Don't you love it when someone in finance or operations (or even a neighbor) asks, “What is it you do again?”
A lot—in fact, most—of effective modern marketing is about reducing the perception of risk around the purchase of a product or service. Now marketers are being called on to reduce the risk associated with the business impact of their work in a way they haven't before. That's really what the hubbub around ROI is all about.
We talk a lot about return in this business, but very little about the associated risk. Risk and return are inextricably linked. Many of us are hurting because we don't sufficiently address the most acute pain of all.
If we don't acknowledge risk, we're only looking at half of the challenge: the half any CFO is most interested in.
In a famous, Nobel Prize-winning and historical experiment, people demonstrated that they are twice as afraid of losing something as they are optimistic about gaining something. It seems the fear of loss, as an emotion, is twice as strong as faith in gain.
Did you see the “Pepsi Show”? Almost everyone took the cash instead of “going for the billion."
So let's skip the Wanamaker quote and focus on reducing fear, uncertainty and doubt—or, in a word, risk.
The ‘fear, Uncertainty and Doubt' Dilemma
Your sales manager is rolling her eyes right now. Reduce fear? She knows that fear is critical in the sales process. If she's smart, she's using “fear of loss” as one of her most powerful tools to communicate value to her prospect.
When used effectively, fear is pitted against itself, like fighting fire with fire. Sometimes, you need an explosive to put out a raging oil fire. So when defining and defending your business case you have to demonstrate that if the prospect does nothing, losses are twice as likely—and twice as great—than from the risk in deploying your offering.
Ahh… doing nothing. Kinda sounds good, doesn't it?
For marketers and salespeople, B2B or B2C stasis is the enemy. Right now, doing nothing feels safe to your prospect. You know how tight your CFO is. Stasis is also at the root of our economic malaise. Fear is a great motivator and a great manipulator. So it may be a useful tool for persuasion, but it's not a solution. When in doubt, people simply freeze in fear.
Ultimately, marketing will reduce fear in the prospect, or it will fail. So while messaging and sales tactics may leverage fear, to be successful marketers ultimately have to do two things: demonstrate safety and engender trust around what they propose.
These goals demand great customer relationships and credible messaging. Reducing risk through strategies of great customer relationships and credible messaging requires standardized process, testing procedures and metrics to advance quality and reliability around marketing initiatives.
This means documenting the process and financial impact of what you propose and then reviewing the accuracy of that documentation while the process is underway and again after it is completed.
Leveraging Fragmentation Can Reduce Messaging Risk
There is a lot of panic around the lost readership in print, the less time spent listening to radio, and the reduced number of network TV viewers. Yet people are consuming more media than ever by consuming a number of media channels at the same time.
Smaller markets and segments means more opportunities for testing content, and more direct, relevant messaging.
So embrace fragmentation. Love it. It really is a beautiful world out there. Think of your fragmented markets as a set of tribes. You must learn all their languages and the means by which they use them. You must sound like them, look like them, laugh like them, and enjoy the things they enjoy. In short, you must validate your tribes' identities.
Validation and confirmation of common cultural or business values reduce risk for your prospect. Leveraging lifestyle is only the beginning. Drill deep into your constituencies, mirror similarities, and avoid the vain, not to mention expensive, tendency to go wide communicating your offering.
You must understand and communicate how your proposition improves individuals and the tribes they represent. That knowledge comes from research, of which there are innumerable methodologies and tactics.
You'll know which research method is best by looking at the fragments, or tribes, that make up your customer base and syncing your method with their life patterns. Remember, building hypotheses is integral to the scientific method and requires strong instinct and creativity.
Generating concepts for testing is the point at which the creative marketing arts are most important. Research into the relevance of your communication returns revenue by negating the losses around poorly executed messaging. Revenue is impacted positively as efficiencies are realized with more precise communication. Risk is reduced as communication channels and methods are confirmed as best practice.
Process Drives Effective Customer Relationships
Documentation and measurement are important regardless of the size of your enterprise. CRM isn't software; it's a process. CRM applications, when fully and properly implemented, can enable efficient customer relationships, but software is a means to an end and not an end in itself. CRM software applications are not effectively deployed when there is no process in place to drive them.
Every going concern must have a customer relationship policy and process that can be continually measured and improved. If you are not measuring and improving customer relationships, you are not marketing. Make yourself a better marketer right now by answering these two questions:
- Are your customer relationship policies and processes documented?
- Can you measure the business or financial impact of your current customer relationship efforts?
Current business conditions demand that we marketers document and measure our work in quantitative ways so that it can be better understood by the entire organization. We can lower the perceived risk around marketing by making it transparent to the whole organization.
The Old Agency Model: No Accountable Risk Reduction
Agencies are struggling to manage the risk around what they propose. CPMs and CPIs don't measure business impact. It is not enough to simply message to a dubiously measured audience.
Furthermore, documentation of marketing process is not standard operating procedure at the traditional agency. Documentation actually works against the agencies' old business model. If an agency documents its processes, then there's a risk that its client might not need them.
Finally, the classic agency model dictates that the agency wins only when it sells more advertising. How can that model adapt to address risk and accountability if the agency's revenue model, and its client's business model, are in opposition?
Yes, a few big agencies are engaged in “communications planning” under various guises as an effort to address the problem of audience fragmentation. The problem is “communications planning” is not oriented to address ROI and business impact. Communication planning's ascension to “hip new thing” status is driven more by changing media behavior than by a need for risk analysis and value justification around recommended marketing strategies.
Furthermore, only the largest agencies with advanced technical arms are adding value on the CRM side. Be careful if you're outsourcing this part of the marketing function. If you do outsource, demand documentation around marketing process and the financial impact of that outsourcing.
Minding the Gap Means Managing Risk
Your CFO is skeptical of your marketing initiatives because he sees them as the riskiest thing your company does.
If you want your ideas to work and see them implemented, you've got to aggressively manage the risk side. Show your prospects how your proposition is twice as good as doing nothing. Show your management how marketing is half as risky financially as not marketing at all.
Most important, you've got to assume the risk associated with being accountable if your ideas don't work and be willing to adapt them to the information you get from putting your idea out there in the first place.
The willingness to identify, acknowledge, quantify, review and adapt your marketing work will bridge the gap between your efforts on the marketing side and the weighty fiscal pressures your prospects and your management are charged with improving.
