Marketing to boost your profitability

How you need to think about marketing in a challenging business environment

Originally appeared in Stuff NZ 13 July 2022.

Antony Young is a co-founder of The Media Lab (formerly The Digital Café), Wellington’s largest independent media agency.

OPINION: Speaking to business owners these past few months, their biggest challenge is simply keeping their operations turning over smoothly.

Retaining staff is top of mind. With a massive skills shortage, wage inflation, and recent estimates that the country will lose upwards of 125,000 people overseas in the next 12 months, pressure is on just about every company. That’s largely why you can’t walk into a restaurant today without a booking, that prices on supermarket shelves are creeping up and the building contractor isn’t calling you back.

So is this a good time to be marketing?

Getting better customers

For many businesses right now, they don’t need more customers, they need better customers.

While your mind immediately goes to bigger clients, they might also be clients that are less costly to service.

If you are a producer, it’s the product lines that you have more scale and are more efficient at producing.

Or it might be the customers that stay with you longer. Maybe it’s just the ones that pay you on time.

Having worked with hundreds of companies, I’ve found the 80/20 rule almost always applies. Re-directing your marketing at attracting your more profitable customers can be a game changer.

I worked with UK mobile telco company O2. At the time, all of its competitors advertised special offers to get consumers to switch companies once their phone contract plan ended. O2 instead focused its advertising primarily at existing account holders with rewards to stay with them, because it knew that they were more profitable than trying to attract new customers with a joining offer, who in 12 months were more likely to switch to a new operator for another offer. It was one of the most successful ad campaigns in the country at the time.

Charging a premium

One of the hardest things in business is getting customers to pay you more for your product or service.

The more customers you have coming through the door, the more options it gives you, and it then becomes more feasible to raise your prices.

Marketing will help you to do that. I own a blueberry farm. At the start, our focus was on growing the best blueberries we could. In our first season, locals started to discover us. We consciously made an effort into marketing ourselves outside our local area.

By our third season, 70% of our sales came from people visiting from outside our district and we were selling everything we could grow. So, we put up our prices despite the supermarkets dropping theirs. Customers kept coming and our profits multiplied.

We’re heading into a recession

The thing is you can’t really turn marketing on like a tap. I liken it more to building a plumbing system.

Start building it on the fly and risk the system leaking, in your case valuable dollars. It takes time to figure out how you want your brand to be seen; coming up with the right messaging; developing the right skills in-house; and putting in place the means to measure and improve your advertising.

The experts tell us that the economy is likely to contract. It’s going to be even more important to get ahead of the market. Figuring out how to win new customers now and in the future will be one of the best insurance policies for your business.

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Antony Young is a co-founder of The Media Lab (formerly The Digital Café), Wellington’s largest independent media agency.  He spent twenty years heading media and digital agencies in New York, London and Asia, before returning back to New Zealand.  He is also a blueberry farmer in the Horowhenua.

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