T'ain't What You Do (It's the Way That You Do It)

I know I've spoken about this before but I'm intrigued by how many FMCG brands count success based simply on the number of baskets their product is in within a 52 week period. It's even more surprising when you consider that for many brands, increasing this penetration is accomplished through free product such as buy one get one free – essentially paying customers to purchase the product. I wasn't expecting however a brand to actually pay customers to buy their product but this is exactly what General Mills are doing in the US with its latest campaign, providing gift cards in denominations of $5, $10 and $25 for 1 in 20 purchases.

Now this is pure play sales promotion and although the prize is instant win cash it could easily be any kind of prize draw item. Sales promotion by its very nature is there to promote sales and the brand will know exactly what will happen – there will be a spike in purchases as new consumers are attracted to the offer, existing consumers bring forward purchases and competitor consumers switch – all for the chance of winning something. The hope – and it's normally a slim one – is that a small percentage of the customers who purchase the product because of the offer will enjoy the product and stay with the brand.

The American poet and physician Oliver Wendell Holmes once said "The main part of intellectual education is not the acquisition of facts but learning how to make facts live" – essentially not acquiring something simply for the sake of it without due consideration as to how it can be "brought to life". This is however what many marketers do today with their acquisition campaigns – looking to acquire as many sales as possible without thinking about how the customers behind these can then be retained.

As a loyalty marketer it's easy to point the finger and say you'd be better off spending the money on your existing customers and retaining them – going on to then spout some facts and figures about how much cheaper it is to retain a customer than to acquire one. However, a dogged focus on just retention is almost as dangerous as a single focus on acquisition. All customers will churn at some point – whether this is because of the tactics of another brand, a maturing/changing of tastes or just because the reaper has "come a knockin" – you can't keep a customer forever.

An alternative approach though is what we term "Acquisition for Retention" – this is a focus on acquiring customers which you are looking to retain. This doesn't change the techniques used to acquire customers - sales promotion is still an important tool in supporting this – but what it does is ensure that the type of customers you acquire are the ones which are likely to want to continue buying your brand.

For example, if you have a large promotion with a prize such as "win a holiday to the Caribbean", the type of customer you will attract is someone who wants to go to the Caribbean. If the offer is rich enough and compelling enough they may not actually want your product at all – just the chance to win the prize. The General Mills promotion will fit into this type of offer – customers attracted to it will simply like the idea of winning cash.

In order to create promotions that attract the right kind of customers you need to keep in mind three golden rules:-

• Desirability – Understand your customers and what motivates them – select rewards which resonate well with your core customer segments and are a little less ordinary
  
• Achievability – Ensure rewards are achievable for different customer segments – whether this is an on-pack collection programme or a sales promotion prize draw, customers will tune out quickly if they feel the effort doesn't justify the reward
  
• Brandability – Ensure any rewards reflect and deliver upon the brand promise – the rewards are an extension of your brand so choose carefully who and what you want to be associated with
  

Walkers Crisps in the UK ran a campaign recently called "Brit Trips" that fits these rules perfectly. The campaign allowed consumers to collect on-packs codes from promotional packs and to enter these within a website to build up a points balance. These points could then be exchanged for a range of UK based activities including ½ price entry to attractions like Sea Life or theme parks as well as hotels and holiday parks. The campaign aligned well to the three golden rules with:-

• Desirability - The promotion worked well with its core customer base of families – providing family orientated rewards

• Achievability- The promotion fitted the economic climate well – allowing families to save money during school holidays with just 2-3 purchases providing a reward

• Brandability - Walkers has picked up on the recent trends for locally sourced food and has played to the fact that it uses 100% British sourced potatoes. The "Brit Trips" campaign helped to re-enforce this brand positioning by focusing on rewards which are local and British - helping to drive this point home with its consumers.

The success of this campaign can be easily seen from its online usage - visitors to the Walker Crisps brand sites peaked at 575,000 in April 2008 (source: Nielsen NetRatings April 2008) and year on year grew from 17,000 in June 2007 to 444,000 in June 2008 – an increase of 2,575%! Although Walkers spent a lot on media to promote the campaign, reportedly over £5m, what really worked well was a promotion that was targeted to their core audience with a selection of rewards that resonated well.

So that's the acquisition part of "Acquisition for Retention" sorted, what about the retention part?

Stay tuned for a subsequent post when I'll discuss what to do with the customers once you have them…

(Post title: "T'ain't What You Do (It's the Way That You Do It)" is a song written by jazz musicians Melvin "Sy" Oliver and James "Trummy" Young. It was first recorded in 1939 by both Jimmie Lunceford and Ella Fitzgerald)

Boom and Bust Marketing

Despite assurances from Gordon Brown at the Labour conference in 2000 that we would not return to the days of boom and bust, here we are in 2008, tumbling out of a boom and right into a bust. There are probably many reasons for this that I'm not qualified to discuss, but it would appear one of the primary reasons is an overheated and overvalued housing market. A market which created a great amount of perceived wealth and was encouraged and hailed as an indicator of our successful economy.

There was no real recognition that it was essentially a bubble waiting to burst – like the internet bubble before it and the tulip market bubble way back in the 17^th century. Opinions differ as to why they form – whether it's simply greed or herd mentality – but it's generally only in retrospect when the bubble has burst that we see it for what it was and people begin to recognise that demand goes down as well as up.

What's interesting is that while we see this at a macro level, its happening all the time in different markets. Through my work with various FMCG brands I was amazed to see that the number one measure of success for many brand marketers was penetration – the number of people who have the brand's product in their basket in a given period of time.

The movement of this measure in a positive direction has become critical to many and being the number 1 or 2 brand in penetration terms is the place most brand marketers want to be. Changing this measure can be relatively simple though – in the short term – by creating a sales promotion which targets a large number of people with a very compelling offer.

The problem is, the gain from this sales promotion is not real – many of the brand's existing customers have simply bought forward to take advantage of the offer and many others have only purchased it because of the offer. Sure it has introduced new people to the brand – some of whom will stay – but no where near the amount of people who were contained in the spike in penetration.

Now there is nothing wrong with this approach – generating awareness and creating trial is a key activity for any brand - the problem is believing that the spike in penetration is reflective of the actual customer base.

Where brands believe this, thus starts a never ending cycle of sales promotion – creating new promotions to follow quickly on the heels of the previous promotion so as to prop-up the penetration figure over time. This can be costly on two accounts – firstly the brand is literally buying this extra penetration with free product and secondly they are conditioning their existing customers to only purchase through offers.

As times get tough and budgets are reviewed, this constant over spend on sales promotion is going to result in some brands coming back down to earth with a bang as the penetration bubble bursts.

Ideally brands should be looking at how to maintain market share and grow this in a controlled and responsible way – not focusing on price reductions and volume lifts but focusing on brand values and recognising and rewarding existing customers. Sales promotion will always have its place to drive awareness and trial, but acquisition without a focus on retention is a slippery slope to boom and bust.

As Gordon Brown said a little prematurely back then - no return to short-termism – no return to boom and bust.