We sometimes feel inspired to write about things that interest us. We sometimes share things that that we have read about that could be helpful to our clients.
Bouncing back....
Whether its a physical recovery from injury, or a commercial recovery, some of the same lessons that apply… Here are some musings from my recovery from an Achilles injury, that I thought could apply just as well a business bounce back.
Lessons from my Achilles injury, that can apply to any bounce back…
I like to think of myself as an active person. I have accomplished a good deal of goals (summiting both Kilimanjaro and Mount Whitney, reaching Base Camp 1 on Everest, rim to rim of the Grand Canyon, etc), and its important to me that I stay strong and fit, and able to keep up with my kids… Regular training, kettlebells, Pilates and specifically running has been a part of my life for many years, and other than following the instructor at the front of class, I never really thought too much about what or how I was doing. I just got on with it. That is until recently when I developed an injury. An intersectional Achilles tendinopathy. I was faced with something I didn’t understand and ignoring it didn’t help – it didn’t go away. I could not run… even walking was painful. I needed to get help.
As I consult with specialists and follow their instructions, the pain is easing, and I am able to start doing more. The lessons I am learning from this situation can be easily applied to a good deal of situations, not least driving a commercial bounce back when the market has shifted somewhat.
Get professional help – faced with a situation I did not understand, I needed to find an expert to help guide me on my recovery. I listened, learned, read the guidance and learned some more. I am following instructions and I am evaluating my progress along the way. My Physio is amazing, and I am most certainly making more effective and efficient progress thanks to her specialist knowledge and support, but it’s my body and my recovery, so I want to learn as much as I can, to both speed up my recovery and to better equip me in making sure this doesn’t happen again.
When I work with clients on commercial turnarounds, one of my main goals is the development of confidence and capability in a client’s team. I want to impart my knowledge and experience in client teams, so they are stronger and more resilient after my engagement than before.
Slow & steady wins the race – I really am so mentally ready to lace up my trainers and hit the 10K loop right now, physically, however it is another story. I am realising the importance of collagen reserves in the Achilles, the need to steadily repeat my weighted heel lift exercises, set after set, and the need to take a rest day in between to allow the tendon to strengthen.
In business, its just as important to take a steady approach. To build gradually and to recognise the importance of a pause. Steady progress and continual evaluation of a turnaround allows teams to strengthen, visions to crystalize, opportunities to become apparent, and capability to evolve. It would do me no good at all to hit the trail this morning, I would be hobbling around for days after and do more harm than good, as tempting as it may be… The slow and steady approach builds strength and endurance for the long haul.
Eat the elephant in bite sized chunks – The next time I do get to lace up my trainers, I have been advised to start by following ‘Couch to 5k program’. Just a few weeks ago I ran a 10K PB. It’s galling to be so far behind. But having rested for weeks, I know whatever distance I do is going to hurt (in a good way, hopefully). Instead of aiming for my next PB, I need to take it one step at a time. Steadily adding distance before I even think about speed.
I worked with a client recently who had been tasked with opening a Direct-to-Consumer route to market, he immediately built a website, took ownership of the companies Facebook account, and launched the brands offering to consumers.
If he had looked at each piece of his task, he might have realised consumer markets need a level of customer service support that is quite different from what the organisation was set up for. That some (most) SKU’s were shipped in trade packs not singles, that there wasn’t a robust returns process in place for consumers. While focussing on the whole task, this client didn’t see some of the component parts, he was just looking at the whole. I prescribed then antacids and we broke the project down into workstreams, with each piece progressing nicely…
As I continue to plod along my recovery journey, jealously watching other runners from my window, I am trying to take the lessons. I can see the end of the tunnel, and every day I move a little closer toward it. The pace will fasten the further I go, but for now I am listening to the experts, making steady progress and building resilience and flexibility…
How leaky is your bucket?
Consumer behaviour has been erratic with many brands experiencing huge peaks in consumer acquisition followed by significant declines in retention rates. Here we take a look at consumer motivations and offer 5 strategies to stem the flow from your leaky customer buckets…
How stable are your customer acquisition and retention rates?
It is unlikely to be a surprise to anyone that the pandemic has caused major changes to consumer behaviour. How we live and work has for now at least changed; and that has impacted not just what we buy, but where we buy from, when we shop, and what our requirements and expectations are of the products and services that we buy. For many brands, that has led to a significant increase in acquisition rates, followed by a dramatic reduction in retention rate, and many marketers are now left questioning how to plug the leaks in their customer buckets - how to retain as much of their newly acquired customer base as possible.
At the start of the pandemic, consumers were scrambling to source all the products they would need in lockdown, panic buying set in, and ALL buying options were explored, but as we collectively began to understand the situation, and supply chains recovered from the initial frenzy, consumer behaviour began to settle down, and new trends started to emerge. For some brands (like Amazon) this has had an incredibly positive and so far, sustained impact on their bottom line, but many others are now experiencing mass customer attrition as the one-time buyers, panic buyers and ‘needs must’ customers return to their pre pandemic brands and retailers of choice. Alongside this however, some consumers who were loyal through inertia pre pandemic, have now tried alternatives, and have found them to be equally palatable to their previous brand or retailer of choice, resulting in either a new preference or an equally acceptable alternative and a reduced share of wallet for the initially preferred brand.
Today, the panic buying mentality has dissipated, but our consumption behaviour remains changed. Over the past year our lives have been touched by many more issues than just the pandemic - these issues are making us think about what is important to us as we ‘build back better’. Climate change, sustainability, Brexit, police brutality, domestic violence, BLM, changes in working practises and the need to commute, the list goes on… These issues compel us, as a society and as individuals to reflect on how we want to live once the pandemic is over, and we cannot change or evolve the way we live, without changing the way we shop and the items we chose to buy and consume. Even HRH the Prince of Wales made the point at the World Economic Forum that “There is a golden opportunity to seize something good from this crisis..." and that this time represents a real chance to craft a more sustainable and equitable world.
It is widely known we are now approaching the critical point where 66% of the UK population are fully immunised which then makes uncontrollable waves of the pandemic unlikely (here at least), and especially more so as more than 80% have had at least one inoculation. By the end of Summer, the need to stay home, wear face masks in shops, and limit the number of people we interact with will have passed. Our freedoms will return and with that, our consumption, appetites and purchasing behaviour will once again evolve. What this means for individual brands is yet to be seen, but those that will win out will inevitably be the ones that understand, empathise, and take visible action supporting consumer sentiment.
Motivational science tells us consumer behaviour is an output of a consumers need/want, their circumstances and attitudes toward a given category. The need/want being the ‘job to be done’ rather than the productised solution being sold.
Probably one of the most famous quotes in marketing comes from Harvard Business School Professor Theodore Levitt “People don’t want to buy a quarter inch drill. They want a quarter inch hole”.
The circumstance could be situational (what is appropriate), proximity (distance from store), availability (out of stock), or financial (price, affordability), while attitudes could relate to for example, sustainability and a preference to buy recycled, recyclable, refillable, reusable, vintage. How well brands understand their consumers motivations and speak to them in their marketing programmes will directly impact the level of churn they experience in their customer base going forward. The good news is that it is very possible to demonstrate empathy and plug the leaks to retain profitable repeat buyers, if you know what it is that is causing customers to defect...
How To Patch The Leaky Bucket…
Make no mistake: The solution to your leaky bucket problem is not to accelerate the rate at which you acquire new customers but rather to strengthen the loyalty of your existing customer base. In turn, your most loyal customers will continue to add value to your business without the initial expense associated with acquisition discounts, premiums and freemiums, etc.
Relevance Leak
Probably one of the most famous quotes in marketing comes from Harvard Business School Professor Theodore Levitt “People don’t want to buy a quarter inch drill. They want a quarter inch hole”.
If brands understand the role their products and services play in consumers lives, and in what context they are considered relevant, then marketing becomes relatively easy and quite straight forward. The rub, however, is that most brand managers spend so much time looking at a brand from inside the business that they fail to really grasp the consumers perspective. There are thankfully a lot of examples of brands that do get this right; some of my favourites include Baileys realising they do not compete with vodka and tequila, but cake, this insight not only helped the brands fortunes but also helped them win a major Marketing Effectiveness award to boot. Or Netflix realising they lose more viewers to Fortnite than HBO.
With so much information, noise, and choice available, compartmentalising solutions and applying category parameters helps us to manage and assimilate the data we are presented with. Manufacturers and retailers compartmentalise products by manufacturing process, materials, or where they sit in the store environment. Consumers compartmentalise products by the “job” they do, the “quarter inch hole”, or the indulgent reward that a glass of Baileys provides (which could not be more different from the short, sharp, shock of a tequila shot with salt and lemon). Until brand teams understand relevance in the same way consumers do, they are destined to misaligned thinking and missed opportunities.
One brand I have worked with in the photo gifting sector has a wealth of research that the primary consumer motivation is to ‘make someone feel loved’ but the competitive set in which they benchmark are other resellers of printed merchandise. If we were to think like a consumer, we would be asking how can I show someone they are loved? What is a relevant solution to mark a birthday or remember an anniversary? Now we compete with flowers, with theatre tickets, with jewellery, just as much as we do with other brands offering the same solution.
And finally, I cannot talk about relevance without mentioning another of my favourite case studies – Worcestershire Sauce. The product has long been a staple in many kitchen cupboards, but because few people used the product regularly, and thanks to its inherently long shelf life, the brand faced a problem with routine depletion. Their solution, extend the relevance of the product. A campaign was launched highlighting additional uses (new sources of relevance) for Worcestershire sauce and low and behold consumers started using it in Spag Bol, in stews, on cheese on toast and the demand for what was a slow-moving item, increased exponentially.
By understanding the parameters of ‘relevance’ we can both play to the pre-existing perceptions our consumers hold and extend them concentrically. Most brands have at some time of another conducted research into brand relevance and motivations to buy, and a wealth of additional information exists in social media chatter, if you are stuck for ideas on how to move your brand forward, its always worth taking another look at how, when, why, and where your products are being used.
Access Leak
I live in a small leafy town in Buckinghamshire. It has great schools, a nice community, some great local pubs serving tasty food supplied by local farms. What it does not have however is a decent sushi place. Pre pandemic I spent a couple of days a week in a city and would search out a decent sushi bar for lunch as often as possible. Having been working from home for well over a year, I would love a decent sushi lunch, but you can’t buy what’s not available. Soon, hopefully I will be back in the city enjoying a green dragon roll and shrimp tempura, but as I had no access, those sales have been lost. This same scenario plays out for so many categories, and as working patterns evolve, and consumers work from home more than ever before, how many more opportunities to buy are stymied through lack of access?
With this in mind, more and more CPG firms are realising they need to take ownership of the access consumers have to their brands, with many embarking on Direct To Consumer transformations. Not only is it sensible to extend access and ensure online availability while building direct relationships with your customers, it also mitigates the upcoming impact of a new era of retail. Bricks and mortar stores no longer exist solely to serve the customers that walk in, but now more than ever to also provide a local ‘pick and pack’ facility for online deliveries or a final mile / click and collect solution for consumers wanting to reserve online. The increasing operational requirements of physical stores will inevitably lead to more ‘back of house’ requirements and a smaller shoppable store. This will inevitably lead to a consolidated offering in store and reduced access for, particularly second, third and fourth in category brands.
When we focus on access, we must also consider the customer journey. The events leading up to the point of purchase and the level of convenience that is needed to support a transaction. Its no coincidence that most professional families with young children both shop for and book their grocery delivery slots for later in the day (when work is done, and the kids are in bed). Access and availability need to coincide with the window of opportunity your customer has for making a purchase. It needs to reflect not just a physical capacity to buy, but also the ‘mental load’ on the customer in that moment. There is a perfect window / opportunity for every purchase - some items are bought at a destination and the experience of shopping is part of the endorphin rush and gratification that the purchase represents, but other items are necessity purchases that are ideally made as seamlessly and effortlessly as possible. Understanding which channel is relevant to your customer will help you build an access strategy aligned to how your customers want to shop. Its also important to consider that initial purchase behaviour may be different from subsequent purchases – I may want an instore experience to navigate the options available for my first purchase, but once I know what I want, I may prefer an easy reorder online for subsequent ‘replacement’ purchases – as an example, make up counters are the perfect place to find the perfect shade of lipstick or foundation, allowing a ‘try before you buy’ option, but routine depletion purchases can easily be made online, especially if the customer is now working more from home (less access to the shops) and is wearing more makeup to counteract the dodgy lighting for zoom calls. Understanding the customers purchase motivation, their circumstances, and their attitudes towards the purchase, and thinking about the events leading up to their shopping journey will all help in reinvigorating an access strategy that is customer centric and frictionless, and when shopping is easy, we often spend more, and return more readily.
Association Leak
For more than 30 years Viking Direct was a stalwart of the British office supplies market. Office Managers were the keepers of the catalogue, they knew the catalogue contents inside out and would lend them out to colleagues who would decide what items they needed, and then request those items the next time the Office Manager placed an order. This worked brilliantly for many years, until a younger generation of tech savvy office workers entered the professional landscape. These customers found the searching the catalogue and ordering via telephone time consuming and the lack of autonomy this ordering process allowed was too rigid for them. Viking had a problem. The now aging but loyal Viking customer base remained loyal, but as the older buyers retired, the brand was failing to attract a younger demographic, who just did not see themselves reflected in the Viking brand.
Viking Direct initiated a comprehensive brand update, balancing the traditional values that the loyal customers appreciated with a greater focus online. Categories were widened promoting greater choice, investments in onsite search improved the buying process and critically an updated brand aesthetic was developed. These changes were promoted via a new TV campaign featuring young vibrant professionals working in modern environments (including ‘on the go’ working) and featuring a voice over by radio personality Chris Evans. Viking successfully improved the level of association younger consumers felt with the brand leading to improvements in Net Promoter Score and Propensity to Buy followed by improvements in Orders Per Year and Spend Per Order. Customers were shopping more often and spending more with Viking because they felt the brand now better represented them. Over the following 12 months Viking enjoyed revenue improvements exceeding £18M p.a. and a stronger growing customer base which pointed to a continuation of this upward trend.
Value Leak
As marketers it is our job to find the right balance between the benefits you give and the price you get. Optimising this can be a difficult task and as a result few brands outside of FMCG markets apply a scientific approach to their pricing, instead relying on trend analysis, gut feel and past experiences to set price points. To navigate price elasticity and react to competitive challenges, we use promotional mechanics such as additional volume (+10% extra free), premiums (free gifts) and freemiums (BOGOFs) to attract buyers, and if we apply these mechanics sparingly and they reward customers and incentivise early or additional purchases as well as attracting new buyers into our brand. Use these mechanics too liberally however, and we devalue our brands and train our customers to ONLY buy ‘on offer’. Customers learn that they can get more for less, if they wait it out and buy on promotion, and consequently brands see negative impacts on customer numbers, order frequency, spend per order (smaller units sold at full price) and a host of other KPIs, including brand equity and overall demand. It is a virtuous or vicious circle, depending on how you look at it – giving away more value becomes the norm, and price elasticity is changed through changing consumer perceptions.
This is exactly what happened with Baileys. Baileys was a market leader with significant equity and a consumer base that would happily have paid full price, however retailers pressurised Diageo (Baileys) to offer significant discounts and over time consumers were trained to only buy on a deal. Despite having a high position on the consumer power / demand axis (Y), the brand stayed below average price (X axis) meaning it was not optimising its profit potential. This was driven by the excessive unnecessary discounting that retailers were demanding. As a result, for 15 years they never got price past the £10 barrier whilst Jack Daniels which had been parity priced with Bailey’s art one time ended up at £17 per bottle. Bailey’s image, equity and quality positioning were tarnished, and the brand was stuck with ever decreasing margins due to COGS inflation. If the brand team had stood firm on pricing and demonstrated the power of consumer demand, not only would they have enjoyed greater profits, but they may have retained more of the loyal customer base who at one time saw Baileys as a premium, luxury item, but who ultimately downgraded their perception of the brand as the heavy discounts continued. As the premium perception dwindled so too did consumer association and the brands relevance as an indulgent treat.
Similarly, Homebase ran a regular programme of “-10% Days”, these were extremely popular and successful in the early days and drove additional footfall and spend; customer numbers improved for a while and over time shopping habits changed. This again ultimately changed the benchmark however, and customers saw 10% discount as the norm and the impact waned. Soon 10% was not enough to attract new customers, resulting in the need to improve the offer and after several years they then had to become “15% Days” just to maintain the volume.
It is, however, eminently possible to optimise your value strategy, and deliver on both the short term and long-term sales, profit and customer targets. As an example, Jose Cuervo, with the help of leading econometrics agency RedRoute International, modelled various pricing and promotional scenarios leading to valuable insights in the impacts of each approach. These insights supported the development of a pricing and promotional strategy that not only improved revenue and customer performance, but also helped gain market share. Through the ability to make intelligent pricing decisions, Jose Cuervo could respond more strategically and more hastily to competitor promotions and this in turn supported improved relationships with retailers. By ‘getting pricing right’ Jose Cuervo have demonstrated that they can increase GP by 2-4% of NSV, and retain their premium position in category, maintaining and protecting the associated brand equity and consumer loyalty that comes with such a position.
Experience Leak
Peloton is just an exercise bike. First class is just a little further forward on the plane. A Mercedes is just a mode of transport… These things are true of course, but they are also so very far from the truth. It’s the experience that sets these things apart, more so than the product itself. Why else would anyone spend hours standing in a wet muddy field in Somerset in to hear the Foo Fighters perform, when you can hear them on the radio? Experience sells. Culture sells. Making people feel part of something special sells.
While many brands understand this at the start of their journey, and attract loyal customers with a great product that works like a dream, over time products and services are reverse engineered to reduce cost and consumers end up with a disappointing experience. Who else can remember the size of a Cadburys Curly Wurly from the 1980s compared to today’s meagre bar?
Conversely, with the constant innovation happening in most consumer markets, we as consumers are constantly aware of the next best thing… be it the new iPhone, latest Dyson Airwrap, Michelin Star meals being delivered to your door, driverless cars, or a vaccine for Covid. Our expectation levels are rising. And, because nothing is ever as easy as it might seem, the way we as consumers benchmark our experiences is just as multi-faceted and non-categorised as previously mentioned in the relevance section.
We benchmark our experiences by our experiences. Our last best experience is the benchmark for all future experiences. The nice tightly defined product category we as marketers operate in is irrelevant to consumers. What this means for that photo gifting client, is that they are now being compared to the Bloom & Wild flowers I received (complete with a discount for a second bunch) from a friend when she knew I was having a rough time, and the online escape room we did as a family for my dad’s birthday, or the carefully scented and beautifully wrapped jumper that arrived from Sezane bought to reward myself for hitting a milestone moment in my business, it doesn’t matter I bought it in the sale for myself, the experience of unwrapping a parcel was no longer about what it looked like and felt like, but now also what it smells like!!. All those things made me/someone else feel loved, they all celebrated a special time, and created memorable experiences. So next time I am looking to ‘make someone feel special’ I may consider a photo gift, but I may send flowers, buy them something from Sezane, or arrange tickets to a memorable event…
The point of this article was to demonstrate some of the strategy’s brands have used to arrest customer attrition and improve customer engagement metrics. Hopefully, it has given you a little something to think about. If it has sparked any thoughts, please do let me know. If you would like to explore any of these ideas further for your business, please drop me a line to arrange a discussion, I love solving problems and I have lots of case studies and examples packed with data that might just be helpful in plugging your leaky bucket… or at least tempering the flow as the next stage of consumerism evolves.
Forecasting, when the past is no longer as reliable a predictor of the future...
Forecasting, when the past is no longer as reliable a predictor of the future...
As we emerge from lockdown and hopefully embrace a period of recovery and reopening, we cannot ignore the profound impact the last year has had on how we live, and with that how we consume, transact, and engage with the world around us. How then, can brands effectively plan for what is next?
This was the subject of a recent round table debate with some of the UKs leading econometricians. During which, the panel comprising Steve Messenger, Clive Frostick and Bryan Smith, highlighted the robust nature of a strategic forecast (as opposed to a standard baseline plus forecast), concluding that if enough rigour and challenge is entered into then reliably forecasting for a post Covid marketplace (the next 12 months) should be realistically achievable.
As we emerge from lockdown and hopefully embrace a period of recovery and reopening, we cannot ignore the profound impact the last year has had on how we live, and with that how we consume, transact, and engage with the world around us. How then, can brands effectively plan for what is next?
This was the subject of a recent round table debate with some of the UKs leading econometricians. During which, the panel comprising Steve Messenger, Clive Frostick and Bryan Smith, highlighted the robust nature of a strategic forecast (as opposed to a standard baseline plus forecast), concluding that if enough rigour and challenge is entered into then reliably forecasting for a post Covid marketplace (the next 12 months) should be realistically achievable.
The five-step process below details how leading marketing performance agency RedRoute International suggest brands approach strategic forecasting, and is based on how they have achieved and continue to achieve enviably accurate forecasts for organisations as varied and complex as Heathrow Airport, Photobox Group, Money Supermarket, and many others…
Almost without exception, the last 12 months has taken its toll on business. Whether it was the forced closure of retail stores, supply chains falling apart as international border controls became more onerous to navigate, consumer demand either falling off a cliff or skyrocketing through changing consumer wants and needs, the ‘corona-coaster’ analogy certainly felt apt to many… But with a gradual opening of economic opportunities, how can businesses now forecast and plan for the year ahead? The answer, unsurprisingly, starts with an assessment of where you are today.
In purely general terms, the inherent nature of the “predictive task” is now no different from what it has been in the past, the degree of rigour and challenge however, that businesses need to apply may be significantly increased.
For some businesses in stable and mature markets, forecasting may simply have been a case of ‘baseline plus or minus’ taking a few general trends and macroeconomic indicators into account. Our panel however and their many FMCG clients, have long understood the financial implications of accurately forecasting to even within a few basis points of the most likely outcome – after all balancing supply and demand can make or break commercial opportunity.
Alongside adopting a more rigorous process, our panel points out that the degree of variability will inevitably be greater in post Covid forecasting, for the simple reason that so many things have changed all at once.
Forecasting the Effects of Marketing Factors
The first thing to bear in mind is that the impact on people, distribution channels, needs, attitudes, behaviours, and marketing practices has been quite different across each sector of the economy. Digital-only businesses have in most cases seen significant increases in demand whilst, apart from some stores such as supermarkets, retail, hospitality, and leisure have suffered greatly. This means, now more than ever, each commercial situation must be considered on a case-by-case basis. There can be no ‘universal’ or ‘one-size-fits-all’ solution. Instead, we need to logically think through how things have changed, what the implications of those changes are, and how we should adapt / modify what we know from the past about how marketing works, to help create the picture of what is most likely to happen in the future.
If we have learnt anything over the past 12 months, it’s that we cannot avoid uncertainty and should expect more changes, marketplace volatility and fluctuations in consumer demand as the situation evolves, and so adopting a test and learn, or as the panel put it “Assess, Plan, Do, Verify” approach, will be critical as we build knowledge and gradually become more certain of what lies ahead, over time.
So how should businesses assess what the coming period may look like? How can we predict the most likely outcomes and impacts of our marketing investments in such capricious conditions? The five-step process, albeit somewhat simplified here, walks through a logical approach to forecasting resulting in the ability to identify and scale the key drivers, the agility to adapt as conditions change and the foresight to prepare for unlikely but nevertheless possible events, because let’s face it, no one saw this coming but it happened, nonetheless.
Step One: Start with what you know to be true. Clearly, a baseline is needed with any forecast and today that baseline may look quite different from what has been seen in the past. Traditional B2B businesses have emerged as strong DTC players for example, so taking stock of the new shape, size, and structure of your organisation, both as a whole and as a sum of its constituent parts (including supply chain and onward distribution networks) is going to be a critical step. What is the current size and shape of your business? Have the actual consumers changed? If so, what is the new mix? Have consumer needs changed? e.g. we have seen a rise in walking and cycling? Have consumer values changed? is there now a premium on being ‘covid secure’? Have the distribution channels or routes to market changed and, if so, by how much? And how might all these changes persist in the future as / when restrictions on movements and so on are relaxed?
Step Two: Identify the drivers behind every change. As marketeers we should all buy into the idea of “cause and effect”, our campaigns (cause) are designed to elicit (effect) a consumer response, usually to buy or engage with our brand. So, if we are seeing changes (effects) in the way consumers are engaging with us, we need to understand the cause (or more likely causes) or underlying drivers for those behaviour changes. City centre coffee shops for example are inevitably feeling the impact of fewer commuters passing by on their way into work, but alongside this they should also acknowledge the potential Covid fears among those still passing, or the impact of cycling or walking to work rather than taking the bus, perhaps a different route is taken, or perhaps consumers are becoming more health aware or financially prudent so are cutting back on the morning latte and danish pastry with a different motivation in mind? Most likely it will be a little bit of all of these and some other drivers, that are collectively having an impact. Its only through knowing the full range of impacts that we can truly assess the reasons behind a change. Some will be obvious, others may be less so, and because of this brand should look to update their understanding of their customer relationships over time. If consumer groups / mix has changed, then brands may also want to reconsider the segmentation models deployed. Do pre Covid attitudes remain intact or has there been a fundamental and lasting change in the consumer relationship with your brand? Brands that invest in customer insight now and as the situation evolves will be most able to adapt with their customers and stay or become first choice in category.
Step Three: Measure the impact of each driver. No single ad has a measurable impact on consumer behaviour, but a combined and sustained campaign can change the tides, and there have been numerous examples of brand campaigns that have done just that. If we think on these same lines, the impact of Covid was not a single event, but an all-consuming and sustained campaign affecting so many aspects of life for such a lengthy period, and so attributing one element to changing a business’s fortune would be overly simplistic. Each separate driver that led you to where you are today needs to be measured and evaluated for its impact to be understood. As markets begin to unfurl the blend of drivers that remain will inevitably change, for example we are as of yesterday allowed to shop in store more freely, but will consumer confidence and willingness to endlessly browse the rails of retail return at the same rate? If we understand how all the small drivers led collectively to the big changes we are seeing today, then we can plan for different combinations as we move steadily forward into a state that is more open, but changed, nonetheless.
Step Four: Learn as you go. Through stages 1 to 3 we have built the ability to create new forecasts and hypotheses based on ‘best available knowledge’, but in ‘fluid situations’ such as the reopening of economies, the relationships and nuances that led to change, will continue to ebb, and flow as the situation develops, meaning the strength of impact for each catalytic element will also continue to change. By now however, you have identified and scaled the main drivers of why consumers are choosing to (or not) engage with your brand, so continuing to monitor and assess the most crucial elements via market research, live in-market tests, etc and continuing to revisit your forecasts will provide an ongoing rigour, strengthening the projection, in the short term at least.
Step Five: Plan for the unexpected / Scenario planning. The pattern of what will happen in the long term is naturally subject to much higher degrees of uncertainty because it is not yet know how much of changes in behaviour we have seen will ‘unravel’ once normality returns. And we do not know for how long the current non-normal situation will last. So, the best approach to cope with uncertainty of this type is to use scenario planning. Many alternative situations are worked through and the results tabulated to guide decision-making. The important thing when doing these long-term evaluations is not be afraid of outcomes that look very radical compared to what had been seen in the past. The shifts that have taken place saw 15 years’ worth of growth of online commerce take place in 15 weeks in 2020. The one thing that you can say with certainty is that the future will, forever, look radically different to the past but the process outlined above will enable us to project future marketing impacts with “reasonable expectations”.
To summarise, the recommended approach to follow is one of “Assess, Plan, Do, Verify” with the five specific steps in implementation as outlined above. The inherent nature of the predictive task is no different from what it has been at any time in the past, what is different is the level of reliability that we will have in the projections which will obviously be less. We can offset this risk by putting greater effort into the Assess phase, by making sure we can measure the impacts of the things we do, and by having an effective feedback loop to Verify the outcomes and re-Plan trajectories rapidly and continuously.
For more information on strategic forecasting, analysing marketing performance, or to schedule a conversation with one of our econometric experts, please contact Sarah on ++44 7903 913 736 or visit www.RedRouteInternational.com
With a recession looming, should we cut our marketing budgets?
Do you understand the true value of your marketing activity? Are you capturing the ‘defensive play’ as well as the short term gains? Have you considered the long term impact that reducing visibility can have on your accumulated weight / share of voice and how that translates to revenue in the years to come?
Marketing spend if often the first-place companies look when savings need to be made. Its understandable ~ when cash flow is an issue and belts need tightening, it’s only natural to ask how we can justify spending huge sums on advertising and marketing.
Sure, the marketing press warns us not to cut budgets in a downturn, but that often seems self serving… Its only if you really understand the value of your marketing activity that you can make informed investment decisions.
Most companies will calculate a ROI for their AdEx spend, but most companies vastly underestimate the impact of their marketing. Inhouse calculations usually start with a proportion of last year’s sales and calculate the short-term upside, but this misses huge parts of the picture.
· How much of your business is transactional? (i.e. driven by sales activation activity)
· How much are your competitors spending? and how open are your customers to switching? Marketplace erosion is real, and in many markets, saliency matters.
· How much cushioning has your previous campaign provided? Do you have sufficient accumulated weight (share of voice) to withstand a short hiatus?
· Which elements within your marketing mix are the most impactful?
· If you are to cut spend, do you know where to cut? Will cutting ATL brand building activity save you money now? Sure, but it could cost you in lost revenue for the next 5 years.
Econometric modelling, sales attribution and share of voice analysis doesn’t have to be as complicated as it sounds, and the insight it delivers can be game changing. Imagine finding out the campaign you thought delivered a negative ROI actually delivered a very healthy 3 or 4 because it played defence not offense.
With that information, what would you do differently?
Contact me to arrange a more detailed conversation….
Some thoughts on a post Covid existence… For the near term at least…
Cast your mind back just a few short months… who would have thought when we were celebrating Christmas and welcoming in the New Year that we would be spending Spring in lockdown???
As I watch the news, listen to friends, family and clients describing their experiences, their plans for their businesses, their changing opinions and thoughts about the new world order, I can’t help reflect on a few key themes that might play a role in sculpting the shape of things to come…
Cast your mind back just a few short months… who would have thought when we were celebrating Christmas and welcoming in the New Year that we would be spending Spring in lockdown???
It’s certainly been an unprecedented start to the year, and with the UK lockdown being extended this week, by at least an additional 3 weeks, it’s hardly surprising that we are seeing frustrations coming from people struggling with isolation, missing friends, family and the familiarity of life’s normal routine. While there are a lot of suggestions for how we should be spending lockdown, be it learning a new skill, starting a new hobby, or volunteering to help your local community, for those of us in business this is an anxiety inducing time, full of confusion, concern and worry.
Much has been written about how the world will be forever changed, or not, but the truth is no-one really knows what the post Covid world will look like just yet. But, if we agree that the dominant societal ideology isn’t a singular mass concept inflicted upon us, but more the result of the hundreds of millions of tiny individual decisions that we all take day in day out, then we must accept that we are in some ways at least, in control of how we emerge from the crisis. That the actions we take now and in the weeks and months to come, can strengthen our relative position once the restrictions are lifted and free movement resumes.
As I watch the news, listen to friends, family and clients describing their experiences, their plans for their businesses, their changing opinions and thoughts about the new world order, I can’t help reflect on a few key themes that might play a role in sculpting the shape of things to come… This is not an exhaustive list, and just to be completely transparent, I have no more insight, foresight or certainty than anybody else, I’m simply sharing some thoughts that might provoke discussion, consideration or dissent… How you view it is, just like how you respond to the crisis or anything else for that matter, totally up to you…
1 – Physical distance is increasing. As we observe the 2m safety advice we are standing further apart as we converse, queue or simply pass on the street, this for some is leading to nuanced choices about how we will commute to work in the future (that packed commuter train suddenly has different connotations), where we socialise (packed bars and heaving clubs could soon feel as out of place and archaic as the cigarette smoke filled pubs of our youth), how far we travel for holidays (air travel anyone?) or even how we shop for our weekly groceries…
And what about going to a festival, huge sporting events, or even spending a Saturday afternoon shopping at the mall? Now, I’m not for one minute suggesting these changes will be total, dramatic and permanent, but they will undoubtedly be nuanced in some way, for a while at least…
2 – Emotional distancing. Long before anyone had heard the word ‘Coronavirus’, we have to some extent seen increased distancing around the world with people retreating to likeminded camps of shared ideology, national identity, faith or politics. Think Brexit, Trump, Border Controls and immigration. In times of uncertainty, fear and confusion, its natural to retreat to a safe and familiar space, with people who look like, think like and act like you. But in doing so we need to recognise that we are also widening gaps in society, and we need to be mindful of the convergent impact on our thinking, our culture and our acceptance of others.
As we emerge from our period of isolation, and think about life after Covid, how open will we be to foreign travel? How many people will be holidaying abroad, versus the Great British coastline with the services of the NHS within easy reach? What about welcoming travellers and tourists to our shores? Not to mention the economic impact for those financially hit by the virus? Will the ‘haves’ and ‘have nots’ be even wider apart in a post Covid world?
As someone who loves to travel, relishes new experiences and welcomes the opportunity to learn about new cultures, taste new foods, and meet new people, I sincerely hope we continue to travel freely, unencumbered by the fear of germs and viruses, or mistrust of people from different lands. That said, there is a growing list of places I would have thought carefully about visiting last year for political reasons, and now this year and likely in the near term, for hygiene / potential contamination and access to healthcare reasons….
3 – A greater sense of community. Within communities we are seeing some wonderful examples of altruism, kind heartedness and loving thy neighbour. Just consider the 750,000 strong NHS volunteer army, support for the frontline workers with our Thursday night ‘clap for the carers’ which is gaining traction and volume week after week, and the simply stellar Captain Tom Moore raising more than £25M (at time of writing) by walking 100 lengths of his garden by his 100th birthday later this month. These are just some of the more widely publicised examples, but I am certain we all know many more local, closer to home examples of heart-warming and uplifting community camaraderie. It may be that I’m seeing things from my small town in north Bucks and so have a blinkered view, but it’s a far cry from the ‘eyes down’, ’mind your own business’ that I witnessed on the London underground just a few months ago… There is a great sense that we are in this together, how long lived that philosophy will be remains to be seen, especially after lockdown restrictions are lifted. It would be nice to think more of this will remain, than perhaps existed before Covid. Don’t get me wrong, I’m not bemoaning a lack of community spirit pre C-19, I am a firm believer that most people are inherently good and kind, moreover the pace of modern life for many was such that taking time to run errands for someone else was just too much to fit into an already busy schedule…
4 – Prioritising family time. When the schools closed, there was widespread panic among the parents WhatsApp groups at my kids school, but within days the feed was filled with parents admitting they were really glad not to be rushing out of the house every morning, to not have to shout at the kids to get their shoes on and pick up their PE kits, to not have to worry about being late for work as you speed to the school gates and away again as quickly as you can.
Lockdown has bought many challenges but it has also allowed busy parents to slowdown, to spend quality time with their children, to eat together, to create memories, to camp out in the back garden or just to share day to day experiences of cooking together, reading together or painting rainbows to display in your window. It’s not that parents didn’t want to do this before, but that some family time had been sacrificed in order to make everything else work. Now, working from home (so less time commuting) has been proven to not only be possible, but for many (at least partially) preferable, will we be as willing to return to the stresses, pace and chaos of life as it was?
5 – Adaptability, agility, and resilience will doubtless feature highly in the list of buzzwords for 2020. It’s hard to think of a business that hasn’t had to rethink, reshape and adapt to the current situation, in some form or another, but it’s not just business that are having to adapt. We are all adapting to a new set of circumstances and figuring it out one day at a time. Those who were the quickest to respond, both businesses and individuals alike, are those with inbuilt adaptability and resilience at their core. Resilience is more than a character trait, its how you designed the business or lived your life. For business, resilience and agility are usually correlated with sound management, cash reserves and the ability to throw money at something to support fast action. That may be a key take-away from this, with businesses and indeed families, prioritising saving for a rainy day. In business, alongside focussing on cash we will be looking at operating models, location strategies, workspace layouts and increased automation, especially in production, warehousing and manual tasks that have been severely impacted by the physical distancing need for 2m space between co-workers. Doubtless, households will be adapting their own ‘modus operandi’ too – historically living like old Mrs Hubbard with daily trips to Waitrose or Sainsburys local, I’m now planning to keep a tin or two on hand, just in case.
6 – There’s opportunity in everything. Whatever the shape of things to come, if we look for opportunity, we are sure to find it. I have had conversations this week about how the long awaited and technologically enabled virtual workplace (Work From Home) will open up far more in a post Covid world than existed before the crisis – this not only means less commuting for those already in jobs, but it also opens opportunities up for mothers of school age children, single parents, those with disabilities or geographic restrictions for another reason. Aside from the economic and social impact of facilitating online working, the business benefits from divergent thinking, new approaches and different perspectives learned from non-workplace experiences is potentially significant.
Whatever things look like, this period of forced slowdown, allows the opportunity to change, adapt, tweak or radically rethink what, how quickly and where we will rebuild. Let’s make sure we use this time to think before we act, that way we can build something satisfying, sustainable and successful.
7 – Taxes are going up. With financial support on a scale never before seen in the UK, it doesn’t take a genius to work out it all has to be paid for somehow. Quite how, when and how much won’t be known for quite some time, but sure as eggs the borrowing will need to be re-paid, and poor Rishi Sunak will inevitably go from a new and very popular Chancellor to the bearer of bad news for many….
To conclude…
“When things get back to normal” is probably amongst the most used phrase in the English language right now. The extent to which things do get back to how they were even a few months hence, is a much-discussed topic, with both extremes and everything in the middle being aired as the most likely outcome. Whatever happens when the restrictions are lifted, I hope we find a way to combine the best of what was before, with the positives we are seeing now (altruism, family time, community spirit, gratitude for core workers, funding for the NHS, adaptability, connectivity, reduced pollution, daily exercise, etc), to create a better future for us all.
Can a new normal be better than what came before? In some respects yes it can, in others however potentially not - how we experience it will depend on how we perceive it (optimism /pessimism, adaptability/rigidity) - it is ultimately undeniable that things will continue to be different for some time to come. How we choose to deal with that, individually and collectively, is up to all of us. We are all, as they say, in it together!
Practical steps to take as we prepare for the business impact of Covid-19.
As we stand braced for further disruption from Covid-19, with its enforced isolation and the subsequent deterioration in business, economic conditions and community groups, its important to recognise that there is still much within our own control.
As we stand braced for further disruption from Covid-19, with its enforced isolation and the subsequent deterioration in business, economic conditions and community groups, its important to recognise that there is still much within our own control. We each can decide how we approach the circumstances we find ourselves in – the choices we make now will determine who will survive and thrive.
The following steps are some of the things I have been discussing this week, hopefully they will be of some use to others too…
1. Focus on cash. Revisit your budget, re-forecast revenue and spending plans, model out a number of scenarios and build detailed plans for each one. Speak to your accountant, local business growth hub, etc and find out what financial support is available to you. The chancellor has made significant provision for the financial impact of Coronavirus, make sure you understand what this means for you and maximise the allowances, payment holidays and tax breaks available.
2. Embrace the virtual and maintain the social (albeit at a distance). Keep projects, relationships and teams alive via skype, web-ex, zoom or your chosen tech. Neglecting the humanity and connectedness in our lives and businesses will be damaging far beyond the impacts of Covid-19
3. Expect and manage the “trough of despair”. Change can be hard for many, and it inevitably comes with a certain amount of frustration, anger and resentment, especially when we are not in control. This can lead to some difficult emotions and illogical behaviour (note: the supermarket toilet roll isle). Add to that very real feelings of isolation and loneliness and many among us are facing some challenging conditions. Now is the time to get ahead of the game, support each other and look for the light at the end of the tunnel. We are on a rollercoaster, we know there are some dips ahead, but in time we will ascend and summit, the ride will end, and normality will resume. Let’s make a choice to be in a good place when that happens and do what we can in the meantime to position ourselves for growth. Business growth, personal growth, adapting a growth mindset and embracing the opportunity to read, learn, research.
4. Focus on your own actions. Don’t expect a central team, manager, or colleague to have the answers – this is a new situation and we are all in it together. Instead of looking to others or waiting for others, be the change you want to see. Define it, shape it, create it and model it. This isn’t just a time for businesses to embrace change and plan for future opportunities, but also for individuals to position themselves for future career opportunities within organisations.
5. Don’t apply old solutions to new problems – this is a paradigm shift unlike anything we have seen before. For many years we have discussed the opportunities technology has presented for home, remote and flexible working, but its never been fully embraced, until now. Our circumstances have changed, our attitudes are changing, motivations are largely driven by fear and anxiety today, but one day joy will return. Whether circumstances and attitudes fully return is something for us all to discover together, but what is apparent today is new problems need new solutions.
6. Remember to celebrate your wins. We are in a horrible situation with far reaching consequences and a certain amount of sobriety is inevitably called for, but we will need to balance out the gloom with recognizing, rewarding and celebrating our wins. Whether it’s a new approach that’s gaining traction, the achievement of a team commitment, or a community initiative that’s genuinely helping others in need, it is important for morale, motivation and everyone’s mental health to celebrate the positives.
7. Stay customer focused – Its never been a more important time to really know your customer. If we accept that buying behavior is a function of need, circumstance, attitude and motivation, really knowing who your customer is on a deeper level will help you to plan, engage and second guess customer reactions which will help you in decision making, investment choices, resource allocation, etc. Revisit those research studies, embrace online surveys, set up virtual focus groups and learn as much as you can, and then implement.