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Publisher's Outlook
September 2001


Nadji Tehrani

Marketing Blunders Continue
When Will They Ever Learn?


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.

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:

  1. The extreme pressure by Wall Street for rapid growth in sales and profits has contributed to the problem.
  2. 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.
  3. 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!

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.


Nadji Tehrani
Executive Group Publisher

[ Return To September 2001 Table Of Contents ]

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