Using Interactive Marketing to Compete in a Down Economy

Yesterday, Cydni Tetro, the CMO of FamilyLink.com shared that a VC she met with said, "flat is the new up" when referring to revenue trends. It seems that everyone I've been talking with lately has a company that falls into one of three camps:

1. Well positioned in a declining market.
2. Maintaining sales at a higher cost than the past.
3. Experiencing growth because of their position in a growing market.

In healthier times, I would expect to see more companies in a fourth category: companies aggressively growing within an expanding market; however, I'm not aware of these firms today. One of the challenges of a down economy is that the rate of innovation tends to slow. Instead of adopting "reinvent or die" as a mantra, companies are hunkering down for survival and trying to maintain their current revenue and market share positions with as little investment as possible. Since the "entire economy" is down, they believe that maintaining their revenue position and market share is an adequate goal. And for the most part, they are right.

But, whenever there are challenges in the market there are also corresponding opportunities. Why? Because each company will react to those challenges differently. The variables by which success has been measured and through which success has been achieved will start to move unpredictably, and companies can see success turn to failure overnight if they are not vigilant and adept at adapting to these fluctuations.

This was certainly the case for Ancestry.com after the Internet bubble burst in 2000 and 2001. Ancestry.com could have easily become another casualty and gone the way of pets.com, but we were always looking at our bottom line and were able to use interactive marketing to continue to improve the position the brand and service. We had visibility into what was happening in the market and with our online marketing. We were thus able to implement programs and tactical changes to maintain market share at the same time the online economy was in rapid decline. The big difference then was that online activity and purchases were actually increasing at the same time businesses were failing, causing an overabundance of cheap ad inventory. Ancestry.com was able to increase their "interactive dragnet" at the same or lower cost than before. This is one of the key reasons the company is in the position it is in today. But today, the challenge is that online spending is flat or in decline at the same time competitive pressure is increasing. The remedy today is a little different.

Interactive Marketing in Red and Blue Oceans

Here is a sample scenario in terms of interactive marketing, but the same applies elsewhere (in a cause and effect sequence):

In this scenario, the economic pressure creates an increasingly bloody "red ocean."

1. Fewer consumers are looking for your product that is clearly an unnecessary purchase.
   
2. You chase these customers with more advertising dollars to maintain revenue and market share.
3. Your advertising rates increase.
4. Your cost per acquisition increases.
5. Your competitors increase their advertising spends.
6. Everyone starts getting "cute" to exploit perceived gaps, creating wide swings in cost and performance.
7. Soon, you or your competitors decide the increased cost isn't worth the return and decrease spending levels.
8. Costs temporarily come back down below previous levels.
9. You or competitors jump back in with more money because costs are now lower.
10. The cycle continues . . .

This is the issue with advertising dollars in the "bloody ocean." (If you haven't heard about red and blue oceans by now, where have you been hiding?) The challenge is that when consumer demand goes down, it actually costs more to reach potential customers because of increased competition for scarce or effective advertising inventory. Economic theory would state that, overall, when the economy declines advertising rates should also also decline because fewer companies can afford the same ad rates. Demand for advertising inventories should decrease, leaving an excess supply, which should drive down costs. However, as outlined in the above scenario, this is not the case in a very competitive market . . . until competitors in the bloody ocean simply can't afford to pay existing rates. So, how can you compete effectively when you and your competitors are tempted to act irrationally? What should happen is the following: Pursue a "blue ocean" marketing strategy:

1. Fewer consumers are looking for your product that is clearly an unnecessary purchase.
2. You take the time to identify advertising strategies over which you have the most control and the least exposure to competitive pressures.
3. You maintain or decrease your red ocean spending strategies, such as PPC search ads, sponsorships, and display advertising. You don't want to just turn these off, but you don't want to focus on these strategies to maintain market share at the same time your competitors are becoming more desperate and may drive up marketing costs for these programs. Give these strategies time rather than money, and you will likely see your advertising rates decrease.
4. Advertising rates maintain or decline based on your decision not to escalate spending.
5. Now, you focus on creating a "blue ocean" marketing strategy. You should always be doing this anyway, but this is more important than ever in a declining market or in a weak overall economy.

Swim into the Blue Ocean

The following are five strategies to creating some "blue ocean" from an interactive marketing perspective:

1. Engage in joint marketing initiatives. Join with companies with related products to share marketing dollars through product bundles, barter advertising, value added free trials, or other joint efforts. You are now increasing visibility of your product or service without incremental cost. You are also focusing on strengthening your market position through strong partner relationships. This is a great long-term strategy.
2. Go after the long tail. Instead of concentrating on current interactive marketing, where competition has been fiercest, expand your advertising efforts to include a longer tail or into a market that is less competitive.
3. Focus on relationship programs. Affiliate programs, friend referral programs, and social marketing are extremely low risk. All of these programs are free or straight pay for performance based on actual customer acquisition (rather than impressions, clicks, or other metrics). If you can't motivate your customers to share your product with their like-minded friends, your problem may be much deeper than your interactive marketing strategy. Similar to joint-marketing initiatives, these programs provide you with a long-term strategic advantage. A customer who invests time and effort to share your product with someone else far more likely to become "bonded" to your brand than someone who doesn't. The same goes for those who invest time optimizing affiliate links or talking about your service on Facebook or Twitter.
4. Focus on business model innovation for thought leadership. Can you make your business model more attractive or implement a marketing strategy that generates buzz? Similar to engaging with partners, any strategy that leads OTHERS to talk about your product and participating in your marketing strategy stretches your advertising dollars. If you have a CD-ROM product, consider an online offering. If you have an online offering, consider making more of your service available for free.
   
   Don't just make a change (i.e. providing your service for free for a limited time or implementing an ongoing customer competition with weekly winners), but tell everyone about it. Bloggers, analysts, and even the press are likely to pay attention to anything that is novel related to business model innovation. In mature markets, this is one of the BEST strategies to create a strategic barrier. Ask yourself: "How many of my competitors can afford to change their business model right now?"
5. Think guerrilla warfare. Consider using Compete.com, Keyword Spy, Spyfu.com, or another service to gain insight to your market segment and gain an idea of how your competitors are reacting to the economy. Competitive insight and careful analysis of data and trends are important activities that can give you a competitive advantage during difficult times for your market or the economy at large. See how you can improve your online presence using free and low-cost services, such as free download services, social media, participating (thoughtfully) in forums and message boards, etc.

As with any economic disturbance, you also need to be able to separate the effects of the economic downturn from other factors that may also be hurting your sales. I'll write another blog entry about how this is done, but it begins and ends with having excellent business analytics.

Taking the time today to invest in interactive marketing relationships and experiment with blue ocean strategies will ensure you are properly positioned to get the biggest gains when the market rebounds.

Incomplete Experience Paths - A Marketing Nightmare

I just took the time after several months to fix an update issue I was having with some software drivers on my computer running Vista. Here was the scenario:

The HP Update program that was supposed to provide software updates wasn't working. Every time I would try to download an update, it would download but fail to install and would end with the following message: "HP Install Canceled" and a red "X" next to each update I had been prompted to install.

Finally, a few months ago, a new update appeared with the name: "Urgent! HP Install Canceled Issue Fix." It sounded like it was just what I needed to get the other updates to install. The problem was that the bug that the software solution promised to remedy was blocking the installation. Cruel irony.

Well, I was prompted today to download and install this update again and went through the trouble of researching a solution. The solution was simple enough: I had to run the HP Update software as the computer's administrator. No biggie, but what a broken customer experience! Here are a few of the most offensive experience gaps I have seen over the years. Most of these could be prevented easily with a little more review and preparation. But mistakes do happen.

• Incomplete messages being sent to customers. One of the most effective messages we ever sent at MyFamily.com to millions of users was an incomplete message that said "Today is April 18." Many people clicked to see what was special about April 18. Some expected it was part of a stealthy promotion we were running, but it was just some incomplete code that was rolled live. In the end, we looked rather foolish when we explained to customers what had happened.


• Missing calls to action or response links. Every communication with a customer should invite them to take action. Newsletters are the worst offenders in this area. Newsletters are to inform, but they should also invite customers to do something. One of the most important steps to take when writing any newsletter is to segment your customers from your prospective customers to give each group a different call to action. A subscription service, for example, should always include invitations to non-members to join their service in each newsletter and then customize the newsletter for current subscribers with messages about how service improvements have increased the value of their membership. This is a simple concept that is easily done and often overlooked.


• Missing links. Here is the most obvious lesson of all. If you want someone to get to something on your website, you should promote it . . . or at least link to it. Early in my days at Ancestry.com, I implemented a redesign of the homepage with input from several stakeholders. I reviewed the design with Paul Allen, and he wanted to reduce the clutter on the page further by removing more links. One of the links that was cut was the link to the "Learning Center." A few weeks later, Paul came to me wondering why our traffic to the learning center was down so dramatically, why nobody was visiting it anymore. I explained simply that more people are likely to click on a link that exists than one that doesn't exist.


• Including a incorrect link or phone number. Always visit every link and call every phone number you include in any promotion piece. Don't just visually look at the link and type it into a browser. Copy and paste the link to make sure you are using EXACTLY what is included in the promotional piece. This is especially critical if it is going out in print. A wrong phone number is worse than not including one at all. Get someone else to call the number as well to make sure the number is correct and that the complete customer path and experience is in place BEFORE printing or sending out a promotion. I was once ultimately responsible (although the initial error was not my own) for a religious-oriented direct mail piece that included a phone number for a phone hot line that wasn't exactly "religious." We negotiated to have the number redirected to us for the duration of the campaign, but not before a few customers had already called the wrong "service."


• Customer service being left out of the loop. This includes your online FAQ or help links. Customer service needs to know about changes to your product or service that might impact customers. You can embarrass your entire organization by not letting the customer service department know about current bugs, challenges, or anything else that customers may contact them about. You should never find yourself in a meeting addressing customer issues and experience the following scenario: Someone from support explains an issue they are starting to hear about from customers and someone else says, "Ya, we've been working on that. It's a known problem." That statement is evidence that communication was missing and that information is flowing in the wrong direction. Transparency is the right solution.


• Dead end experiences. How many promotions have you run on your web site? What do you do when one promotion ends and another begins? What about price promotions that may be sitting in someone's email inbox for next three months? What experience will they have when they finally get around to opening it and clicking on a link? This point could use three or four examples, but consider the following principles when designing pages or experiences:
  
  1. People can likely get to a page on your site through multiple paths, including directly from a search engine. Unless the page is a targeted landing page, you probably want to include full navigation.
  2. Links can live forever. Never just take down a page or promotion. Either replace it with something more recent or use a friendly redirect to tell your customers (and search engines) where they should now be looking.
  3. Clearly let customers what to do next in any sequence, such as a sign up path. Don't accidentally hide the link you want them to click by turning it into an inconspicuous text link with a beautiful style that doesn't make it look like something they should click.
  4. If someone starts down a path (such as conducting a search) make sure they can get back to start again without using the browser's back button.

At the end of the day, an incomplete experience path can actually do more damage than frustrating your customers and potentially lower your revenue. Incomplete paths are likely to damage your brand in the eyes of your customers, turn customers into enemies, and leave you looking like an idiot. Been there, done that.

Marketer, can you respect yourself in the morning?

I've had an interesting week this week to say the least. Don't worry. I haven't had an affair as the title may suggest. I've just been thinking about self-respect and what compromises in ethics and morality marketers are willing to make for themselves and their clients.

Asked by a couple of friends to help them market their products, I've been introduced to an underbelly of marketing I had never really recognized in the past. I guess I've had the blessing to always market legitimate products to customers whom I respect appreciate. Have I just been blissfully ignorant and naive about other approaches to marketing? Perhaps. But now I'm a bit saddened.

To keep this blog entry short (OK, relatively short), I'm going to go straight to a list of practices that may lead to unsettled nights and waking up with regret and a loss of self-respect as a marketer in the morning. The list also serves a dual-purpose of showing you what to look for when identifying online scams, so you don't fall prey to their deceitful practices.

1. There is no way to contact the company or the only means of communication excludes the possibility of talking to a live person. Real companies respect their customers and want to help them when challenges arise.


2. You search for the product or brand and see it associated with the words "fraud" and "scam" repeatedly. Anyone who has a bad experience with a product or company may be vindictive and go overboard to hurt the company; however, thousands of hits in association with the word "fraud" or "scam" can't be a good sign.


3. You've never heard anyone say anything good about the product or service beyond hype in marketing messages. This is related to my blog entry a couple weeks ago about delivering a "remarkable product." An absence of positive reviews is not necessarily an indictment, but it means you should be careful with your expectations.


4. The product is marketed using questionable practices. If you see ubiquitous ads for a product everywhere but have never heard of the product again shows a bad ratio between marketing presence and satisfaction. the next few points outline some specific marketing practices to look for.


5. You learn about the product through spam. Spam includes unsolicited email, unrelated message board postings, and "friends" who push affiliate links via social networks. Twitter has become notorious for social spam, but I've seen a positive trend with fewer spammers following me lately.


6. The product is marketed heavily on Clickbank. I hate singling out an affiliate network here, but Clickbank is notorious for allowing scams to advertise through its network. It appears that everyone is in on the scam, including publishers, affiliates, and Clickbank itself. Does that make activity in Clickbank an "un-virtuous circle?" Maybe an "immoral circle?" It's definitely not vicious to anyone but the consumer.


7. The product promises are too good to be true. I had to throw this one in here. There are many companies that continue to market the "promise" of their product rather than the reality of what the product may actually do for you. Outlandish claims and hyperbole are sure-fire indicators that an unscrupulous marketer is behind the message.


8. The value exchange is unreasonable. Good products cost money. So does excellent information. But lots of scams are just over the line from overpriced products, including information that is freely available online repackaged as an e-book.


9. Something free requires a credit card or cell phone number for delivery. The cell phone number signup scam is relatively new, an "innovation" related mobile apps and social media ads. Read the fine print on any "free" offer that requires you to provide a credit card number of cell phone number. With mobile phone delivery, you may be allowing them to sign you up for a monthly subscription that is billed to your cell phone number. Slimy!


10. The company treats its customers with disrespect or contempt. While this is a fairly common practice in today's course society (I once heard the former CEO of eBates.com jokingly refer to his customers as "cheap a** bast****" during a presentation), companies that run scams tend to antagonize and intimidate their customers rather than listening and helping them. They are harshest in their enforcement of refund and cancellation policies . . . until you threaten to report the company to the FTC or Better Business Bureau.


11. The company cares more about revenue than satisfying the needs of the customer. I almost left this one out but had to include it on principle. It actually represents a conundrum. There is no ability to satisfy customers if a company can't make money, but a company has no "right" to be in business if it isn't serving the needs of customers. I still maintain that the best path to profitability is identifying a customer and then working passionately to serve the customer's needs. Any company that has a sole focus on revenue or "what customers can do for us" is looking at customers as a means to an end. Serving and hopefully delighting customers is how a company succeeds. A focus that is too heavy on revenue often leads companies to abandon their most valuable advocates while they "step over a dollar to pick up a dime."

A rule of thumb I have often used is answering the following question: "Am I afraid of my customers or do I embrace them?" There are lots of possible variations on this question, such as "How excited am I to tell people about my product and service?" The point is that any marketer who fears his customer is likely in a tough position because either the product or service he is marketing isn't delivering on its promise or it has been marketed in a deceptive manner.

So, when you are marketing a product or service, are you ensuring yourself a peaceful slumber or are you going to wake up in the morning wondering what on earth you were thinking the night before?

Marketing ethics fell through the floor right before the dot com bubble bursting, led by loyalty programs, lead brokers, and referral services. I hate to say it, but as an interactive marketer it's feeling a lot like it did about 10 years ago. Will we wake up and opt for self-respect or keep building a house of cards one compromise at a time?

Great vs. Proper Expectations

Poor Pip! Getting his expectations dashed again and again. Dickens understood the rarity of achieving grand expectations. So many of us in business want to set grand expectations on behalf of our customers that we do so without contemplating what will be necessary to deliver on our brand or product promises.

Establishing great expectations in the minds of customers only to dash them again and again is setting ourselves up for failure. The concept is similar to what Alan Greenspan termed "irrational exuberance." Setting an escalating set of expectations where little or nothing is actually delivered is in fact asking customers or clients to suspend disbelief and act in an irrational manner to continue to buy into a dream with little or no actual evidence.

Someone I admire reminds me often to "under promise and over deliver." I've heard that time and again in my career--as an excuse to pad numbers, to extend product development time lines, or to justify when a product that is really poor is "good enough."

The Bible's parable of the two sons, found in Matthew 21:28-32, does a great job of setting the table for this marketing principle:

But what do you think? A man had two sons, and he came to the first, and said, ‘Son, go work today in my vineyard.’ He answered, ‘I will not,’ but afterward he changed his mind, and went. He came to the second, and said the same thing. He answered, ‘I go, sir,’ but he didn’t go. Which of the two did the will of his father?" They said to him, "The first." Jesus said to them, "Most assuredly I tell you that the tax collectors and the prostitutes are entering into the Kingdom of God before you. For John came to you in the way of righteousness, and you didn’t believe him, but the tax collectors and the prostitutes believed him. When you saw it, you didn’t even repent afterward, that you might believe him.

Brands that make promises they cannot keep disappointing their customers and don't meet the expectations of those who want to believe in them. Nearly every brand or product is able to "talk the talk" of what people want to hear. But brands that get caught up in superlatives and ever-increasing promises are LEAST likely to satisfy the needs of their clients or customers. Why? Because they make too many promises.

Let's face it: most of us can only do two or three things extremely well. Very few are the renaissance men who can fence, write fine poetry, calculate the circumference of the earth, as well as sing and dance professionally. Yet we are more than willing to make those types of claims for some of the products we sell.

The following is a list of 10 recommendations to help anyone avoid the trap of over promising and under delivering:

1. Describe your product as it really is and not as it will be. I just love how people issue press releases with "forward looking statements" in an effort to create noise in the marketplace. If you can't sell what you say you have, you don't have it.
2. Don't pre-announce a product or service. Although you may find an exception or two, such as dispelling rumors or announcing progress on a public program, prematurely announcing a product or service is like crying wolf and creates a "sigh" on the part of those who are awaiting the real news. Also, pre-announcements often decrease the novelty of the actual release of a product or service. A good rule of thumb is to only announce a product or service you can link to or actually sell.
3. Avoid superlatives. Very rare is the product that is actually demonstrably the fastest, best, longest-lasting, or even most recommended. These terms can easily be replaced by lesser terms, such as: great taste, less filling, excellent value, speedy, etc. Superlatives are often counter-productive because they create a question in the mind of the consumer, such as: "Is this really the fastest courier service available?" Superlatives are great to establish a sense of humor or unique niche position, but few brands can afford taking that risk.
   
4. Remember there must be a fly in the ointment. People tend to have a built in "crap-o-meter" to tell them when something is just too good to be true, and they resent being misled. Any properly written unique selling proposition includes a trade-off on the part of the customer, what they are willing to give up when purchasing your product. Don't be afraid of that part of your value proposition. For instance, Little Caesar's Pizza is all about value. "Hot and ready" is a long distance from "gourmet specialty pizza." Little Caesar's doesn't mind that its customers are in on that little secret.
5. Let customers tell your story. This is probably my favorite insight. You are far less likely to make extraordinary claims if you leave the story telling to your customers. They can describe what they were looking for and how you or your product filled their need much better than you can. And they are more believable as well. Customer quotes in press releases are rare but can also be very effective.
   
6. Let partners tell your story. Similar to customers, business partners can also reinforce your position in the value chain. Think of it as a company that makes staplers making a recommendation of another brand for staples based on the experience of their customers. That's a much stronger endorsement than a company that says, "buy our ink and our paper to use in our printer."
7. If you are describing a product prior to release, only describe the core or most basic features. Many product roadmaps shed features as they progress. You don't want customers sold on features that don't make it into the final release.
8. Always hold something back as an element of surprise. As a corollary to #7, the element of surprise can delight customers and keep your competition off balance. Describing a new product or service in too much detail prior to launch leaves little room for your audience to be delighted.
9. Avoid communicating specific dates when possible. Launch ahead of schedule when a date has been set (easier said than done). Public companies have less latitude when "over delivering." The Street rewards companies for doing what they say they will do, not necessarily doing more than promised. Startups and more entrepreneurial ventures can beat expectations every day if they want by simply never committing on a date. Part of the secret of exceeding expectations when it comes to timelines is to never communicate the timeline itself. A product that bursts on the scene from "nowhere" will typically carry more mystique and have much lower hurdles for acceptance than a product that has been anticipated for the last five years.
10. Listen to your customers and focus on what they need most rather than every possible feature. You can exceed your customers' expectations by just showing that you listen to them. Most customers in today's chaotic environment are still shocked to find a company that listens to and addresses their biggest needs. Small demonstrations of understanding and respect for the customer will cover a multitude of inadequacies in other areas.

I hope this list helps you delight your customers by easily exceeding their expectations.