How 1 Bad Assumption Can Cost You $Millions

    By Lauren Kress, The Business Scientist | Blog, Article |

    It's scary to think that one bad decision at the strategic level could be costing your business millions of dollars in revenue (or more...depending on the size of your business).

    Unfortunately, avoiding the pain of thinking about that - isn't going to make the problem go away anytime soon.

    When it comes to achieving your marketing goals...you need to make sure you understand where you're headed to begin with.

    One of the big problems that we have in marketing is that we tend to focus on execution and "doing".

    Most advertising and marketing news sites focus on the big, shiny campaigns that are fun to criticise (Marketing Week being a welcome exception to this) and when most marketing consultants and creative agencies speak about bad decisions, they're often talking about it from a creative perspective.

    (*Cough* Gruen Transfer)

    So we hear comments like "we focused on emotive storytelling" "the creative didn't look right", "the message wasn't authentic", "they chose the wrong celebrity" or even things like, "I don't know, I just didn't like it".

    Not very concrete. Not very scientific. (A seperate post on this to come methinks...)

    BUT marketing is a science, and it needs to be thought about in terms of investment-led growth for the entire business - we need to start thinking about marketing the same way we think about M&As, IPR, R&D...not just one department arguing about whether the CTA button should be hot red or hot pink.

    So when it comes to decisions about budget allocation - there shouldn't be any guesswork.

    There should be a clear understanding of how that budget will grow the business in the short term (through customer acquisition) and in the long-term (through consistent market penetration to increase market share).

    The work that goes behind this is tremendous - and it needs to be approached scientifically.

    It cannot start with things like "most of our customers are..." or "people often leave the business because..." it has nothing to do with your NPS, it has nothing to do with the latest conversation your salesperson had.

    A data point of 1 is not anywhere near the amount of data we need to govern our decisions.

    In my work with clients - whether they are targeting other businesses or directly to consumers - we start by conducting a deep-dive into the business to uncover assumptions and roadblocks to growth.

    To demonstrate my point of how 1 bad decision could throw an entire 12-month marketing strategy off, here is a hypothetical example that is very similar to discussions I have with my clients when we start working together:

    Client: Our latest NPS shows that we're at risk of losing 10% of our client base - so we want to focus on customer retention for the next 3-6 months.

    Me: Ok - how many customers were you expecting to lose?

    Client: Well, ideally none. We'd like to aim for as little as possible.

    Me: Is 10% customer loss uncommon in your industry? What is the benchmark we're comparing your business to?

    Client: We would like to retain these customers so we can grow our bottom-line

    Me: If your objective is to grow your bottom-line, we really need to be focusing on customer acquisition - what have you got planned in terms of acquiring new customers or upselling to existing customers?

    Client: Nothing at the moment, we did a campaign 6 months ago to drive customer acquisition

    Me: Was it effective?

    Client: Yes.

    Me: Then why did you stop?

    Client: We didn't have more budget

    Me: But if you made money from the campaign - and you know this campaign works - then why didn't you just reinvest a percentage of those profits to keep a consistent message out there with this campaign, and iterations/variations of this campaign?

    Client: It was costing us a lot of our budget, and we weren't making that much from it.

    Me: But the campaign was effective? Or was the campaign not effective?

    Client: To be honest, we're not really sure

    Me: How did you measure efficacy?

    ...and so we get to some of the meatier issues that have been costing our clients big time - not only in terms of budget, but also in terms of opportunity loss.

    There is a way to do marketing - and there is a way not to do marketing. Before you get to the creative execution, it's important you stop and think about what it is you really want to achieve.

    If you'd like to find out more about the science behind better business, check out our latest podcast episodes on The Oyster with Lauren Kress.

    You can also access our latest insights video on Lauren's strategy and step-by-step approach to managing and overcoming uncertainty here.

    Lauren's Work & Brands


    Find out more about the work Lauren and her team do to grow health, wealth and professional service brands big and small at: www.thechangemakers.org.au

    Find out more about the FREE training Lauren provides to Entrepreneurs, Business Owners and Business Leaders at:

    www.thebusinessscienceinstitute.com

    Subscribe to Lauren's Youtube Channel and Podcast show to keep up to date on the science behind better business at:

    www.youtube.com/c/laurenkress

    https://anchor.fm/lauren-kress

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