It’s not the economy, not this time.
I worked with a luxury home products company that was still struggling despite their audience and sector continuing to rebound 4 years after the recession was declared over, and more than 2 years after the luxury audience began spending again. Despite the gains in the sector, their sales continued to decline.
With money being spent on home remodeling and renovations, it did not make any logical sense that the company was continuing to struggle. To stop the bleeding they added on two lower priced lines quickly, to catch the sticker shock their customers were now expressing.
When I started I learned quickly that these two lower end products were not researched or vetted. Instead, it was a reactionary move.
“Our product is expensive and it’s good to have a lower priced line to offer to those who just want something basic to fit their budget.”
Marketer: “But your budget product is priced much higher than the mass-market industry.”
Owner: “Yes, but with the lower line, they still get our brand name.”
Congratulations, you’ve just started on the path to the collapse of your business. You’ve diminished the value of your brand by offering a lower quality product with no discernible incentive or offset.
There was no marketing roll out or sales support for this new line. A very rough cost analysis of materials and production resources showed a near negligible margin, a negative one once commissions were added in. Using the analysis I was able to show the owner that he was having a negative revenue impact.
Aside from that, to match sales, the sales folks would have to sell significantly more products, production teams would have to make far more. Even if they did that, with a negative margin, they would lose money. The product lines were discontinued.
To address the continuing decline of the business, after meeting with the stakeholders within the company, reviewing the customer data and analyzing the performance in detail, to refocus the marketing I:
- developed overarching marketing strategy
- specific audience targeting
- addressed initiative specific strategies
- revamped branding
- developed new collateral
- re-estabished a mix of channels that were used specifically by our varied homeowner and builder audiences, and engaged the homeowner more to drive the demand.
To support the inside sales team I:
- developed internal sales training materials
- created product support pieces, talking points
- set up lead nurturing programs & automation
- instituted customer re-engagement and retention processes
- and delivered better, more qualified leads.
It worked. Over 3 years:
- the average order value increased by 64%.
- The company growth averaged 20% a year
- decreased the cost of marketing-to-sales ratio
- delivered 3 of the top 5 sales years in the 20 year history of the company.
“By failing to prepare, you are preparing to fail.”
– Benjamin Franklin