By Marilyn Heywood Paige
If you’re like many business leaders, you see marketing as a money pit. You know that there are better, more strategic ways to approach it, but you have too many other priorities to juggle. A thorough comparative assessment of the marketing options will help to minimize wasted spending, but it requires more time, energy, and mental concentration than you can muster.
Who can blame you? It’s too difficult and time-consuming to understand and weigh options, so you avoid or shorten such an arduous process by selecting the first reasonable approach that presents itself. You and many other CEOs handle marketing this way.
Convenient Versus Effective Marketing
While the tendency to choose marketing options based on what’s familiar and reasonable is typical, it is also the reason you’re losing money on your marketing efforts. When you make marketing decisions based on comfort and convenience, you sacrifice your ROI.
The tendency is so common (and not just in marketing) that economist and Nobel laureate Herbert Simon named it “satisficing.” It means to satisfy and suffice. When you satisfice, you choose the option that is good enough to make the problem go away. In his 2016 marketing classic, Pre-Suasion, Robert Cialdini wrote, “Although in an ideal world one would work and wait until the optimal solution emerged, in the real world of mental overload, limited resources and deadlines, satisficing is the norm.”
The Price of Satisficing
Because you make marketing choices out of a tendency to satisfice, you squander your returns. And again, you’re not alone.
When 1,000 marketers from around the world were surveyed in 2018 about what percentage of their marketing budgets were wasted on ineffective channels and strategies, most respondents said they incinerated between 20 to 26% of their budgets. That means marketers waste at least $20,000 of every $100,000 spent. Can you afford that?
Forbes writer Kristen Hambelton attributes wasted ad spend to “one central facet: a failure to pull accurate insights from marketing measurement data and apply them toward strategic decision-making.”
Data-Driven Decision Only Work If You Measure The Right Things
And that’s what the conventional marketing wisdom is on that wasted 20 to 26%. It says that if you measure and tweak your campaigns, you will get a higher ROI. But that presupposes that the tactical decisions you made in the first place were sound. That’s a large (and erroneous) assumption. If you were satisficing when you chose those tactics, you are likely doing (and measuring) the wrong things.
The data you pull from methods you picked without a thorough study of the context in which your business sits is akin to getting insights from a corrupted database. It’s never going to give you an accurate picture because the foundation is flawed. Even if your data analysis is perfect, you’re measuring the wrong things because you chose faulty tactics and execution methods to begin with.
First, Understand the Context In Which Your Brand Operates
You need to understand the context in which your brand operates to make strategic and cost-effective marketing decisions. Conduct a marketing situation analysis that looks at the following four pillars:
1. The environment2. The business3. The customers4. The competitors (Stokes, 2018)
By doing so, you’ll have the information you need to make better decisions.
Instead of Satisficing, Use a Marketing Situation Analysis
A marketing situation analysis is your ticket to getting a higher ROI on your marketing budget. It’s also the basis from which to build an effective marketing strategy. Yet few SMB companies undertake a marketing situation analysis because it requires more time, attention, and skills than they want to invest.
But the old saying is relevant here. Pay now or pay later. Remember that $20,000, the average amount companies waste every year? That’s the price you pay (or more) when you don’t do a proper marketing situation analysis before embarking on marketing campaigns.
What Is A Marketing Situation Analysis?
A marketing situation analysis is a series of discovery projects that inform you where your business sits in the marketplace. It can include a SWOT analysis, CRM analysis, website analytics review, brand audit, SEO analysis, industry analysis, competitor analysis, and target market research. Each of these studies gives you critical data from which to make more strategic decisions with your marketing. Without these data points, you are guessing what marketing methods will achieve your objectives.
Save yourself the $20,000, headaches, and years of frustration. Stop satisficing, and start using a marketing situation analysis. If you’re unsure how to begin one, contact us. We can help.
Cialdini, R. (2016). Pre-Suasion: A Revolutionary Way to Influence and Persuade. United States: Simon & Schuster.
Simon, H. A. (1956). Rational choice and the structure of the environment. Psychological Review, 63(2), 129-138. https://doi.org/10.1037/h0042769
Simon, H. A. (1955). A behavioral model of rational choice. The Quarterly Journal of Economics, 69(1), 99. https://doi.org/10.2307/1884852
Stokes, R. (2018) eMarketing: The Essential Guide to Marketing in a Digital World, 6th edition. The Red and Yellow Creative School of Business.
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