The Secret to Being Grainger

April 30th, 2010

As a distribution industry consultant who spent many years at Grainger (NYSE: GWW), I often get questions about the company from other distributors. Typically, the questions go something like this:

“How does Grainger do it? They’re the biggest distributor around, they have more customers and more products and higher margins than just about anyone else, and they show no signs of slowing down. How can I be more like them?”

Sometimes, executives will give me specific examples. An electrical distributor recently told me, “One of my customers just bought 10 30 amp circuit breakers from Grainger at a 35 percent gross margin. If he’d called me, I would have sold them at a 17 percent margin. Why does that happen?”

Adding to the general confusion about Grainger: A high-priced approach is supposed to be a niche strategy. But Grainger is arguably the largest distributor of its type, it sells to nearly every type of company and offers about 1 million products. In other words, Grainger seems to be pulling off the very difficult challenge of being both the margin and market share leader in distribution.

So how do they do it? It’s really pretty simple. Almost every distributor targets one of these types of segments:

A product category (e.g., power transmission, fasteners, tools, HVAC products, PVF, building materials, office supplies, etc.)
A customer industry (e.g., hotels and motels, restaurant equipment, mining, healthcare, janitorial, utilities)
Or some combination of the two (e.g., selling building materials to home builders)

Grainger’s segmentation is different. The company does, in fact, sell just about every type of product to just about every type of customer. But Grainger defines its target segment by a specific situation: when customers need products quickly and with no hassle. This target segment, which Grainger informally refers to as “speed and convenience,” allows it to operate differently than other distributors and get superior results.

So while most distributors try to get a lot of revenue out of a small number of customers, Grainger wants to get a little revenue out of every customer.

When businesses or people need products quickly, they think about suppliers differently. For one thing, they accept that they will pay a higher price to have access to products they can get immediately, a concept academics call “place utility.” One former Grainger president for whom I worked used the example of a vending machine in a hotel. You know that $2 is a very steep price for a can of soda, but it’s worth it to you because it’s fast and easy to get your Diet Coke there vs. leaving the hotel to find a very inexpensive source, like Costco. The Costco store might not be open and even if it is, you will have to buy a whole case of warm soda in exchange for saving 90%. That’s a big margin swing but the “speed and convenience” of the hotel vending machine, along with the chilling of the product, which is a “value-added service,” makes it worthwhile.

Think about the times you stop at a 7-Eleven. There are no bargains in the store, but you know and accept this before you walk in. Thus, if you wind up paying 30 percent more for milk, you will probably feel the “speed and convenience” benefits were worth it compared with driving to a grocery store.

Businesses function in the same way. On a regular basis, purchasing agents, maintenance personnel, warehouse managers, etc., need something quickly and conveniently. In those situations, they go to the supplier who is most likely to have all of the needed items (which is called “assortment convenience”), has the most effortless ordering system and can deliver goods the fastest. In these situations, customers are not very price sensitive, even if they are very hard-nosed buyers when negotiating traditional contracts. Thus, Grainger is often the real or perceived best choice for the customer.

This applies to every type of product, even “commodities.” The more urgently a customer needs a product, the less commoditized that product becomes. For example, very few HVAC contractors rely on Grainger as their primary source for refrigerant. It’s a commodity most of the time, and HVAC distributors sell it at very low margins to try to win other business. However, if you are an HVAC contractor with a customer whose cooling is out on a 100-degree day, and you need refrigerant, you are likely to point your truck right into the Grainger parking lot. You will have a high degree of confidence that the product will be in stock, and you will be in and out of the branch quickly. In this situation, price doesn’t matter, even for a commodity. It’s all about speed and convenience.

Okay, so we’ve defined Grainger’s target segment, and we’ve talked about the nature of products needed urgently. Here are some of the ways Grainger delivers value for “speed and convenience” purchasers:

The most locations. Grainger has more than 600 stocking branches in North America. Sometimes customers need things extremely quickly, even the same day, and Grainger is the closest and fastest alternative more often than other distributors. Additionally, through its enormous distribution network, Grainger can probably deliver a wider assortment of goods the next day than any other supplier.

The most inventory. Grainger carries enormous stocks of inventory. In its “2009 Fact Book,” it claims more than a billion dollars on hand. Of course, this was offset by a relatively high gross margin of 41 percent. Like every distributor, Grainger has to choose between service levels and inventory turns and, in the speed and convenience business, you choose service levels.

The best catalog. In some types of distribution, paper catalogs are still essential because they are the fastest and easiest way to look up many types of products. Grainger’s catalog is particularly fast to use, adding to customers’ tendency to pick it up instead of competitors’ books. The Grainger catalog enhances the company’s ability to handle “speed and convenience” transactions faster than competitors.

The easiest to use website. Sometimes, the speediest and most convenient way to purchase something is by using the keyboard that’s right in front of you. If you are a business buyer, you already know Grainger is more likely to have what you need quickly vs. other distributors. You also know that Grainger.com is a particularly well-designed and easy to use website. Grainger has always been an e-commerce pioneer; the truth is that they are still in the lead.

Let’s wrap up by getting back to the question of how Grainger can be one of the largest distributors while executing what seems to be a niche strategy. Actually, it really is a niche strategy, but the niche is enormous in the extremely fragmented industry that makes up MRO. Every single business needs products quickly and conveniently and thus becomes a relevant target for Grainger’s value proposition. In an industry the size of MRO, which Grainger estimates at $125B in its 2009 Fact Book, they hold less than a 6 percent market share. So even in this “niche,” there’s a lot of room to grow.

Remember that “convenience” is also part of the equation. Sometimes even when customers are not in a hurry, it’s just more convenient to buy from Grainger. The company is more likely to have the product on hand, it’s clearly listed in their catalog or website, and they provide very friendly and competent service. All of these considerations make customers care less about price and more willing to buy from Grainger.

So there’s really nothing mysterious about what Grainger has done. The company has succeeded by serving “speed and convenience” needs for decades. What has changed over the last several years is the company’s willingness to focus on what it does best and get out of areas that don’t leverage its core competencies. This is the result of extremely high quality leadership that is likely to find new ways of enhancing its capabilities. That means Grainger will probably get even tougher in the future and expand its market share gradually but steadily.

Tags: distribution, grainger
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Pedal to the Metal: Three Fast and Furious Growth Tactics for Distributors

April 14th, 2010

Are you aggressively planning for sales growth as the economy recovers? Are you ready regardless of how fast business improves? Leading distributors are investing heavily in growth initiatives right now. Get ready to win market share by investing in three cost-effective sales and marketing capabilities: telesales, internet marketing, and database marketing.

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Market Yourself Aggressively: Seven Bold Job Hunting Tips

January 26th, 2010

I’ve worked and consulted for many great companies, and as a consultant, it’s my job to stay connected — so, many people come to me for help and advice as they look for jobs. I learn a lot from these individuals as they conduct their searches, and one common mistake I see is that people are not aggressive enough. Perhaps it’s because people who are unemployed sometimes lack confidence, or they perceive the balance of power is against them and they don’t want to be perceived as pushy. But I think many executives “in transition” (the new term for “unemployed”) get too tentative, think too small, and thus decrease the odds they will find a great job.

Here are seven tips that I’ve developed based on my observations. I don’t expect many professional recruiters or HR veterans to agree with all of these. But I’ve seen each of these tips used to great advantage, so they work sometimes, for some people. Use your judgment.

1. Search a Very Wide Geography

Probably the most common and damaging mistake I see job hunters make is they limit the geography of their search. For example, I live in Colorado and many of my local contacts who come to me say something like, “I want to stay in the Denver area,” which usually means they aren’t looking very hard anywhere else. Limiting your search geographically is not aggressive.

Now, narrowing in on a geographic area might seem like a reasonable requirement for a job search. Executive recruiters often ask this first. But they are asking this question not so they can find more jobs for you but rather so they can eliminate you as a candidate for many of the jobs they’re seeking to fill right now. The second you tell a recruiter you don’t want to move, you’ve taken yourself off the list for most opportunities.

Consider my local friends. You might think that it’s logical for there to be lots of jobs in this area because Denver is a pretty big metropolitan area. In fact, the Census Bureau reports that the Denver “MSA” (Metropolitan Statistical Area) has a population of 2,357,404.

Here’s the problem: the population of the United States is 304,059,724, meaning Denver has just 0.78% of the national’s people. So putting in place a limitation like, “I want to stay in the Denver area” means you are probably eliminating more than 99% of all US job prospects. How much harder did your job search just become?

I understand that people have good reasons for wanting to stay local – they have established social networks, a spouse working in the area, or a custody agreement regarding children from a prior marriage, etc. But most of the time, people just really want to live where they are now.

There’s nothing wrong with this, of course, and I understand the reluctance because I have moved 14 different times in my life, not counting relocations within cities. Moving is very difficult, expensive, and emotionally draining.
However, it is not as emotionally draining as unemployment, or worse, severe financial hardship. So if you are limiting your search to where you live today, recognize the tradeoff you are making. And consider casting a wider net even if you don’t want to move. I’ve seen many cases where someone who told me that they wouldn’t relocate changed their minds later when they became desperate. And yet they had wasted six months’ of their search process ignoring everyplace but their hometown.

You can always turn down a job offer, but they’re still nice to have. You can’t accept an offer you don’t get. So go get some offers, wherever they may be — then decide based on your circumstances at the time and the nature of the job if you want to accept it or not. Searching strictly for local jobs is not aggressive unless you have no choice.

2. Leverage Your Past Fearlessly

Several weeks ago, I had lunch with a good friend who is trying to start a very interesting company. Everyone who knows this individual thinks he’s extremely impressive. He’s extraordinarily intelligent and capable and has a terrific resume. He’s had high-level positions with some of the world’s most prestigious companies and he has the kinds of education and certifications that other people can only dream about.

However, the start up that he is pursuing has very little to do with the work that he’s done before. In addition, he doesn’t have any significant intellectual property to claim. That means that even if he finds investors, there’s nothing to prevent others from copying his business model. So it’s risky and while that’s aggressive, it’s also a long-shot opportunity.

Out of curiosity, I asked him why he wasn’t pursing something that was more similar to the work he has done in the past. As it turns out, while he had many successes working for his prior employers, in two cases, his tenure ended badly. Apparently, he’d taken on extremely difficult assignments and when they didn’t work out, he had to leave the companies.

This is actually a pretty common scenario, and it doesn’t diminish this individual’s remarkable abilities or effectiveness one bit. But when he’s job-hunting, no one will know the details of his prior jobs; my advice to him was to search for jobs that are similar to his past positions even while he is working on his start up.

A lot of people like my friend leave corporate jobs to “do something different,” like entrepreneurial ventures. And while that’s tempting, the fact is that we have the very best shot at landing a future job that looks like the ones we’ve had in the past. Our strengths and resumes make us very attractive to companies hiring those positions and they are the jobs we can compete for most effectively.

If you haven’t done so lately, take a look at your resume from the perspective of an employer. What does it say you are best qualified to do? What kinds of jobs are you most suited to pursue? Learn how to portray yourself as an expert in your field — a master of your area because of your experience, training and education. Then practice describing why you have extraordinarily strong qualifications and simply ignore parts of your previous jobs you don’t wish to discuss. That’s not only aggressive, it’s what many of the people you’re competing with are doing as well.

3. Master the Dreaded Practice Interview

I think it’s sort of a platitude that you should practice your interviewing skills, but hardly anyone does it. This is unfortunate, because interviewing effectively is an acquired skill and most people are pretty poor at it if they haven’t practiced it a lot.

Have someone interview you and videotape it. Scrutinize the tape, make some improvements and then do it again. I know that most people hate the way they look and sound on videotape, but that’s really how you look and sound, so you might as well know it. Once you do, you can work on improving the way you come across and eliminate the things you don’t like. You will see and hear yourself do things on the tape that you weren’t aware of that are distracting or take away from the impression you’re trying to make.

I once videotaped someone who couldn’t seem to land a job no matter what he did. When we watched the tape, he was aghast to see that whenever he was thinking about a question, he dropped his head down and stared at the table. It was disconcerting and made him look discouraged and not at all confident. After a few tries, he was able to correct this and some other faux pas and was much more confident in his interviewing. He landed a job soon after our videotaping session, even though he had been interviewing for a couple of years with no luck. That practice, he said, is what made the difference.

There are many other areas of interviewing that will improve with videotaped practice sessions — how you enunciate, the words you choose, your hand gestures, the way your clothes and hair look and how loud and fast you speak, etc. You simply cannot master all of these details unless you see yourself in action.

Make sure whomever plays the role of the hiring person is ready for your rehearsal. They should be professional and play the part with complete seriousness. When you begin, enter the room like it’s a real interview, shake your interviewer’s hand, and once you get started, stay “in role” until the interview is done. Don’t stop if you flub up — you can’t do it in a real interview, so make yourself recover from mistakes in practice. Finally, ensure the interviewer has a long list of questions to ask, some of them quite difficult or pressing on areas of your resume where you are the least confident. There are almost no interview questions that you can’t anticipate, so be ready with answers to all of them. As I tell my friends, memorize your ad libs in advance so that you can deliver them articulately and with poise and confidence when it counts.

Hardly anyone practices their interviewing on tape and then reviews the results carefully. Be the aggressive, consummate professional who does.

4. Ask Friends to Help — But Not the Way Other Candidates Do

I find that many people are reluctant to ask their friends and colleagues (current and former) for substantive help in finding a job and this is a big mistake. I know everyone “in transition” emails and calls some friends to ask that they keep them in mind if anything comes up, but that’s not what I’m talking about. That’s not aggressive.

Aggressive networking for a job involves reaching deep into your well of relationships and contacting everyone you can possibly think of to enlist them in your search. When you ask someone for assistance, it creates a sense of obligation on their part that doesn’t exist otherwise. I don’t know why this is the case, but I’ve seen it happen many times. You won’t know which of your friends, associates and former coworkers will have great opportunities to send your way until you ask them to, but I have been frequently surprised at where great job leads come from.

But even if you ask for help, most people who know you are looking for a job won’t think of you when they run across relevant leads. Everyone’s busy and has their own problems to deal with, and you probably won’t come to mind very often except to your best friends and colleagues.

So go farther. Ask them to write recommendations for you on LinkedIn. Ask them if they will go through their Outlook contacts with you on the phone and give you email address of people you can approach with their blessing. When I founded my consulting practice, I did this with a former associate of mine and wound up with a dozen great leads, one of which turned into a significant contract. While you have them on the phone, ask if they will be a reference for you and then follow up with an email summarizing your strengths and experience, so they will have it handy if a prospective employer calls.

Don’t worry about offending someone or being turned down when you ask for their assistance. People are usually happy and even flattered that you are seeking their help. Very often I’ve seen former colleagues go out of their way to recommend and help each other even if they weren’t on the best of terms when they worked together. I have some strong recommendations from people with whom I had rocky relationships when we were at the same employer and have received some great leads for jobs and consulting assignments from them as well.

Many people I know have found new jobs by building a large network of professional acquaintances and then working it hard for leads. Since many and maybe even most jobs come from personal networks, you are really missing out on some great opportunities if you don’t take this seriously and do it aggressively.

5. Be the Consultant You Didn’t Know You Are

Although I’ve been consulting for nearly six years now, I got into it by accident. After my last corporate role, I decided I would find some local company to buy and run myself. While I was looking into this, one of the people I’d worked with years ago called me and said, “Hey, I hear you’re not busy right now. Would you like to do some work for us?”

“Sure,” I replied.

“How much do you charge?” he asked.

I thought for a moment. “I have no idea.”

We laughed, worked out an agreement and I did the project. I read some books on how to be a consultant so I wouldn’t do anything too stupid, but I wasn’t planning on making my living this way. However, when I finished that project, I began to get calls from other former co-workers and I never did get back to buying that company like I’d planned.

Many people I know who are looking for jobs could also do some consulting. It doesn’t take much money to get started and it’s a great way to network. Consulting assignments also lead to job offers, which has happened to me more than once. Besides, it sure beats sitting around between interviews.

In my case, consulting has become my career, but it’s so easy to get in and out of that it can also simply supplement your income while pursuing full-time gigs. There is no real “risk” other than the very modest time and money required to establish your practice. Besides, the very process of setting up a small business is highly educational and interesting.

Lots of people look for jobs. Aggressive people consult along the way.

6. Flaunt Your References Up Front

Using references is one area where I think the experts are wrong. Supposedly, you shouldn’t include references with your resume. In fact, nearly every resume I see ends with some boring statement like, “References provided upon request.” The truth is that no one requests your references until you already have the job, at which point they don’t do you much good because the game is already over.

I’m of the opinion that it’s a bone-headed use of a valuable resource, and here’s why: in the rare cases where someone attaches references to their resume, I absolutely cannot resist looking at them to see who they are. It’s like the “P.S.” on a letter — you feel like there must something interesting tucked away there and you don’t want to miss it.

I first noticed this phenomenon when I was a hiring executive. I received a resume with references attached and they appeared to be very successful and interesting people. I found myself thinking, “Wow, I should interview this guy so I can talk to these intriguing people who are recommending him.” And then I grinned and wondered if that was precisely what the individual had intended. If so, he was really onto something.

There are so many resumes in the marketplace right now that it’s very difficult to stand out. If you have interesting-sounding people as references, I think that reflects well on you and thus helps you differentiate yourself from other candidates. You may even find some gullible executive like me who wants to interview you just so he can talk to your references. I can’t imagine anyone would react negatively to this strategy, so it appears to me that there is no reason not to give it a try. Using references the conventional way is almost useless, and certainly not aggressive.

7. Ask the Illuminating and Critical Closing Question

In any situation where I am closing a deal, such as a job interview or while pitching a consulting project, I always end with a same question:
“Based on the specifications in the job description [or the consulting assignment], how do you feel my qualifications match up with what you are seeking?” This usually yields a slightly startled look, but people seem to like the question and they always open up and give you information you wouldn’t have otherwise.

I find this is useful in a couple of ways. Most importantly, it surfaces objections or reservations the other party is feeling about me or my company, which allows me to address them immediately. They’ll often say something like, “Well, overall, you appear to be very strong, but I’m not sure you have enough experience in segmentation.” This gives me an on-the-spot opportunity to address their concern and help them understand that, because of my experience, I am actually a highly accomplished expert at segmentation.

This question also helps you exhibit an appropriate amount of aggressiveness. You are unafraid to get into sensitive areas with tact and look for answers and resolution. You are the type to surface and deal with the tough issues. This conversation also helps you identify important areas for post-interview communications, like your follow-up letter.

So there you have it — some tips on marketing yourself more aggressively during your job search. If you have a chance to try them out, please let me know how they work for you. And, most importantly, happy hunting!

Tags: job hunting, job seeking, jobs
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Anti-Social Media Marketing

December 3rd, 2009

Marketing professionals are feverishly obsessed with “social media marketing.” Social media includes websites where huge numbers of users provide their own content and create connections and relationships by sharing information and following each other’s updates. There are dozens, and perhaps hundreds of these sites like Facebook, LinkedIn, Twitter, MySpace, Spoke, ecademy, Classmates.com, Friendster and Flickr, where people exchange business and personal information, status updates, photographs, videos, news articles, political views, resumes, sexual interests, sports opinions, recipes, health facts and endless amounts of other data.

It doesn’t end there. Social media marketing also includes the use of blogs, online videos, discussion forums and creating ways to allow customers to provide feedback and ratings on the pages of your websites. And a lot more. It’s tremendously valuable and some organizations have done a great job getting real value out of their social media marketing efforts. Here’s a brief but highly compelling article on how Citrix, which makes desktop and server utilization products, uses social media marketing.

Without a doubt, there are massive marketing benefits available to marketers who can figure out how to harness the attention and preferences of audiences using social media tools. Everywhere you turn in the marketing world, people are promoting the value of engaging social media for businesses purposes. I quickly went through a week’s worth of emails to find invitations to attend or view whitepapers, webinars and conferences. Here is a sampling of what I’ve received over the last seven days:

How to Develop a Social Media Strategy That Works For Your Brand
Connecting Constant Contact and Social Media for Internet Marketing Success
Free webinar – Webcasting + Social Media Increase Attendance: An UNLEASH09 Case Study
The Best of Both Worlds: How to Effectively Leverage Social Media Relationships with Real-Time Collaboration Tools
Email Gone Viral: How To Extend Email Reach Through Social Sharing
2009 B2B Social Media Benchmarketing Study
Service in the Time of the Social Customer
Understanding Your Online Reach
Generate a Buzz for Your Business Through Social Media Marketing. Convert that Buzz into Revenue.
5 Killer Ways to Promote Your Facebook Fan Page

Now, I subscribe to several marketing newsletters, but there are hundreds of others and this list represents just a week of emails — and I probably missed some. Marketing via social media is white hot — the level of excitement is off the charts.

Social media, however, cannot yet substitute entirely for other, more traditional forms of marketing. Recently, I was on an “expert panel ” at a marketing event and the audience was breathlessly excited about social media. At one point, all of us panelists were asked to comment on the value of this new channel and when it was my turn, I stated that while I thought social media would someday provide enormous marketing value, I was concerned that people were focusing too much effort and attention on it. I said that, in my view, there was probably no huge “first mover advantage” in figuring out how to market successfully via social media and that it was important to continue to utilize email, direct mail, direct sales, telesales, advertising and other channels for now. I said that people should make sure they stayed current with what was happening in social media and they should be constantly experimenting, but, since no one has yet cracked the code on measuring the results of these new opportunities, it was important not to get distracted from demand generation methods we currently use that we know are effective.

These statements won me a large number dirty looks and I felt like I’d just announced that I was predicting a major comeback in Yellow Pages advertising. Several people in the audience probably dismissed any notion of hiring my company to do marketing consulting for them and I think there may have been murmurs of organizing a lynch mob.

The odd thing is that I actually am very excited about the potential of social media marketing and we use it in my company everyday. I just think that its value as a form of demand generation isn’t clearly understood yet and, since it’s not very measurable, it flies in the face of responsible marketing for most companies to devote inordinate amounts of resources to it.

We have a tendency in marketing to assume that new channels make old ones obsolete. For example, when email began to gain in popularity and effectiveness, many marketers concluded that direct mail was on its way out. Oddly enough, email marketing, to some extent, became a victim of its own success. Spam grew at a faster rate than quality email, and soon customers’ in-boxes were loaded with so much garbage that system administrators all over the country became more aggressive at filtering out unwanted email. Unfortunately, a lot of good quality email, much of which customers had subscribed to, got caught in spam filters. Deliverability rates of email marketing campaigns dropped precipitously and the whole medium has lost some of its effectiveness. The net result is that direct mail, good old fashioned printed offers sent through the USPS, has made somewhat of a comeback. The death of direct mail was highly exaggerated.

Something similar is likely to happen to social media marketing and I think it’s already started. For example, I get many emails telling me that people have started to follow me on Twitter. These emails contain no information about my new fans, just a cryptic user name, which I can click on if I want to see who it is. What I have discovered is that a growing number of these “followers” are providers of porn and are probably signing up to follow tens of thousands of unsuspecting Twitter users like me. If this continues unchecked, I will not be a Twitter user for long because, as it turns out, I am not actively seeking more junk mail in my in box. I suspect you are not, either.

My own company has yet to generate any business from our social media efforts. “Old” methods like telephone calls, emails, speaking at conferences and networking still drive most of our business. When I started Real Results Marketing five and a half years ago, I resolved to go through my contacts and either email or telephone people in my network every month. To this day, most of the business opportunities we uncover happen through this type of work and former colleagues are still the richest source of consulting deals. It’s a real struggle sometimes to make myself take time out of a busy day to make those calls or send those emails, but they’ve proven so vitally important to our revenue stream that I don’t dare let up on these efforts.

I realize that most businesses can’t rely on the founder’s professional network as a primary form of demand generation. Bigger companies have their own tried-and-true methods for driving growth. Your company may utilize a sales force, telesales personnel, advertising campaigns, sophisticated database marketing initiatives and other tools for creating sales opportunities and I’d argue that the importance of those approaches hasn’t diminished one bit in the face of social media growth.

Whatever has worked for you historically should still be the primary focus of your sales and marketing. You certainly want to stay plugged in to social media and, by all means, attend workshops, conferences and seminars on the subject. It might even be a smart investment to devote a headcount or two to doing nothing but experimenting with these exciting new marketing tools and following the lead of companies like Citrix, noted in article link above.

Someday, someone will master how to market effectively and measurably via social media. Once that happens, all of us in marketing will need to learn how to adapt those discoveries to our businesses and use them to drive sales and profits. Until that time, however, marketers should focus most of their resources on the tools they understand so they can live up to their primary responsibility of driving profitable, long term growth for their employers.
I have joked that I have become the leading advocate for “antisocial media marketing.” I’m actually a big supporter of these exciting new channels — just not at the expense of marketing techniques that have been proven to work. Nonetheless, my less extreme position on the subject probably means I won’t be voted the most popular speaker at marketing conferences in the future. I’ll just to have to be sure I stay one step ahead of the lynch mob and keep making my networking calls month after month.

I hope your business is thriving. You may be hearing from me soon.

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Aggressive Marketers Outspend Rivals by 60% During Recession

June 29th, 2009

I just finished a comprehensive survey of marketers with my friend, Andy Martin at Al Dente Marketing and we were surprised by some of the findings. Sales were down for “only” 58% of the surveyed companies, with 11% reporting flat revenue performance and 31% actually growing the business. Given the lousy economy, we thought the news would be worse. On the other hand, a full 15% reported sales down more than 25%.

The news isn’t all bad for marketing departments, either. A full 25% of companies said they’re spending more on marketing while 42% are spending less. But, and this is important — those cutting expenses are slashing marketing by -35%! Those spending more on marketing are doing so by +26%. That’s a 60-point swing between the aggressive and the timid. I’d hate to be a marketer competing with someone who had a 60% bigger budget right now.

We noted a shift in spending from traditional marketing channels to Internet marketing, although it wasn’t as pronounced as we expected. Probably the biggest area getting more money is email marketing, although direct mail is getting more resources as well. Andy and I speculate that since these areas can be measured, they’re a fairly save haven in the current economic storm. Plus – they work great if you know how to do them well.

A whopping 83% of respondents claimed to be spending the same or more on market research and analysis in 2009 vs. 2008. As one respondent wrote, “It’s all in the data. We just have to define, track and gain better understanding of the results.” Now is a very important time to have a good “marketing GPS” to guide you.

There is a big emphasis on innovation. About three times as many respondents are spending more on new products and services vs. those spending less.
In terms of pricing, it was mixed bag, with some respondents claiming to be more willing to meet competitors’ prices and others focusing on bundling products and services or giving incentives for larger orders.

We asked respondents about the economy; 22% thought it was getting worse, 32% thought it was improving and 46% believe it’s not changing. We gathered detailed responses about when people think things will improve and you can see that in the presentation, which is linked below.

Overall, most respondents seemed to be relatively upbeat about the state of the economy, although some were less than enthusiastic about the government’s actions. One marketer wrote, “We will recover from capitalism to enter into a new era of socialism…comrade.”

The complete survey, with representative verbatim comments can be found on my website as well as Andy’s. Here’s a download link for a PDF.

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Gripping Copy and Why Great Marketers Should “Eat the Stunned”

June 29th, 2009

I recently conducted a workshop with my friend, Andy Martin, at Al Dente Marketing. We were at the Business Marketing Association annual national conference in Chicago, and the conference was held at the iconic Drake Hotel.

(Side note: why does the Red Roof Inn off wireless Internet access for FREE while the very high end Drake doesn’t offer it at all? To add insult to injury, old-fashioned plug-in connections are available – for $12/night. Someone needs to inform the Drake that it is no longer 1999.)

Andy and I had put together a great workshop on growing marketing during a recession. We had conducted quite a bit of secondary research, interviewed several growing businesses in person and also prepared the preliminary results of an online survey we had completed (discussed in the blog entry, “Aggressive Marketers Outspend Rivals by 60% During Recession,” elsewhere on this page.) I had signed us up for the conference workshop several months ago and had at that time chosen the title, “Managing Marketing and Pricing in a Down Economy,” a very accurate description that is, unfortunately, deathly dull.

Gripping Copy

Several years ago when I was managing a corporate marketing department, I was trying to convey to my creative team the writing style I wanted them to develop. I somehow came up with the word, “gripping,” which almost always serves as a terrific adjective for anything related to marketing communications: gripping titles, gripping descriptions, gripping events, gripping designs, gripping visuals, gripping photography, gripping stories, gripping copy, etc.

You’d think that after 20 years in marketing, I wouldn’t have to relearn important lessons, especially those as fundamental as naming a workshop in a way that draws an audience. Somehow, however, in the rush to deliver a workshop title and description for what is a very important conference, I forgot all about “gripping” and came up with something dull instead.

Like the proverbial cobblers whose children wear no shoes, we marketers are sometimes guilty of failing to write messages that go beyond the traditionally dry, business gobbledy-gook and actually interest readers. This is an epidemic that has gotten worse, in my opinion, and if you don’t agree, go to the “About us” section of just about any corporate website, begin reading and then call me when you wake up.

Eat the Stunned

Fortunately for me, I have recently begun working more with Andy, who pushes me hard to drop the business-speak and use words and phrases that drive intrigue and interest in readers and listeners. So, when Andy suggested we change the name of the BMA workshop to “Eat the Stunned” because one of our findings was a huge disparity between how aggressive marketers are spending vs. timid rivals, I knew instantly that he was right.

Unfortunately, it was too late to change the “official” name in the brochures and on the BMA website, so we changed it for the workshop materials and explained what it meant. We had good attendance at the workshop – but I bet it would have been better if we had used Andy’s title from the start. After all, what’s the chance you would have skipped reading this article if was named, “Managing Marketing and Pricing in a Down Economy?”

The BMA is currently preparing a copy of our presentation with recorded audio form our workshop keyed to the slides. I’ll let you know when that is available so you can hear it all the way through if you’d like. For now, here is the presentation from the conference. I hope you find it gripping – and that you eat your stunned competitors during this recession!

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