A workshop with idle machines needs a different management and marketing tactic from one that cannot reliably deliver the work it has already sold.
Yet the pro forma solution from many ‘digital marketing gurus’ would be to ‘generate more leads.’ For one, it may be sensible advice, for the other, totally wrong.
The same business can move from the first situation to the second in the blink of an eye. The advice that helped fill the order book can then make the delivery problem worse.
Good marketing advice carries small print, ‘be sceptical, trust your instincts, and understand all the numbers’. The ‘numbers’ always includes the elusive, hard to measure factors that are often the game-changers.
We make grand assumptions constantly. An impressive case study becomes a conference presentation, then a rule that everyone should follow. Somewhere along the way, we lose sight of the buying cycle, the available resources, and the particular customer problem the business set out to solve.
Consider the instruction to concentrate on retaining customers because keeping one costs less than finding a new one. Usually this is very good advice.
For a subscription business losing customers through poor service, understanding why customers are not renewing would usually be better. Spending more on acquisition while customers leave in frustration just gives the service department a larger queue of complaints that leads to further erosion.
However, a roofing contractor cannot persuade a satisfied homeowner to need another roof next year. The relationship still matters for referrals and reputation, but growth requires access to other people who need a roof. A retention campaign that ignores the purchase cycle solves a problem the business does not have.
Even where customers buy regularly, the economics deserve scrutiny.
A discount to someone who would have bought at the normal price reduces margin without changing behaviour. Retention only creates additional value when your action changes an outcome worth changing. The constant promotional pressure exerted by supermarkets on suppliers has served only to erode supplier margins and destroy brands.
Then there is the instruction to put more money into the marketing activity that delivers the best measurable return. Sensible enough, provided you understand what the measurement tells you, and it is a useful addition to your understanding of customer behaviour.
A customer may hear about you from a colleague, read your material, and later search for your business by name. The final enquiry tells you where they entered the sales process. It does not, by itself, explain what persuaded them to look for you.
Move all your money towards the activity that collects the enquiries, and you risk starving the activities that created the interest. You can improve the reported efficiency of your marketing while weakening its ability to generate future demand.
That does not give anyone permission to hide poor performance behind the words “brand building.” It means you need evidence that suits the decision, and a measurement period that respects the buying cycle.
The common mistake in these examples is accepting the prescription before diagnosing the problem.
More leads assume you can profitably serve more customers. Retention assumes you can influence another purchase or prevent a worthwhile customer from leaving. Increasing a marketing budget assumes the next dollar will create enough additional value to justify its cost.
Write down the assumption before you approve the activity, and then ask what evidence would show you that it no longer holds.
“It depends” offers no help unless you can explain what it depends on, and how that changes the decision.
Nor should we use context as an excuse to discard experience whenever a fashionable idea comes along. Understanding the customer, keeping promises, and earning an adequate margin remain essential to success. The tactics we use to achieve them needs more frequent examination.
The practical question is what constrains profitable growth here, now. A shortage of suitable buyers requires a different response from poor conversion, inadequate capacity, or a service failure.
Before accepting the next piece of marketing advice, ask: “What would have to be true for this to work in my business?”
If the adviser cannot answer that, a larger font on the presentation will not help.
The character of Don Draper in ‘Madmen’ depicted in the header probably said it best.
