Beware the marketing death spiral

Does this sound familiar: The economy is really bad. That means we have fewer customers. So let's respond by spending less money chasing those customers. Translation: you have decided it is a good idea to get a smaller share of a smaller market. This, in turn, means you will get fewer customers, generate less profit and need to cut costs, including marketing, even more. That means more sales shrinkage, more cuts and, before you know it, you are in a marketing death spiral that can end only one way -- with the closure of your company.

So what do you do? It's impossible, you say, to increase spending. Fair enough. So start with these three tips:

#1 Improve your existing spending. That means auditing all your spending to determine what is working -- and what is a complete waste of time and money. If you can't determine ROI (Return on investment), start doing it. Now.

#2 Open your mind to other possibilities. Most companies are under marketed on the net or virtually invisible because of flawed web site content and design. This is a crime because online marketing is often the lowest cost option, easy to customize and measure, and has shorter lead times than just about anything else.

#3 Stop treating every customer the same. Chances are about 10% of your customers generate about 80% of your profit, yet the marketing spending of the average company does not reflect this reality. Most often, the most profitable customers get no more attention than the least profitable customers. Worse, many companies cannot even identify their most profitable customers. So your first job is to develop a database of your best customers and start marketing to them on a regular basis with direct mail and/or email blasts.

Next time: outstanding outdoor advertising and the all-to-common outdoor advertising that deserves to go to the outhouse.