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Have you got an addiction to discounting?

April 13, 2011 by Drayton Bird

I am one of the most disorganised jokers you'll ever meet but a book by one of the world's best organised people influenced me hugely ... even if it didn't do much good.

It was "My years with General Motors" by Alfred P. Sloan.

Sloan led General Motors to become the world's largest motor manufacturer. It was so important to the US economy that they used to say "What's good for General Motors is good for the USA."

But General Motors — and Ford and Chrysler — got into terrible trouble and had to be bailed out, barely surviving.

There were many reasons why, but one was their marketing. Besides the fact that their ads all tended to be boastful and dull, they fell into a habit I see as the marketing equivalent of crack addiction: heavy discounting.

This gives an immediate boost to sales, but you become addicted to it. And you get nasty after-effects — as with crack.

  • The people who buy most from a promotion are your best customers, who would have bought anyway
  • People bring forward their buying so there is a slump afterwards
  • You are training your customers to expect bribes

 To explain more why this is so dangerous, I must take you back 25 years.

Ogilvy and Mather had a unit called the Ogilvy Centre for Research in San Francisco. The Director, Alex Biehl, worked on a project called PIMS - which stood (I think) for Profit Impact of Marketing Strategies.

The aim: to discover how different marketing weapons affect profits.

Over 200 firms took part. One thing the project revealed was very simple, very important — yet is news to almost all marketers.

Firms that spend more money on discounting than advertising are far less profitable than those that spend more on advertising than discounting.

The project divided firms into four quartiles. Those in the top quartile spent most on advertising and least on discounting. Those in the bottom quartile did it the other way round.

The ones in the top quartile were on average twice as profitable as those in the bottom one.

Think about it. When you spend more on offering deals than explaining why people should want to buy your stuff, you are perilously close to saying, "Our stuff is not good enough to sell on its merits at full price."

To go back to where I started, today General Motors is no longer the world's biggest automotive firm. Toyota is.

Another brand once led its market but no longer does. It is Dell.

And guess what? Every single email Dell sends me offers a deal.

They have been overtaken by Hewlett Packard and Acer.

I am not saying never discount. I offer discounts all the time.

Nor am I saying traditional advertising is the answer to your problems.

What I am saying is that messages that give people reasons, emotional or rational, for buying are the key to building your business and brand.

By the way, never forget: one person can be a brand, as I reflected last night when I passed Jamie's Italian in Bristol — which was, as always, packed out.

It has done so well so fast that I believe it's going to be floated on the stock market.


Drayton Bird is an expert contributor to Marketing Donut. He runs Drayton Bird Associates and is a renowned direct marketing teacher, speaker and author.


For more information, read our guide to how to price your service.

Multinational SEO: A minefield or a piece of cake?

April 12, 2011 by Thomas Schonenberger

For a long time we adhered to the policy of hosting a website in the country that you want to rank for. This indeed seemed to work best, but what happens when your website needs to target several different countries. The old tedious way would have been to host a subdomain in each relevant country. A huge amount of work and maintenance involved, but a necessary evil if you wanted to do well in those individual countries.

I know there must be many of you right now shouting "Webmaster tools allows you to do that!", and indeed it does. It allows you to host a site targeting multiple countries and indicate to Google which sub folder is relevant to which territory (This is presuming you have your information architecture set up with individual folders for countries for example /de/ for the German site and so forth.). There was always the worry though that if I set a folder to target Spain then what about all the traffic from South America? Am I now excluding those visitors because I have directly indicated that my website is for Spain?

The good news is we have run some trials and some sizeable customer implementations (96 sub domains!) where we have proven to ourselves that regionally targeting a site in webmaster tools does not exclude that site from featuring in other countries! A prime example of this is that we have targeted a client site of ours to America, and even though it is hosted in America, a search for "Shoe hangers" in the UK in brings them up top. This is on strength of SEO alone. What does play a major role in this ranking is the geo location of the linkgraph. This company happens to have a UK base and as such has a lot of UK links to the .com site.

We have won another implementation recently that will be somewhat tricky. The problem here is we have a website that spans 3 countries, The UK, France and Italy and will be listing properties in all countries. Where this gets tricky is that the inventory is most often captured in the local language. So how then do I list a property in Rome, written up in Italian on the English version of the website? The bottom line is that I cannot. If I do I will run the risk of duplicate content and poor SEO. The answer is simple. Google is all about user experience. If you are English speaking and on an English website, even though you are searching for property in Rome, you don't want to be presented with Italian results, and Google's standpoint from a User experience point is the same. They want quality results so your only real option is to translate the listing :)

Have you experienced problems with Multinational SEO? Do you face a dilemma as to site architecture and what will work best in the search engines? We are happy to chat and let you know our thoughts.


Thomas Shonenberger is an expert contributor to Marketing Donut and company director of MediaVision Interactive.

Brand new customers only? Seven ways to nurture your valuable client base

April 11, 2011 by Fiona Humberstone

What is this obsession with chasing after new customers all the time? Driving the children to school the other day I was incensed by a Direct Line advert, bragging about introductory discounts, presumably for new customers.

Remember the Nationwide advert for “Brand New Customers Only”? That ad worked because we’ve all experienced the injustice of special deals being offered to new customers and not us loyal ones.

And is it just me or do you also go through the same rigmarole every year of needing to take out a new car insurance policy (often with the same provider) because it’s cheaper to sign up again online than it is to renew?

Seriously? It doesn’t make sense and financial service providers are some of the worst culprits. But I wonder if small businesses aren’t just as bad? Do you spend your time and energy on looking after the clients you have, encouraging them to do repeat business with you? Or is your marketing strategy all about the new business?

New customers cost up to seven times more to win than leveraging business from your existing customers. And your existing customers, who presumably know you, like you and trust you, are likely to spend up to three times more than new clients. So if the financials don’t add up, why do we do it? Why do we spend so much time and energy chasing new business rather than nurturing our valuable client base? And if we should be nurturing our client base, then how do we do it?

I’ve recently run a Customer Retention conference with customer management expert, Liz Machtynger, so this is a subject that’s very close to my heart.

Here are seven ways you can nurture your valuable client base:

  1. Brand for the long term. Is it possible to create a brand that helps you retain as well as attract new customers? I think so!
  2. Be clear about what sort of clients you want to retain. Not everyone you work with will be your ideal client. The client that waves the biggest cheque won’t necessarily be your most profitable client. Think hard about which clients will be delighted with what you know you can deliver.
  3. Take some time to nurture the relationship at the outset. Liz calls this “getting your customers safely on board” – listen to your customers: what they want and how you can deliver that.
  4. Recognise and reward your customers. Take the time to say ‘Thank You’ for a piece of work. This might be as simple as a postcard in the delivery box, a range of tailored offers or inviting special clients to an event you’re running. Make them feel special.
  5. Lose with grace. If a customer leaves you, recognise when it’s best for both of you. Don’t take it personally. Get yourself ready to win them back (assuming it’s the right thing for both of you – it isn’t always…)
  6. Take your clients on a journey. Develop a range of products and services to keep your clients coming back. It sounds obvious but I know of many wonderful businesses who don’t think further than the first interaction. Explore how you can help your clients over the long term as well as the initial quick fix.
  7. Find out what your customers are really thinking. Ask them! Either via a questionnaire, online survey or just face-to-face. Call them to say thank you and find out how their experience was. You can use this feedback to improve your service.

Has this got you thinking?

Fiona Humberstone is an expert contributor to Marketing Donut and runs her own creative consultancy.


Giving your customers reasons to love you

April 08, 2011 by Jonathan Clark

I have been thinking about the brands we love and how to improve customer retention. Let me tell you a couple of stories.

Three years ago, I took delivery of a car and on the way home it literally died. I did not see the car again for four months. However, the gentleman who looked after my “case” was exceptional. He updated me regularly, kept me totally informed on progress and made a bad situation OK. The car firm also sent me a range of well thought-out sorry gifts that were actually appropriate and of suitable value. I am now very loyal to this brand and I have a good opinion of them.

The other day, my wife and I were chatting about Clark Plc expenditure. We had decided to tighten the belt in a few areas and Sky TV was first on the list. With three kids of different ages, all of us have different viewing requirements ranging from football, Disney and South Park to Grey’s Anatomy. We currently have the full Sky package. It was going to be challenging to cut back.

In fact, my wife had a very, very good experience with Sky TV. The man on the phone listened and came up with a superb idea that was appropriate to the situation and our request. It was surprising and well delivered. To be frank I think we were expecting a bit of a challenge. It was the opposite. So now I have a great opinion of Sky, Clark Plc has the viewing requirements sorted and I will tell people about the positive experience.

So this got me thinking about two things: why we become loyal to certain brands and how businesses can improve customer retention.

Rewarding loyalty

In order to establish a loyalty scheme of any kind we need to establish who it is we actually want to reward and what it is we want to reward them for. If our most valuable customers are 100 per cent loyal to us then do we give them rewards just for being there, or do we concentrate on making the less valuable customers more valuable? We must ensure that we are adding value to our business and not simply creating a discount scheme.

Defining our objectives needs to be the first step – are we looking to reward behaviours that are good for our business, such as a customer spending more within a certain time frame, for instance?

We then need to understand our audience segments. Customers are all different and treating them as one entity means that we may be missing the main motivational factors for some of them.

After we have segmented the audience we need to look at who is the most valuable to us and why – is it the segment that makes up the highest proportion of our base? Those who spend the most? Those who are the least hassle? Or those who we feel we might be in danger of losing soon? How do these customers stack up against our objectives?

Having understood who our customers are, we need to understand their motivations – this allows us to be relevant. What do they value most?

We are a business, so we also need to understand our own motivations – what would we like our customers to do? Spend more? Stay with us long-term? Again, we need to look at this against our objectives.

Adding all this up we can see who we should be targeting, what we want to encourage them to do and what is going to motivate them. Our aim is to identify positive behaviours we want to reward and habits we can seek to change in order to make our business more profitable.

In an environment where winning new customers will get harder, it is more vital then ever before that we cherish our current customers. Some are happy, some are apathetic and some may be disappointed. As spring approaches it would be wise to look over your customer base and reward them, tackling any issues with empathy and understanding. We do long for loyalty from them; let’s give them some reasons to love us and importantly to tell their friends and associates about the great experience they have had with you.


Jonathan Clark is an expert contributor to Marketing Donut and the executive chairman of Bright Blue Day.


For more ideas on how to make your customers happy, read our guides to customer service, customer loyalty and how to deal with customer complaints.

QR codes should enhance user experience

April 07, 2011 by Zabisco Digital

QR codes are a relatively old technology but one which has really started gaining momentum in recent months, according the Search Engine Watch. So, with more and more social marketers taking an interest in QR codes, how can we make use of them?

The key has got to be in adding value for the target audience. QR codes shouldn’t be there “because they’re cool”, nor should they appear to help you “look innovative”. I believe the true innovation will come from the use of QR codes to enhance reality and create a better user experience both online and off.

Quick fad or valuable tool?

Consider what a QR code actually is and what it does. A QR code is a quick and easy way to reach a URL destination or other piece of online content. What it does, is to make engagement easier by saving people the time and effort of writing down a URL or typing it into their mobile device.

Next, consider whether or not your end user would actually benefit from QR codes. There’s no point using a QR code if the majority of your audience doesn’t use a mobile phone, right? And if it would benefit them, where and how would it do that?

My prediction is that QR codes will become really important for retailers selling physical products to consumers by including them on barcodes and labelling. So, let’s say I find a pair of shoes I love but they don’t have them in my size; imagine if I could scan a QR code to find out when they will be in stock and also to browse other colours or suggested alternatives — my offline experience has been enhanced by online!

Social validation will also continue to grow in importance, so imagine I’ve gone into a mobile phone shop and I’m thinking of getting myself the new Samsung Galaxy. I hear everything I need to from the salesman, he gives me all the specifications and pricing and even lets me have a go. If I’m sensible, I’ll go home and find out more about the phone and read all the tech reviews.

But why wait? A QR code on the phone could lead me to a tech review plus some real, personal reviews from other people who actually own the phone. It could even tell me where I can get the phone at the best price.

There is a whole array of other potential uses for QR codes but essentially it really needs to focus on adding value for the end user.


Laura Hampton is a copywriter and online marketer at Zabisco, a digital agency in Nottingham.


For more information, read our guide to QR codes.

The five most common email marketing mistakes

April 06, 2011 by Georgia Christian

There is a lot of advice out there to help ensure that your email campaign is beautifully created, sent out successfully and, most importantly, well-received.

What many people tend to forget — and this goes for seasoned email campaigners and newbies alike — are the common mistakes that are all too often made when you are developing the perfect campaign.

Here are five of the most common email marketing blunders. If you successfully avoid them, it will ensure that your content is relevant, good to look at, grammatically sound and entirely logical:

  • You want and/or expect instant success. Banish the thought from your head immediately. With email marketing your aim is to develop a relationship with your customer and this takes time, sometimes more time than you think you have. You’ll need to have patience and a strong resolve. You and I know, understand and accept that Rome was most certainly not built in a day so don’t be in such a rush to get that campaign out “like yesterday!” Make sure you are 100 per cent happy with it and it has been tried and tested before you send it out. You won’t regret it.
  • Your message isn’t clear. You want it to be powerful, concise and with a strong call to action. If there is any doubt in your mind that it lacks these points then you need to reassess it, even if it sets you back time-wise. It will be worth it in the long term, believe me.
  • You aren’t entirely sure you have permission. If in doubt, here’s a quick question you can ask yourself to check: “Have they specifically requested to receive my emails?” If the answer is “no”, then you have to go back to the drawing board and work on building up your subscriber list. It’s a simple enough task and will ensure that your emails aren’t deemed spam.
  • You have subscribers on your list that haven’t heard zip from you in six months. Go through the process of getting them to remember you again. Send a friendly “remember me?” email and guide them to sign up to your newsletter again. It’s the best way to ensure that your subscriber list remains entirely “opt-in” and therefore more valuable.
  • You buy an opt-in list. I have one word for you here and that’s “unscrupulous”. Your target audience is specific and so is the product or service that you are trying to market, so sending your campaign out to 20,000 people who you don’t know and who certainly don’t know you is not a good idea. Neither is getting blacklisted for spamming, which is what would probably happen if you took this unsavoury route. 


Georgia Christian is the editor of the online email marketing service Mail Blaze.


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