Posts Tagged ‘marketing’

New York Life: How Traditional Approach Made for Great Marketing

May 19, 2010

This week, I got the May 24 issue of Fortune Magazine and skipped to this issue’s profile of one of the “World’s Most Admired Companies.” This time it was New York Life, the nation’s largest mutual life insurer. As I read the article, I was pretty intrigued by the company’s operation: very conservative. While New York Life is owned by policyholders, it didn’t follow the lead of other major insurers to invest aggressively for the sake of paying generous dividends. And the insurer chose to remain neutral in a price war on some lines of insurance, even though that meant losing some business in 2008. New York Life also invests in its own captive sales force – 12,000 agents strong – a practice so cost prohibitive to many publicly-traded insurers that they’re forced to rely on a network of banks, independent agents, and broker-dealers to push their insurance.

Fewer and fewer of us want to be viewed as traditional or passé, so one would think that New York Life’s conservative approach would have cost it a great deal of business. And in the go-go years, that seemed to be the case. But now, two years after a near meltdown in financial services, New York Life appears to have been vindicated: it had a record $15 billion surplus of cash in 2009; it has continued to pay policyholders dividends for the 156th year, and had an increase of 40,000 policies sold in 2009. Even better, it didn’t have to raise premium rates like many of its price war competitors.

Just look at the effective marketing system New York Life has built for itself. Recall the components of the marketing mix: product, price, position, promotion, and distribution. It’s easy to discern from the article that New York Life got all of these components right. While New York Life also sells mutual funds, long-term care insurance, and annuities, it has neither forgotten nor abandoned its core product: life insurance. In fact, the company still emphasizes it as an important part of a family’s protection. Because of its traditional investment style, New York Life’s pricing is competitive. In terms of promotion, New York Life turned its traditional operation into a distinct advantage, boosting ad spending by 24% and trumpeting how its conservative style was appropriate for these economic times. Distribution is handled through by New York Life’s own captive agent force – the only agents for New York Life, all New York Life, and nothing but New York Life. Every New York Life agent I’ve met knows its products backward and forward, and knows quickly which ones are most ideal for prospective and existing customers. Now positioning… New York Life apparently could market itself as the kind of insurance company that gives its policyholders great peace of mind. Policyholders can sleep at night knowing dividends will be paid consistently, premiums will remain stable, that they have the right insurance, and that the company will be around to pay out when they need to make a claim.

I am not a New York Life policyholder. I came very close a couple of years ago, but another company had a policy that was better suited to my needs. And I found it hard to reject the New York Life agent who had been working with me to find the right policy for me. But when my insurance needs change, New York Life is on my short list, a further testament of its marketing success: make a great impression on a prospective customer so that if he/she doesn’t buy now, there’s a good chance he/she will do so in the future.

Your Marketing Should Stress Time, Not Money

March 24, 2009

In her blog today, Kelly Spors, entrepreneurship columnist for the Wall Street Journal discussed a study by Stanford Business School which suggests that marketers who emphasize time as opposed to money when promoting their products and services tend to have better sales.

One experiment the researchers did was to have two six-year old girls set up a lemonade stand, and tested three signs: “Spend a little time and enjoy C&D’s lemonade.”; “Spend a little money and enjoy C&D’s lemonade.”; and simply “Enjoy C&D’s lemonade.”  According to Spors’ post, the researchers were asked to pay between $1 and $3 for a glass of lemonade and were then asked questions about their impressions about the lemonade. 

The experiment found that the “Spend a little time…” sign attracted twice as many passersby than the sign emphasizing money, and those who were attracted by the “time” sign paid almost twice as much for the lemonade and said they were more likely to enjoy it than those who saw the “money” sign.  

Despite the recession, time still seems to be more precious than money to most people.  And it also seems that people are more judicious with their time and will pay more for something that either makes the best use of their time, or – as suggested in the blog post – helps them achieve a great experience with a product or brand.

Marketers might be better advised to try building engagement with their brands rather than promote it as a money saver. 

Kelly Spors’ blog post can be seen here.

Cutting Your Marketing Investment can be Hazardous to Your Company’s Future

March 6, 2009

In a recent post on an online community for small businesses, the owner of a residential housepainting company wondered whether he should continue with his annual $50,000 direct mail campaign, the economy being what it is.

It is not uncommon for companies to slash or even eliminate marketing expenses during a recession.  But while cutting marketing can have immediate benefits to your bottom line, it can do long-term damage to your future sales, market share, and even your brand.

Companies often mistake marketing for an expense, when, in fact, they should consider it an investment.  After all, they are putting forth dollars into vehicles that are expected to return in the form of future sales, customer loyalty, and brand equity.  Cutting off this investment also cuts off any return they may generate.

Granted, when money is tight, you will need to cut budgets, even possibly marketing.  But the trick is to do so strategically.  Now is the time to take a serious look at all your overall marketing strategy and the tactics that comprise it.

Look at all the marketing tactics (newspaper ads, yellow pages, direct mail, etc.) you’ve employed in the past year as if they were a portfolio of stocks.  How much money did you invest in each during the year?  How much of your sales can you trace back to each?  How much potential sales can you trace back?  In doing this, you determine the current and potential return on investment (ROI) for each marketing tactic.  Cut out the tactics with the lowest ROI and concentrate on or expand those with the highest ROI.

Also, experiment with less costly, high potential ROI marketing tactics – social media marketing, blogging, Twitter, etc.  These vehicles can be helpful in creating buzz about your product.

And most of all, don’t forget your customers – especially not your most loyal and frequent ones.  Send them notes saying you appreciate them (rather than their business).  They’ll understand what you mean.  Also, in your communication with them, don’t try to sell them directly.  Instead, ask them questions about problems and challenges they are facing.  Show them that you care.

Companies who continue to market – and market smartly – during these economic times can gain loyalty from customers, promote awareness of their brand, and gain market share from their competitors.  Let one of those companies be yours!

Starbucks Serves Up Great Marketing as Well As Great Coffee

March 4, 2009

Yesterday, March 3, I had the privilege and honor to meet Starbucks CEO Howard Schultz.  Schultz was visiting various downtown Chicago Starbucks stores, and the one I frequent – 600 N. State – was one of them.

The store staff quickly pointed me out to Mr. Schultz as one of their most loyal, and he asked me a couple of questions about my experiences with that Starbucks store.  I told him how I couldn’t have been more pleased with the customer service bestowed upon me by the partners at this Starbucks.  (Note: Starbucks refers to its store employees as partners – GREAT MARKETING!!).

Mr. Schultz impressed me much, but not by anything he said.  In fact, Mr. Schultz didn’t do much talking.  He did a lot of listening.   Schultz asked many questions, both to partners and to customers.  I was there to see it.  And I was never prouder to be a Starbucks regular.  Especially at the 600 N. State Street store.

Now, to set the record straight, I frequent several Starbucks stores, and I’m highly pleased with the service I get from all of them.  But at 600 N. State, the partners really know how to make their customers feel welcome and appreciated.

Under the stewardship of store manager Tiffany and assistant store manager Danielle, the partners consistently greet customers and get to know them by name.  They know us by our regular drinks and are quick to start preparing them.  They ask us about our lives, and share information about theirs when we reciprocate.  At 600 N. State, you feel more like a party guest than a paying customer.

The partners at 600 N. State all seem happy to be working there and come from all walks of life: white, black, Hispanic; young, middle-aged; straight, gay.  This store is all-inclusive, both in terms of staff and customers. 

Howard Schultz and the Starbucks chain exemplify great marketing principles, particularly:

  • That the most effective, least expensive marketing research is listening to your customers;
  • If you’re providing a service (and Starbucks delivers as much a service as it does a product), make sure your service providers – your partners – are happy.  Happy employees beget happy customers; and
  • That a happy customer becomes a regular customer and a happy regular customer becomes a referring customer.

Rock on Starbucks!

Even Pro Baseball is Marketing in the Recession

February 26, 2009

If my last blog post is any indication, the March 2 issue of Fortune magazine is a goldmine of stories about the importance of marketing during this recession. Another article from this issue, “Baseball Battles The Slump”, caught my eye, about how the Arizona Diamondbacks keeps its fans loyal during these hard times.

According to the article, when a longtime season ticket holder e-mailed D-Back CEO Derrick Hall, informing him she’d fallen on hard times and asked his help in helping her hold on to her season tickets, Hall personally phoned her and arranged for her to share her season tickets.

In addition, with Phoenix having the lowest per-capita income of any Major League Baseball city, Hall wanted to insure the Diamondbacks retained the loyalty of their lower-and middle-income fans, instituting “kid’s pricing” for hot dogs and other concessions, and having pro shops where fans can buy D-Backs merchandise for about one-third of what other MLB teams charge.

What really impressed me was that when dining out, Hall picks up the tab of family whose youngster is wearing a D-Back’s hat; how Hall gives away free tickets to local schools; and that he praises players who mingle with fans before games and sign as many autographs as possible.

Hall demonstrates five valuable marketing principles we must never forget:

  • Know your customers;
  • Listen to your customers;
  • Appreciate your customers;
  • Instill a customer appreciation orientation in your employees; and
  • Give your customers a great experience along with a great product or service.

These principles work in any economy, but companies who continue to practice them during the recession will really score a home run!