Most growing businesses don’t invest enough in their marketing. Are you guilty of the same?
In this week’s episode we speak with Lou Zambello of Opus Consulting on how growing business need to market their businesses.
He has advice for marketing B2B vs B2C companies, how to break through all the noise out there to deliver your message, and what the right mix of online and offline marketing is.
If you’re not sure if your message is reaching or resonating with your audience, today’s episode will point you in the right direction!
Rich: Our next guest has over three decades of experience in successfully growing and transforming a range of businesses, from startups to billion dollar enterprises, either as an operating executive, a board member or a consultant. His expertise includes strategic build, business planning, marketing strategy and planning, multichannel media strategies, and brand and creative development.
Rich: He focuses his time now on assisting small businesses and working with entrepreneurs. He’s a senior consultant at Opus Consulting Group in Portland, a business performance consulting group. His passion is the outdoors and he is a professional fly fishing guide, established author and commonest. He earned a double major in psychology and economics from Cornell University, and holds an MBA from Harvard Business School.
Rich: We’re very excited to have on the show, Lou Zambello.
Lou: Thanks for having me.
Yury: We’re excited to have you, Lou. Without further ado, could you tell us a little bit about your experience, and particularly, you were Senior VP of Operations and Creative with LL Bean, one of the biggest employers in the state. What led you to work with small businesses and startups?
Lou: I think today there’s a lot of energy around startups, and obviously the web and digital marketing has allowed small local businesses to have international reach. So the strategic decisions that small businesses make are very, very interesting now. I enjoy taking a concept or a family run business and helping them grow that business outside of Portland, outside of Maine, and outside of the United States, and internationally in some cases.
Yury: Do you feel it’s easier to work with startups and family-owned businesses in comparison to operating a multi billion dollar business?
Lou: Well, you certainly have the ability to change more quickly a direction. You know, big companies are like big ships, they’re hard to move. While small businesses are like a kayak, one stroke and you can change the direction.
Rich: I like that, one stroke for a Kayak. I can tell that you spend a lot of time fly fishing.
Rich: You focus a lot on marketing. Do you feel on average that companies invest enough in their own marketing?
Lou: I mean, I’ll make a very strong statement, which is, I would say 90% of the companies that I talk to don’t invest enough in marketing. Too many businesses still think of marketing as an expense, not an investment. You know, you can talk to a big plumbing company and they have no problem investing in new trucks because they see the shiny trucks in the driveway, and they’re like, “Yep, that’s what I got from my money.” But at the same time you ask them to invest in marketing, and because they can’t see it, it’s less tangible, sometimes they think of it in an entirely different way and they really shouldn’t.
Rich: Is that the only reason, or is it that they don’t see the ROI? Like with the truck, I know that I have to do this because that’s the only way I can actually get to the job. Is there a difference when it comes to marketing and advertising, maybe those two things go hand in hand?
Lou: I just think the people that start new businesses tend to have an expertise in that particular business, not necessarily in marketing, so it’s just a little more foreign to them. I’m an old catalog business executive, and banks would loan money based on the value of the list of customer names that a company had. You could get millions of dollars because you had 3 million names on your mailing list, that’s a real asset and a real value, and you only get that if you invest in marketing.
Lou: But again, most of the small businesses don’t have as much experience in the value of customer lists, so they don’t think of them the same way as they think about a truck, a new truck, but they should.
Rich: Is there a magic number that small businesses and startups should be putting towards their marketing, whether it’s a percentage of sales, or a percentage of something?
Lou: I wish there was a magic number, I wish there was a formula, but there really isn’t because businesses are so different. Some start from scratch with no awareness, other businesses have been established a long time, some businesses are selling direct to consumers, some are selling to other businesses. So there really isn’t, it’s a matter of looking at each business individually and figuring out based on their financial plan, what they can afford and what makes sense.
Yury: When we talk about marketing and advertising, at the core of it is communication, and the desire to connect with the customers and the audience. But how can we breakthrough the noise to really connect with our prospects and customers when we talk about marketing? As a followup to it, do you have any ideas or examples that stand out as noteworthy in Maine?
Lou: Yeah, that’s always the big question, right? Today, with so much going on and so many channels of cable and emails to answer, and how do you breakthrough all of the information that’s bombarding everybody every second of every day. It changes, but currently I have three different areas that I like to talk about in terms of helping small businesses breakthrough the noise.
Lou: The first one is, provide your customer or perspective customer with real helpful information that they can really use. So for instance, I just happened to move to a new house after 20 years, and there’s a lot of things that you need to know to complete a move. So if I’m a company, that maybe I’m a moving van company, if I provide customers a checklist of things you need to do to successfully move, that’s real information that people find valuable.
Lou: Part of my move was I had to refinish my wood floors. The company that we chose could’ve advertised things you need to do to keep your wood floors looking good, or what happens if you have a scratch or damage to your wood floor. Or if a cat box is on a wood floor it can damage the wood floor, what do you do about that? There’s lots of examples of real information you can give, which cuts through the noise.
Lou: Second area that I like to talk about is real time information. Let’s say I’m a restaurant, and I believe in local food. I could actually put on my website the morning of every day of a short video of picking whatever’s ripe at that particular time. If this is the day that we pick broccoli and that night we’re going to have some sort of broccoli Alfredo on the menu, you can give real time information to people, and that really appeals to people. “Wow, look at that fresh broccoli in the field. I’m going to go to the restaurant tonight.” There’s a lot of opportunities to provide information in real time, and that breaks through the noise as well.
Lou: Then the third category is you can just do really crazy things that attract people’s attention. So I continue to try to get rich to pitch to pest control companies, because I got this great idea where you have the president of the pest control company eating termites or ants or grasshoppers or something that’s connected with their business that is just going to attract attention. There’s plenty of opportunities to do some crazy things connected to business that I don’t think people think about. So I’m still waiting for my first pest control company client.
Rich: We’ll try and work on that with you. Although I would totally be down for trying to eat a whole bunch of different bugs, except maybe not spiders. They’re our friends, and also that seems disgusting in my mouth.
Rich: But anyway, shifting on that, one of the things that I think a lot of small businesses, a lot of businesses in general don’t have as good a grasp on is, is they’re all about themselves, not necessarily understanding really what their customers need. What are some of the ways that we can learn more about our customers so that we can do a better job marketing and selling to them? What are some things you’ve done in the past, or seen?
Lou: I’ve done this as a consultant, but I always recommend that the president or the senior people in companies actually interact with their customers. That may sound obvious to people, but it’s amazing, it doesn’t take too long before a company grows in size and the president is behind the desk dealing with all the things that presidents have to deal with, and they don’t actually go out on the routes. If it’s a plumbing, I’ll use the plumbing company example again, and actually see what’s important to customers and talk to customers.
Lou: We required at LL Bean years and years ago, that almost everybody in the company, as an executive, listened on the phones for hours to the customer interactions. Really the only way you can get a real sense of your customers desires, fears, and emotions is to really talk to them and watch them in an interaction with your people. So that’s sort of on one side of the scale.
Lou: On the other side of the scale, I’m a big fan of one question surveys. Nobody wants to fill out a survey, even a three question survey. It’s like, “Ahhh.” But one question, it’s easier to answer it then to decline it.
Lou: So you have many, many opportunities, website, customer interactions at a cash register, to ask, “Hey, give me the answer to this one question.” And as you cumulate one question after one question, after one question, customer after customer, after customer, you can start to piece together a pretty valid idea of what’s important to your customer and what isn’t.
Rich: That works if we’re already established, if we already have customers, but what would you say to a company that is literally just getting started, or a company maybe that’s established but they want to go after a different audience with a different type of product? What kind of research would you recommend then?
Lou: I always tell the entrepreneur that’s starting up a company that you talk personally to your first 100 customers. Every single customer that decides to try you. Maybe you don’t interfere with the transaction while it’s going on, but you contact that customer the next day and say, be honest, “Hey, I’m a start up. You’re one of our first customers. Love to hear from you.” Customers love that, of course. So you’re still able to get that sort of that sort of information.
Lou: The other thing of course is to haunt your competitors that are already in that business, and ask their customers some of the same questions. A little creepy standing outside of the doorway of a particular retail store, but that’s … As an entrepreneur, you’re not as interested in quantitative data, you’re interested in getting a feel for what’s important to customers. You may talk to 50 customers and not really get much good information except one. Sometimes it only takes one customer to give you the real insight, so that you can differentiate your company.
Yury: Should it be like a daily routine, a monthly routine, a quarterly routine? The person who is busy building the business, for them it may not be on a priority list. Is there a way to develop a system that they know that today I need to make a call, tomorrow I need to go and creep outside my competitor’s store, or things like that?
Lou: That’s a great question. My experience is that life gets in the way unless you prioritize that sort of customer interaction, so I think you schedule it. Every Friday afternoon I am going to spend my time interfacing with customers in some way. I’m either going to be on a chat line with them, or I’m going to be listening over the phone, or I’m going to be calling them up, or I’m going to be greeting them in my store. I think you have to structure it into your day, so that you don’t say, “Ah, I’ll get to it next week.” Because next week never comes.
Yury: Right. We all live in the land of tomorrow, right?
Yury: The other good question that I have, I hope that it’s a good one. I’ve been thinking about it for a while.
Yury: In my day-to-day at Machias Savings Bank, we focus on marketing and customer experience and surveys and stuff. But the big question is, what is the right mix of online and offline marketing, and how do you decide what’s right for your business?
Lou: I have several assumptions that may or may not be right, but that’s what I believe. I believe that part of the way to breakthrough the noise of day-to-day life is you have to reach people in different ways.
Lou: If you just reach them digitally, I think it’s less effective than if you can reach them digitally and non-digitally because I think people like to triangulate information. Boy, if I see an ad and then I see something on Facebook and maybe I hear about an event that Machias Savings Bank is sponsoring, now they’ve hit my consciousness three different ways and I’m going to focus on it.
Lou: The other thing specifically related to Maine is that we have an older population, and so there are people that are really online savvy and there are people that are not. Just to take savings banks, those folks that are standing in line to deposit a check instead of just depositing with their Smartphone, they’re probably not very digitally sophisticated, and yet they’re an important part of every savings bank space.
Lou: You have to understand your base of customers, and say, “Gee, I have to do a fair amount of offline marketing to reach these people.” You can’t really predict it either based on age, because I know a lot of 70 year olds that aren’t on the computer at all, wouldn’t even know how to turn it on. My mother at 84 is an internet troll, so you just can’t tell.
Yury: My grandma learned how to use Skype so she can just talk to me.
Lou: So you have to-
Yury: Speaking about those trolls.
Lou: In Maine, I think you have to really consider a good mix of all of offline and online advertising.
Yury: Before we go crazy on our marketing expenses, we should understand demographic and the psychographic of our customers, or just population in general.
Lou: It also depends on what you’re trying to do. Again, the challenge on a lot of Maine businesses, and this is a whole topic, is it’s trying to attract the younger customers because they’re your future. But your current customers are paying for your marketing to your new customers, and they’re older. So you have to maintain your old base of customers, while you spend money to attract the new ones, and that’s a challenge, and it’s a challenge from everybody from Machias Savings Bank to LL Bean and every company in between.
Yury: I’d like to be in that company.
Rich: How do you market a B to B company versus a B to C company? What are some of the differences that a B to B might have as challenges versus that B to C?
Lou: Well one challenge, of course, is understanding who you’re marketing to. Because when you’re marketing to another business, it’s not an individual, it’s a business, and every business is different. Sometimes you’re marketing to the president, sometimes you’re marketing to the administrative assistant, and sometimes you think you’re marketing to the president but you’re really marketing to the administrative assistant because she’s running the company.
Lou: So that’s the first challenge, is to understand who you’re marketing to and what’s going to ring their bell because it can be very different.
Lou: Then after that, I think it’s understanding that your base of customers, by the very nature, it’s a smaller base. You might only have several hundred key customers that you’re trying to call on, and so your marketing can … you can afford to be a lot more specific and discreet with your messaging.
Lou: I mean, obviously in the ideal world you’d like to have a slightly different message for every single one of those 200 customers. Well, maybe you can use partial templates and you can have a base of content and then pick and choose individual pieces of that content to target individual customers, because can get a lot of information if you’re just trying to target 200 customers.
Yury: When we’re talking about this precision and customization of the messages for our key audiences, so is marketing an internal thing or is it something that you should hire out an agency or consultancy? The reason I premise it with the customization, is there an opportunity, or is there an opportunity to do a better job with an external agent helping you, or do you think there may be a gap and we may lose some critical elements in that transaction?
Lou: There’s been a lot of books written recently about core competency, and as a company understanding your core competency. Based on that, if you think your core competency is critical to your success, then you keep that internally because that intellectual knowledge that you gain every year is an asset that you can build on. If it’s not within your core competency, then you outsource it.
Lou: In terms of marketing, again it depends on the company. Pick on my same old plumbing example. If that company is entirely populated with plumbers that really haven’t done any marketing, that aren’t that interested in it, you shouldn’t try to bring that in house. I mean, it’s not a core competency and you outsource that.
Lou: If you’re a retailer of young women’s fashion, I think there’s probably a good chance that your marketing should be internal because it changes by the hour, and I think it’s a competency. If you don’t develop, then you’re probably not going to be in business. It depends on what industry and what strengths a given company has or doesn’t have.
Rich: It’s not a one size fit all, at all?
Lou: No, and I keep saying that. People keep looking for recipes, and I wish there was a marketing recipe. But it’s not like accounting, it’s not double entry accounting. Although, some people would think that that’s a fantasy too.
Lou: But, I mean, it is unique to each company and each customer base, and I think you need to talk to a number of people that have familiarity with that and make your own decisions.
Rich: If you could change one thing to improve the business ecosystem here in Maine, whether you yourself could control it, Lou, or just like magically wave a wand, whatever it would be, what would that change be?
Lou: That’s a great question. A couple things, I think. Obviously, the availability of capital is important. There’s a lot of entrepreneurs that I know, that I work with, where their business idea dies because they can’t get access to capital.
Lou: I spent a couple of years in California, and in California there’s 10 venture capital companies and private equity firms on every block. I mean, there’s so much money floating around, it’s so much easier to make connections. In Maine, it’s a little more difficult.
Lou: There’s certain agencies in Maine you can tap into to get funds, but you have to be a little bit successful. So it’s tough if you’re a new entrepreneur to raise money. So that’s the first thing.
Lou: Second thing is, Maine is handicapped by the fact that the University of Maine, and all those smart kids up there, are in Bangor, and a lot of the action is down here in Portland. There’s USM, and we have other schools down here, but there isn’t that same tech corridor where there’s this merging between schools and small business like there is at 495 in Boston, or in North Carolina, or in Los Angeles or San Francisco.
Lou: I wish the colleges from the University of Maine System to Bowdoin, Bates and Colby University of New England would all get together and try to figure out a way to create this kind of entrepreneur center to really drive innovation in Maine, because from the small businesses come big businesses.
Lou: There’s a number of companies that were started in the west coast from guys that graduated from Bowdoin, as an example. They could have started them here, and what a difference that would have made. If Amazon had started here instead of out west, can you imagine?
Yury: Or Google or Facebook.
Lou: You can go on and on, right?
Lou: I think some things are happening now. There’s plenty of organizations that are trying to get it going, but it just hasn’t quite hit their … people haven’t hit their stride yet.
Rich: Lou, this has been great. Where can we find you online?
Lou: You can go on the Opuscg.com website and you can find me there.
Rich: Awesome. Lou, this has been great. Thank you so much for stopping by today. Appreciate your sharing your expertise.
Lou: My pleasure, anytime.
Rich: Thank you guys.