Been to the Bookies Lately? Does your marketing look more like spread betting?
Living a stone’s throw from Cheltenham racecourse you would expect the occasional indulgence betting on the horses. Indeed, I do succumb to the temptation and use this magnificent facility, dedicated to the sport of the Kings, to entertain many of our clients. It’s a great feeling when the horse you’ve backed comes in at 10 to 1. This is followed by a smug feeling of contentment because, having checked the form, read the Racing Post and triangulated my thoughts with my guests – I convince myself that I have made the right selection – or more accurately made an educated guess. Sadly, when someone wins, someone has to lose. The temptation to gamble has preyed on human vulnerability since time immemorial and has permeated the depths of our behaviours in personal and business life. Let’s face it, we all like to back a winner! From a commercial standpoint, when some businesses look to develop their marketing strategies you can’t help thinking that the gambling gremlin has landed. But it doesn’t have to be this way – you can back the right horse every time if you have the courage of your convictions. Let me explain what I mean.
Gambling has become an incredibly sophisticated activity – fuelled by online businesses – that has helped shape the fortunes of many a City financier and empty the pockets of Joe Bloggs. Its mystical jargon now forms part the modern vernacular for no lesser reason than its role in bringing the entire western world to its knees! Indeed, hedge funds and spread betting are now familiar to the man in the street – and the man on the dole – yet, despite its critics, it is here to stay in one form or another for eternity. We even enjoy its chameleon-like antics in every day TV. Do you remember Play Your Cards Right (who could forget Bruce Forsythe, ‘HIGHER HIGHER! LOWER LOWER!), where the contestants have to decide whether to bet that the next card to be turned over would be high or low? Yes – spread betting in its simplest from!
You might find it a little strange for a company to adopt a similar approach to its marketing but nonetheless, from my experience, this is often apparent. In this context what I refer to as gambling is choosing, for seemingly the right reasons, where to invest the budget. The temptation is often to spread the effort – cover all your bases – and costs across numerous marketing activities with little focus on any one particular area resulting in average (at best) performance. There is hope, and the occasional prayer, that the response from an activity will produce the result you want. Unless you have a bottomless fund or budget to dig into or can engage in a commercial ‘gearing’ facility you will inevitably find yourself diluting your efforts and reducing your marketing impact. If you were a professional trader or gambler you would probably expect to lose your bet so why engage in risky marketing when you can hedge your bets (no pun intended!) and put yourself in greater control? It’s a simple model.
Let us first consider this absurd statement: ‘not all customers are equal’. There you are, I’ve said it. I have blasphemed. And what’s more, I’m unashamedly promoting this concept because it’s true. For too long, customers consider that service is a ‘one size fits all’ concept. But in reality the cost of servicing each customer is not.
Business engagement, resource allocation and marketing spend is not proportionate to every customer because every customer has an intrinsic value to your business. It makes sense that Customer A, spending a million pounds with you and Customer B, spending £100, have different positions of importance, however, the dilemma is that they will both expect the same level of support. So, rather than throwing money at all customers and prospects it makes sense to take a step back to understand the basis of what makes your business tick and who you really need as your customers.
This journey can start by looking at your current customers and evaluating the information you have to assign a monetary value to each company. I like to call them Treasure accounts at one end of the spectrum and Avoid customers at the other end. This process of segmentation will establish a base line from which to make certain decisions around your engagement strategy. It will allow customer profiles to be created that will focus marketing activities in a proportionate manner. Through further analysis and financial mapping, you can also determine what share of business you are achieving and the potential value that can be attributed to each customer. The alternative is to engage with everyone, but one risk of this approach is to establish a common denominator that will be much lower than the ideal.
Like the smart boys in the City, you now have background information that is invaluable to you. It tells you who your profitable customers are, their makeup, their potential and your level of engagement across the business. You now also have the profile of the customers you want and a greater understanding of why you need them. If you were a gambler, you would be starting to get very excited at this point because you are beginning to see the bigger picture of the outcome and most importantly what factors influence the outcome. You start to put your money into activities around your best customers in a disproportionate way and begin to learn a lot more about them. You start to realise that some customers aren’t worth an each way bet because they will lose you money so you decide that there will be no further investment in them or similar prospective companies you have previously targeted. The likelihood of you growing your business more profitably becomes an odds-on favourite.
So, there is a lesson to be learnt about gambling and business. When you have all the information about your customers available to you, you can call the shots as you are in control. As a result, you can write your own odds. But if you are not – you might just be an ‘also ran’!