In the Fall of 2019, I called a local HVAC company to get my furnace ready for the fast approaching winter. It was a family-owned business run by my twin brother friends – Jon and Chris – that year they celebrated their 100th anniversary in business – an incredible feat spanning four generations.
But when I called on this day, I was shocked at how I was treated. A younger woman answered with a customary Thank you for calling ABC HVAC company – how may I help you?
But the moment she heard my voice, she believed I was someone else, someone she knew personally. I had to spend the next five exhausting minutes convincing her I was an actual customer, not a friend playing a joke, suffering through the most unprofessional exchange I’ve ever had on the phone with any business.
I still made an appointment, but I shudder to think how much business this woman has cost my friend’s company. Granted, she probably didn’t mistake every caller as a friend playing a trick, but she clearly lacked (or ignored) a script, or a process, and a clear understanding of her primary role – to book revenue generating appointments from in-bound calls.
All of the money and effort, 100 years of credibility and name recognition, millions of dollars of accumulated marketing and brand equity, thousands of past customers referring business, all wasted when someone is allowed to free-lance how they answer your phone.
Still, I never said a word to either Jon or Chris. And that’s why this kind of employee sabotage is so dangerous, because rarely does anybody tell you about it, because they don’t want to be a rat, or responsible for someone losing their job.
Frankly, I didn’t want to trouble them, and knew they probably wouldn’t do anything about it. Being in business that long meant they had amassed a number of life-long employees, and in exchange for that loyalty, it appeared some employees were given a freedom of sorts on how to interact with customers.
But this happens every day, in all types of businesses; rogue employees with no process or direction on how to optimize in-bound calls WASTING what should be easy money. Yet very few realize its importance or take on the challenge to fix it.
And that’s too bad, because it’s relatively simple to fix, admittedly harder to keep enforcing. But McDonald’s does it, when was the last time you went through their drive-thru and someone didn’t ask you to upsize your meal? If McDonalds can get minimum wage workers to follow a script and a process to sell, so can you.
If your advertising isn’t working as well as it should, the likely culprit is something internal, and that’s why you should audit the entire marketing machine inside your business.
There are 3 areas worthy of analysis, and at the very least, I promise you will uncover thousands of dollars of waste and/or missed opportunities.
- Marketing Expense Audit: How many marketing expenses have you accumulated that may no longer be working, or being used to their fullest extent?
- Sales Optimization Review: What processes are in place to optimize every transaction with a customer for additional sales and retention?
- Physical Space Review: Is your place of business clean and presentable? Is it congruent with the image you want to project to new and existing customers?
Marketing EXPENSE Audit
Over time every business will accumulate dozens of ongoing marketing expenses that hang around year after year, like unread newspapers lying at the foot of your driveway. And most of the expenses aren’t being held accountable for their return on investment, often they are forgotten, leaving only a bookkeeper aware of their monthly drain on cashflow.
Have you ever signed up for a free trial subscription to HBO, or another type of streaming service? And then 12 months later you realize you haven’t watched a minute of their service but still paid $15 per month? It’s like that in advertising to, only the sums are much larger.
My first professional job in advertising was with the largest newspaper in Indiana, The Indianapolis Star, this was back in the late 1990’s when newspapers still dominated local advertising. As salespeople, we had little worry that our clients would renew their annual contracts AND pay a rate increase, usually in the range of three to five percent. It was almost as reliable as taxes.
These agreements locked in our customers’ spending for an entire calendar year, and if they didn’t spend, we penalized them in a way that made the spending better than the penalty.
Rarely did anybody take the time to deeply analyze the performance of their ads, they just ran them, week in, week out. Often the same ads would run the entire year. Millions of dollars, on autopilot. In a way, we were a subscription that clients didn’t pay much attention to, kind of like HBO.
Everyone assumed it worked, measurably or immeasurably. Often, clients would forget to run enough ads to fulfill their contracts and then have to double their spending in December to avoid the penalties. The extra spend was not based on a need or a potential return on investment, it was based on a burdensome agreement. You should never enter into a marketing agreement where you can’t cancel without penalty as long as you give a few weeks’ notice.
In the Spring of 2010, while working for one of the largest advertising agencies in the world, our main client was the Albertson’s grocery corporation. They operated thousands of Albertson’s branded stores, but also hundreds of other different banners like Safeway in California, Tom Thumb in Texas, and Jewel Osco in Chicago.
They just completed an acquisition of Supervalu, a smaller conglomerate operating a variety of brands including Cub Foods in Minneapolis, and Farm Fresh in Virginia Beach.
Farm Fresh lost their marketing director during the transition, and I was put in charge as an interim marketing director. And for the next several months I spent weekdays in Virginia Beach, commuting by plane from Indianapolis, marveling at the vast military presence in the region; fighter jets would buzz around all day at low altitude, creating a deafening noise that nobody seemed to notice but me.
Here is an interesting fact about the Virginia Beach area; it hosts one of the largest naval installations in the world. The massive aircraft carriers that frequent their waterways should have required the city to build three different bridges the size of The Golden Gate in San Francisco, but there are no bridges, because the military wanted tunnels to be built instead. Because of the high volume of warship traffic, the U.S. Navy wanted all highway crossings downstream of naval installations be in tunnels, so that no high-level bridges could be attacked in wartime, and potentially blocking vital shipping channels.
While I was overwhelmed by the sheer impact of the military presence, I was equally overwhelmed by the volume and complexity of Farm Fresh’s advertising commitments. Here is a list of what I can remember:
- Weekly direct mail and email to a few hundred thousand customers
- Weekly circular, often 12 – 16 pages worth, printed and distributed to the entire metro population of 1 million plus households, distribution spread over 4 different newspapers
- Full-page ROP Print ads in the newspaper at least 4x per week, in 4 different newspapers
- Weekly digital display ads on the newspaper websites and dozens of other local sites
- Weekly radio supporting the circular, with production required every week, commercials airing on more than a dozen radio stations
- Weekly search ads (SEM) on Google
- Weekly advertising on social media, at the time, Facebook was the primary spot
- Sponsorship with one of the TV Stations for a weekly cooking segment featuring Farm Fresh’s nutritionist
- Monthly full-page full color ads several city lifestyle magazines
- Ads in a dozen other tourist and specialty publications geared towards the military presence and beach tourists
- Billboards throughout the city
- Charitable sponsorships beyond belief, for dozens of organizations; like little league teams, soccer clubs, churches and non-profits.
- Sports sponsorships that including signage, radio, and print ads with the local minor league baseball team
- Title sponsorship of a popular annual food festival
- Weekly creation of and installation of many signs … so many signs. I have never been involved in an industry that spends more time and money on signs than grocers. Farm Fresh had their own print shop, and for needs beyond that, had vendors on-call like surgeons to a hospital.
Farm Fresh could afford (more like hide) all of this advertising because they had over 60 stores, grossed billions of dollars in sales, and received co-op funds from the food producers.
Still, just because they could support this wide array of advertising didn’t mean it was necessary, and that it all worked. In fact, I convinced the President to immediately cut out as much as I could. After about 3 months, I scaled back all of the advertising outside of the weekly circular and whatever specifically supported it. Hundreds of thousands of dollars cancelled. Zero impact felt in terms of store traffic and sales.
This angered a lot of media salespeople, heads of charities, sponsorship sellers, all felt it was our obligation to “support” the local community. I felt we supported the community by remaining a viable and profitable retail business – employing thousands – and providing affordable food and convenience an entire city.
I slowly became a fan of the weekly print circular – something I didn’t read and to this day never read. It’s a dinosaur marketing tactic as old as the newspapers that deliver them. For one thing, they attracted co-op funds from the food manufactures like Procter and Gamble, Kellogg’s, and hundreds of others who competed for space and sales volume in their stores.
But most important – we could track the circular. Whatever we advertised on the 12 – 16 pages would sell more than what wasn’t advertised in those pages. The great thing about the grocery business is they track all sales, across thousands of products, helping determine important metrics like:
- The Cost Per Lead – or the total cost of advertising divided by the number of customers who walk through the door each week. This went down as I cut out the accumulated waste while focusing more on track able investments.
- Average Transaction Value – in grocery speak they call this average “basket”, and the higher this is the more you can spend on attracting leads. This is influenced heavily by what happens inside the store, how well trained the people are, and by the in-store merchandising.
- Customer Value – knowing what each customer is worth over their lifetime guides all marketing efforts. Identifying and then segmenting who you market to saves money and steers you to better decision-making on messaging and media.
If I couldn’t track it, or determine its return on investment, I cancelled it. And more than anything it gave me more time to focus on making what we knew worked – BETTER.
So, here’s my advice: Just stop. Cancel as much of your accumulated marketing spend as possible. Immediately. Aside from your website, shut down every other marketing spend. This should include sponsorships even if they are charitable in nature, because sponsorships fall under marketing. If it’s a donation and you expect nothing in return, that’s different. But the minute they sell you a sponsorship, and your name goes on a banner or a hole on a golf course, it’s marketing.
Unless you are certain that an advertising expenditure is providing a return on your capital investment, cancel it. Take a few months to breathe, save some money, and be more cautious before committing to anything else.
Sales Optimization Review
I live just north of downtown Indianapolis, and I’m surrounded by pockets of massive brick and limestone mansions with yards that could be mistaken for golf courses. There seems to be an arms race over can have the most mulch. There is one landscaping company who’s sign adorns more lawns than any other– I’ll refer to them as Company A.
I pay attention to their jobs when I walk or ride my bike around the neighborhood, I discovered the owner of the company also lives in the area. I will bet they painstakingly built their business over the years with a lot of hard work and determination, and that most of their sales now come from referrals. I see no external marketing efforts whatsoever, other than signs in yards, and their website is just a brochure.
Recently on a walk, I noticed something that should bother Company A, another landscape company – Company B – was getting started on a new job directly across the street from a recently completed Company A project.
This wasn’t just any project, both homes were on the corner of an intersection with a stoplight, on a very prestigious stretch of road, with historic mansions on either side, also a heavily traveled artery to downtown. These were highly visible, marketable and lucrative projects for any landscape company.
Company A had just completed a re-design of the front and back yard of this corner lot brick mansion. Sod was laid, many rocks were stacked, black iron-gate fences installed, trees and shrubbery added, and after about 6 weeks of hard work during a soggy Spring, the project was finished, and it was beautiful. And every day I’d estimate a few hundred wealthy neighbors walked by it, and thousands more in cars, all noticing Company A’s sign proudly out front.
Yet, the neighbor directly across the street chose Company B. Why? I’m sure there are many reasons, but I’d be willing to bet big money that Company A had no system in place to encourage business from neighbors.
They could have mailed a simple one-page color brochure to all neighbors sharing photos and testimonials about their completed project, along with a letter from the owner inviting their neighbors to take advantage of a limited time discount or offer. This simple inexpensive outreach would have assuredly resulted in more business. But often it’s overlooked, and it’s too bad because a timely, opportunistic mailing would generate enough new business for years.
Looking back to my friends HVAC company, what can they do to ensure the bad experience I had on the phone never happens again? Well, for starters, just realizing how someone answers your phone is just as important, if not more important, than the money spent getting someone to make the call.
Then at a minimum, any employee who answers the phones and books appointments should be given a script, have their phone calls periodically recorded and monitored for adherence to that script, and be incentivized to capture as much contact and demographic information as possible, in addition to securing an appointment.
A service technician, or any representative going into a customer’s home should also be given a script, an outline of what’s expected on each visit to maximize the selling opportunity, but also the marketing opportunity.
Recently I called a local plumbing firm to repair my leaky sink. They do good work, hire good people, and the owner is well-known and liked in the community. But he’s leaving money on the table on every single service call, maybe he knows it, and doesn’t care. Maybe he’s making enough money already?
But as a marketer, I know it’s easier (and more profitable) to maximize existing customers than find new ones, and here is what the plumbing technician failed to take advantage of when he visited my home:
- No attempt to book a future “checkup or preventative maintenance” appointment.
- No attempt to sell me a service plan granting me priority in emergency situations, plus other benefits that far outweigh the small annual fee.
- No effort to engage my neighbors with brochures, door hangers or a letter.
- No attempt to collect a testimonial.
- No thank you card or follow up note or survey
Again, if McDonald’s can do a lot of this with kids on minimum wage, surely you can figure out a simple process (linked to incentives) for your employees to follow – one that includes regular monitoring – and continually encourages and rewards good behavior.
The implementation and/or improvement of these sales optimization tactics will add more profits (at less expense) than anything else you can do as a business owner.
Physical Space Review
When I was finally old enough to drive, my parents knew I’d need gas money, so they persuaded the owner of their favorite restaurant to hire me as a busboy. This was my first real job, busing tables, doing dishes, and cleaning whatever needed cleaning.
The restaurant was called The Icehouse, and it was the most popular eatery in my small town. Their motto was “Food, Fun, and Firewater” (firewater is alcohol) and the atmosphere was loosely based on TGI Fridays and Chili’s, with catchy entrée names, fun appetizers, all served in a warm environment full of nostalgic signs and TVs.
Part of the reason for its popularity was the owner, Steve, better known as The Ice Man. Every single day at lunch and dinner, The Ice Man would personally greet every customer to make sure their food was delicious, and refill their drinks as needed. He would stroll around the restaurant humming the phrase, “Only in America,” a nod to the fact that anyone (even a former factory worker like him), could achieve their dream in the United States.
The Ice Man was compulsive about his business, he knew how it should run and wouldn’t tolerate anything different. While at college I worked for a few other restaurants, but I never experienced the same kind of leadership and discipline. And none of the other restaurants were as clean as The Icehouse.
I never appreciated how much attention Steve put into making sure everything was spotless. Every job had scripted assignments for regular cleaning, from busboys all the way to the head bartender. In fact, The Ice Man’s other favorite motto was “If you have time to lean, you have time to clean”.
No detail was too small. Starting with any piece of litter in the parking lot down to the last cigarette butt. Then the exterior and interior windows, tables, and all surfaces were cleaned daily. Overnight the floors were swept and mopped, along with a polish of the shiny brass bar. The kitchen was spotless, the storage area for food, spotless. The bathrooms were cleaned once per hour.
The Iceman understood the broken windows theory, chronicled in the wonderful book by Michael Levine, Broken Windows, Broken Business, that even the smallest things reap the biggest rewards. It doesn’t matter what you or I think of our business, what’s really important is how it seems to customers, employees and the general public.
This applies to any type of business or enterprise. On larger scale, when Rudy Giuliani became the Mayor of New York in 1994, he was ridiculed for his focus on minor initiatives and petty crime. For example, like removing graffiti from all subways and pushing the pimps and hookers out of Times Square. The message he sent was one of zero tolerance, for any crime. And the result famously became a safer, cleaner city.
On a smaller scale, if you’re accounting firm has a parking lot full of water-filled potholes, it will seem in-congruent to your customers, possibly repelling them from the image you’d like to project of trust and accuracy. Or if you are a car dealer, and your service department looks like Gomer Pyle’s garage, it will be in congruent with the shiny new cars you’re trying to sell in the adjoining showroom.
For the business owner there should be a zero-tolerance policy in place in regard to the physical space that makes up your business. Investments made into physical infrastructure can be expensive and difficult to commit to, but they pay dividends for many years.