) that to be effective, the relationship between marketing and sales demands close cooperation. Yet even as the most critical of a company’s interactions, marketing and sales are often at each other’s backs, placing blame, demanding action, and generally acting worse toward one another than they do to the competition.

The metaphor I like to use to describe a well-functioning sales and marketing organization isn’t a Kumbaya campfire, but a relay race. In this example, marketing hands off sales tools and campaign leads, with sales taking the hand-off and running toward the finish line – the completed sale. Yet as simple as this example is, anyone familiar with track knows that the hand-off is the most difficult part of the race.

Before taking the hand-off, the runner ahead (sales) must start getting up to speed. The runner behind (marketing) therefore, needs to share plans and metrics so sales knows what to expect and can begin to prepare their customers, prospects, and accurately complete their  forecasts. Efficiencies are lost when these racers aren’t fully aware of where the other is on the track; that is, salespeople are accidentally or purposefully unaware of what marketing objectives are, when campaigns are running, and what to expect in terms of number and quality of leads.

Further, in relay races, there is only a set amount of track space allowed to make the transfer – racers must understand the distance each racer will run. In my example, if sales expects marketing to qualify leads further or marketing expects sales to follow-up on leads in a certain timeframe, the baton can be passed too soon or too late, outside the zone, resulting in missed sales opportunities.

Even when the runners are up to speed and the transfer is made, disconnects between objectives, targets, and priorities can cause our metaphorical baton to be dropped and take an organization out of the race altogether. Marketing is in charge of evaluating the market and strategizing initiatives, but always with the input of sales so common targets, messages, objectives and timing can be established. This needs to be done quarterly to not only stay aligned, but to evaluate what is and isn’t working.

Relays are the most team-intensive sport in track, and therefore are won only when every participant is not only performing at their best, but makes certain that they’ve passed and received the baton smoothly between team members. To do well, marketing and sales need to do their best individually. But to win, marketing and sales need to cooperate as a team.

Teaching entrepreneurship isn't impossible.

My son starts his junior year in high school Monday. His first class? “Entrepreneurship”. Given that he’ll have me, our clients, and associates as resources, I expect him to ace the class. Yet perhaps that is an unfortunate expectation, because I’m not sure entrepreneurism can be taught.  

I also taught a college course last year on Small Business Management. I conveyed useful information as required by the curriculum, and included important speakers, videos, and motivational information for added emphasis for important topics. The students seemed to benefit, I’m pretty sure I did a good job, and I’m pretty sure my son’s high school teacher will also. Still, some students in that class will never venture off on their own, some will fail and quit, and still others will succeed. One already has.

But what part of entrepreneurism can be taught, and of that, is it truly entrepreneurism? Or is it simply management? What are the building blocks of entrepreneurship versus the innate personality required to be knocked down seven times and still get up an eighth?

Can you be taught to have a comfort with risk?

No, but you can teach risk management, and offer advice on where others have faltered

Can you teach passion?

No, but you can promote sacrifice and self-reliance.

Can you teach leadership?

Absolutely, but it grows with experience.

Can you teach commitment?

No, but you can inspire and encourage.

The rest, perhaps, is tactics and processes. This is why mentors are so important to the entrepreneur. Mentors are as much about reviewing operational plans and go-to-market strategies as they are about being an example, and a source of inspiration and encouragement.

On the whole, I don’t think you can pluck anyone off the street and make them a confident entrepreneur, ‘Trading Places’ style. But those who have a natural inclination to go against the grain and rise above the noise can learn to be entrepreneurs, even if it can’t be taught. 

When your dreams are a crock.

I wasted some time today to complete an estimate for a modest-sized potential client today.

Kind of a waste, because I’m doing it out of obligation for someone for whom I know will not buy it. It didn’t take too long, so I’m not bothered, but I thought it blog-worthy because for the umpteenth time, its another boot-strapped start-up that I know they’ll stick to their dream instead of facing reality.That reality is that dreams require sacrifice.

Experts will tell you that most start-ups fail due to under-capitalization. I suggest that that is a symptom of a greater issue: Common Oprah pabulum encouraging your dreams. I know, what a downer. "No one ever got anything without dream

s!" Whatever.

Nothing wrong with dreams. “Go get ‘em, Tiger!”

But dreams are only useful when you understand the reality. Not only the plan for when the dream is realized, but also the plan for when it fails. As a mentor to entrepreneurs, I’ve sat through plenty of VC presentations. 70% of the presentations never addressed the Plan B. Never have I seen an initial plan lacking a discussion of risks ever make it past the initial presentation.

The idea of having one’s own business, building one’s new widget, being one’s own boss is too great a draw to allow concerns about the costs, (time to market) runway, and the outside help that is needed to see it through impact your decision, because,

“Follow your dreams!” said Thoreau*.

So off they go.

So when the dream becomes work, when the risks become higher, when set-backs become more common than anticipated, the fledgling entrepreneur takes shortcuts.

Extends credit to the unworthy.

Buys services from the cheapest comer.

Plays Three Card Monty with incoming invoices.

And when the reality of the present overwhelms the dream they had in mind, they hold tight to that dream because in spite of the unpreparedness, in spite of the lack of planning, they

“Hold tight to the dream”. Because that’s what the poster in their office says.

But too often in the self-absorption common to mere mortals, we forget that our dreams are not others’ dreams. And dreams, to paraphrase Ayn Rand, are not claims on reality.

So my rates aren’t in your budget. (As if I believe you ever created a budget.) Yes, Billy Bob was cheaper. That’s fine, Billy knows what he’s worth. Or maybe Billy Bob is chasing his dream too, blind to the reality that you, too, are looking for the easy way out. Life is not a Successories poster.

So I’m not going to lower my rates for your dream. I’m not going to extend you credit for your dream. I’m not going to trim off the preliminary steps I think are critical to success with the project.

I have my own dreams.

*Thoreau never said this.

Extreme Couponing: Mobile Shoppers and the New Face of Mobile Couponing

In this article, my friend and colleague Brian Morrison, President at Ipsh!, the mobile marketing agency of Dallas' The Marketing Arm (I think that makes him a thumb) discusses how mobility, couponing, and a weak economy are combining to create an exceptional opportunity for mobile marketers to drive more business.

Mobile Shoppers and the New Face of Mobile Couponing

Fear itself.

Only a few times in my career have I had to address fear as a key obstacle to a new product introduction.

Of course, fear is ever-present in doing or buying anything new, but not often is it in the top three. And rarely fear, as such. In marketing, that is, in encouraging a buying decision, fear is more often wrapped in something less... well, absolute. Uncertainty, not fear. Caution, not fear. Inertia, not fear.

Fear is more real, more certain, and more an obstacle than any other faced by marketers. Fear as represented by the perceived lack of control. A lack of control is never overcome in the real sense, but only mitigated through trust.

Trust in turn is encouraged through understanding, established with a relationship, built through consistency, preserved through responsiveness, and confirmed through repetition - selling to and buying of - a loyal customer.

That is nothing new, as although it takes longer to overcome, the fear obstacle is addressed by simply doing what we as marketers know we ought to be doing all along... understand our market, develop a relationship with them, deliver products and services with consistent quality, respond quickly and appropriately to problems and questions, ... and repeat. Other than that, it is, ironically, out of our control how quickly we can make customers feel sufficiently in control to try something new.

So when management, sales, or product grow concerned that uptake of a new product or service is slower than predicted, you'll know that all things being equal, simply staying on track and by doing the right things right, it will happen in time.

Comfort them with FDR's words: "The only thing we have to fear, is fear itself."

Top 10 Branding Miscues of 2010... and three more.

Advertising Age magazine, a leading trade publication for the industry, recently published their list of the top 10 marketing and branding miscues of 2010.

Surprisingly, this little bit of breezy popcorn journalism skipped what would have been my #1: The BP Gulf disasater. A bigger marketing disaster would be hard to fathom, as retail gas outlets were boycotted and the PR got worse and worse.

My #2 missed the list too; the inability to 'sell' Obamacare to the American public by the administration. Politics aside, for a man who was elected to 'change', I've seen little of it, particularly given a democratic congress and, in Pelosi, a house speaker able to deflect slings and arrows.

My #3 missed as well... the tarring the TSA was unable to adequately address. There is no depth to the philosophy behnd the mission of the TSA... just a shallow defense that whatever they do must be right because there have been 'no successful domestic attacks' since 2001. That's a weak foundation that will crumble when something, inevitably perhaps, does slip through the cracks.

What are your ideas of the worst marketing and branding miscues of 2010?

Twitter Quitter

I quit Twitter today. Oh, this isn’t going to be some minimalist manifesto, just a statement of fact.

I deleted my posts, all 1500+ of them, shared over the past two years or so. Some were moving, insightful. Most were fun. None were ever drivel. No one ever knew what I had for breakfast, I never foursquare’d myself into a virtual mayoral coup d’tat, no one knew when I was ill, and only occasionally did I mention the weather. I even gained a friend or two.

I just got tired.

I initially joined Twitter and other social media to remain up to date on the social media communities important to my clients. I even joined MySpace back in the day – closed the account when it became irrelevant to me.

I like to write, and Twitter and Facebook are good virtual water coolers for office at home types like myself. But they are an extension of me, that is, my personal brand, and before every tweet I’d have to consider that. That can be tiring, particularly for someone such as myself, given to dark humor and sarcasm – 140 characters is plenty of room for a zinger, but never enough for context.

So I’m not dropping out in some Luddite fantasy, I’m just lightening my load a bit. I can be distracted and Twitter is nothing if not a distraction. It was one more thing that took my time from things that were clearly more constructive, useful, profitable, enjoyable, important. Like all good business decisions when faced with limited resources (in this case, time) I had to determine if it was core to my business or life, and if I could justify the continued investment in it. The answer was clearly, no. It was not core, and there are other, arguably better ways to market myself and my ideas, and interact with others.

So my Twitter account is inactive. Of course, I’ll stay in touch, though my number of followers will undoubtedly fall sharply in the coming weeks (another invented preoccupation I'll not miss). I’ll follow the Twittersphere for news on how to leverage Twitter in marketing, and from time to time check on tweets from those I follow who continue to leverage Twitter expertly. The end of this relationship is amicable. I can tell you about Twitter. I can help you create a presence on Twitter. I can now see commercial purposes for Twitter I couldn’t see just a few months ago.

But for now, I’ll just be observing.

Purpose over Process

One of my favorite quotes about articulating and pursuing goals is from climber and author Todd Skinner: “To stick to the plan instead of the summit can make you fail to climb the mountain.”

In marketing as in mountaineering, being able to separate the purpose of our actions from the process of our actions is imperative for success. As marketing has wisely moved increasingly toward using analytics to quantify its contribution to the organization, often we can get caught up in the analysis over the objective. It isn’t enough to celebrate the sales directly correlated to a promotion, or the movement of a new product’s valuation from an analyst review following a presentation. These are useful metrics and benchmarks, not the overall objective.

Instead it is important to recognize how those results impact broader corporate goals. The clear articulation of easily understood goals is critical not only in gaining support for your actions, but in identifying when those actions deviate from the intended effect so corrective action can be swift.

The objective is a constant, so be careful that you do not use numbers to defend your actions, but rather to define them. You want to clearly articulate and get support toward the shared organizational objective, not the steps in the process.

No one ever asked Sir Edmund Hillary how many steps he took to reach the summit of Everest.

Why?

Everyone knows that the bane of parents of toddlers everywhere is the repeated question, “Why?”. If a toddler wants to know why the sky is blue, they’ll ask again and again until you move off your initial perfunctory response of “God thought it looked pretty that way” to actually answering the umpteenth “Why?” by explaining the refraction of the sun’s rays on our atmosphere in terms a three-year-old can understand.

“Why?”

Because even an inquisitive toddler knows that asking “Why?” repeatedly is a great way to get to the answer. Not just AN answer. THE answer. There is even a rule of thumb in Six Sigma circles involving the “Five Whys”. It is a Six Sigma tool that doesn't involve statistical hypotheses… and so can be completed without complicated Minitab calculations. Asking “Why?” repeatedly can quickly drill down to the core of a problem saving time by focusing on causes, not just symptoms.

“Why?”

Because in marketing, as in manufacturing, solutions are often not as simple as they may seem initially. There are now layers upon layers of tightly woven inter-related initiatives that build brands and drive leads.

“Why?”

Because marketing today isn’t as linear as it once was. Since 2000, marketing has become increasingly segmented, specialized, and multi-directional. Information is accessible anytime, from a multitude of sources, both positive and negative.

“Why?”

Because technology, namely the Internet, Social Media, Dashboard software, and Web 2.0 have both created new, responsive interactive channels and revealed new ways to measure old (mass media) channels that make marketing far more quantifiable, measurable, accountable and effective than ever before... and marketing needs to embrace this paradigm.

“Why?”

Because if marketing ever wants a seat in the boardroom and to assume its rightful place in setting strategy for the organization, it will need to not only know the right answers, but be sure it is asking the right questions.

BP media mis-steps: Incompetent PR or arrogant leadership?

I can’t help but consider the past six weeks of corporate responses from BP regarding the Atlantis Platform disaster. The initial response in the first week was bad enough to warrant a typical blog entry about proper PR, compare the obvious textbook Tylenol case, but I thought that too banal. Yet as time passes, the official responses continue to be not only awful, but awful in a colossal, ongoing, repeating, self defeating, ignorant sort of way that underscores that BP executives are far better at talking than listening. Or doing.

The spill in the Gulf is now the largest ecological disaster ever in the United States. (BP needs to thank the gross incompetence that led to the tragedies and human toll at Bhopal and Chernobyl for keeping them off the top of the ‘worldwide’ list. For now.) So let us consider for a moment what it must be like at BP headquarters:

Consider the boardroom dialogue at HQ that allowed BP CEO Tony Hayward to say to a UK newspaper that “The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume.”

What of the urgent meetings among top executives that ended with the suggestion that BP stick to initial estimates of 1,000 barrels per day of leaking oil, when many independent experts were saying up to 20,000? Did they think the public – including experts in flow measurement – weren’t ever going to find out?

What of the casual water cooler conversations between cubicles where idiotic comments that the company “doesn’t know how birds and marine life have died” were allowed to be shared – and then implicitly encourage public opinion pieces about how the wildlife damage is minimal – “only being a little oil on a couple bird’s wings”.

Not to mention apparently very little comment regarding the eleven men who lost their lives when the platform exploded. (The media is complicit in their attention to the ‘pipe cam” over the human toll.)

There are more examples. Many, many more, as the list of mis-steps is as long as the oil slick is wide. But can we blame the PR team? Well, insomuch as an OIL COMPANY apparently had no, or a poor, or not agreed upon, disaster response process in place, yes. But even at that, it is often the corporate executives, regularly relegating PR (and marketing) to the back of the bus and out of the boardroom, that are likely to blame here. Instead of allowing these critical communication professionals to help manage the disaster communications, designate executive spokespeople, and align messages, BP simply sent employees a reminder of the Non-Disclosure Agreements in their contracts and then continued blathering unbelievable statements like a five-year-old caught with their hand in the cookie jar.

Until the disaster, the BP marketing and public relations team was doing an excellent job redefining BP (which holds the worst safety record in the industry), as a leader in eco-friendly oil production and alternative energy. But corporate PR can only do so much. Eventually, words must be backed with action if a brand makeover is to ‘stick’.

Even at BP, I suspect their PR professionals understand this. Unfortunately, their executives never have.

"Plan", as a verb.

"Turn left here."

"But that's a building!"

"You missed your turn. Please make a u-turn as soon as it is safe to do so."

"But I'm in an alleyway!"

So, a couple years ago, I was visiting New York with my family, showing them my old haunts and taking in a game at the old Yankee Stadium. I opted to get a GPS unit from the car rental company because I knew that the roads had changed in the years that had passed since I last drove Long Island's Northern State Parkway.

Unfortunately, when on her very first assignment the lovely voice of the GPS unit directed me to a condo development in Queens instead of a hotel in Lindenhurst, it quickly became evident that things had changed since she'd last been calibrated. It wasn't long before I stopped referring to the chronically incorrect voice in the bright yellow sack as the family-friendly 'lemon lady', and opted instead for the far more colorful 'b*tch in the bag'. After the second day, we stowed the painfully out-of-date navigation unit in the trunk.

Are your business plan documents like that confused guidance system? Is your business planning process useful in navigating toward your goals or is it an annual process that is more routine habit than useful tool? If you are creating it once and then not updating it regularly to respond to changes that occur in the market, then what you created wasn't a tool, but a paperweight. Too often businesses large and small will smartly discuss goals, create a plan, normalize it across functional areas, print it out in color on glossy paper, put it into custom binders, and then put it on the shelf to be updated the next year when it is pulled down, dusted, and updated.

That approach only works for holiday decor.

So, sanity check: We are now halfway through the second calendar quarter, and have you even looked at your annual plan? Have you evaluated the assumptions and how they've played out? Did your competitors introduce new products, services, distribution? Did you or they change pricing strategy, pursue M&A or new partnerships? Is the same team in place? Did you hire someone for their experience and expertise and then quietly encourage them to follow a plan to which they did not contribute, wasting their insight? Did the market change? The environment? Did taxes increase? Were new products and versions and functions and services added precisely on schedule as outlined in the assumptions in the plan?

The plan document is not the objective of the planning process, any more than drawing a map is the purpose of a holiday. Planning documents are useful tools in guiding strategy and providing touch-points - so that even if the signs on the street change, you can still guide the organization to its destination.

Focusing on the map instead of your destination is a sure way to get- and stay - lost.

10 Steps to an Ineffective Marketing Plan

Browsing in Half Price Books yesterday, I stumbled upon the business section and a multitude of seldom referenced marketing guidebooks with their spines intact, pages pristine, with no notes in the margins. In spite of the fact that there are so many marketing books written yet so many marketing books unread, there seems no end to their creation. In the interest of full disclosure, there is, in fact, a partially completed unpublished marketing tome residing on this hard drive. So, much like we buy diet books instead of dieting and fitness books instead of exercising, businesspeople too will apparently buy marketing books instead of, um, thinking. So perhaps what is necessary isn't a book of to-dos, but of to-don'ts. In this vein, I present my Top Ten List Of Things To Do To Make Your Marketing Plan Completely Ineffective.

1. Wait. Eventually priorities will change, opportunities fade, deadlines pass, and your choices will dwindle making analysis of them easier.
2. Evaluate sunk costs and resources as if they are equally as important as to those required going forward.
3. Analyze and segment data until it is unrelateable to the original objective.
4. Test, iterate, re-test, and reiterate until your brand, messaging and communications are thoroughly inconsistent.
5. Apply book learning to the exclusion of real-world knowledge and experience.
   
6. Apply real world knowledge and experience to the exclusion of book learning.
7. Budget based on past sales data.
   
8. Use an off-the-shelf, "marketing plan in a minute" template.
   
9. Exclude new ideas because they come from outside your industry.
10. Apply any idea because you heard (insert guru of the day here) say it at a conference.
    

Eventually, I bought a copy of Joshua Ferris' And Then We Came To The End, about a Chicago advertising agency and its staffers weathering a recession. (No, the coincidence did not escape my notice.)

What are your experiences? What would you add to this list?

Marketing in the age of frugality

In the article "The New Consumer Frugality," by Egol/Clyde/Rangan from strategy+business magazine, the authors restate and expand opinions I made in earlier posts, including Fear and the American Consumer, wherein I supposed a world where fear, uncertainty and doubt (FUD) was the primary motivation of consumers and again in this post, where I suggested that there was a new normal of a higher savings rate, less consumer spending on credit, and general 'new religion' on main street.

The authors state that according to a Booz and Company study, fewer than 20% of consumers will return to their pre-recession spending levels. (It's nice to be right.)

The authors state: "A new frugality, characterized by a strong value consciousness that dictates trade-offs in price, brand, and convenience, has become the dominant mind-set among consumers in the United States — and probably in other wealthy countries as well. Two-thirds of American shoppers are cutting coupons more frequently, buying low price over convenience, and emphasizing saving over spending. Per capita consumption expenditure has declined across demographic groups. Consumer sentiment remains weak. These trends are not going to change, no matter the pace of economic change."

Then again, given that more than half this country's GDP is consumer spending, it'd be good to be wrong in this instance.

Still, what does this New Frugality mean for marketers?

Repeating a mantra of marketers weathering each recession, the authors state that we should continue aggressive marketing in a recession - but that unlike earlier times, that the return to 'better days' will not be marked by a return to normal strategies in product, pricing, promotions or distribution. The increased emphasis on, and redefinition of, value (defined as a combination of price, brand, and convenience) will drive decisions across all consumer groups - and this, combined with the community and transparency brought about by the rise of Web 2.0 means that credibility and performance will be paramount to consumers; views of this value judgment less impacted by status positioning and clever brand advertising than by collective market experience. And while brand awareness and loyalty are proven out by the experience, the post-recession consumer will seek out distribution channels that offer the best measure of that brand combined with price and convenience.

So two main lessons of the quoted study involve pricing strategy and promotions strategy: When looking for pricing solutions, the identification and segmentation of customers is, as one might expect, paramount. Price only to maintain profitable return on the most loyal customer segment where value continues to be perceived. As I stated last December, consider pricing strategies and tiers for various channels to deliver the best value as judged by each segment using different channels.

The second lesson involves MarCom. Develop promotional strategies that articulate the convenience (in distribution), pricing tiers and brand selection at all consumer/brand touch points. As the authors remind us, this will require marketers to embrace new advertising and promotion capabilities, particularly those around new digital tools that engage consumers at all points in the buying decision and encourage desired purchasing behavior.

The New Frugality is more than a new economic normal. It is a sea change. We now find ourselves in the 'frugal age' - and it will define us as much as the digital, space, or industrial ages did before.

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• Ignore the Optimism; Retail Frugality Is Setting In (seekingalpha.com)

You don’t need marketing.

As the old saying goes, “People don’t need a quarter-inch drill bit. They need a quarter inch hole.”

“No, we don’t need marketing. We need sales.”

“No, we don’t need marketing. We need more prospects to include us in RFPs.”

“No, we don’t need marketing. We need our customers to know how to use the product better.”

“No, we don’t need marketing. We need to attract better applicants for our open positions.”

“No, we don’t need marketing. We need our employees to understand what we stand for.”

“No, we don’t need marketing. We need to sales to understand our target customer.”

“No, we don’t need marketing. We need a bigger goal.”

True enough, people don’t need marketing. They need everything marketing provides.

So in a sense, you’re right. You don’t need marketing.

You need a miracle.

In which he foretold the future.

So, about a year ago, I posted an entry in response to a survey from Chief Executive Magazine regarding my prognostications for the year just past. I offered my learned opinion, shared it with you, and now, in the interest of full disclosure (not to mention I'm too busy and not clever enough to come up with an original end-of-year post) here's the results:

I said:

On December 31, 2009:
Dow Jones (currently at 8,932) will be at 9621 points
Oil (currently at $40.50) will be $59 per barrel
Interest Rates (the Fed Funds Rate, currently at 1.00%) will be: 1.00%

Actually, on December 28, 2009:
Dow Jones (currently at 8,932) is at 10,547 points
Oil (currently at $40.50) is at $78 per barrel
Interest Rates (the Fed Funds Rate, currently at 1.00%) is at: .50%

Prediction comments:
(I said) Uncertainty is driving the market and the economy; once some certainty arrives with new administration - for good or bad - wild swings will stabilize and the widely oversold market and general malaise will slowly lift.
What happened:
Uncertainty was driving the market and the economy; but any sliver of not-bad, or less-bad news, swung the pendulum back just as wildly as the markets moved to cover shorts and other dubious financial mechanisms. The seating of a new administration, alas, had nothing to do with it as the market didn't settle for months after the inauguration.

Confidence comments:
(I said) Business decision-makers will become comfortable de-coupling their decisions in the real world from abstractions like the Dow. But once that fog clears, the impact of government intervention on national debt and as a general signal of the new regulatory environment will be a drag on growth.
What happened:
Ooo. Seems I was on the money; particularly regarding new regulations - and predicted tax law changes. Yet something went unsaid - the new normal of a higher savings rate, less consumer spending on credit, and general 'new religion' took hold on main street.

So there you go, there's a lot more to the year past than a brief blog post, and others would question some of my inferences, but in the end I was more pessimistic than necessary - or perhaps just more realistic - about the real state of the 'main street' economy. But the reality is far more immediate than Wall Street prognostications... to paraphrase Ronald Reagan, "Are you better off today than you were a year ago?"

Happy New Decade.

The price is falling! The price is falling!

Just a note for the editors of marketing pubs out there: "how to market in a sagging economy" articles have been done. To death. Okay, we get it. Preaching to the choir here. Move on.

Its a valid subject, but most of these articles are promotion-oriented. What hasn't been discussed as much is the role of price strategy in a sagging economy, and generally. This especially occurs to me today because of a current client project, where pricing strategy is the current key gating concern prior to product launch.

Obvious Secret #1: Pricing strategy, especially in a weak economic environment, has little to do with, well, price.

Even in the best of times, great products, great promotions, clever ads and a loyal base can be undone by a misguided or misapplied pricing strategy. This is because left to their own devices, finance and sales executives will see sagging demand as a numbers issue and not a brand issue. Plus, it is expedient to react instinctively with a red pen (cutting prices) when profits shrink and sales falter.

Bad plan.

Unstudied discounts are not as easily undone tomorrow as they are done today. Price cuts are a short term solution to a larger, longer term issue; that is, the product hasn't established the brand position to maintain margin in a discount environment. Understand that price cuts are welcomed by consumers but always create subtle dissonance - an inability on the part of the consumer to properly relate price to value, so when the market returns upward, as it always does, this results in a nearly Sisyphean effort to re-establish a brand position held prior to the discount. Pricing is not a cost issue - it is a value issue.

Understand the way customers make buying decisions and become far more visible, and more efficient, in delivering on these criteria; this will always be more effective in building recession-proof brands. This is because pricing is a long-term strategy, not a short term tool. When the economy sours, there are other levers to pull - operating costs, added value, extended hours, free upgrades. Think about supplier pricing and work new billing models to manage cash flow. Invest in money-saving IT investments such as Unified Communications and collaboration products. Reevaluate your market position and consider new marketing initiatives to go after markets competitors might have recently abandoned. Fire some costly customers. Adjust invoicing offers and procedures to improve cash flow and reduce defaults. These tools and others are manipulated in good times and bad with far greater flexibility than price, which can only move in two directions: up, or down.

Its easy to be Chicken Little and think in blocks of fiscal-quarter-bound panic over a current fiscal situation, but creating and applying the right principles for pricing allows for decisions that over time not only weather current storms, but position a company for consistent growth over the long haul.

On worry and inaction

Jeremy Kloubec, a former colleague of mine now with consulting organization Infosys, writes recently about the dire unrealized predictions facing the VC community just a year ago. He details the shifts in the industry and partially credits the architects of the still-nascent recovery programs.

His comments reminded me of something my mother often said: "95% of things you worry about never come to pass."

Of course, its that 5% that keep us up at night.

As it pertains to our business life, if, as Peter Drucker is credited with stating, "the best way to predict the future is to create it", then 100% of our angst can be squeezed to 5% insignificance by the simple act of doing. Dire warnings and worry generally come with the same highly unlikely assumption: "If things do not change, ..." That peculiar assumption ignores the fact that humans - particularly capitalist humans - are not given to inaction. Even our base 'fight or flight' instinct indicates an action of one type or another. Change is inevitable.

And so it is with this crisis. We're not out of it, not by a long shot, and our myriad collective and individual actions will differ in effectiveness and certainly create new crises even as they create new solutions. But our reactions to events and the actions we take are all we've got and will continue to alter the linear path.

If history is any guide, that's more than enough.

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• Drucker at 100: What Will You Do Differently on Monday? (blogs.harvardbusiness.org)

Do The Math

A common though underutilized truism in marketing is to quantify your claims whenever and wherever possible.

'Biggest', 'Better', Fastest', 'Smallest', 'Cheapest' are nice claims but of little* value. Only slightly better are percentages, useful in any circumstance when the real numbers are small to begin with ($0.04 is a penny less than $0.05, but it is also fully 20% less)

I was reminded of this point by a number** of excellent recent blog entries that are worth a read:

How to Make Your Data Matter, Fast Company, by Dan and Chip Heath - Notable insight: "...an $800 billion stimulus works out to be the rough equivalent of seven weeks' income for an American household. Is that worth it? Seven weeks' worth of work to stave off a potential depression. Or maybe you're appalled. Regardless, we can finally have a real argument, because we have a better idea of what we're arguing about."

How Comedians Clarify Brain-fuzzing Stats, again, Fast Company, by Dan Macsai - Notable Insight: "...If Rod Blagojevich winds up in jail, four of the last eight Illinois governors will have served time. Did you know -- and this is true -- that only 48% of the people who commit murder end up in jail? You are more likely to end up in jail if you become the governor of Illinois than if you become a murderer. Make the smart choice, kids. (Jon Stewart)"

What Does A Trillion Dollars Look Like?, courtesy of cnbc.com - Notable insight: "With the largest market cap among U.S. companies, Exxon Mobil’s value of publicly traded shares is over $345 billion (as of 3/31/09). If this amount was denominated in $100 bills, the block of Benjamins covering the area of a standard American football field would stack to a height of about 28.7 feet."

Ultimately if your numbers are impressive or modest, whole numbers or percentages, what matters is that your audience understands them and relates to them in clear terms that mean something to them.

(*specifically, 86% less value, that is.)
(** exactly three)

Fear and the American Consumer

In a recent article in his newsletter Drum Beat News, my colleague Jack Howe writes of the death of 'conspicuous consumption':

"Luxury buying is off in a major way - reports from Neiman's, Saks, and all top brand name retails report the same cut back from their consumers. So the company that must survive is making sure they offer solid business cases with every offer. Understanding the consequence of how the CEO, at the business your selling to, gets paid can pay off for you, the seller. As consumers, we are still spending, just not in the ways we were before. It is highly unlikely, given the cost of bailing us out of our current economic situation, that we will in our life time, see a return to what we knew as conspicuous consumption."

Interesting also is his observation in the same article that the increasing homogeneity of automobile design also points to the idea that 'standing out' is 'out'.

Whether or not I agree that recent poor auto design is a sign of a larger cultural shift, the apparent death of 'conspicuous consumption' is an interesting argument and worth evaluating from a marketing perspective. Given rising national and personal debt, a worldwide credit crisis, inflationary pressures on energy and food stuffs, plus the impact of environmental awareness and regulation, comfort with high levels of consumption no longer looks - or feels- 'right'. There are even anecdotal stories of monied customers foregoing store-branded shopping bags in order to keep a lower profile on their ill-timed retail therapy.

For years many marketers have relied primarily on brand prestige (associating personal attributes onto or from a product) and constancy (that is, 'I know what I'm getting', aka 'no one ever got fired for buying IBM') to maintain market share and margins. With the new normal of a slower consumer engine on the economy, we must re-evaluate what motivates customers now. I see these four are among the leading motivators:

Value: The rise of the big box discount chains, while suspect themselves in this era of the 'new normal', provide insight into consumers desire to buy in bulk, reduce packaging, and generally 'stock up' in what is perceived to be a very volatile period in our history.

Necessity: Discretionary spending is off, minimalism is in. Name your own example: Even here in truck-crazy Texas, Hummers are criticized, while the sparse Prius hybrid is envied. Vacations are out, staycations are in.

Savings: Once arguably in negative territory, personal savings in the United States has turned to a pace not seen in years, some estimates now as high as 4%. Anti-debt radio personality Dave Ramsey has a slogan that says it best: "...the paid off home mortgage has taken the place of the BMW as the status symbol of choice."

Fear: Arguably the previous three motivators are a result of fear to one degree or another. But this is a non-specific, generalized fear of a quickly shifting geo-political and economic landscape. Remember what happened to action movies after the Berlin Wall fell in 1989? Stallone had to find new enemies because the Ruskies were our pals. It was easy in an earlier era when Russians were the bad guys and we had a collective target for our enmity. But the new political environment, unnamed terrorists have exacted far more damage to our lives and psyches in the last decade than the Russians did in the prior fifty years.

Once, leveraging FUD (fear, uncertainty, and doubt) was the last refuge of marketers unable to sell a product or solution on merits. Today, it seems to be the self-imposed primary motivation of consumers. And in a world where banks are bankrupt, car manufacturers are nationalized, real estate is no longer an inflation hedge, terrorists have us disrobing to get on an airplane, and the national debt clock needs more light bulbs, who could blame them?

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How much green is there in green?

In a recent price sensitivity analysis conducted by Rockbridge Research, it was discovered that most consumers would purchase a product indicated as 'green' (environmentally friendly) over a 'regular' product of the same type, but only if they were the same price. The study concluded that overall, "...as the green product’s price increases, consumers’ inclination towards it decreases."

Not surprisingly, specific audience categories offering unique attitudes toward the 'green movement' differ in the value they place on such products. Six distinct consumer groups within the overall adult consumer population were identified, with “Green Tech Leaders” willing to pay far more for a green certified product, while “Anti-Greens” are not willing to pay much more at all. That alone is interesting as it still indicates a willingness to perhaps consider the positive social implications of buying green even to those who do not value it themselves. This indicates that green product attributes are valuable, but not widespread enough to accommodate anything but a modest price adjustment.

From a share prospective, a green alternative may move the needle. From a margin perspective, this study indicates that their isn't yet much green in being green.

To learn more about Rockbridge’s Green Technology Segmentation, click here.

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