en•ovation group

July 13th, 2009

Source: Deliver Magazine (July 2009)

Author: Gwen Moran

No one needs to tell you that the economy is struggling. As a marketer, you’re more keenly aware of the challenges in today’s marketplace than anyone. But while most of your peers are responding to this economic downturn by slashing budgets (and praying for the storm to pass), some are taking a slightly different aproach, asserting that every situation - no matter how seemingly dire - holds opportunity.

Jack Trout, founder of Trout & Partners in Old Greenwich, Conn., couldn’t agree more. “Marketers who pull out now are missing a tremendous opportunity,” says Trout, also the co-author of numerous seminal books on marketing, including Positioning: The Battle for Your Mind. “Without as much advertising out there, the noise level has dropped off, giving you more maneuvering room because not everybody is yelling at the same time.”

But if cutbacks are inevitable, make sure they’re not across the board, says Russell Winer, marketing departmen chair at the Stern School of Business at New York University. “Keep an eye on what your competitors are spending and make sure your voice share stays the same,” he adds.

The best approach for scaling back is the examine each line of spending, looking for patterns and cutting non-essential outlays that don’t produce results. Preserve resources for the functions and activities that directly support sales and can be measured for their effectiveness in bringing new customers, such as coded offers, online activities and other forms of direct marketing.

And while there are no silver bullets to get customers to flock to your business, here’s a look at tactics that work for most companies:

Don’t cut price - add value. Success begins with a solid value message, but that doesn’t mean cutting your prices. “Price reductions cause serious problems when times get better,” Trout says. “You’re saying your value story is price. That’s a hard story because your competitors can mark down stuff as fast as you. It’s the road to wrack and ruin.” Instead, he says, work on building brand loyalty by communicating more and showing customers you understand the pain of the recession.

That’s what your prospects’ minds are focusing on right now, adds Jay Conrad Levinson of the “Guerrilla Marketing” franchise. “Explaining what your business is doing to help customers weather difficult economic times - providing high-quality products or services that last longer or somehow save them time or money, for example - can create a stronger bond during the recession,” he says.

Guarantees and messages that emphasize why buying your brand is insurance against making money-wasted bad decisions are particularly effective. “If people feel you don’t know what’s going on with them, or how tough they have it, they’re not going to be inclined to buy much from you,” Levinson says.

Beef up your return per customer. Keeping an existing customer is one-sixth of the cost of landing a new one, says Levinson, who advocates expanding the return on your current customer base. Two key ways to do this are to enlarge the transaction size and sell more frequently to your customer base. For the former, look for ways that give customers an incentive to buy more without simply cutting prices across the board, like gift-with-purchase offers or loyalty-based benefits programs.

Hyatt Hotels & Resorts has used the economic downturn as an opportunity to rethink its 9 million-member frequent-guest program, Hyatt Gold Passport. “So much of what goes on in loyalty marketing is about customer loyalty to a company,” says Jeff Zidell, vice president for the Hyatt Gold Passport program. “We turned that upside down and thought about our loyalty to the customer.”

The revamped program provides new benefits for all members, but particularly those at the top two levels. Hyatt announced the enhancements in April and May during its six-week “The Big Welcome” promotion, during which 30,000 Hyatt Gold Passport members world-wide could win a free one-night stay at a Hyatt propety by entering a sweepstakes at a special Web site. Winners were chosen randomly each Monday during the promotion. The free-night credit was immediately applied to their Hyatt Gold Passport accounts.

The promotion included ads in major newspapers worldwide, postcards at hotel front desks and announcements sent to Hyatt Gold Passport members with their regular statements. Hyatt also placed several short videos online, urging viewers to visit “The Big Welcome” site to enter the sweepstakes.

It’s too early to provide hard ROI figures, but Zidell says Hyatt saw a jump in paid bookings during the campaign. “Several hundred additional paid nights booked by those same customers,” he adds. Meanwhile, Hyatt is already planning its next set of Hyatt Gold Passport enhancements.

Integrate your efforts. Approach outreach in a more holistic way, using more than just one vehicle. Liz Miller, vice president of programs and operations at the CMO Council, sees a trend toward direct mail with personalized URLs for customized offers and information. “There is a distinct move to use direct mail to drive deeper engagement online,” she says.

Savings Bank Life Insurance of Massachusetts (SBLI), which has policyholders in 40 states, relies heavily on an integrated marketing approach. “Direct mail drives a lot of our new leads,” says Rose Cahill, vice president and director of marketing for the Woburn, Mass.-based company. “But it’s a combined approach that makes our efforts more effective.”

SBLI currently mails 500,000 to 1 million letters almost every month. In reaction to the recession, SBLI has stepped up mailings to “responders” - prospects who have responded to past offers but who haven’t yet made a purchase. The correspondence typically invites recipients to inquire about life insurance through mail-in coupons, a toll-free number or a dedicated landing page. Visitors can obtain a rate quote, enter their phone numbers for an agent callback or research insurance at SBLI’s online Learning Center.

The center includes an interactive “insurance needs calculator” and Webcasts featuring free financial advice. “People are looking for value,” says Cahill, who estimates that about half the mail-generated leads respond through the Web site. “They’re shopping around more, and it’s taking them longer to make decisions. So the more content and education you can provide, the better.”

SBLI also is reaching out to existing policyholders more frequently. The company recently sent letters to 30,000 customers, encouraging them to upgrade their coverage. It’s changed the tone of its correspondence, too. “Our messaging has gotten more serious and a lot less promotional,” Cahill says.

The most successful outreach effort? A letter to all SBLI customers from the company’s CFO talking about the importance of insuring your family and the financial strength and security of the company. The message was meant to reassure customers skittish about their expenditures and investments.

Whatever your approach, the one thing to remember is that times will get better. Use this time to stay true to your image, build market share and position your brand to be stronger in the turnaround. “Marketers can make enormous contributions to their companies right now,” Trout says. “But they have to have the courage to look at what needs to be done and stand up and do it.”

Entry Filed under: Articles of Interest