Why the Role of Trusted Advisor Has Become So Important

Role of Trusted Advisor in Business Communications is CriticalI am a firm believer that deep down inside, people want to do the right thing. Perhaps it is my Economics training – a key foundation for this field of study is that consumers will typically make a decision that improves their well-being. Of course, if that decision is good for you, but not good for society, then the theories of Economics don’t always explain how decisions are made, or necessarily lead to decisions being made for the greatest common good. In these cases we need a trusted advisor.

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Does Brand Value Live Beyond the Grave?

enduring-value-brands-Lehman-BrothersI was most amused when reading about a new Scotch whisky that now carries the Lehman Brothers name. The product is called “Ashes of Disaster,” so is clearly meant to evoke memories of the failed financial services company. As a reminder, some consider the failing of Lehman Brothers the catalyst that triggered the 2008 global financial meltdown.

According James Green, a 34-year-old London entrepreneur that is launching the whisky, “It has a contrite, bereft peatiness,” as quoted from the Wall Street Journal article. Mr. Green plans to offer his spirits online and has gotten orders from bars in London and New York.

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Social Media’s Influential Role

role_of_influencer_todayI have already written about the important role “influencers” play in the purchase process – from the choice of what ice cream flavor to eat, to the complex purchase cycle of an enterprise software solution (link to prior post). This article will take a closer look at how social media has taken on an important role in helping influencers connect with buyers along their purchase journey.

It wasn’t long ago when Facebook was an application just used by college students looking to make plans for the weekend, or to catch up with others on recent news or activities. The amazing growth of members quickly validated how popular and how much value its members place with this social community.

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Marketing is More than Advertising

I find it interesting when I speak with new acquaintances and they ask me what I do. I’ll typically respond with “I’m a marketer” or “I’m part of a marketing team.” Nine times out of ten, the response I’ll get back is “Oh, you do advertising.” I used to be surprised with this response, given that advertising is really just a small part of the marketing discipline. Now, I have come to expect it.

Of course, advertising is a part of the marketing mix. It comes in many forms, as shown in this recent media share chart.

advertising_spend_by_catetory_2013
Average allocation of advertising budget for marketers in 2013. Source: BIA Kelsey.

Each of these categories represent are part of the advertising spend, with each component offering unique advantages and opportunities, depending upon what you are selling and where your audience resides.

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Is there a Link between Customer Satisfaction and Loyalty?

customer_loyaltyFew would argue the importance of customer satisfaction. Every business owner strives for happy customers. In practice, however, what does it mean to achieve customer satisfaction? What makes a happy customer? Are they more profitable? More loyal?

Fortunately, considerable research has been performed on this subject, which will be quite helpful to address these questions. The first challenge is to understand what is actually going on versus what business owners think is going on. According to Lee Resources, 80% of companies say they deliver “superior” customer service, but only 8% of people think these same companies actually deliver this type of service. That is quite a perception gap. A big part of the reason why such a gap exists is that most unhappy customers don’t tell you – only about 4% – according to “Understanding Customers” by Ruby Newell-Legner.

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Public Relations on a Shoestring Budget

public_relations_on_shoe_string_budgetBy Gordon Benzie

 

Having just discussed the importance of measuring the incremental marginal value and marginal cost of public relations as a way to determine an optimal level of investment, sometimes that option simply doesn’t exist. If you only have a limited budget, then you must simply learn to make do with what you’ve got.

For the purpose of this post, let’s assume you have at least some funds that can be allocated to PR. For your initial public relations campaign, you need to start small. Regardless of your budget, spending a high proportion of available cash flow on an untested, unknown marketing activity is needlessly risky, so don’t do it! Instead, set a few targeted objectives and allocate a modest budget to accomplish.

Most importantly, you must be able to measure these actions with metrics that matter. Then give yourself a minimum of 3-4 months to lay the foundation for your Public Relations campaign to allow for a bit of a “runway” to experiment with a couple of activities. Often a campaign will “grow legs” and set in motion other, related actions that bring rewards and opportunities you never even considered.

First Steps

Once you have mentally committed to this “experiment,” the first step is to identify an objective or goal that can be measured and is a reasonable expectation. You don’t need to talk to a marketing consultant to know that if you are currently ranked #50 amongst your competitors, issuing a press release won’t get you to #1 over night!

To help illustrate, let’s say you own a shoe store, located in a mall. Your customers primarily consist of those who are either already at the mall and see something interesting in your window display, or are repeat buyers. Given your knowledge of the business, you know what a “normal” traffic baseline is, so for this example, our goal is to increase foot traffic by 20 percent. Note I am not directly targeting an increase of revenue, but instead that increased traffic will lead to more sales. My hypothesis is simply that a rising tide will raise all boats, leading to more sales. If increased traffic does not improve sales, then a different problem might exist.

The Campaign

Now we have a goal, the next step is to think about is what event or activity can be established and communicated to achieve more traffic at the store. Perhaps you are friends with a local celebrity in the area, in which case you could advertise they will be in your store next Saturday to sign autographs. With this “call to action,” you can now invest the time (and resources) to draft a press release announcing this activity, which then would need to be published in time for your prospects to read about it and make time in their schedule to visit. You could then reach out to your local paper to make a short announcement, even inviting someone from the paper to attend (if they are available). A few phone calls and some time spent writing the announcement sums up your investment for this trial activity.

Another example might be to sponsor a local school event by providing running shoes for some (or all) participants. This could be a way to raise awareness to the other athletes in the area your commitment to being part of the local activities, helping to make your store be known as one that is investing in the community. In “marketing speak” this is referred to as brand awareness. With this scenario, the investment cost all depends on what you want to give away.

In the end, the activity or campaign will then need to be measured against your objective to see how it fared. Missing your objective can teach you just as much as over-attaining it. Dissecting this activity can reveal enormous intelligence on how your customers perceive you, as well as insights into their buying behavior. From this knowledge, you can then adjust your approach, message or outreach to hopefully continuously improve your results and return on investment.

And that, after all, is the key to unlocking the future upside in any business.

 

Gordon Benzie is a marketing adviser and business plan writer that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

What is the Right Amount to Spend on Public Relations?

public_relations_return_on_investmentBy Gordon Benzie

 

Once you have made the investment to do public relations, the next step is to determine the right level of investment. While some consider a bus the best way to commute, others might be completely justified to insist on a Lamborghini. Your level of spending must match your business profile, budget and message objective. If you are publicizing a high end brand, a corresponding higher level of PR investment might be warranted. For all other campaigns, return on investment should be carefully evaluated to determine what is right for you.

One approach is to apply the concept of “zero-based” budgeting. Start with nothing, and then only justify incremental programs, starting from a zero baseline. If your ROI is positive, then spend more. As long as your returns continue to be positive, a reasonable case can be made to continue to expand. Note that some returns may be “soft” and yet completely justified. Borrowing from my economics background, at some point, your marginal returns will turn negative. At that point, stop spending more dollars and shift focus to continuous improvement at that spending level.

It is easy to quantify what you are spending on Public Relations. It is the benefits that are more intangible. As a way to help with this process, below is an example of a return on investment of public relations campaigns can be reasonably measured.

Measuring Better Public Awareness

Increased awareness is a benefit that makes sense on paper, but can be difficult to measure. To start, try doing a Google search on your company product name, company name or whatever term you are seeking to measure increased awareness on. In your search query, make it specific to your company market, target audience, geographical location (if applicable), etc. How often were you mentioned? How high up on Internet searches did your terms rank? This is a quick way to gauge a baseline exposure level.

Of course, search engine optimization impacts ranking levels. More news will too. More public relations activity generates additional listings to drive improved web traffic. If your listings doubled, web traffic will likely increase, resulting in greater value with increased levels of prospect engagement.

Another way to measure is with your sales team. As they go out on customer prospect meetings or calls, how often must they explain who you are? This measure will be rough at best, but, you might get answers such as “all the time” or “about half of the time,” which can then give you a baseline to measure against. Less time spent introducing the company means more time for sales people to sell.

In the end, the best measurement strategy depends on what type of business you are in, the competition and what level of existing awareness already exists. Investing in public relations can yield many benefits. Pick your target, implement a campaign and then measure it. Repeat. Over time, your understanding of the market will increase, which can then be used to justify expanding or contracting your existing spend rate.

 

Gordon Benzie is a marketing adviser and business plan writer that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

Why do Public Relations?

Why do public relations?By Gordon Benzie

 

For this post, I thought I would challenge what the role of public relations is, with the objective to provide a thoughtful perspective on what value PR plays within an organization.

To start, the objective of public relations or PR is to raise awareness of a company, non-profit group or any other organization. Why does this matter? Well, to start, it is a lot easier to sell products or services if your audience has heard of you. Simply stated, no one wants to buy from a stranger. Public relations overcomes this sales hurdle by creating stories about the organization that will be viewed as interesting, or at least interesting enough to be read about by your target audience.

Note that this methodology must be applied with the sole objective to engage your audience. If other people find out, that is fine. But, you must be careful to not waste limited resources reaching individuals that will never be part of your buyer’s purchase lifecycle. This philosophy must be applied religiously to every opportunity for contributed articles, guest blog posts, speaking engagements and award opportunities.

My Audience Already Knows Me

I have spoken to some business owners who state that their target audience already knows who they are, and they know all about their company’s product or service. If this is the case, why spend the investment to reach out to them again? The reason why this investment makes sense is that it is going to help you to continue to best serving your market segment. Just because a customer has heard of you doesn’t mean they will continue to purchase or renew their existing services with you on a consistent, never-ending basis.

The Risk of Complacency

Imagine this scenario as a theoretical a case study. A new competitor enters your market. What do you think will be the first thing they do to introduce themselves to your customers? Odds are some sort of PR campaign, including announcements, special offers, grand opening day parties, etc. They must make this investment as they are coming into your market as a “disruptor,” which must be announced in order to be effective.

Now let’s say that you haven’t been investing your own PR campaign. Maybe funds have been tight as you have neglected this activity for the past year or so. Maybe your website and social media channels are a bit out of date too, falling into the category of something that could be deferred for a year or two.

Unfortunately, you are now a sitting duck for this new competitor to come in and eat your lunch. Once they begin making noise, you will be caught off guard. Assuming you move quickly and start to invest in getting your PR program back on track, it will still take time. Days, weeks or even months will pass before you are able to first get your routine changed to re-focus on this topic. You will be in “catchup” mode for some time. Every month you are behind is a month where you are at risk of losing customers. Think about it … what is the opportunity cost that someone might come into your market and try to steal market share?

At minimum, it might make sense to at least keep a few programs running, even if funds are tight. This way you still have a “toe” in the water, as a steady “beating of the drum,” to remind the market and your audience of current customers and prospects. This activity states that you are still there, and are actively reaching out to them to continue to help better address their needs with your product or services. Seems like a good investment and an even better business strategy decision that can be easily incorporated into your marketing communications strategy.

 
Gordon Benzie is a marketing adviser and business plan writer that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

Did Labor Unions Really Kill the Twinkie?

The nostalgia world may never be the same after the events from earlier this month. After 88 years, Hostess, the makers of Twinkies, Ding Dongs and Wonder Bread, is going out of business. According to the story that ran on NBC.com, the CEO blames the unions, which made the decision to go on strike as part of the latest round of labor negotiations. The company has been in Chapter 11 bankruptcy proceedings for the past 10 months or so. Last week it was announced that all assets will be liquidated, resulting in about 18,000 employees losing their jobs – certainly an unfortunate turn of events.

When I first read this news story, it struck me as interesting how strong the focus was about the role that the Labor unions played in “bringing down” the company. Since the labor unions would not accept new lower salaries, the only choice CEO Gregory Rayburn had was to shut down the company.

That is one way to tell the story.

Another angle is that the company failed to adjust to the times. Over the past decade or so, eating habits changed – the focus today is on eating healthier foods. Given this trend, it is not surprising that a company such as Hostess began having problems, given its product line. I don’t think anyone will argue that the nutritional value of a Twinkie is not too high … according to info published on Livestrong.com. At 150 calories per Twinkie, it has 4.5 g of fat, 20 mg of calcium, 20 mg of cholesterol and 19 g of sugar, equivalent to almost 5 tsp. Double each of these figures for the typical way this product is sold, as a two pack. Other Hostess products don’t fare much better.

This brings me to my point. When you are crafting a story for the press to cover as a business communications or news announcement, there are many options on how to pitch it. Seldom is there just one story. In this case, perhaps the Hostess CEO and management team sought to blame the unions for the downfall of their iconic institution in order to deflect a different line of questioning – such as what were you doing about new product introductions a decade ago when this trend first became obvious? A few days later, more details began to emerge indicating that maybe there were other issues impacting sales. Clearly their cost structure was not well aligned to revenue. It might be that there is no business model that could work for these products today; however, a story focused on that theme wouldn’t do well to help the company find a new suitor. When faced with these alternative stories, portraying the problem on the unions was probably the best way for them to deflect blame while keeping the door open to a new buyer that believes they can address the labor issue.

When you have a business communication to address, sometimes you get to choose what the lead in story and news will be – more often if you proactively make an announcement or hold a press conference. If this is the case, best to take advantage of this opportunity. Other crisis communications, such as an oil drilling platform explosion and fire, can’t really be modified to give it a good “spin.” Over time, if your story has more to it, then it is most likely that the rest of the story will follow. But, it will be secondary to the original announcement, which might just buy you some time to get through your crisis, should you have to experience this type of announcement.

 
Gordon Benzie is a marketing adviser and business plan writer that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+.

Communicating Pricing in a Multi-tiered Distribution Model

It is no secret that companies regularly charge different prices for the same product. Just look at the airline industry as one example. Nearly every seat has a different price, which can vary depending upon the day of the week, your status as a frequent flyer and how close the flight is to departure. The strategy behind this pricing decision is valid – lost seat revenue from departed flights can never be recouped. Airlines must try to fill every seat for the highest possible rate to maximize revenue. This pricing dichotomy can create a potential communications challenge, but only if the rationale behind this difference isn’t reasonable.

I would propose that the car rental industry’s pricing strategy doesn’t make sense, and as a result, that industry is communicating poor messaging resulting in a loss of consumer loyalty and repeat purchases. Speaking from my own experience, I see the purchase of a rental car as a commodity item, one that is identical regardless of what provider I choose to patronize, with one exception – Enterprise. They will bring the car to you. This is great service, and truly a competitive differentiator.

Here is my source of confusion – if you take the time to create an online profile with your preferences, including personal identifying information about what you like to rent and where you like to rent, this privilege you are bequeathing to the car rental company comes at a price – you are charged a higher rental fee! One might think that a “preferred” member should at least be given a coupon or some sort of advantage for going through the hassle of creating the online profile..

Let’s assume there is some sort of loyalty program that gives repeat buyers a discount. If that were the case, then the choice to purchase through a third party might be worth less to a car rental company – a commission must be paid to these purchases, reducing the economic value of such a purchase. The reality is just the opposite, and the price difference is unbelievable. At Hotwire.com, I can rent an economy car for $15 per day, provided I can create an alert and check back periodically to when that rate comes available. Alternatively, if I go directly a car rental company and try to book the same car, the price is about $80-$90 per day, for the same period, same location and same type of car, a rate increase of 400-500% higher. The only difference is that the $15 rate is non-refundable, so clearly there is some value in being able to cancel without penalty.

Perhaps, this is a reasonable pricing decision and worthy from an economics perspective to continue this practice. I don’t know, as I am not privy to this information. My point is that from a consumer messaging and business communications perspective, this discrepancy simply doesn’t make sense. For example, the car rental companies could offer a “refundable” and “non-refundable” rate, if that is indeed the source of the extreme pricing difference. Then, it starts to make sense.

In the same way that an empty “seat” on a flight represents revenue that will never be recaptured, rental cars sitting on a lot overnight represent the same opportunity cost. Clearly, a multi-tiered pricing strategy is logical. The challenge how do you execute a sensible pricing and communications messaging strategy that can be a win-win for both the company and its customers?

Does your business or industry have its own pricing “nuances” that only you, as an insider, understand? If so, maybe it is time to fix them.

 
Gordon Benzie is a marketing adviser and business plan writer that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+.