Looking to a new year of challenges, uncertain economic future, questions about rising taxes, medical premiums and gasoline impacting consumer spending and confidence, marketing takes an even more important role in the wellbeing of a company’s future. Marketing is no longer purely about segmentation, media, advertising and unique selling propositions. It’s also about technology, big data intelligence and most overlooked is the marketing master’s role in blending the traditional aspects of the trade with the new aspects unveiling the thought leadership needed to create the recipe for survival. It’s called- TRANSFORMATION.
Let’s try to stretch our thinking to be transformative by taking on the exercise or challenge that pushes thinking beyond pulling the traditional levers or at least pull them in a nontraditional way. It’s this approach to marketing that will separate the current marketers from the future ones or perhaps the good ones from the great ones.
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| Bounce Wireless |
Introducing the fictitious company “Bounce Wireless" (a subsidiary of Forward Communications Co). Bounce has a thriving business of selling prepaid cellular phone services. They predominantly serve the underserved meaning a demographic that has is not very affluent; live a little closer paycheck to paycheck. These consumers enjoy the flexibility to buy minutes and services as they need them with no long term commitment. However this value proposition that makes Bounce so attractive has become their challenge.
THE CHALLENGE:
Bounce does not have customers signed up to 3 year service agreement like their competition. Bounce has much more instability forecasting their revenue streams because if the economy gets tough or the market gets competitive the Bounce customers can delay purchasing. Bounce’s competition can predict with a high degree of certainty what their revenue will be because of long term contracts. As a result the competition can invest in R&D, infrastructure and marketing with much more confidence.
THE GOAL:
Bounce has determined they would like to also obtain 3 year agreements from a customer base to create more financial stability. Otherwise, Bounce needs to operate like a retailer hustling for sales every week to hit a forecast which is very unpredictable.
· #1 TRANSFORMATIONAL MOMENT- UNDERSTAND YOUR ULTIMATE GOAL
Most companies quickly jump to “how” they want to address a perceived goal before they take a moment to recognize “what” the true goal is. Ultimately the parent company Forward Communications underlying goal to generate more value for their shareholders. Stepping back that could mean signing customers up for more 3 year contracts but it doesn’t have to mean that’s the only or most optimal way to achieve the underlying goal of delivering more value to the shareholders. But what to do next?
· #2 TRANFORMATIONAL MOMENT- TAKE INVENTORY OF YOUR ASSETS
Bounce Wireless has several core assets and here are a few:
1. Recognized name brand
2. Retail locations where their current customer base lives/shops
3. National wireless infrastructure network
4. Smart and eager employee base
5. A relationship with the underserved demographic
So how can Bounce leverage these assets to achieve the “ultimate goal”? One way is to use an old marketing principle of search for the “white space” or in other words where are your assets different than the competition. The obvious difference is item #5 “a relationship with the underserved demographic”. But isn’t that asset what’s causing Bounces instability?
· #3 TRANSFORMATIONAL MOMENT- LEVERAGE YOUR UNIQUE ASSETS TO CHANGE THE THEORY OF THE BUSINESS:
Bounce determined that one way to create more stability in their current revenue streams is to deepen the relationship with its current core customer. How can Bounce “lock-in” this customer (maybe not into a 3 yr agreement as this group is shy to that idea) to be more loyal and consistent with their spending? Ultimately Bounce Wireless had to determine what this core group had in common. It was a need for cost effective basic financial services. Here are a few TRANFORMATIONAL IDEAS Bounce brainstormed:
1. Free In-store check cashing services
2. Payday Advances
3. Advanced Minute Purchase Discounts
4. Free 1040EZ Tax Preparation
Rationale for these programs was to drive frequent store traffic with the current base and more dependence. Offer services to “current” customers with active minutes or contracts OR those who were going to enter an agreement with bounce ex. Free check cash with purchase of minutes. Think of it as a loyalty program but your membership card is active service.
Not all of these ideas will pass the proforma test but it does change the way Bounce could leverage one of their assets to transform into a financial services company as well as a wireless provider. It’s what Peter Drucker would call changing the “Theory of the Business”. Bounce can leverage their current relationship with this underserved customer base in a new business model creating more store visits and customer lock-in to their wireless services (as these cost effective financial services are only for Bounce Wireless customers).
· #4 TRANFORMATIONAL MOMENT- DID A CHANGE IN THE THEORY OF THE BUSINESS CREATE A NEW ASSET?
If bounce offered free check cashing or tax services it could better understand the differences in the economic health of their customers. Bounce could mine financial data which is hard to acquire because this group is more cash oriented and therefor leaves less of a data trail on their spending habits. This new data asset could be leveraged to better target offers and services that might be appealing. Example: A specific family plan of minutes could be offered to a specific customer type based off the insight of their dependents and income derived from their tax preparation information as a part of the agreement for Bounce to prepare the tax documents. Bounce could even highly predict when this customer would get their tax refund and simultaneously entice them with an offering.
Additionally Bounce understanding of specific people’s payday schedule (every Friday or 1st and the 15th of every month) to create custom billing approaches. These billing approaches could perhaps make a longer term agreement more palatable for some where their payment is automatically deducted upon having their check cashed in-store on a regular basis.
· #5 TRANSFORMATIONAL MOMENT- IS YOUR ASSET YOUR ENEMY?
As you recall one of Bounce Wireless assets was they had a recognized name brand. The ironic situation is having a strong brand can be problematic at times when transformation is desired. In this case Bounce was a recognized brand, but it was recognized as a pre-paid wireless company. The customer base Bounce now desire is one who doesn’t want pre-paid services and may not want to be affiliated or have the confidence in a company who serves the other side of the economic spectrum. So how can Bounce Wireless overcome this dilemma?
· #6 TRANFORMATIONAL MOMENT- LEARN FROM OUTSIDE YOUR INDUSTRY
There’s a pretty good chance there is another business that has faced the same challenges Bounce currently has. A fresh perspective can stimulate new thinking and inspiration. In this case Bounce looked to the auto industry. Interestingly Toyota and Hyundai attacked the problem of having a brand identity challenge to reach a new desired market. Both car companies did it in their own way.
Hyundai attacked the same problem completely differently. Hyundai overcame the lack of consumer confidence in their quality by backing the car with the first 100,000 mile warranty. Now Hyundai closed some of the gap Toyota had in the quality perception and the base models were priced to buy its way into the market. Hyundai created a good mass market car strategy.
Hyundai enters the luxury market. When Hyundai created the Genesis it was a car that was advertised to outperform Luxury cars like Porsche (click for video). Even later a more upscale luxury model the Equus (click for video) selling in the US between $50-$60k with many superior luxury amenities when compared to its luxury rivals. It appeared Hyundai was going to use a similar “mass” car strategy to enter the luxury market. Feature up the car, under cut on price. What Hyundai didn’t do as well is count on the barrier to brand on a more brand sensitive luxury consumer.
Hyundai’s miss step (if it had one) was understanding that one of the benefits of manufacturing a luxury product is to be able to charge a premium for it, from a customer who could afford to do so. The mental barrier a BMW or Mercedes driver had to overcome was giving up brand badging to obtain the same luxury features to for a better price. What appears to be happening is the upscale Hyundai models are appealing to their same customer base who would like to stretch into the luxury space vs. actually capturing new customer’s in the existing luxury space. So although Hyundai has “the product” to be in the market, they are unable to command the premium for doing so. One could wonder if Hyundai would have taken the same approach to luxury as Toyota did they could be a more dominant force in the upscale market.
· #7 TRANSFORMATIONAL MOMENT- BE CALCULATED, BE BOLD
At this time Bounce was investigating if they could really convince the more “luxury” type of customer (more affluent and open to 3 yr contracts) to sign-up with their brand vs. many of their formidable competitors. It was at this time, Bounce Wireless decided to do something bold. Its parent company Forward Communications was exploring the idea of launching a new brand of wireless provider specifically aimed at the more affluent market under the name Forward Wireless.
Forward Wireless concept had many challenges to tackle. Store locations, competitive services, launching a new brand all had significant costs but already having a national network of cellular infrastructure (leveraging an inventoried asset- Bounce Network) already in place was huge because that was the most expensive capital investment. Forward Wireless wanted to leverage the improved efficiencies (another new asset) realized in the Bounce financial services business to assist in funding the Forward Wireless deployment.
· #8 TRANSFORMATIONAL MOMENT- IDENTIFY YOUR CULT
This transformational moment could be looked at as a “segmentation” exercise but that would be wrong. A segment is a broad view of a population, a cult it a little more personal. It’s a following, it’s a passion, it’s “your” people. There are plenty of brands that have a demographic or psychographic view of their customer base but a cult is different. Think Apple, think Harley Davidson, think NRA, think Obama (you don’t have to agree with the brand to recognize a passionate following).
Forward Wireless new expansion would like to do more than slug it out with other communications companies that would result into shedding profit in order to buy into a market. So they found a cult- Moms. What do they all have in common? Kids. What are they all faced with? Expenses. But how to leverage the idea?
· #9 TRANFORMATIONAL MOMENT- RELEATE TO YOUR PEOPLE
If Forward Wireless was going to speak to Mom’s it’s going to have to relate in a unique way. Now Forward Wireless could try to speak about technology and over invest in R&D on features she would like to have to communicate and know where little Johnny is- and that’s not bad. However, that won’t create a cult. That won’t prevent price shopping or sensitivity. A cult must strike a deeper passion.
Introducing “One Step Forward” program from Forward Wireless. It’s where parents (and mom’s) learn that 1% of their Forward Wireless contract charges are saved in a college fund for their children. Same reliable services and cool devices other carriers have. Same national coverage but with a cause. Those who don’t have children are making a difference because Forward wireless “goal” is to have $100,000,000 for education by the time Children of today are ready for college. It can be for books, for schools etc. Education institutions can also receive 1% of the proceeds if college faculty and alumni sign up with Forward Wireless and elect to support their school in this way. Now the passion passes from moms to the educated, the Alumni where loyalty runs deep and financial stability is higher for the educated and the target for Forward Wireless.
· #10 TRANFORMATIONAL MOMENT- HAVE YOUR CUSTOMERS BE YOUR EVANGILISTS
Forward Wireless now has to manage assisting universities sign up Alumni to the One Step Forward cause. Principles inform parents on their child’s first day of kindergarten how much money they can have for college just for switching when their current contract is up. Inner city social groups and churches have a deep passion to see economic improvement in the social classed. These groups passionately reminding their staff, their members and their friends of a simple message:
When you talk are you really saying anything?
Take a Step
One Step Forward Forward Wireless
Ten steps that are only as limited as the creativity of your mind. This is the place of the new marketer. To not only have creativity for clever ads or calculated media buys but also for strategic thinking that will desire data and new technology to leverage it, transformational thinking to change the Theory of the Business while never forgetting that people are a social species and always looking for someone or something to be a part of.
TRANSFORMATION CONCLUDED
Thank you so much for giving the useful business bounce tips. I will follow your given steps.
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