Maximise sales and kill your brand

Marketing managers are continually trying to increase their advertising and marketing budget.  Economists talk of the law of diminishing marginal returns.  Direct marketers in particular have been keen to make maximum use of their prospect lists and design a series of mailings for those who do not respond to the first one.  They argue that so long as the lower response rates of repeat mailings are justified by sales, they ought to maximise profit.

From my personal point of view as a consumer, I get very irritated by companies that try and hammer me into accepting their product.  Just one example, credit card selling.  Not only do I receive a mass of offers for different cards, different colours from the same supplier, different brands from the same bank, different banks etc; but they also repeat themselves so often that I don't open the mailings but just fill up the recycling bin.  Moreover this has got past the initial stage of minor irritation and now actively imparts a negative image not just of the credit card concerned but also of the bank and its management. I start to remember that the company concerned is more interested in an immediate sale than in serving the interests of me, their customer.

I am astonished that the banks have allowed themselves to damage their consumer image so much.  It is  perhaps part of the same attitude that led to the recent credit crunch.  Make a fast buck now, and, to-morrow, we will be strong enough to blackmail the taxpayer. I use a bank for a current account but would never now take investment advice, buy insurance or any of those other services they are so keen to sell.

So, think about it. If you get a 1% response rate from your next mailing, should you be pleased if that more than covers the cost or should you wonder what happened to the other 99%?  Did they see the message?  If so, did they bin it straight away?  What is now your brand image among this group of people that you have targeted as potential customers?

If your company is successful and not desperately trying to avoid imminent bankruptcy, you should plan your marketing on a long term basis.  Ideally you have a steadily growing customer base with good experience of your products and services.  That will  provide growing repeat sales and a flow of referrals.  Then, when you regularly remind them of your existence or tell them of new products and promotions, they will be glad to receive the information and a higher proportion will act upon it.  This also means applying self-discipline and not approaching them too often with the same offer. 

I once had the misfortune of working for a company where the management set annual growth targets and the sales force had to load in extra stock to meet the year end deadlines.  Each year the task got harder - until the company was taken over. 

Now that we all have a major share of the banks, do you think they will treat their customers with more respect?  Unfortunately I suspect that the bigger the company the less they respect the individual consumer.  That  is why the small business should normally be able to offer better service than larger rivals - but you cannot advertise that improved service with large budgets, you must build slowly and steadily the actual customer experience.

Keep your advertising budget down and improve your customer service.  That is the way to steady growth in profits.

Talk to you next month

Stephen Orr