| Those
of you who have been reading my editorials since 1982
in this publication must know how frustrated I get
when I discover marketing blunders on a daily basis
all over the place! The problem is not only the fact
that these blunders could be corrected, but often no
one even makes an attempt to try to fix them.
In my editorial entitled, "The
Sad State Of Marketing In Corporate America," I
clearly pointed out that many marketing managers could
not even pass an elementary marketing test in which
many could not define marketing adequately. Having
said that, I would now like to focus on many of the
marketing blunders that are occurring on a perennial
basis.
I have decided to provide a summary of some of the
most common mistakes made in marketing on a
case-by-case basis. As you will notice, many of these
cases are probably the same experiences you have also
had in the past:
The Biggest Mistake Of Them All -- Stopping
all sales, marketing and advertising plans in a
slowing economy. Savvy marketers know that the best
time to market and expand their market share is when
the economy is at or near a recession because that is
the time when most other marketers (or the CEO or CFO
behind those marketers) decide to cut all marketing,
advertising and sales-related travel budgets. This
kind of inexcusable and downright stupid action is
like a doctor trying to save a patient's life, but
first cutting off oxygen to the patient's lungs by
sealing up his/her nostrils and taping up the mouth
and wondering why the patient died! These idiots (and
I am sorry, but I think they deserve to be called
that) don't realize that in a down economy, a typical
company loses between 50 to 75 percent of its
customers due to natural attrition and due to economic
forces beyond their control. The only way to
remain in business, in that case, is by bringing in
new business, i.e., new customers. And...new
customers come from new sales leads...and new sales
leads come from advertising, marketing, promotions and
trade show exhibitions. This is obviously very simple,
clear logic. It is as logical as two times two equals
four. Yet, it is amazing that 80 to 90 percent of
marketers either don't seem to realize this fact or
their hands are tied by the CFO, CEO or COO or someone
else in the organization who doesn't understand
marketing. It's mind boggling, but that's how it is
and that explains why budgets for advertising and
marketing promotions have been slashed to pieces, even
within companies that should know better, including
some bellwether, high-tech companies. I feel as if I
am speaking to a wall, but I hope these people finally
get the point and start promoting their companies,
products and services, because if they don't market,
they don't exist.
60 To 70 Percent Of Sales Leads Are Never
Acted On! -- This is the second biggest
problem: Some companies spend billions of dollars
advertising, exhibiting and sponsoring conventions to
generate new sales leads, yet 60 to 70 percent of the
leads are never acted on! There ought to be a law
against this. The question is, if you are not going to
do anything with the sales leads, why bother
advertising or exhibiting at the conventions, then
turn around and blame the magazines in which you
advertise or the conventions at which you exhibited
for not bringing the right people to the show or for
not generating quality leads?
A Sad Case In Point -- (This is a
true story.) A leading company, company Y, advertised
in magazine X for a decade and always expressed major
satisfaction with all the results. In the eleventh
year, the company suddenly stopped advertising. The
sales manager from magazine X called the client and
asked why they stopped advertising. The client
replied, "Because we are no longer getting sales leads
from our advertisements!" About a year later, the
sales manager of magazine X ran into the client from
company Y. They met over lunch and the topic of
company Y's advertising came up. The client from
company Y confided, "I want you to know that I just
fired my secretary!" The sales manager asked, "Why?"
The client replied, "Your magazine had been producing
sales leads all along during the last year we
advertised; however, my secretary was putting all the
sales leads in a file and accumulating them for 12
months without telling anyone! We simply discovered
this unfortunate situation by accident and you should
be happy to know that she no longer works for the
company and we are pleased to start advertising in the
next month!" Need I say more?
Lack Of Persistence -- In this age of
e-mail, voice mail and highly automated
communications, it has become evermore difficult to
directly reach decision makers. Consequently, about 10
percent of leads are wasted because salespeople simply
make a single communication attempt and if they don't
receive a response from the decision maker, they don't
try again! The other problem is that many people let
the leads pile up (as the secretary mentioned above
did) and they become totally worthless, yet they are
given to salespeople to make cold calls! This will not
only discourage salespeople, but also helps them to
get in the habit of ignoring sales leads. A third
category of problems along these lines is when
companies do not do a diligent job of assessing the
quality of sales leads and, therefore, create further
frustration for salespeople, which wastes time and
money!
No Lead Tracking! -- Another reason
many marketers fail is they simply do not do any lead
tracking, thus they have NO idea what marketing plan
works or doesn't or what advertising campaign works or
doesn't. This is sure to produce millions of dollars
of waste in marketing budgets.
Meaningless Leadership And Innovation -- There
are many companies whose executives believe that if
they are visionary and highly innovative as a company
they don't need to advertise or market their product.
Nothing could be further from the truth. Innovations
mean absolutely nothing if you don't market and
position yourself as a leader and an innovating
company.
The Entrepreneur's Greatest Mistake -- Not
Believing In Advertising -- The history of
corporate enterprise is loaded with companies who have
lost the leadership position because the executive(s)
at the top does not believe in advertising. A classic
case in point is Henry Ford's blunder (with all due
respect to his genius as the first automobile maker to
recognize the benefits of mass production). It has
been said that Henry Ford was completely against
advertising, marketing and promotions because he
thought if you are first in your business, then there
is no need to advertise. He could not have been
further from the truth, because he eventually lost his
leadership by being totally oblivious to the needs of
people (as evidenced by his famous and unfortunate
comment that, "People can have my Ford cars in any
color they like as long as it is black!"), and the
need for marketing, advertising and promotions. In
other words, he told his customers, "I am doing you a
favor by selling you a car and because I am the only
one in the market, you have to take it, as I like it!"
Then along came General Motors, taking major advantage
of Ford's blunder. Their cars came in multiple colors,
with different options, and they backed their cars
with powerful marketing and advertising. The results
are very clear; General Motors has been the number-one
automaker in the world and Ford has been the perennial
number two. Always a bridesmaid, but never a bride!
If It's Free, I Don't Want It -- You
would be amazed at how many companies ignore the
highly effective opportunity of being in printed or
online Buyer's Guides, which are normally vehicles of
free marketing support. It is amazing that some
companies don't even bother to send free listing forms
for being included in a Buyer's Guide, but then pay
for an advertisement in the same issue! I am sure you
will agree with me that this simply does not make
sense, but believe me, that is how it is.
TELESERVICES COMPANY BLUNDERS
As the one industry publication that has
exclusively ranked the teleservices industry for the
last 16 years, gained many contacts in the
industry and conducted extensive research on the
teleservices sector of the industry, I feel eminently
qualified to share my observations on why about half a
dozen of the companies that went public around the
mid-nineties have encountered major financial
problems. While analyzing the reasons behind it, I
have come to three conclusions:
- The extreme pressure by Wall Street for rapid
growth in sales and profits has contributed to the
problem.
- The fact that the owners and founders of the
teleservices agencies were able to obtain
considerable amounts of money by selling their
shares of stock left little incentive for them to
stick around and run the companies the way they
had run them prior to going public. Therefore, a
group of inexperienced, recent-grad MBAs (who didn't
have the experience to run a convenience store at
a profit) came along and started running these
companies. Unfortunately, they didn't know how
complicated this industry is, and as industry
veterans attest, unless you know it inside and
out, you don't have a chance of being remotely
successful running a teleservices agency.
Nevertheless, many more jumped on the bandwagon,
went public and the rest is history.
- All of the troubled companies had one thing in
common: NONE OF THEM HAD EVEN A MEDIOCRE MARKETING
AND ADVERTISING PLAN!
To make matters worse, many investment bankers,
attracted by the growth of our industry, came in with
zero knowledge of the teleservices industry and
started buying incompatible companies, forcing them to
work together. As we all know, oil and water do not
mix. The result was a disaster.
Perhaps the stupidest of all these deals was that a
group of investors acquired two companies, each with a
great reputation, but with incompatible corporate
cultures, and they tried to converge them. Of course,
it didn't work out because of the difference in
philosophies. To make matters worse, they completely
eliminated the name of these companies and created a
new name that has absolutely no meaning, no value and
it is impossible to remember. By now it must be
mindboggling to you how stupid this whole transaction
was. But wait, it gets even worse. After they changed
the name of the company to a stupid name, they stopped
all advertising and did not tell anyone that this
ridiculous name represented the combination of two
previously respected and most prestigious companies.
They thought that the whole world would automatically
know that this acquisition had been made. They lost
millions of dollars and this company is now on the
verge of bankruptcy. I think if Harvard Business
Review is looking for the stupidest mistake made
in corporate America, this would have to be right at
the top of the list. In short, the investors took two
great companies and ran them into the ground without
having a clue because they had no marketing and
advertising concerning what they were about or why
they existed, and no one would do business with them!
IN SUMMARY
When you look at the numerous mistakes made in
corporate America when it comes to sales, marketing
and advertising, you have to wonder, "When will
they ever learn?" If the objective is to waste a
ton of money and generate a lot of sales leads and
then do nothing with them, or place poorly prepared
advertisements that are counter productive or acquire
companies without knowing what you are doing or lose
market position and leadership position due to
ill-advised opinions against advertising and
marketing, one has to wonder how long corporate
America is going to put up with this sheer stupidity
and wasteful or no spending in marketing departments.
If the objective is spending a lot of money and
getting nothing for it, many are doing a good job. But
if you are looking for results, those types I
questioned should be replaced with people who really
know what they are doing and those who really care
about their company's prosperity. As always, I welcome
your valued comments and reactions. Please e-mail me
at ntehrani@tmcnet.com.
Sincerely,
Nadji Tehrani
Executive Group Publisher
Editor-in-Chief
[ Return
To September 2001 Table Of Contents ]
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