Three times in six months I’ve had the opportunity to publicly address that question, refine my thinking and post brief essays exposing my thought process, real-world examples and recommendations. But since that was done over time, here are the myths and tips neatly bundled:

• Re-balance your marketing efforts before you reduce (“Re-balance the Marketing Portfolio” September 7, 2009)
• Customer service is marketing, especially in bad times (“Customer Service as Downturn Advantage” September 20, 2009)
• Brand maintenance helps retain perceived value (“The Good Downturn Brand Shepherd” October 14, 2009)
• Having a long-term strategy makes it easier to take advantage of short-term opportunities (“Strategy’s Downturn Role, Redux” December 27, 2009)
• Communicate honestly and often or customers will do it for you (“Why Bad News Is Good” February 9, 2010)

My thanks to the Bellevue Chamber of Commerce, the Bellevue Collection Merchants and the Mercer Island Chamber of Commerce — all in Washington State — for letting me further explore these concepts and share what I learned.

This might seem counter intuitive to traditionalists: Share bad news with customers? But that will hurt our image, our customers’ trust in us and maybe our business. But what these traditionalists forget is we live in a century with customers who both distrust typical marketing messages … and aren’t afraid to use Twitter.

I think of this as my fifth and final myth of marketing coming out of a downturn: Communicate only good news. And it’s one I discussed with The Bellevue Collection Merchants last month.

Let’s be realistic, for two reasons. First: As firms get back on their feet there will be missteps. Customers know this, and expect more transparency. People expect to hear bad news when coming out of bad times, especially if they know an individual industry sector has been troubled. If all they hear instead is happy-fluffy-bunny marketing speak, they will either be suspicious and wonder what you’re hiding, or they may wonder if you’re clueless about the true state of affairs. That’s not a good either-or to be in the middle of.

Second: Twitter, blogs and online discussion boards make it impossible to control or “manage” bad news in the old mass media sense when it comes to developments that affect large numbers of customers directly. Once it’s out there, it’s out there — and it spreads fast. It’s better to be slightly ahead of it than sweeping up from behind.

You only need to read a few articles about Toyota’s poor communications regarding its growing recall crisis (and crisis is the right word here) to see how customers value rapid, honest information. But even if you’re not a Toyota, either in size of company or scope of problem, there is no shortage of examples why sharing only good news can backfire in today’s environment.

Research in Motion suffered a series of BlackBerry service outages over a week in December. RIM was slow to be forthcoming about what was happening or how long it would take for service to be restored. Instead, affected customers turned to Twitter to search on the hashtag #blackberry and to share information they’d been able to learn. (@FrankCatalano was one of them, having contributed a tweet about when service would be restored based on a phone conversation I had with a Verizon Wireless tech.) News outlet coverage considered the tweets the most up-to-date, definitive picture of what was happening, rather than lagging company statements.

Similarly, but on a smaller scale, the online backup service Mozy suffered a recent outage which had automated backups failing nationwide for several hours. Similarly, there was no explanation posted on the Mozy support site. And similarly, users relied on Twitter and other Internet means to compare notes.

These are only two of many examples in which companies, slow to admit problems, are trumped by anyone with a Web browser or mobile phone who shares information — information that may ultimately be aggregated into news coverage that can hurt credibility.

This doesn’t mean that you should be all doom and gloom when something goes wrong that affects your customers. Rather, promptly admit there’s a problem. Emphasize what you’re doing to mitigate or overcome it, and if there is anything customers can do themselves. Communicate to your staff and vendors at the same time as you communicate to the customers, if not before — everyone should have the same information to avoid dangerous gaps in knowledge, and to keep rumor from rushing in to fill a vacuum.

Companies should never forget that their attempt to control communications has a competitor: every electronic device their customers own. That’s why sharing bad news can be good for the one thing competent marketing can’t easily repair. Trust.

The guest commentary: “Perfect, perfectly useless tech.”

Finally, they’ll sometimes say, “But we’re in a downturn. I just care about sales.”

The last time I wrote about the role of strategy was during the last downturn, seven years ago. And there’s nothing like being in a downturn, even if it’s supposedly in the rear-view mirror, that illustrates why strategy — a clear, well-thought out strategy — is important. In short, strategy means knowing where your business wants to be after the downturn. I suspect some of the best moves being made right now are from companies thinking long-term, so they can take advantage of short-term opportunities.

I took some time to explain why earlier this year at a Bellevue Chamber of Commerce talk on the myths of marketing. Having a marketing strategy — which is a core component of any business strategy — can be as simple as taking the time and thought to understand four C’s:

Customers: Do you know who your customers are — not just their titles and companies, but what motivates them?

Competitors: Who are your direct competitors for your products and services? And who are your invisible competitors — how people get things done now without you or your direct competitors?

Core competency: What are you and your company really, really good at? Not just what business or industry are you in, but what do you do uniquely well?

Course: As a result of all of the above, what’s your course (keeping in mind your customers, competitors, and core competencies)?

None of the above is brain surgery; it’s just a less buzzword-filled way of looking at the essentials of building a good marketing strategy. But knowing how you’d answer those questions, definitively and most importantly specifically (e.g., customers are “urban men 25-34 who are early adopters of technology,” instead of “anyone with a wallet”), can help you gain tactical advantage.

Take Alaska Airlines, as one example. I’ve been a long-time very-frequent flier and recently served on its volunteer Gold Advisory Board, so I’ve had as close a look as any customer at how the airline plans and executes. During the downturn — which hit airlines extremely hard as travel budgets dried up — Alaska tightened its belt, as did all the other carriers. But it kept its eyes open.

And what it saw was that its competitors were abandoning routes from Seattle. From my outside perspective, Alaska’s strategy has not been to be a national hub-and-spoke carrier serving every market, but to look at destinations outside the the Western U.S. where there is under-served demand for non-stop flights to-and-from Seattle and Alaska’s other primary West Coast hubs. So when other carriers cut, Alaska added non-stops to Atlanta, Austin and other destinations attractive to business travelers. For leisure travelers, Alaska rapidly moved in to add flights to multiple locations in Hawaii when other airlines pulled out.

Overall, Alaska Airlines appears to have increased seats to cities where non-stop demand outstripped supply, while at the same time staying true to its strategy of flying to where customers in its primary hubs want to fly. Having a core strategy and a close eye on competitors allowed Alaska to move nimbly when tactical opportunities presented themselves.

Having a clear strategy lets any business change tactics if opportunities arise or disappear quickly. It also allows you to articulate why you’re making a move to customers, staff and other stakeholders in a manner that’s consistent and inspires confidence about how your short-term decisions support the long-term vision.

Some may say that’s business strategy. But marketing strategy and business strategy should be tightly intertwined: what markets to pursue, what products and services to offer, how to identify and differentiate from the competition, and how to communicate that difference to the target customer. Marketing strategy isn’t separate from business strategy. It’s central to it.

It’s often been said that if you don’t care where you’re going, any road will do. Having a solid marketing strategy can provide a road that helps any business traverse the hills and valleys of the inevitable downturns.

Over the years I’ve been involved in a number of projects to name products, services and companies. And these projects can go pear-shaped in ways almost too numerous to contemplate, from endless free-for-all brainstorming to unilateral executive decisions  — only to discover later the exec subconsciously found a choice comfortingly appropriate because it was the name of a largely forgotten competitive product.

So I’ve developed a series of steps to avoid the most egregious mistakes while still coming up with a solid name. And note that I don’t say the perfect name. No name is perfect out of the gate; it has to be used consistently for a product, service or company that actually delivers what is promised.

How do you get started? Here’s the short four-part version.

1) Set naming criteria. Before brainstorming, before seriously considering any name, take a step back and establish a short list of naming criteria, as few as three to five. Obvious criteria can be general (“sounds active”) or specific (“starts with the letter F”).  The critical part of this step: the criteria must be agreed upon by all the decision-makers in advance.

Criteria can run the gamut. For products or services, some criteria may be that they fit within a product family identity or otherwise take into account a key benefit or marketing/creative requirement. An organization may have different needs.  A boy’s soccer club located near Mt. Rainier might have as naming criteria that a name be active, gender-neutral, and have dual soccer and mountain meaning.

Some standard criteria are that a name is easy to spell, say and remember. But even these don’t have to be requirements, if a name is purposely supposed to be trendy or unusual.

What’s most important is that there are naming criteria. Rules allow focus in brainstorming and something to throw a name against to see if it sticks.

2) Go brainstorm. This is the part everyone seems to understand. However, whether you brainstorm with staff  or with third parties (including customers), make sure everyone has the naming criteria and everyone has a deadline. After the deadline, map each name to the agreed-upon criteria to come up with a list of candidates.

3) Cull candidates. Next, filter the candidate names through a series of sieves.

Existing uses. Find out who else is using the name and for what purpose. Start with a quick search on Google. Ideally, also do a trademark knockout search on a public database. An existing use isn’t necessarily a problem if it’s in a different industry, but you should know before you decide on a final name. And have a complete list of competitors’ company, product and service names and their acronyms on hand– even if your candidate isn’t identical, it’s usually a bad idea to have a name that is confusingly similar. Or so lawyers tell me.

Available domain. See if the Internet domain for your candidate is available by doing a WhoIs database search, ideally with a service that doesn’t register domain names such as DomainTools.com. Seven years ago, when I wrote an earlier naming advice piece for the Software and Information Industry Association, grabbing a related domain name was a nice-to-have. Now it’s a must-have.

Customer reaction. Contact a few customers and prospects, formally or informally, and see how they react to the name. A neutral reaction isn’t necessarily bad; many names only stick after repeated exposure or when placed in the proper context with a physical product or logo. But consistently negative reaction should raise a red flag and make you take pause.

Some organizations may have other culling steps — such as verifying a name meets corporate identity guidelines or absolutely can be protected by trademark — but the above usually apply in all cases.

4) Make the decision. By now you should have a handful of finalist names, ideally no more than three but sometimes as many as five top candidates. All should meet the naming criteria. And they should have passed most or all of the culling steps.

Prepare a bullet point list of pros/cons for each finalist name. These can outline unusual results from the culling process (“really positive reaction from customers,” “exact Web domain available”) and other observations.

If you have the time and budget, prepare simple graphic/logo treatments of each finalist to help the decision-makers visualize how a name might look in actual use.

Now, make the decision. And know you have a backup name or two just in case you hit an unforeseen snag with the chosen name just as you get ready to implement.

Naming can be difficult and contentious. Sometimes even the throw-away names jokingly tossed off in brainstorming can become a finalist. Naming is, after all, a creative activity. By channeling that creativity through a process, you can minimize disagreements over what constitutes a “good” name, and maximize the odds of instead developing the best name for your specific needs.

But only if the brand itself is maintained throughout.

Going into my talk on the myths of marketing at the Bellevue Chamber, I’d just come off of several anecdotal exchanges about whether a company should even bother to think about brand now, and instead focus only on price and sales. “Who cares whether it properly carries our brand,” one paraphrased back-and-forth went with a high-level executive. “The customer will figure it out.”

Setting aside the hubris inherent in forcing the customer – the paying customer – to do your corporate identification work for you, this illustrates clearly my third myth of marketing in a downturn: The brand makes no difference; only sales do. Or, put another way, leave branding and brand maintenance to better times.

Certainly the financial benefits of having a strong brand aren’t in dispute. One education industry direct marketing/publishing firm once estimated the pricing premium that accrues to strong education brands over undifferentiated brands was in the range of 15% (I can’t, unfortunately, find the exact citation, so I’m relying on memory).  And BusinessWeek, in the midst of this downturn, noted that the top companies on its Best Global Brands list, “have beaten the S&P 500 by seven percentage points on average so far this year.”

As a matter of fact, well-regarded orphan brands are being snapped up. That’s why Eddie Bauer and others discarded in the downturn are quickly finding new homes, and not always in the same setting. Linen N’Things went for a mere million bucks to return as a Web-only operation; others earlier were acquired by chain stores as house names to convey exclusive cachet (for example, Nuprin is now a private label brand for CVS). Even if a brand was mismanaged or neglected into unprofitability by its previous owners, new owners are relying on continued recognition and loyalty by individual customers for fast results.

So keep your own brands strong for your company’s benefit. This isn’t a call for expensive-but-empty image advertising or a fancy new logo. Simply don’t do things that undercut customers’ involvement and the emotional connection to what your brand means to them. Do what customers expect from you. Don’t do things that are totally counter in order to make a quick buck.

Proctor and Gamble appears to have thought long and hard about this when faced with how to shepherd their iconic Tide brand through the recession and keep its market share from tanking as it came under attack from lower-priced laundry alternatives. Tide has been positioned since the end of World War II as a premium product. The solution came from carefully examining what could and could not be changed and have the product still qualify, in customer’s minds, for the “Tide” name. The result, Tide Basic, sells for 20% less, has the promise of clean that buyers expect from Tide while sacrificing many of the latest (almost faddish) additions, such as anti-pilling and color-preservation technologies.

In early market tests in the South, it was reportedly gaining shelf space from mid-tier brands. Yet it keeps the core promise of what Tide is sacrosanct.

Maintaining a strong brand in bad times keeps you top-of-mind, and provides reassurance and comfort to customers that they will consistently get what they have gotten in the past. No one should underestimate the psychological benefit of reassurance and comfort when financial conditions are poor – customers may more greatly appreciate products and services they can count on. A brand, simply said, is a kept promise.

Even if you can’t get the pricing premium that your brand might otherwise demand today, when the economy fully recovers you should – but only by being a conscientious brand steward and not sacrificing your brand’s inherent and perceived value.

Customer service seems like an obvious area to cut when times are hard. But that’s a myth (and the second one I explored in my Bellevue Chamber talk). What companies should do, if they’re cutting marketing aimed at customer acquisition – and as I noted earlier, they should re-balance before they reduce – is protect the money spent on customer service.

Why? Because customers with money in a downturn expect to be treated better.

An excellent piece in BusinessWeek earlier this year cited the cautionary tale of Hertz. In January, Hertz  laid off 4,000 people, many of them front-line workers. The result? Customers in Hertz’ loyalty program didn’t have cars waiting for them as arranged, or couldn’t quickly return cars before catching flights.

I ran into this at Boston Logan when I repeatedly had to wait 20 or more minutes in line to find out what had happened to the car I had reserved that wasn’t ready. Yet Hertz’ rates didn’t drop in concert with the reduction in customer service.  What did drop was professed loyalty: the frequent-traveler discussion board FlyerTalk was inundated with complaints about Hertz’ customer service.

Similarly, Starwood – the corporation behind familiar hotel brands Westin, W and Sheraton, among others – recently introduced the Ambassador program. The program is an invitation-only pilot in which some of Starwood’s customers are tapped on the shoulder to have a personal concierge for all of their travel needs. However, Starwood pulled their Ambassadors from the ranks of its Starwood Preferred Guest Platinum Concierges, a pool that manages a special line for Starwood’s best customers.

Almost immediately, complaints began popping up on FlyerTalk that requests to the Platinum line were being botched. So in order to create a new customer retention program, Starwood may have inadvertently damaged an existing one that touches far more loyal customers who are Starwood’s true ambassadors.

What should businesses do when put between the budget rock and customer service hard place? If they’re big enough, cross-train to preserve customer service during peak periods.  BusinessWeek notes USAA trained investment agents to handle insurance calls when things got busy, and Marriott trained administrative assistants to double as banquet servers when needed. Both allow more flexibility with fewer people.

And don’t forget the loyalty-building benefit of surprise and delight. Online shoe retailer Zappos.com, purchased by Amazon.com, used to routinely upgrade customers to overnight shipping, unannounced. People remember a pleasant surprise. And tell their friends.

Even a smaller company can do things to maintain or even enhance customer service in a downturn that simply require attention, not cash. For one, be more available. Sumner Home Mortgage, a mortgage broker in Washington state, has made a name for itself by having its loan processors  respond to customer inquiries promptly, and well outside of business hours – important for a complex purchase rarely made.

I was stunned recently when, on the East Coast for business, I dropped a note to my loan processor at 6am local time – and had an immediate response. Turns out my processor was preparing to catch a flight, checking her email at 3am, and answered.  Surprised and delighted? You bet.

At the very least, let your best customers know they’re appreciated through personal touches. Send handwritten thank you notes to significant customers. Have a few members of your staff – ideally, at the very top – pick up the phone and call customers just to make sure things are going well. They’ll remember it, word may get around that you care, and you’ll likely get good information on how you’re doing that you wouldn’t otherwise have.

In a downturn – and, for that matter, in good times – customer service is very much a part of marketing. Cutbacks that directly affect the customer experience can have long-term consequences, in part because they may cause customers to think poorly of you in the short-term.

FiReGlobal — or Future in Review Global, a Seattle-based one-day version of the multi-day Future in Review Conference I’ve attended in the past — is the brainchild of Mark Anderson, a noted technology industry industry analyst with whom I’ve collaborated, competed and disagreed with over the  years (in a kind and gentle way apparently unheard of in most contemporary discourse). Yet there is no better thinker on global tech issues than Mark, and I’m delighted to attend this inaugural event in Seattle and to serve on the event’s Steering Committee. FiRe truly has been a cross-disciplinary tech event that has no peer.

If you’re free on Thursday, October 15, I encourage you to join me at FiReGlobal. Or better still — make yourself free to attend. I suspect you won’t regret it.

Now, you might expect someone who designs marketing strategies to call this a “myth” (as, I suspect, did the audience at the Bellevue Chamber of Commerce Business Lunch). But no business should automatically reduce — not unless it thinks about re-balancing, first.

The reality is businesses have to keep on marketing. During a downturn, if customers stop hearing from you they start to wonder if you’re in trouble financially … or if you still exist. Your company or product name needs to remain visible.

Re-balancing your marketing portfolio is the first step. By that, I mean review all of your spending and determine which of your marketing expenditures reach your target audience the most cost effectively. Then focus on stuff that’s either extremely targeted. Or extremely cheap.

What’s out

Some marketing tactics immediately fall off when placed on the effective-or-cheap side of the scale:

• Sponsorships that don’t build relationships or are visible to customers.
• Trade shows or exhibits that have never led to many verifiable leads.
• Image advertising that tells the world how great you are, with no call to action.

Pretty much all ego marketing is out, and that includes tactics you do because, well, you’ve always done them.  And can’t clearly articulate what the benefit has been.

What’s in

What’s in is cost effective, targeted — or so cheap and easy that if you fail, there’s little downside. This can differ depending on the industry. But let me offer a few examples that may be more universal.

Public relations: As recently as a decade ago, PR used to be about indirectly generating word of mouth through the filter of the news media. Now, it’s equally — or more — about reaching customers directly who are doing Web searches or browsing online. Of course, you have to start with something newsworthy. But then you can use an inexpensive online PR distribution service, such as PR Web, to broadly distribute a release for as little as $80 — far less than traditional services of years ago.

Facebook and Twitter: Consider a Facebook company page. Or a Twitter account to broadcast updates about your company, products and services. Both can attract fans and followers and are far less expensive ways to notify customers about what’s new than traditional media (though they do take staff time, just as blogs and discussion board participation do).

Public speaking: Increase your public profile by sharing your expertise  at everything from local chamber of commerce events to national trade industry association conferences. In addition to getting your name out there,  it helps with being perceived as a thought leader in whatever it is you do. Even talk about your efforts during the downturn, and your successes. People generally will want to learn what you’ve learned — as long as you don’t turn it into a commercial.

Finally, never ignore what works in your own industry, if it’s cheap and effective — no matter if some call it boring or passe. The important thing is only that it works.

A colleague of mine in tech cites what she calls the Siren Lure of the T-Shirt. As she notes, “Microsoft is not a job. It’s a wardrobe.” The appeal of the t-shirt as a promotional giveaway never seems to diminish. At one recent event, attendees pasted temporary tattoos all over their faces just to get a free t-shirt. Which they then put on, wearing the company message and sharing it with everyone within sight.

Every industry has its equivalent of the t-shirt. Or additional cheap-and-targeted marketing tactics.

“But I have to [fill in the blank]!”

Inevitably there is push back, usually by those in the executive or sales ranks, that marketing tradition must be upheld and some programs must not be cut. (These folks can’t always articulate why, but are very comfortable being a company’s Tevye.)

This is where a rebalancing approach can be the most powerful. You don’t have to completely cut something expensive if it’s high profile — assuming it works. If you routinely had a huge presence at a trade show or conference, fully disappearing may start whispers. Instead, reduce.  Replace a booth with a private meeting room or suite. If display or broadcast advertising works, place smaller or fewer ads, or buy targeted TV in local markets instead of national TV. Overall, have a smaller, more cost-effective footprint.

Some things you think are costly may actually wind up being more effective in a downturn. Even if you don’t change anything.

Another colleague recently did a survey on marketing in high-tech. It showed that many prospects, instead of having a dozen direct mail pieces on their desks, now have only two or three. Suddenly those remaining pieces have more impact because they’re not competing with as much marketing noise.

Look at the landscape of your competition. If they’ve dramatically cut back on marketing, don’t think of it as permission for you to cut back on marketing. It’s an opportunity to get more mindshare and have your dollars go farther.

The bottom line

Reflexively cutting your marketing activity in a downturn can be counter productive. Instead, carefully evaluate what you’re doing in all marketing tactics. Dump what’s expensive and poorly targeted, even if it’s what you’ve always done. Reduce what’s expensive yet targeted, or maintain it if it’s extremely well targeted. Add what’s cheap that keeps your name out there.

Cutting without re-balancing could imply to customers that you’re gone and let competitors erode your market share. And that could make the “gone” part a self-fulfilling prophecy.

]]> http://intrinsicstrategy.com/2009/09/re-balance-the-marketing-portfolio/feed/ 1 http://intrinsicstrategy.com/2009/08/intrinsic-strategy-is-one-year-old/ http://intrinsicstrategy.com/2009/08/intrinsic-strategy-is-one-year-old/#comments Mon, 24 Aug 2009 01:49:50 +0000 Frank Catalano http://intrinsicstrategy.com/?p=298 The strategy consultancy known as Intrinsic Strategy is, as of this month, a healthy one year old. (If you include its continuous Catalano Consulting predecessor, it cannot quite yet raise a toast to itself as they are now a consecutive, combined 17 years old. But it can attend a film with strong language.)

The year’s been busy for me. Kindly invited to speak or moderate at events of the Washington Technology Industry Association, Washington Technology Center, Software and Information Industry Association, Association of Educational Publishers and Bellevue Chamber of Commerce. Dove back into commentary and analysis as a guest contributor to TechFlash. And, of course, solidly doing marketing and business strategy consulting for technology-related companies in education, consumer and other markets.

I’ll shortly be taking my “Marketing Myths in a Down Economy” talk delivered to the Bellevue Chamber last week and reworking its advice as blog posts over the next several weeks. So the fun — and, I hope, useful information — is just beginning.