What makes a great marketing strategy?
Long gone are the days where marketing is an afterthought, a great marketing strategy positively connects the Brand to the Customer.
A case for marketing
In the mid 2000s, Kmart Australia was struggling. The business turned over $4 billion annually, yet was ‘flirting with collapse’, making almost zero profit. Tellingly, 90% of sales were driven by discounting. To generate foot traffic and draw customers away from competitors, Kmart ran almost continuous sales with 50% mark-downs. Whilst discounts resulted in short-term spikes in sales, they did nothing to build brand equity or profitability. The broader retail environment was tough with intensifying competition from online shopping.
In short, the brand lacked a connection to their customers and a great marketing strategy. It had lost its way. Continuous sales, confusing shop layouts, long queues and mind-boggling varieties of stock all combined to paint a not-very-pretty picture for incoming Managing Director Guy Russo in 2008. Fast forward to 2014 – Kmart had become the most profitable department store in Australia.
We find Russo’s stunning turnaround of Kmart’s fortunes fascinating because most analysts had written Kmart off as a basket case. And yet he managed to do it, because he took the time to develop a marketing strategy that put the customer at the heart of the business. Before we continue, let’s define what we mean by marketing strategy.
A strategy is how you connect with your customers, new ones, existing and lapsed
You need to know your customers, how you get to know them more, where to connect with them and how you help them make conscious decisions to purchase from you. Your high level marketing strategy details your connection to the people you serve and why they should purchase from you. You’ll then set objectives (which should be SMART – specific, measurable, attainable, realistic and timely) that help you understand that the connections are working.
The rest of the strategy then involves identifying the best way to reach and realise your objectives and any obstacles that might exist. You may come up with hypotheses that you will test. This process is informed by the Business Strategy and Brand Strategy, perhaps even your Digital Strategy. This means carefully making choices about how your finite resources such as budgets, time and technology should be best deployed and how you measure your results.
Don’t make the mistake of confusing an objective with a strategy. For example, you might say ‘our marketing strategy is to grow by improving customer retention by 10% year on year.’ In this case, a 10% improvement in retention is an objective. The statement says nothing about how it will be or why it should be achieved.
To realise the objective of a 10% increase in customer retention, we might hypothesis that we should incentivise repeat purchases. We do this because this is a leading indicator for your business - we know we’re providing value fs people keep coming back for more - and this aligns with your understanding of your target customers - they value discounts as this has traditionally seen an increase in repeat sales.
‘arrrgghhhhhh’ you say, ‘this sounds like a lot of work!’ And it might seem to be a lot of work, but strategies don’t have to take a lot of time to build with the right tools or have to be pages and pages long that nobody reads.
Strategy is not a swearword!
Start small, but start.
How you make it happen is your tactical action plan
A tactic is a specific action that needs to be taken to implement your strategy to reach your objectives. In building terms, if a blueprint is the strategy guiding what the end result should look like, then a hammer and nails are one of the tactics that bring it to life. Marketing tactics can relate to the product, price, place, promotion, people (customer) or processes. So, if the objective is to encourage customer retention, several tactics might be implemented such as retargeting customers a specific number of days after their most recent purchase, sending an email with a 20% off redemption code or introducing a loyalty points program.
Tactics as science experiments
Think of tactics as the marketer’s tool kit. If the objective is to encourage repeat purchases, several tactics might be in the toolkit, such as retargeting customers a specific number of days after their most recent purchase, sending an email with a 20% off redemption code or introducing a loyalty points program.
You want to consider yourself like a scientist that is conducting experiments. You create a hypothesis based on your experience and available data about what will work to reach your objective. You predict the results of the experiment and then you launch it.
We work in 90 day increments because often in the marketing world, things can take a little longer than you initially hope - you know, the one social post you posted won’t magically turn into 1,000 website visitors.
Track how your experiment is going using the available metrics. These metrics need to be meaningful and align back to your objective. If repeat purchases is your goal and you’re tracking social followers closely, you don’t have a pulse of what is happening in your experiment. A better metric would be click through rate of your retargeting campaign, email opens and click through rates, loyalty program sign ups.
At the end of the 90 day period 9 (or however long you set - hello 6 and 2 week product marketers) review the data and draw your conclusions. Record your learnings, if you can, so that it informs your next experiment.
To be strategic is to discern what to do and not to do
Take the Kmart example. Russo commenced his tenure by undertaking what he called a ‘discovery’ phase. He observed that Kmart was attempting to compete as both a discount store and a high-end retailer, and not really successfully serving either market. Russo understood that Kmart, at its core, was a discount retailer. As noted in Eloise Keating's article in Smart Company, he compared Kmart competing with mid-tier stores as McDonald’s selling T-bone steaks with knives and forks and introduced a brave new pricing strategy to reflect the ‘bottom-end’ positioning, cutting prices by an average of 30% across the board and eliminating discount sales. The result was an impressive 69% growth in earnings before tax between 2011-2013.
Great strategy puts the customer first
We call this ‘human-centred marketing’ and it’s core to what we do. In the past, businesses could get away with developing a product or service and then figure out how to sell it to consumers. Think of the Mad Men era days where advertisers were rockstars.
These days, thanks to technology and the internet, the power balance has firmly and permanently shifted to the customer (thankfully!) and consumers are a bit despondent to advertising - today’s rockstars are now influencers (sigh).
Businesses that design their offerings based on meaningful customer insights and that communicate in a way that builds an emotional connection will have the competitive edge.
How did a discount department store competing on price do that?
Critically, Russo and his team took the time to get a deep understanding of the Kmart customer and gained insights to inform decisions including refreshed store layouts and simplified product lines. Through their research, and as highlighted in "How Kmart beat the odds on everyday low prices," they discovered that shopping at a discount store evoked negative emotions, including the shame of trying to make ends meet.
To overcome this, the ‘everyday low pricing’ strategy was launched to the consumer with a new ad campaign that celebrated the positive emotions consumers felt when finding a quality product at a bargain price.
Featuring real mothers who were invited to a Kmart store and asked to guess the prices of items, the ad played on the pride felt when nabbing a bargain. Finding a great deal is satisfying and something most people like to brag about.
The result? Not only did a ‘soft’ measure such as the association between Kmart and ‘pride’ score well, but store visitation went up by 20% over the next two years, and the number of items sold went up by 42%. By putting the customer at the centre of the business, Kmart won a new place in the hearts and minds of Australian consumers.
Why you should write down your marketing strategy
Your business may not be in the dire straits that Kmart found itself all those years ago. But if you can’t confidently say you’re making the most of every opportunity, or if your results seem to be flat-lining, it might be time to review/refine or create and document your marketing strategy.
Perhaps you’ve been putting it off because you’ve thought that developing a good marketing strategy is hard.
And whilst it does require focused thought and collaboration across the business, there are ways to do it easily to get you moving quickly.
When you’re focused on delivering results for the next quarter, it can feel counterintuitive to hit a pause button and question everything you’re doing. In the face of competitor intensity, it’s tempting to simply do more; run another promotion, produce another brochure, experiment with advertising on a new social media platform. In other words, it’s tempting to operate on a purely tactical basis. But working with 25eight for just one hour a week in as little as 8 weeks, can help you develop and execute an effective strategy.
Share your strategy so that everyone has a clear picture of how you will connect with your customers and reach your business objectives
Whilst it might be tempting to skip formally documenting your marketing strategy, documenting it has several benefits;
It forces clarity of thought as you interrogate which choices to make.
There’s less risk of distraction, misapplication and/or wastage of resources.
Your business is less likely to be reactive.
It creates a shared understanding within your business about how you intend to approach achieving your objectives.
It’s much easier to develop an action plan that can be measured, as you will have defined what ‘success’ looks like and know when you’re moving in the wrong direction.
And ultimately, this leads to a much greater likelihood of your business achieving its objectives quicker, and with less wastage.
Ideally, it should live somewhere where everyone can access it. In your cloud project management tools such that it can be referenced to help make decisions. And, it can be as simple as a one page document.
We’ve got a one page marketing strategy template that helps you focus on the most important elements. Get it here
And then ask us how we use tech tools to action it and plan out our experiments, so data is collected and