Routes to the market

Received wisdom has it that when the going gets tough, the marketing team gets the chop, but that approach may be changing in this recession. Kathleen Hall investigates.

Jack Fairhall, chief executive of social network building site Kwiqq, saw his turnover fall when the recession hit last year. He responded with a more aggressive marketing strategy and saw a revenue uplift of 180 per cent in the following quarter. ‘I would attribute the increase in sales entirely to shifting our strategy online,’ says Fairhall.

‘It wasn’t due to higher demand because, if anything, companies had less money to spend on the sort of services we were offering.’

Previously, Fairhall had used the more conventional channels of cold calling, direct mail and trade shows. ‘We were doing things like blogging, but not in the concerted way we do now. We also use things like Facebook and LinkedIn a lot more. There are platforms that were not as mature six months ago as they are now, such as Twitter, which have allowed us to be exposed to people we wouldn’t otherwise have reached.’

Financial pay-off

Moving to an online strategy has had the added benefit of saving Fairhall money as he has cut back on traditional marketing. ‘We will be looking to reinvest in these activities at a future point. But the only thing that doing more marketing online has cost us is time. Previously, we had someone who spent about ten per cent of their time using social networking to raise the profile of the company. Now it’s more like 60 per cent.’

It’s a decision that many other chief execs are taking. Figures from the World Advertising Research Center show that only advertising on the web is growing (up 17.3  per cent), while print, television, radio, outdoor and cinema are all contracting.

However, online only accounts for 23.9 per cent of overall advertising spend in the UK, and web-based marketing is by no means a sure thing. Thomas Brown, head of research at the Chartered Institute of Marketing (CIM), says that although e-commerce is a growing market (one pound in every ten is now spent in digital Britain),  the internet might not represent the best investment for every company.

‘There is a risk that organisations can view moving online as a cheaper option and shift everything accordingly. But before doing this, companies should make sure that their customers and target audience use these media in the way that those companies actually think they do. Testing and measuring is absolutely key.

‘Legislative and ethical implications should also be taken into account. For example, you don’t want to just bombard your customers with emails. And you should also bear in mind the data protection considerations before using their information.’

Brand recognition
Brown adds that it can also be important to retain a presence through more traditional channels of marketing such as print, even when there isn’t an immediate sales return. ‘There are certain markets where your customers will just expect to see you advertising through these routes. The purpose of air shows for the aviation industry is a good comparison. Appearing in them doesn’t deliver a direct sales value, but it is the sort of thing that Boeing customers, for example, will just expect to see the company performing in. The same goes for other types of marketing.’

Vivion Cox, director of consultancy iProCon Human Capital Management, says the biggest focus of the company’s marketing strategy has been to clearly demonstrate value to customers: ‘Five or six years ago we might have got away with saying: “Look, these are the services we offer,” but you can’t do that in this climate.

‘We’re now also a lot more systematic as to who we target in organisations. It’s not just a case of putting your product out there. Initially, we sent 1,000 brochures out to companies detailing our services and hardly got any responses.’

Cox consequently shifted tactics and applied the “sales funnel” model he was taught while studying for an MBA at Cranfield to target the correct market. ‘We painstakingly compiled a list of over 2,000 companies that we thought were right for change. We researched who was specifically involved in those departments and who we should contact. As a result, the response was a lot better and we won more clients.’

Bread and butter
Raja Taseem Sajjad, owner of halal sandwich shop Lazeez, has also benefited from the insights into strategical marketing he gained from an MBA course as he faced the daunting task of setting up a company in the midst of a market crash. ‘Over the past year I’ve focused on building our name. We’re based outside Oldham and I’ve just completed a mass marketing campaign, which involved targeting small organisations like the local council, art galleries and civic centres in order to broaden our customer base. If I hadn’t done an MBA, my idea of a marketing campaign would just be to print a load of leaflets and distribute them. As a result of our success, I’ve had corporate finance people and VCs from Dubai approach me.’

Marketing for beginners
CIM’s Brown says that companies don’t necessarily need to study marketing in order to carry off successful campaigns. ‘Many SMEs might not think what they’re doing is marketing, but in reality it is. Just look at the success of drinks-maker Innocent: with only three guys and a small amount of seed capital it found a way to differentiate itself in the market. They focused everything on addressing that need and now they have a turnover approaching £100 million.’

The basic advice is the same whether targeting the business or consumer market, says Brown. ‘Smaller businesses need to be clear about their objectives. Companies should ask themselves how they can align their marketing activities to their targets in terms of profits. If you’ve run an event, afterwards you should evaluate how it went and shift your plans accordingly to doing less or more. Customer affinity has never been more important in this climate.

Talk to your top ten prospects about what they expect and want from you and be flexible right down to the core of what the business does.’

Brown says that the biggest hallmark of this recession is that it will have a permanent effect on consumer behaviour. ‘Things aren’t going to be like they were before, so it is important that companies think of innovative ways to market their products. Small businesses have the advantage of being able to spot an opportunity in the market and move quickly in a way that larger companies aren’t able to.’

As some companies are forced to cut their overheads, invariably marketing is the first service to be scaled back, but that may very well be a knee-jerk response.

‘There is research that shows companies which cut their marketing investment are worse off in the years that follow. So instead of cutting back completely, they should see how they can change their marketing cost base. For example, as a cheaper alternative to sending out printed newsletters, they could send out e-newsletters instead,’ says Brown.

‘Whatever companies do, it’s important they don’t stop investing in those activities that touch the outside world.’

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