Saturday, January 08, 2005

Changing the Rules of Sales and Marketing

By Dale Wolf

The 2% Situation

A century ago, John Wannamaker became rich as a retailer in Philadelphia through his expert use of mass advertising. He is attributed with the quote: ”I know I am wasting 50% of my marketing budget … my trouble is that I don’t know which 50%.”

If John was getting performance from 50% of his budget, he was doing well, indeed. Statistics compiled by many national associations over the past 20 years would say that John was doing well because most marketing programs are lucky to achieve 2% response rates.

Despite notable exceptions for specific campaigns, this has been true for a long time, across all media – free standing inserts, direct mail, broadcast and print advertising, telemarketing, in-store promotion, banner ads, etc

Compounding the Problem

Further, it takes on average eight sales leads to close one sale. 87% of the leads are fruitless.

We Can and Must Do Better

With 98% waste in the marketing budget and 87% in the sales budget, can we continue to treat our marketing and sales activities as an expense item buried in SG&A on our balance sheet?

How much more money is your CEO prepared to burn on such inefficiency? Is there any wonder why marketing budgets are the first to be slashed when a company is having difficult times? Clearly, we need to manage our investments in marketing and sales more efficiently.

As direct marketers, we felt this waste of our clients’ budgets was intolerable. We began experimenting with different ways to achieve success and arrived at what today we call Contextual Marketing.

We made three changes:

  1. We shifted our clients from isolated marketing events that were based on periodic schedules or reactions to episodic situations and put our clients on a consistent, persistent direct marketing process. Every initiative became an element in a larger flow chart. Every customer action was measured and evaluated. Results were databased and used to alter communications in subsequent initiatives.
  2. We began personalizing messages and offers to smaller and smaller clusters, down to the individual company or household. Today with the Internet, we can deliver differentiated messages to individual customers. We shift our clients from copy focused on brand positioning, bragging about their product features to copy that delivers solutions for their customers.
  3. We timed delivery of our messages to when the customer was most likely to make a purchase decision.


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