Marketing

Declining by Degrees

Draft - Dec. 2006

I've come across a phase that so perfectly describes the slow self destruction of a company. The term is "Declining by Degrees" - which was coined by MiceAge.com contributor Kevin Yee. He explains in context of Walt Disney World, that every year management makes cuts to various elements of their company as to reduce costs and maximize profitability. It can be argued that the customer never notices any of these cost cutting measures, but it's the compoundation of the various cuts do get noticed. The cuts can range from utilizing one person to do a job that three people used to do, it could be reducing maintenance such as repainting a building once ever five years when the previous period was every 4 years. His argument is that the slow deterioration (the decline) of service based company does actually get noticed by the customer, diminishing the magical experience that a customer once experienced with that company.

The problem with cost cuts to service is often the effects aren't noticed until it's too late. A restaurant that offers up poor service will only notice the effect when people begin to stop going to their establishment. We all know of a favourite place that did some cost cutting measure that reduced our experience with the business. Often management is oblivious to the cause and effect of such cuts, but the consumer always picks up on these cues. Where a person might tolerate a few minor changes to the things they like, that greatly diminishes with the more changes that get instituted.

My theory on what happens is a company growth is a result of the time and effort an organization has put into creating a great customer experience. As the company grows, the organization begins to become bloated with a more and more people that aren't directly responsible for delivering the experience to the consumer (such as legal departments, IT spending, managers managing managers, etc.). So to maintain profitability something has to give. That's when we see management look for places to increase profitability, and often the easiest places to find cost savings are the exact places that helped to build the company up. These consumer 'touch points' are often the first targets. A cut here, a snip there, all add up. Soon organizations end up with what I call the upside down pyramid. That being, high levels of the non-revenue creating labour force. My uncle always said the last people to lose their jobs should be the blue collar worker - meaning the person that produced the good that made the money. Yet often the revenue generators are the first to be slashed or outsourced, while preserving the upper tiers and inner bloat that rarely deals with the customer, and questionably contribute to the bottom line.

The point of all of this is cost savings are good. But a company should look inwards, before they dare start messing with elements that made the company what it is. I believe part of the reason that the fringes of the organization are the first to be targeted (ie the customer service phone rep). Is that the point where company and consumer meet are usually at the furthest fringes of the organization. Between the customer and the president is the layer of bureaucracy that shrugs off responsibility and externalizes cost savings to those with less power and clout - those who can least defend themselves. Clearly nobody wants to take the poison pill them self, that's why there's great need for leadership that see's that often the problems that have caused a company to stagnate are usually closer to the centre of power than CEO's want to admit.

Tone of Advertisement = Tone of Company?

Draft - Dec. 2006

This is a theory, so I could easily be proven wrong. But I have noticed that you can tell a lot about a company based soley on the message they give through their advertisements. Often companies that are in trouble have ads that are negative or condesending in nature. Companies that are losing market share utilize ads that border on arrogent, and often come across as agressive - especially towards their competition. Which is logical. Clearly external factors inch their way into the internal workings of the company. If you work in the marketing department, your co-workers and friends are losing their jobs - and your bosses are demanding results - this will impact on the message your begin to send out to your customers.

So I think it's safe to say if the company is on the up, the result will be friendly, "we like you Joe customer" types of ads. Companies that are getting destroyed in the market start to see the customer or wider society as the problem hence we get: "what's wrong with you Joe customer, why won't you do business with us" type of ads. And since people don't like negative people, it's not a leap of logic to see the relationship between incline/decline of company to the advertising put forth by a company.

Keep your Employees current

Draft - Dec. 2006

I've seen the inner workings of numerous companies, I often wonder how many employees truly understand the mission of the organization. What strikes me is the number of companies that give out conlicting messages to their employees. This confusion seems to be amplifed based by the size of the company. And what I mean by conflicting messages is that companies continually adapt, update, modify, discard stratgies over time, but what I've noticed is when these changes trinkle down to the workforce the often overlap with older agendas.

I commonly see posters from dated campagains competing for attention with current campaigns. It seems effort is put into disminating organizational objects but not in making sure that employees are only exposed to the most current theme. If the mission of the company changes so too should all signage, displays, employee touchpoints, etc. I know this sound so simple, yet it's rarely done. Some department somewhere will always be selling some long forgotten ideal. When other employees or customers visit that department they begin to receive conflicting messages about the company. Again this seems so simple but look around and you'll see dated irrelevent information everywhere. It can been old memos, lunchroom message board items, old pampflets, etc. They need to be purged on a regular basis as to help enusre a consistant message is being delivered.

Companies really need to both unify and simplfy the message of what their goals are sent out to the employee. It should be simple and relevant. It shouldn't contain 10 points about vauge or unachieveable goals/objectives - i.e. "Be Number 1!" or "Establishing better Teamwork". It would be better to communicate goals like "Customers are our guests, and you are their host" if you want to change the way employees view their customers, Or say you wanted to reduce employee office waste, instead of promoting something vauge like "Do your part for a cleaner world" promote concepts like: "Ask yourself do you need to really print that out?". It really has to be something that registers with everyone, people tune out anything that's not personally applicable.

Arm & Hammer

In my research I came across this great marketing idea. Arm & Hammer will email you every 3 months to remind you to change your fridge/freezer baking soda. This is a great idea for the consumer that cares. The reminder helps build brand loyalty, and gives the company a chance to up sell, or promote new products. Think they could send out coupons to print out, and offers on new or other products in their line. But such a system must be handled with care: meaning they only send you one email every 3 months - no spam!

As seen on their website: "We recommend that you replace the ARM & HAMMERŪ Baking Soda in your fridge and freezer every 3 months to keep them smelling fresh and to prevent any taste transfer between stored foods. We can even send you a reminder via E-Mail--just check out our Reminder page."

I must admit, I've been slow to buy into Brita water filter systems. But what began to sell me was that it seemed to really clean the water. When I poured water in the top tub from the tap, I was shocked to see how yellow the water was. And it was unbelievable - the filtered water was so clear. I was sold.

But last night I was refilling the water container, and I thought to myself, the water looked so yellow - there can't be that much rust in my pipes?

So I started stare at the jug and I noticed one important thing - the filter cap that is only visible in the top section of the tub - has a off white colour with a tint of yellow. Hmm I thought. So I began doing tests, I held yellow paper up to a glass of water, and sure enough it turned the tint of the water to a tan yellow colour.

So I wonder - has Brita chosen the beige white colour as to make the water look less pure? It would surely be a smart product design. Think, your going to think the filters do wonders - and who's going to drink water with a rusty tint from the taps ever again? - Well I will, but that's not saying much!