What Could Go Wrong? Protect Yourself From Marketing Risk

You have built your marketing plan, started your execution and you are ready to launch.  Your team is excited.  Will you succeed?  The answer to this question may depend on how much time you have spent anticipating and mitigating the potential risk in your marketing plans.

If you are a financial manager, you can diversify a portfolio or hedge currencies to limit your risk exposure.  Does the same thing apply to marketing leadership?  Can you protect yourself from market and marketing risk? Are there steps you can take to help ensure your months of planning and preparation do not go up in smoke?

The need for marketing risk management

If you have worked in marketing for a while, you know that different types of marketing risk are very real.  The best-developed new product, program or plan can come apart for a variety of reasons.  You likely implement a number of different marketing risk management initiatives already, whether you think of them that way or not.

Marketing risk management is anticipating risk and then taking action to remove or reduce that risk in your marketing development and execution.

When does marketing risk occur?

• Marketing planning – risk can enter your marketing plans as you begin to build them.  Different initiatives and strategic choices carry different types and levels of risk. 
• Opportunity assessment – During new program and new product opportunity assessment, marketers evaluate and compare the market opportunity of different strategies and concepts.  Marketers often focus on optimizing awareness, preference, purchase, market share and ROI.  Often the pursuit of sales and profit growth can lead companies to ignore or underestimate risk in selecting projects to pursue.
• Program/Product development – During the development process, the program or product concept that you approved for development may evolve for operational, but not strategic, reasons.  Changes in execution that deviate from a strong concept may limit the impact and performance of your new product or program. 
• Launch – Many marketing programs or new products have been launched only to face an internal budget cut or a change in external market factors.
• Company or product failure – A public relations issue or product problem could damage your reputation. 
• Established products – In any given month, a competitor, a retailer or a change in the economy can limit the attractiveness of your products.  External risk is harder to predict and can have more severe consequences.

Some risk is easier to identify than others.  Some risk is easier to manage than others.  Marketing is subjective.  There is risk in most marketing initiatives.  Sometimes it takes higher risk to achieve higher reward.  You cannot win some races without taking on risk.  Sometimes you want risk to completely go away.  Some times you just want to manage risk and not fully remove it. 

To achieve reward more consistently, being able to identify, evaluate and manage risk can make the difference between a successful company and one that goes out of business.  Having active risk management tools and programs in place can help you move new products and programs to market quicker and with greater success.

What forms does marketing risk take, and how do you protect against them?

Do you have marketing risk management programs already in place?  Here are some examples of marketing risk and corresponding risk management:

Enterprise Risk Management

Marketing risk management should be part of your enterprise risk management efforts.  This is a holistic approach to managing risk in an organization and typically includes assessment and mitigation of risk in areas such as:

·       Strategic – risk inherent in company strategic decisions and their outcomes

·       Operational – risk inherent in internal operations, equipment, labor and management

·       Financial – for example – investments, currency exchange, interest rates

·       Pure risk – for example, hurricanes, earthquake, war

Marketing risk can occur in any of these categories.  Risk in these categories does not often come at the same time, but they are often interconnected in large initiatives.  An operational or strategic failure introduces financial risk.  Companies must manage their risk portfolio to manage multiple risks across multiple programs.

Ensuring that marketing strategies and initiatives are included as part of your company’s enterprise risk management dashboard and program can be one important step to help add visibility and tools for your marketing risk management efforts.

Putting marketing risk management to work

• Marketing planning – As you create your marketing plan, not only identify your objectives, strategies and action plans, but also identify potential roadblocks, hazards or threats (risks) to your plans.  If you identify potential risks during planning, you can make more informed choices and start risk management earlier.
• Opportunity assessment –During your opportunity assessment process, identify both potential risks and rewards.  If you assess your options for both ROI potential and risk, it is possible that programs with lower ROI, but also lower risk, may be better choices.  You may also select a high-risk opportunity due to high potential reward.  Make sure you are considering both risk and ROI in your opportunity assessment.
• Program/Product development – Delivering a high potential product from concept to market can be more challenging when many people are involved in the development process.  Committee decision-making can slow, kill or evolve a strategic project.  A long or complicated development path may allow the team to stray from the original concept. Your ability to keep a new program or new product true to the approved concept during development can reduce risks following launch.
• Launch – There are many variables that introduce risk following a launch.  An aligned leadership team that supports and protects key strategic initiatives from internal risk factors such as budget cuts, lack of sales support, or operational complications can improve results.  Reducing the internal risk of new programs or products gives them a much better chance in market.
• Company or product failure – A solid, ongoing risk management team puts operational checkpoints in place to help prevent their company from having a significant market or public relations issue.  Does your team have both quality management and crisis management programs in place?  If not, it should. 
• Established products – A good way to be prepared for market changes is to continually monitor the market and ensure that both the market team and the operations team are informed of any new potential market risks.  Any new issues of concern can then trigger response planning with the needed team members.

What you can do now?

• Commit to integrating risk management into your marketing planning and program / product management efforts
• Identify who will lead your marketing risk management efforts.  Everyone should play a part, but having someone on your team who is specifically assigned to lead risk management can further protect you.
• Work with your organizations leadership team to integrate marketing into your enterprise risk management program
• Set up time this month to assess and identify potential risks in current and future programs
• Based on this assessment, put together and implement risk management / mitigation plans

Marketing risk management is not a simple issue, but regular and consistent efforts in this area can make a big difference.  As Ben Franklin once said, “An ounce of prevention is worth a pound of cure.”

This blog was originally posted by GrowthSpring Group on the MENG Blend website.

David Lund is the founder and president of GrowthSpring Group – a unique a strategic growth and marketing innovation firm that works with clients to accelerate success by helping them identify and launch new market growth initiatives. www.GrowthSpringGroup.com

What kind of elevator do you need for your elevator pitch?

Does your elevator pitch work for you?  Do you need one?  I recently read a blog posted on LinkedIn titled, “I don’t really care about our elevator pitch.”  The author shares he does not care about his pitch, “simply because what matters is issues and opportunities.”

He may have found a way to jump to that conversation, but many have found value in using a simple, but effective pitch to get a conversation going.

You may or may not be pitching your value proposition to a prospective client on an elevator.  For most, probably not.  I do believe, and have repeatedly witnessed, that the ability to clearly and concisely communicate your value proposition can open the door to a meaningful conversation on what you have to offer.  I have also seen the reverse where a poorly articulated value proposition quickly leads to disinterest and a potential missed opportunity.

Elements of an effective pitch

In my experience, a great pitch has three components:

1.    It is short and easy to explain

2.     It shares the unique value or benefit you have to offer

3.    Your benefit engages the listener’s emotions as well as their brain.  It makes them think, “I want that – it will make my world better.”

If your pitch does these three things, you will often get your listener to say, “tell me more.” After all, isn’t that what you want your prospect or a person you are meeting to say?  Your pitch should start a conversation.  A short, meaningful, engaging pitch will do far more to start conversations than a long-winded explanation of everything you have to offer.

What is our company’s pitch? “We help companies grow faster.”  We often hear, “tell me more.”  Then, we have a conversation about their challenges and the value we offer. 

So…what is your elevator pitch? 

Does it fit the three criteria above?  Many do not.  Based on a range of pitches I have heard in the last year, many companies need to work on their pitch – or, at least, they need a special elevator in which to make their pitch. 

See if one of these elevators fits your elevator pitch.  Based on the pitch your company uses today, what type of elevator do you need to deliver it?

Elevator in a tall building – Some people take several minutes to share their pitch.  This requires a long elevator ride in a tall building.  A pitch over 20-30 seconds is likely working against you.  You should be able to deliver your pitch in 1-3 sentences.  My experience is that a great one-sentence pitch will be most effective in prompting someone to respond with “tell me more.”

Many elevators to different floors – This is common with many companies.  Each person at the company makes a slightly different pitch about different aspects of your value proposition.  Some may effectively engage the listener, but as they describe different points of value, your representatives are taking prospects to different destinations.  Your company can be more effective if your entire team is aligned to pitch your company in the same compelling way.

All the elevators look the same as in those other buildings – Your company has an established elevator pitch, but it is so generic prospects cannot tell how you are different from other options.  An example of this would be, “We help you market your products to your customers.”  A generic pitch seldom engages one’s interest or emotions.  Often, the thought or response triggered by pitch like this is, “I already have someone who does that.”

No elevator, take the stairs – This happens when someone has no clear pitch to explain their company.  The listener has to work to learn what the company does. Prospects either ask questions to try and figure out if there is value for them, or they tune out and quickly leave the conversation.  Don’t make prospects become stair climbers, have your pitch prepared for when you meet people.

We have one fantastic high-speed elevator.  This is the best elevator for your pitch.  It is a short ride, it will take you where you want to go, and you are pleased when you get there.  If your pitch quickly engages your listener because you may make their world simpler or better, you likely have a highly effective pitch. 

In the end, the goal of the elevator pitch is to start a conversation, not to start and close a sale in 30 seconds.   Tell enough to engage and communicate your value, but leave your listener wanting to learn more. 

Voltaire once wrote, "The best way to be boring is to leave nothing out."  Don’t be boring.

David Lund is president and founder of GrowthSpring Group, a unique a strategic growth and marketing innovation firm that works with clients to accelerate success by helping them identify and launch new opportunities to profitably grow sales. www.GrowthSpringGroup.com

A Strategic Checklist for Growing Your Business in the New Year

As we approach the holidays, marketers shift their focus to their plans for the New Year.  Have you made a final review of next year’s marketing plan and budget? Have you started your planning for next year?

Every organization has a different planning process and objectives.  At the end of the day, your marketing plan execution is likely tasked with creating demand for your products, building your brand, and driving earnings and new business growth.  A well-thought out plan will help you achieve these results.  To assist in your year-end planning preparation, I am sharing a checklist of key strategic planning steps that can help align and focus your team on achieving your strategic goals.  While you may have already completed all or most of these steps, this list may prompt an opportunity to enhance your current planning and preparation.

Understand your market and your competitive position in the market

_____ Define and assess your market, your competitors and competitive position.  Many companies use a SWOT analysis for this step.  Another method is to use market data to prepare an assessment of recent market performance versus competitors and market share trends among your target customers.

_____ Define your primary and secondary target customer.  Know why they do and do not buy from you.  You cannot effectively plan if you do not understand your customers.  If you do not know your target customers and their motivators, an earlier priority in 2015 should be to conduct research on who they are, what they value, and why they choose you or your competitor’s products or services.

Ensure you are focused on the right goals

____ Define what success looks like in the new year.  It is likely that different members of your team have different objectives and a different idea of what a successful new year should look like.  Hold a discussion with your leadership team to define what success should look like for your organization by the end of next year.

_____ Define, align on and approve your SMART goals.  The term SMART for goal setting has been used for many years.  SMART stands for specific, measurable, attainable, realistic and timely.  It is often good to also consider goals that are challenging and specifically grow your business.  Build on the previously step to “define success” and turn your definition into your SMART goals. When setting goals, make both earnings and new business growth top priorities – you cannot grow your business if your only focus for next year is on cost reduction.

Along with setting your goals with your leadership team, take time to agree on the success metrics and measurement system you will use to track progress to your goals.

Ensure your team is truly aligned to your goals – and with each other

____ Stop to make sure your leadership team is truly aligned to these goals.  If your leaders are not fully aligned on a single vision of success and the same goals for the next year, the odds are they will spend more time on their own priorities than working to achieve the organization’s goals. 

Specifically discuss on how you will respond to risk in growth initiatives.  New growth initiatives will seldom succeed if all are not aligned on risk tolerance and how your team will respond to failure.  Take time to talk to make sure everyone is really on board – resolve concerns if they are not.

Ensure you are working on the right initiatives

____ Identify the strategies that will likely be most effective to achieve your goals.

Select your top 3 strategic initiatives.  These initiatives should tie to the achievement of a company strategic goal.  Focus your strategies on leveraging the purchase drivers of your customers.  Develop strategies for your goals that drive both existing business and new business growth.  Abandon strategies that have not been productive in prior years.

Identify what you will NOT do next year.  If an initiative does not sell more, cut costs and/or tie to a strategic goal, you are likely wasting your time putting it on your to-do list.  This could be the year to stop working on legacy initiatives.  Don’t repeat an initiative just because it is something you have always done.

Ensure you have the right resources to win – and invest them in the right place

_____ Ensure you have enough of the right people and funding to do the job.  Every team wants more resources.  Every team believes they could be more effective with more people and funding.  Realistically assess your resources.  Plan your year to succeed with the resources you have vs. creating a plan that will overtax your team all year.  Do fewer things better.

_____ Put the right people in the right jobs.  If you want to achieve new results, sometimes that means changing who is leading key initiatives.  It can be especially important to put the right team leaders in place leading new growth initiatives.  Align the skills, experience and relationships with the jobs to be done, and then empower your team to lead and achieve.

_____ When possible, budget to task and not to a number.  Identify what your strategic initiatives will cost in order to succeed.  If budget cuts are needed, trim entire initiatives rather than trimming quality and effectiveness of each to keep everything on the project list.

_____ Build your budget using three categories:  strategic initiatives, New venture initiatives, tactical initiatives.

Strategic initiatives are top priority initiatives that grow your existing business and enable you to achieve your strategic goals.  This is a strategic investment in the near-term health, growth and competitiveness of your organization.  These investments should not be cut except in extreme circumstances.

New venture initiatives are investments in entering new markets, launching new products or testing new marketing approaches. These are the strategic initiatives that drive long-term growth of your organization.  It is important to always include funding for testing and development in this area to promote long-term growth opportunities.  These should not be cut if possible, but could be delayed in timing if there is a strong need to reduce spending.

Tactical initiatives are programs or events that have only short term volume impact.  Every budget likely includes some of these.  Often, these can be cut or reduced in cost and not have a material impact in achieving your organization’s goals. This should be the first place to cut costs if spending must be reduced when budgeting or during a mid-year spending cut.

If you allocate your budget across these three categories, you are more likely to focus your resources on the most strategic programs and initiatives and limit investment in areas that have little impact.

_____ Develop budget milestone review process for continued funding of new venture initiatives.  Make success criteria and timing for milestones are realistic to support new business growth.  Review progress at key milestones and do not add significant new investment if key success criteria cannot be met.

Hopefully, your organization is already implementing most of these planning steps.  If not, consider adding new steps to your process.  If needed, an outside advisor can help you boost the effectiveness and impact of your planning process.  With thoughtful planning and great execution, you will have a very prosperous new year.

This blog was originally posted by GrowthSpring Group on the MENG Blog website.

David Lund is the founder and president of GrowthSpring Group – a unique a strategic growth and marketing innovation firm that works with clients to accelerate success by helping them identify and launch new market growth initiatives. www.GrowthSpringGroup.com

Have You Identified How To Achieve Your Next Step Change In Growth?

Does your company’s business plan always tend to have the same approach – the annual plan is based on growing sales and profits steadily through incremental line extensions, a variation on last year’s promotions or low-risk geographic expansion? Is your planning process often more about controlling costs and risk than driving significant growth? 

“Growing sales 3-5% in in our key product segments combined with some targeted cost cutting will allow us to achieve our financial goals.”

Does your annual business planning process fall short of generating breakthrough ideas that could achieve real step-changes in growth?

If you are hitting your financial targets year after year, staying on the current plan could make sense.  It could be the right fit for your company.  But for others, if you are not growing as fast as you or your stakeholders would like, or if your competitors are out innovating you, it could be time to consider a fresh approach.

It may be time to invest in new product or marketing innovation, but the first innovation you may want to consider is in your planning process.  Sometimes an organization’s commitment to its annual planning ritual can be a constraint to achieving significant year-on-year growth.

As a strategic growth consultant, I often see companies that either have not identified or pursued new opportunities, or they have created enough of their own roadblocks that they cannot achieve their growth aspirations.  They are so used to planning incrementally that they miss key opportunities to transform their company and achieve breakthrough growth.

Looking back on your career, have you worked for companies that:

• Just updated the promotional calendar each year to align with last year’s events?
• Only developed and launched new products that were close-in line extensions because the risk of failure was lower – but often just ended up cannibalizing existing sales?
• Defined their market segments so tightly that there was little room for growth?
• Spent time and money each year just to churn customers with competitors – with the real results being lower prices, lower margins and modest, if any, share gains?

If these are familiar scenarios, let me share three planning steps to try this planning cycle to help you identify potential new approaches to accelerate your success.  They include:

• Revisit what made you successful – What insights from your success-to-date can be applied to drive new growth with new products or new markets?
• Redefine to create new advantage – Change the definition of your market to allow you to change how you go to market.
• Remove the barrier – what is holding you back from achieving greater growth? How will you remove both internal and external barriers – or change the game so they no longer constrain you?

Here are some examples of how to apply these steps when reviewing different components of your business plan:

Who you are selling?

• Revisit: Which customer segments value your brand and your products?  Why?  Are there other customer segments that are similar that would also value your brand for the same reasons?  (e.g. travel gear vs. camping gear)
• Redefine: Is your market defined too narrowly?  Can you expand the definition of who you are selling by redefining your market.  Either expand up or down the supply chain or expand to include other segments in the larger category that includes you.  (e.g. breakfast buyers vs. breakfast cereal buyers)
• Remove: Remove barriers to purchase by being available in new channels, in new forms or at new price points (e.g. develop a special pack that will help you gain distribution into new retailers – or – add ecommerce as a sales channel)

What you are selling?

• Revisit:  the benefits and attributes that differentiate you vs. the category you compete in.  (e.g. easy-to-use, stylish, unbreakable)
• Redefine: What are adjacent categories where you can apply these same attributes to introduce relevant new products that go beyond line extensions to your core market.
• Remove: Remove resistance to launching into new categories.  Put together a new product development team that combines brand experience and product development strength with fresh innovative thinking.  Do not include people who are locked into old biases and approaches that could limit the potential of your new innovations.

How you are selling?

• Revisit: How are you engaging, educating, exciting your target and how do you close the sale?
• Redefine: How you disrupt your target customer in new ways to enable them to clearly see the differentiated value in your products versus competitors.
• Remove: Remove your own sales prevention processes that create friction for customers trying to do business with you.  Take a fresh look at how easy or hard it is to buy from you.

Before you introduce these planning steps, look at your internal planning team.  Do they view the planning process as an opportunity or a burden?  Do they take delight or dread being on the company’s annual planning team?  Is it time to bring some fresh perspective onto the planning team by including others beyond department heads and your finance staff?

This is one set of tools to energize your planning process.  If you are on calendar year timing for your fiscal year, your planning process will begin soon.  Look at how you can infuse your planning this year with new energy and some fresh thinking.  If your company’s planning team is resistant, consider bringing in someone from the outside to help your team take a fresh look with the help of an outsider’s perspective.  This could be the year you develop the plan that changes the future of your company!

This blog was originally posted by GrowthSpring Group on the MENG Blend website.

GrowthSpring Group is a marketing innovation and growth strategy firm focused on accelerating your sales and profit growth. We help you identify new business growth insights & opportunities and execute winning strategies & plans. www.GrowthSpringGroup.com