Running a business is a high-pressure job and every day you face making decisions with incomplete information. You must make important and impactful decisions that affect how your business handles the market with little lead time, in some cases. The impact of those decisions affect everyone with any level of relationship to your business, including creditors, employees, and vendors, not to mention the impact of firm performance on you and your family. Implementing a thoughtful and thorough problem-solving approach build on relevant metrics improves those decisions and helps achieve success.
Implementing a problem-solving process appropriate for the types of decisions you face using relevant metrics; one that involves the people responsible for implementing those decisions helps you reach the right decision in a timely fashion. Everything you do as a business is time-limited; since you often must respond almost immediately to challenges you face from your competition or other elements beyond your control. Consider the pandemic and you see an excellent example of how businesses were forced to pivot almost overnight to survive the shutdowns and other challenges they faced.
Responding quickly to your competition and the environment separates those who succeed from those who fail. If you find yourself constantly putting out fires, especially when those fires threaten your very survival, you must consider a change. Putting out fires also takes time away from other activities necessary for the ongoing survival of your business.
Today, we’ll focus on marketing decisions and how to develop a problem-solving approach to avoid problems and make the right decisions.
What is a problem-solving approach?
Effective problem-solving starts with scanning the environment to uncover emerging issues that might impact your business before you start to feel the effects of those changes on your business operations. We talk about this approach as a “sense and respond” approach that mimics the biological approach taken by organisms that survive to increase their chances of survival. For instance, a rabbit in the wild senses changes in the pattern of light and shadow as an early warning system that a predator is nearby.
Among the elements to consider in your scan are:
- Changes in customer needs, problems, and preferences
- Technological changes that might offer opportunities or threats to your brand
- New products, messages, and pricing offered by your competition
- Economic shifts in critical elements such as inflation, interest rates, and international exchange rates, which are often precursors to expansions and contractions in consumer spending. Also, consumer confidence, which greatly impacts consumer spending.
- Legal pressures and regulatory changes that might impact your business. For instance, recent privacy concerns force companies to consider ways to protect consumer privacy, thus reducing the need for government regulations and laws. For instance, Google will eliminate all 3rd party cookies on its Chrome browser in 2022 as a means to support consumer privacy.
This process of scanning often culminates with a SWOT analysis, like the one shown below, designed to highlight proactive changes the company should implement to adjust to changes in the environment.
Marketing problem-solving questions
Am I solving the right problem?
It doesn’t help your business to implement changes when you’re not solving the underlying problems with the greatest impact on your success. For instance, solving a symptom doesn’t make the problem go away any more than getting rid of your headache makes a serious neurological problem go away even though it might make you feel better. By the same token, solving a minor problem doesn’t produce much in the way of improvement for your bottom line.
This also goes for your consumer market. Recognize that people buy solutions not products. Hence, you must solve a problem faced by a large enough market, one that’s sufficiently annoying that consumers want to spend money to solve their problem, and solve the problem better, at least in some respects, than your competition.
Am I spending enough money on marketing?
Marketing costs money, yet the returns on the marketing investment often occur over a long period of time rather than immediately. For instance, it can take 6 months to a year, or more, to see a return on your digital marketing spending even if you’re doing your digital marketing right.
The marketing campaigns your business develops and implements determine the difference between success and bankruptcy, but it’s not always easy to find the right combination of strategies necessary to achieve a high return on your investment.
An effective marketing campaign brings you positive ROI given sufficient time for the campaign to play out. After all, you need to move consumers from awareness, to interest, to desire, to purchase, which takes time.
Determining how much to spend on marketing is a persistent question with no universally accepted answer. Some advise spending between 2 and 5% of your gross sales while others recommend 7-8% of revenue on marketing. The reality is you need to spend as much on marketing as needed to reach your goals and there’s no easy formula for that.
You should first make sure you find effective ways to market by choosing tactics with high rates of return, such as email marketing that delivers $44 for every dollar you spend. Going with cheaper marketing methods, like social media, helps to save money while still creating a presence for your business and offering highly targeted appeals to reach your audience.
Am I listening to the right people?
It might not sound like a great idea to pay someone to tell you how to run your business – but it can change a lot in terms of your success. Having a legal advisor, or a financial advisor to offer professional insights that help solve problems often keeps you out of trouble, while hiring a marketing consultant means you don’t repeat common mistakes made by those with less expertise and experience.
You won’t have the answer to everything all of the time, and some problems can put your business in serious trouble. For example, being on a list of high-risk merchant accounts makes it hard to maintain needed inventory and costs you customers. Losing the ability to operate poses a huge threat to you as a business owner, and even if you’re able to get that back later on – it might be too late in the eyes of your customers.
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Hausman and Associates, the publisher of MKT Maven, is a full-service marketing agency operating at the intersection of marketing and digital media. Check out our full range of services.