Every Company is a Media Company. It’s a phrase coined some eight years ago by tech journalist Tom Foremski to describe the impact of technology on marketing.
From the Internet to Wi-Fi to smartphones, a tectonic shift has taken place with technology forever changing the landscape of marketing, just as radio and television did before.
Only this time, it’s different. This time, the power has shifted from the hands of a few hundred powerful media outlets to the hands of billions of consumers.
At the same time, companies like yours have been handed powerful tools and an unparalleled opportunity to engage with customers like never before. It’s not just in the obvious new places like mobile websites, apps and the media. Technology has made it easier and cheaper to communicate through video, live events and, yes, even print publications.
Like it or not, you are a media company.
So what’s a media mogul like you to do? You need to do one thing: create content. And you need to do it well. You need to create content that generates interest among your target customer base and engages them with your organization.
It might sound easy, but it’s not. Most business leaders know that effective communication is one of the biggest challenges any company faces. When that communication is what sets you apart in the minds of your customers and prospects, the stakes are all the higher.
Here are a few important points to keep in mind as you set about embracing your new role as a media company.
Be where your audience is
Content comes in many forms. Most of us 40- or 50-something business executives are more comfortable reading printed material. Flipping through your brochure, newsletter or even your own custom magazine is comfortable for us. So hand us something.
But younger VPs and 20-somethings — many of whom do the heavy lifting of researching company buying decisions — are more comfortable gaining intel online. They scour videos on YouTube, mine infographics on visual.ly and peruse PowerPoints on SlideShare. So take the time to figure out which of these is the right channel to reach your target customer.
Share knowledge, not platitudes
Yeah, we get it. Your people are smarter, their customer service is better and their breath smells fresher longer. But that’s not why we might be interested in your business.
What we want to know is how you’re going to solve our problems and make our lives easier. We don’t want you to tell us you are smarter; we want you to show us you are smarter.
Thought leadership articles, white papers and blog posts showcase your knowledge of industries, issues and tactics. They differentiate you from your competitors and position you as a subject matter expert in your market.
Talk about customers more than yourself
The best communicators are great storytellers. Stories resonate. They connect us. They are, simply, what we remember.
Sharing client success stories is one of the best ways to tell your own story. The tried-and-true case study is one of the most effective forms of content in a marketer’s arsenal. If you show us how you can make our businesses faster, better, stronger, we will do business with you. It’s that simple.
And if you have particularly well known and respected clients, you get the added benefit of basking in their reflected glory. Welcome to the media business. Now go tell your story.
Michael Marzec is chief strategy officer of Smart Business Network and SBN Interactive. Reach him at email@example.com or (440) 250-7078.
The Internet feeds prospects’ desire for 24/7 access to information and, at the same time, has changed the face of publishing. Email provides messaging directly to someone’s personal mailbox. Smartphones connect us around the clock and around the globe. And social media has revolutionized communication by providing a vehicle that gives a voice to the masses.
Much has changed and the new paths have opened the way for businesses to chart their own course. There are fewer barriers to getting your message to your targeted audience (unless you are trying to reach them on their office phone, right?) but many more fragmented choices to reach out and connect with them to get your message heard.
Develop a well-thought-out strategy
As with all marketing, the best-laid plans produce the best results. Businesses today need an online strategy, an industry strategy and a direct-marketing effort to build exposure.
Understanding what potential customers want and need is imperative to success, as is knowing where potential customers hang out so you know the best opportunities to connect with them.
Chart your own course
The Internet offers no barriers to entry. Unlike having to pitch your story or white paper to an editor to get it published, the Internet freely accepts whatever information you would like to create and share with its open universe of information seekers.
This accessibility means opportunity is at your fingertips to populate that universe with your information. Popular forms of providing information include websites, blogs, press releases, white papers, case studies, educational videos, virtual webinars, various forms of presentations and pictures of products, comparison matrices, social media sites, such as YouTube, LinkedIn, Google+, and so on.
Some Internet services, such as those that distribute press releases, charge a fee, whereas posting sites, such as blogs or social bookmarking sites such as Digg, are free. Tracking engagement and turning engagement into opportunity begins with a solid website that effectively communicates your message, is connected to all of the information you have placed on the Internet and is optimized for search engines.
Becoming visible within targeted industries is more traditional. Strategic sponsorships of industry association events, trade shows, informational seminars and forums, as well as advertising and editorial within trade news vehicles — both print and online — are just a few options.
Think of sponsorships as your connection with the industry that can match you with potential customers. You are benefitting from relationships these industry associations have with the individuals and companies you want as customers.
Your direct strategy is about getting your company in front of a prospect so that when there is a need for what your company sells, the prospect is already familiar with you. This can include direct mail, email campaigns (make sure they are opt-in) and invitations to webinars or seminars where you present meaningful information.
Other options include Google AdWords or other pay-per-click campaigns, trade advertising, trade shows, online advertising, etc.
Plan for a comprehensive, integrated approach
To get noticed today, companies need to have an integrated plan of action, one that is comprehensive in nature to reach the intended target audiences. Just having a website is not the answer, nor is just going to a trade show or having a video on YouTube. It is much more complex than that.
Building a known name in the marketplace takes a commitment to a planned approach and follow-through. And don’t forget the importance of a consistent brand message and voice, as well.
Kelly Borth is CEO and chief strategy officer for Greencrest, a 22-year-old brand development, strategic marketing and digital media firm that turns market players into market leaders. Borth has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 30 certified brand strategists in the United States. Reach her at (614) 885-7921, firstname.lastname@example.org, @brandpro or for more information, visit www.greencrest.com.
How often do you go to market without a solid business strategy? Probably never, right?
The reality is that if you’re like most organizations, then you’re doing this right now — and you don’t even know it.
That’s because most organizations do not have a well-thought-out marketing strategy. Instead, most are doing what somebody told them they should do. This includes creating a mobile website, engaging in social media and advertising.
All of these are “smart” marketing initiatives. But if they’re done in a vacuum, there’s no way to measure what results those initiatives are intended to accomplish. Worse, you’re chasing tactics instead of delivering results.
There is a significant difference between marketing tactics and marketing strategy. Marketing tactics are ways to bring channels to life. This could be a new website or a mobile-optimized version of your site. Or it could be creating new sales collateral. Tactics should be used to bring your brand message and value proposition to life.
Unfortunately, if they’re not tied to a cohesive strategy, you will not achieve the results you desire.
A marketing strategy, however, allows you to understand the results you should achieve. It also keeps everyone aligned with what you’re trying to accomplish and where you are in the process.
As an example, there are three main reasons for a website: to verify your organization’s brand message to potential customers, to deliver your value proposition and conversion.
Conversion can mean different things for different industries. In retail, it might mean picking out a product, putting it in your shopping cart and making the purchase. In business-to-business, conversion might mean picking up the phone to contact the company, providing a name, email and phone number, or signing up to receive a newsletter.
Without understanding how consumers behave, you may be selling your marketing efforts short. You might not be providing enough information to clearly articulate your brand message or value proposition or you might not be offering users an easy experience that allows for conversion. So how do you ensure that a consistent brand message, value proposition and the ability to target customers converts across all marketing channels?
First, understand who the target consumer is and their needs, attitudes and behaviors. This can be discovered through research, including focus groups or through industry-based segmentation.
Then, conduct a deep dive to understand your business goals and objectives. In retail, this might be the number of sales you want to drive. In B2B, it could be increasing the numbers of prospects in your pipeline.
Finally, evaluate your company’s existing marketing tactics — your website, marketing collateral and overall brand message.
Only then will you be well-equipped to evaluate your overall tactics and compare them to marketing best practices and the competitive landscape. This results in recommendations that include expected business results and return on investment.
Prioritize these by measuring the highest impact against investment levels, and then create a timeline to implement them over a one- to two-year period. Share this strategy throughout the entire organization so everyone understands what will be accomplished and what the expected results are.
Without strategy, and an understanding of everything that goes into it, any money you pour into tactics tends to be money poorly spent. Done correctly, your marketing strategy suddenly becomes your organization’s key driver and leads to tangible and measurable business results.
Dave Fazekas is director of digital marketing for Smart Business Network. Reach him at email@example.com or (440) 250-7056.
Over the past five years, layoffs have become an undeniable fact of life for millions of Americans, and even today as we slowly recover from the great recession, layoffs continue. For example, in June, there were 4.3 million total separations, according to the Bureau of Labor Statistics.
And as painful as they may be, layoffs are sometimes necessary to allow a business to reorganize or restructure to remain viable. If they are not handled correctly, however, a reduction in force could be devastating to the future of a company. Research done after the economic downturn in the 1990s found layoff survivors had high levels of distrust and lower levels of motivation. In addition, absenteeism increased and productivity decreased.
“The keys to effectively managing a layoff are planning, communication and treating people with dignity,” says Jerry Miller, vice president, marketing, at Executive Career Services. “Your goals should be to preserve morale and the intellectual capital of the organization and to avoid litigation.”
Smart Business spoke with Miller about how employers can mitigate the negative effects of layoffs when they become necessary.
What role should planning play with managing layoffs?
Planning encompasses numerous areas, so you need to first understand the reasons for having the layoff in the first place. What do you hope to accomplish? You need to determine what the company will look like going forward — post-layoff.
Then you’ll need to decide which positions are going to be eliminated and why. Also, how much notice will be given and what type of severance packages and other benefits will be provided, including outplacement assistance? While you don’t want the legal department to drive the layoff, you need to know the relevant laws and understand all the legal ramifications. Some of the more important laws to be concerned with include The Worker Adjustment and Retraining Notification Act (WARN) and laws dealing with age and other forms of discrimination.
Finally, and very importantly, you’ll want to formulate your communication strategy, both during and after the layoff. Once the planning process is complete, move swiftly. Don’t drag things out. Word travels fast in an organization and you want to stay ahead of rumors.
How does a good communication strategy look during a reduction in force?
Once the implementation phase begins, communication should be wide and frequent. A critical component of this phase is the notification meetings, which should be conducted by the immediate supervisor or department head, and if the meeting is expected to be especially sensitive, a representative from human resources. This is not a time to delegate. It is critical that these managers, particularly if they have never delivered a layoff notice, be coached in how to conduct the notification meetings. If you are using an outplacement firm, it will be able to provide this type of coaching.
What do managers and department heads need to keep in mind during a notification meeting?
Information packets should be prepared in advance with all the necessary information. Expect that impacted employees will likely be in a state of shock after learning of the job loss and much of what is said afterward will not be heard or understood. They need information to take with them to read when they are finally able to process the bad news. Notification meetings should be private and take place as early in the workday as possible on a day that is not immediately prior to a weekend, a holiday or a planned vacation.
The impacted employees must be treated with dignity and respect. They will share their experience with survivors, and if they are not treated appropriately, it could have a very negative impact on those remaining. Managers should imagine themselves on the other side of that table and treat their exiting employees as they themselves would like to be treated. Be brief and direct in the notification meeting. Anticipate emotional reactions and be prepared to deal with them. Don’t engage in small talk or allow your anxiety to cause you to say something to ease the immediate situation that can’t be lived up to. Explain that positions, not people, are being eliminated. You want to be sensitive to the employee’s situation but direct and firm, making sure he or she knows the decision is final and non-negotiable. Tell employees how much you appreciate their work and thank them for their contributions. Finally, direct them to the next step in the process.
How should an employer handle the remaining employees?
Oftentimes a company is so focused on the layoff itself that it loses sight of the impact on the survivors, but doing so can cause significant problems later. This is where leaders need to lead. Meet with the remaining employees to discuss the layoffs in an honest and forthright manner. Share the latest company news with them and commit to keeping them informed. Acknowledge their emotions and give them time to deal with them, but not too much time — don’t allow them to engage in endless carping or complaining. Work must go on. Managers should lead by example. Be positive but also realistic. Discuss the workload and how it will be distributed, perhaps even asking the team what they would recommend. Keep lines of communication open and check in regularly with individuals. Above all, be available to remaining employees. Don’t spend time in your office with the door closed.
Remember, how you treat people matters, to those impacted as well as to those who remain. If you plan effectively, communicate openly and often, and treat people with dignity and respect, a layoff can be done with minimal disruption and little or no negative impact on the organization going forward.
Jerry Miller is a vice president, marketing, at Executive Career Services. Reach him at (949) 251-5600 or firstname.lastname@example.org.
Insights Human Capital Solutions is brought to you by Executive Career Services
In the service industry, employee-related expenses account for 50 to 70 percent of total expenses, which makes it critical to bring in the right people and ensure your investment is a good one.
“The cost to hire people is significant, from advertising to interviewing to the onboarding process,” says John Harabedian, Managing Director of the Retirement Plan Services division at Tegrit Group. “If you are only retaining 50 percent of the people you recruit, that’s a huge cost to the company that needs to be reduced.”
The benefits of recruiting and retention strategies aren’t just cost-related.
“If you’re growing and you’ve got a strong culture, you’ll be known as a good place to work, which enhances the company’s reputation and image in the community,” he says.
Smart Business spoke with Harabedian about recruiting and retention practices.
Why does a business need recruiting and retention strategies?
Not having a recruiting strategy often leads to reactive hiring. If someone terminates employment, a manager who hasn’t thought about a replacement strategy might make a quick decision to hire someone who seems qualified but isn’t.
You always want to look for loyalty in your employees, that is the key to customer retention as well as cost savings. Customers value continuity; if you have the same person on the account for a long time he or she will know the client well and the chances of the client having a great experience are significantly enhanced.
What are some best practices for recruiting?
Your human resources department should have an active ongoing recruiting process for key positions, even if those positions aren’t open. You interview people as resumes come in, for future position openings. Then if you have to replace someone you already have two or three people in mind — you know what their situation is, if they need to move and their salary requirements for example. This makes positions easier to fill, especially for specialized, technical jobs, and ensures your company does a better job of finding the right people.
You need to define your corporate culture and find people who fit into it. A strong work culture engages employees and provides them with opportunities, which is crucial to keeping them satisfied.
In addition, good employees typically surround themselves with similar-type people, so employee recommendations can be a critical source for hires with the same work ethic and values. You can incentivize your staff with a cash bonus for recommending someone who gets hired.
An internship program is another excellent recruiting tool where both the intern and employer can evaluate each other before making a long-term commitment. You can start an internship program using younger employees who recently graduated with connections to local universities. Then in the second year, once you hire interns permanently, you can use them as spokespeople for the next graduating class. However, a successful internship program is predicated on interns having real work to do. You need to make interns feel like full-time employees by letting them have one-on-one time with managers, attend meetings and do client-based work.
Once you’ve recruited the right employees, what can you do to ensure they stay?
The defection of good employees is all tied to the culture. You need to put people where they have a passion. You don’t want to leave people in jobs they may have entered into if that is not what they want to do long-term. If you can get a person excited about what they do — if they can contribute and have some creativity in their role — they are much more likely to stay with the company.
A growing organization has to recognize you are always looking five to ten years down the road. Not only who are my managers today, but also which employees can become directors or fill other senior level positions? Internal mentorship programs identify key performers with significant potential. And you don’t have to be shy about who is in a mentoring program and who isn’t as it might motivate others.
Keep in mind what influences employees today. Younger employees put an emphasis on family and outside activities that you wouldn’t have found 20 years ago. You may need to be more creative in allowing staff to work remotely or have flexible schedules. You also might have to help older managers adjust to the mindset and values of younger staff.
How do you evaluate your recruiting and retention strategies?
Your HR department should always be looking for feedback from staff as well as evaluating the job application website you use to see if they are the most appropriate.
You can also rate your employees to find out how your retention strategies are working. For example, you can rate staff as (1) key performer, don’t lose; (2) good performer; and (3) average or acceptable, and any employee who is rated below three you would want to actively manage out. Then evaluate which employees are leaving — how many were ones, twos and threes?
Although the recession has created a double-effect that works for the employer — the talent pool is deeper with more people out of work and with fewer jobs more people are staying put — this kind of situation is only short-term. You need to invest in your employees and ensure the company has a wonderful culture in which they can grow and eventually take on more responsibility.
John Harabedian is the Managing Director of the Retirement Plan Services division, for Tegrit Group. Reach him at 330.983.0520 or email@example.com.
Insights Retirement Plan Services is brought to you by Tegrit Group
To fight a war, a country may have at its disposal an arsenal of resources and avenues: air force, army, navy, cyber warfare, public relations, propaganda, etc. When, where and how each is leveraged determines the outcome of each battle and ultimately the war. The successful overall war strategy must include integrated battle plans that exercise the right combination of levers.
It was the ancient Greek physicist and engineer who said, “Give me a place to stand, and I shall move the Earth with a lever.” He realized the power of the lever to increase the force given to it so that the output force is much greater.
Similarly, to drive revenue, a company has several levers at its disposal. However, companies often do not develop and follow an integrated approach to driving revenue. Responsibility for revenue generation falls solely within the sales department’s purview. Too often, individual salespeople independently develop their own approach to drive their own sales.
Revenue levers can have either a long-term or short-term effect. Developing new products/services is an example of a longer-term revenue lever. Companies are better at managing longer-term levers, but they often do a poor job leveraging or optimizing the mix of short-term levers.
Some businesses do excel at optimizing short-term levers. Consider the case of a flea market vendor. She arranges her wares in such a manner as to first attract attention, and second to highlight her best-selling items. If during the day, she notices customer interest shifting to different items, she reconfigures her layout of items to maximize sales.
Larger retailers follow a similar approach. The store layout and items displayed during the Christmas holiday season is quite different than what you will find before Valentine's Day. Ever notice that the high-traffic areas become focal points for customers? Attractive product displays draw customer attention by promoting a sale or welcoming a season.
Other industries that have developed the art and science of maximizing short-term levers include airlines, hotels, and Internet retailers. Airlines and hotels constantly vary prices and promotions to match seasonal demand patterns and adjust prices on a daily basis to match demand against existing inventory. Since airlines and hotels have a perishable commodity (an empty seat on a flight is revenue lost forever), how well they manage their immediate revenue has a huge impact on their annual performance. Internet companies such as Amazon constantly adjust their top-of-list item displays based on each customer’s shifting buying interests to “capture the moment” where they have the customer’s eyeballs. This is done so seamlessly through the use of technology that you don’t even think about it. In a short time, you begin to expect it and count on it to make it simpler for you to find similar products.
Levers can target segments
The levers for your company may include focusing on a mix of products/services to emphasize in the marketplace, targeting certain market and customer segments, leveraging specific marketing and sales messages, offering specific promotions and pricing, and other creative mechanisms based on your particular situation. The movie studios, for example, target different market segments during different seasons. During the summer and winter holidays, they release movies targeting kids and families.
There are other examples of levers. One software company insisted customers buy all their software modules integrated as one system. The integrated system was suitable for larger customers with deeper pockets, but smaller customers could not afford and did not need all the modules. As a result, smaller customers migrated to other solutions. After it recognized the alarming trend, the company decoupled its modules allowing smaller customers to buy the individual modules they needed. A small change in product configuration helped the company impact revenue immediately.
Ask yourself how well do you leverage your short-term revenue levers? How nimble is your strategy to maximize immediate revenue? Do you manage your short-term revenue actively or passively? You must take the time to identify and understand each short-term revenue lever. Then, dynamically and opportunistically choose and exercise the right combination of levers to drive revenue immediately.
Quoted in The Wall Street Journal, Barron’s and WorldNews, Ravi Kathuria is a recognized thought leader. Featured on the BusinessMakers show, CBS Radio, and Nightly Business Report, he is the author of the highly acclaimed book, How Cohesive is Your Company?: A Leadership Parable. Kathuria is the president of Cohegic Corp., a management consulting, executive and sales coaching firm, and president of the Houston Strategy Forum. Reach him at (281) 403-0250 or feedback@ cohegic.com.
Business leaders today are looking for opportunities to engage with customers and prospects in new ways that build stronger relationships, reward loyalty, and most importantly, drive sales.
There is no shortage of strategies or tools to enable stronger relationships — between the old standards of television, print advertising, out-of-home, direct mail, etc., that have been in the marketing plan for years and new technologies like e-mail, SMS/text messaging, mobile applications, social networks and location-based services that may be in the early stages of proving value. Marketing leaders have a lot to consider.
At Signal, we’ve developed a global solution for small, medium and enterprise businesses that simplifies digital communications via e-mail, SMS and social media. With a wide range of clients — from Sears and Redbox to family-owned businesses — we’ve learned a lot about what works and what does not.
Here’s a primer on how you can impact your bottom line with an integrated strategy leveraging SMS and e-mail to develop a direct line of communication to your customers and prospects.
1. Build a customer insights database, not a list of e-mail addresses and mobile phone numbers.
So you have e-mail address and mobile phone numbers in your opt-in subscriber list — now what? Do you know if the e-mail and mobile number belong to the same person? What about the time of people are most likely to respond to your campaign, or whether they engage more with SMS or e-mail communications?
It is certainly valuable to build your subscriber lists for the purpose of sending messages, but consider the obvious benefits of transforming that list to a single “data warehouse” of customer insights and behaviors. Signal’s platform makes it easy to collect a wide variety of data then store it in a single customer profile, which can be used for segmentation and targeting in the future.
The more you know about your subscribers’ interaction with your communications across e-mail, SMS and even social media, the more efficient your marketing efforts become, allowing you to maximize spend.
2. Set expectations and deliver value.
Your customers and prospects already get enough self-promoting e-mail, so it’s important to offer content that adds value to your customers’ lives while also supporting your company objectives.
Have you ever signed up for a company newsletter because of a call to action like: “Sign up to subscribe to our newsletter for exciting company updates”? Though it may seem like a reasonable pitch — “exciting company updates!” — this prompt is generic and does not showcase the value that subscribers should expect from opting in to your database.
Instead, focus on the things that you know customers want: special offers, discounts, exclusive content, etc. Also, make sure that you are clear about how frequently they can expect to hear from you and what type of content you’ll be sharing. Make that content exclusive to that channel, whether it’s e-mail or SMS, and customers will want to subscribe.
By setting the right expectations that give subscribers a good reason to opt-in and stay subscribed, you’ll experience stronger growth and engagement, which in turn extends reach and ROI.
3. Affect buying decisions with timed offers and calls-to-action.
Understanding usage is an important step in delivering value to your customers and influencing their decisions through e-mail and SMS.
E-mail allows you to communicate with richer content as compared to SMS. However, open rates and click-through rates can change significantly depending on when your e-mail hits the inbox. If your content is valuable to your readers when they start their day at the office, a weekday morning may make the most sense. If you’re sending a promotion for a happy hour, then just before lunch is ideal so that customers can start to rally their friends during lunch.
SMS, on the other hand, is a much more immediate communication that can affect a buying decision in real time. About 83 percent of text messages are read within one hour, and open rates for SMS are typically 3 to 4 times higher than for e-mail. For example, a recent study found that 68 percent of lunch decisions are made in less than an hour or on an impulse. Timing is incredibly important if you want your message to impact a customer’s buying decision.
4. Prime the pump with e-mail; close the loop with SMS.
It’s no secret that better outcomes are the result of a fully considered marketing plan. However, too few businesses truly leverage their various channels to maximize the return. Understanding e-mail and SMS usage will help you execute a truly cross-channel strategy for maximum efficacy.
One useful strategy for syncing your SMS and e-mail actions is to use e-mail to build awareness or initial interest in your offer or content, then rely on SMS to prompt action at the moment of truth. For example, you can use your weekly or monthly newsletter or promotional e-mail to set expectations about an important upcoming event, then close the deal with a text message that reminds buyers about that promotion.
Marketing today is more integrated that it has ever been in the past. However, silos still exist — to the detriment of your business’ ability to leverage digital communications channels to their highest potential. Your path to successful cross-channel communications and increased ROI is to better understand customer behavior and preferences and translate those insights into campaigns that map most closely to what your customers want, when they want it.
John Sharry is an Account Executive at Signal, a Chicago-based company that offers a dead simple product that unifies e-mail, mobile and social marketing in a single platform. Recently named No. 108 on the 2011 Inc. 500 report, Signal offers more great insight on Twitter, Facebook and their blog.
Interested in learning why your company’s mobility strategy is failing?
Join Smart Business and Chris Surdenik, president of Call One, at 1 p.m. CDT on September 29th for an in-depth look at mobility in this digital age. Register today!
Surdenik started at Call One in 1998 at the recommendation of Ameritech. He had previously been a provisioning supervisor at USN Communications, where he was responsible for training and administration of the provisioning department.
He knew there was a better way to tackle telecommunications needs.
Now, 13 years later, Surdenik has proven Ameritech’s recommendation – and his decision – to be prescient. Call One has seen substantial growth, most recently being named to Crain’s Fifty-Fastest Growing Companies in Chicago and Inc. Magazine’s 500 5000 list.
Earlier this year, Smart Business sat down with Surdenik to discuss how he tackles business challenges. You can read the interview here.
The bottom line is that it's becoming an ever increasingly mobile world. And for business, that means you're conducting transactions on the go, holding meetings on the road -- and from remote locales -- and accessing your data from anywhere at any time.
So what does mobility mean, and how can you best take advantage of what's out there?
At this Webinar, we’ll tackle such topics as:
* Hardware: Smart phones, wireless devices and creating transparency in business communications.
* Client Experience: Mobility puts you in the "now" at anytime for clients, creating a dynamic customer service experience.
* Integrated Communications: How mobility plays an important role in a fully conceptualized integrated communications plan.
Register today as this is one Webinar you don't want to miss.
Although pricing plays a pivotal role in generating profits, most firms end up leaving money on the table, because they rely on ad-hoc or undisciplined practices instead of a well-honed strategy. Worse yet, they don’t establish a price based on the product’s value, or forgo profitability by hastily initiating discounts to grab market share.
“Executives don’t run enough ‘what if’ scenarios before establishing a price for a product or service and then hope that something good will happen,” says Dr. Jagdish Agrawal, associate dean and professor of marketing for the College of Business and Economics at California State University, East Bay.
Smart Business spoke with Agrawal about the dos and don’ts of pricing management.
Why do companies overlook the need for disciplined pricing management?
For starters, academia hasn’t paid enough attention to pricing so MBAs aren’t familiar with the tools or the need for a rigorous methodology. In fact, there isn’t a single academic journal on the benefits of good pricing. Executives also tend to think that the market establishes the price for goods and services, when it’s up to the seller to educate buyers on their product’s value.
What are the components of an effective pricing strategy?
These best practices are integral to an effective strategy.
- Start with a profit objective. Market share and profits aren’t necessarily related; conceptually, you can reduce your price to zero, lose money and capture the entire market. Start with a profit objective before establishing a price for the product and then research the market to see if it’s on target.
- Practice value-based pricing. Pricing should be determined by the value of a product or service, not production costs. Research the competition and then adjust your price up or down based upon the inferiority or superiority of your product.
- Understand market segmentation. Airlines are experts at market segmentation based pricing. They understand that business travelers don’t pay for their tickets so they don’t care about price, but families always shop for the best deal when booking a vacation.
- Price proactively. Avoid knee-jerk reactions to competitive price changes by continuously monitoring buyer preferences as well as social and economic changes so you can adjust prices proactively.
- Develop prices collaboratively. Solicit input across the entire enterprise, because each group offers unique expertise and perspective that leads to better pricing.
- Invest in marketing. It’s not that buyers won’t pay more, but they need education and data to appreciate your product’s value.
How can companies utilize tools to attack pricing both tactically and strategically?
Savvy companies understand price elasticity and customer preferences and use niche software programs to conduct incremental break-even analyses. For example, what will happen if you drop the price of a product by 5 percent? How much will sales go up and will you still make a profit? Conversely, what will happen if you don’t reduce the price? Start with a conjoint marketing analysis to uncover the nexus between price and value by forecasting the impact of various price changes and then conduct trials or tests to validate the results before initiating wholesale price changes. Some product managers are turning to a new field called behavioral economics, which helps them understand buyer motives and strategically offer rebates or other discounts to communicate a product’s price and value to customers.
How can companies avoid typical mistakes?
Marketing has four variables, or ‘Ps’: price, product, promotion and place. Because price is the most flexible, people tend to use it for instant gratification. But it’s a mistake to temporarily lower prices for competitive purposes, because it compresses margins across the entire industry. Another error is incorporating irrelevant or non-incremental expenses into the cost assumptions because it results in an inflated price that isn’t based on the product’s value. Fixed costs like managerial salaries aren’t necessarily impacted by the number of products a company produces, so you stand a better chance of developing value-based pricing and realistic forecasts by excluding them from the estimated costs. Isolated pricing decisions made by a single department like marketing or accounting are usually off the mark. Instead, develop the brand’s positioning and profit objectives before creating a coordinated promotion and advertising campaign. Next, develop various pricing scenarios through a collaborative effort and run ‘what if’ models to validate your sales and profit goals. If necessary, adjust your product’s positioning or marketing strategies until they align with the desired outcomes, because everything should flow from the brand’s positioning.
How can companies boost profitability through pricing improvements?
Start with the actual product or service to uncover untapped market segments and incremental profit opportunities. Does your product solve a problem? Are there prospective customers who would be willing to pay more for a solution? For example, retailers usually charge less when customers buy online, but some people are willing to pay more for the experience of shopping in a pleasant environment. Train everyone in the company on pricing fundamentals and methodology so they make better pricing decisions and spot additional opportunities to sell goods and services for a higher price. Remember, price is the only marketing variable not associated with the product’s cost, and price allows you to realize the value of all your investments and boost profits.
Dr. Jagdish Agrawal is associate dean and professor of marketing for the College of Business and Economics at California State University, East Bay. Reach him at (510) 885-3290 or firstname.lastname@example.org.
Deborah Fine is pretty good at shaking things up.
Three years ago, when she joined Direct Brands, the largest distributor of physical multimedia products such as books, movies and DVDs was in desperate need of transforming its business model to better compete in an increasingly changing marketplace.
Fine’s problem was pretty straightforward: Many of the company’s holdings had strong brand recognition, such as Rhapsody, The Literary Guild, Columbia House, QPB and The Book Of The Month Club, but those and other brands had lost their luster. And with the shine went some of the corporate revenue.
Aiming to provide more for the customer and recapture brand loyalty, Fine introduced a largely fresh marketing team and implemented new Web and social media strategies. She also took a new look at traditional, proven methods.
“We realized pretty quickly that between the database of scale and owning the ability to power a direct consumer channel, inherent in those lie two very, very large opportunities for growth,” Fine says.
Smart Business sat down with the former president of iVillage to discuss what it took to turn Direct Brands into a digital age company.
Q: On day one, what challenges did you walk into this job and face?
I walked into the success of a model that was largely unchallenged for decades, so there was nothing wrong with this model for a very long time. A mere three years ago, this was a billion-dollar business. The challenge is that the landscape changed so quickly. This is a company that saw throughout its legacy Red Box, Amazon and the changes at Barnes & Noble. It saw radical change around it, and frankly, it didn’t respond with the speed that the company now thinks and executes with.
Q: Did you find there was an urge to leverage your existing resources to expand outside the company’s core competencies?
Yes and no. We identified our growth strategy on several fronts. The first job was to go back to our roots and execute against core, direct marketing tools and best practices to increase loyalty retention — all the things that belied our heritage.
The second was to take the 24 businesses we own — those in physical form as well as their digital companion sites — and bring related business into the fray. For example, if we have amongst our audience several hundred thousand members of The Good Cook, (we have) a reasonable opportunity to monetize that audience and sell them the related casserole dish, spices and kitchen gadgetry.
The third (job) was recognizing the turnkey legacy value and expertise needed to power that model — with best-in-class distribution and customer service components — enabling us to enable others.
Q: You’ve been in industries where disruptive innovation is necessary. How are you bringing disruptive innovation to this organization?
Most disruptive about what we’re doing is exposing the company to new ways of running a business, as well as bringing in new disciplines. Titles such as ‘head of business development’ and ‘chief transformation officer’ were not titles that existed before. So I think I say it sort of in jest, but not really — the biggest change was showing up and bringing in a CEO to transform the entire management team. I changed 80 percent of the management team in my first year. Talent is the silver bullet, and there are very few business practices that are silver bullets.
Q: How are you balancing traditional channels with the new channels for doing this business?
It’s really a hybrid. When I arrived at the company from working as president of one of the largest online sites for women at NBC with iVillage, the perception was that I was going to show up with the world’s largest shredder and literally shred every piece of paper, every catalog and every piece of collateral material that we used to run our business. But no business today, regardless of genre, is able to throw the baby out with the bathwater.
So for us, I subscribe to test, learn, repeat; test, learn, repeat. And that’s what we are doing. Social media is a great example. There’s no way I’m going to walk away from 60 million pieces of direct mail, 500 million e-mails and 27 million cartons that can be marketed in, on and around in favor of a new discipline that may or may not work for us. But common sense says that because our demo is there, because our customer is connecting online, because our customer is active in social media, we have to be there.
Q: So how does this look in practice?
We’re certainly not abandoning our traditional tools, tactics and strategies, but based on demography, it’s the fastest growing segment. It’s requisite for us to be there, and I think it’s a combination of analytical tools, research, training, learning and business processes.
As a example, we had a situation where we had a consumer registering a complaint and posting it. Actually, we had two situations happening at the same time because of that: We had customer service react almost immediately, people who are monitoring those pages, but then we also had our loyal fans, de facto brand ambassadors, come to our defense.
You can go on the site and read their posts: “I’ve been a member for 20 years, 30 years, 40 years, you know. I‘ve never had this problem with the company. The service has always been a hallmark.”
So re-engineering the company is as much about new systems and processes as it is about changing the psyche.
How to reach: Direct Brands, www.directbrands.com
Interviewed by Dustin S. Klein / Story by Jessica Hanna