Posted by Menachem Lubinsky on January 11, 2010 under Recession | 
A school was in dire need of a new heating system. The old boiler had been breaking down with increased frequency, even resulting in the closure of the school for two days. The Board of Directors had decided that to raise the money, they would immediately embark on a full court press, including full pages in the local newspapers. The heading of the first ad began like many ads that were common in the ‘60’s: “Emergency Campaign.” The words were in big block letters and there was a picture of the building below. The letter similarly had a headline: “This is not an ordinary appeal. It is an emergency campaign.”
Another institution on a capital campaign wanted to make sure that potential donors understood that the money to be raised for a new building did not conflict with their ordinary fundraising efforts. It too mounted an intensive advertising campaign with the heading: “Building for the Future.” The copy went on to thank readers for their past support but noted that this appeal was for the new building.
A leading social service organization sought to raise money for a special summer project for disadvantaged children. These children were to be treated to a two-week camping experience. In the past, the organization used to receive funds from two benefactors but because of the recession they were now forced to raise money from the public. The heading of their full page ad read: “These children need your help!” There were pictures of sad-faced children sitting on a stoop.
These are three examples of campaigns that did very poorly, not because there was a flaw in the cause, but the message did not send the “right message.” Marketers have long argued over buzzwords that are effective versus those that that receive a lukewarm reception or in fact have an opposite effect. If the above three approaches were analyzed in a “marketing lab,” each one would come back with serious flaws.
The “Emergency Campaign” was found lacking because it lacks credibility and because people would rather be part of a success than a potential failure. In today’s environment, emergency campaigns make the reader believe that the institution had somehow failed to properly plan for the emergency. There is also the fear that the money for this emergency may not be enough and that there will be a repeat campaign and then some. In short, it exudes an environment of instability and makes people wonder. Crying wolf just doesn’t work anymore for most campaigns, unless there is a strong personality behind it.
In today’s lexicon of successful marketing phrases, the school would have fared better with simple headings like “We’re Turning up the Heat for our Students, ” “We’re Getting our School Out of the Cold,” and ‘Warm up to Our New Generation.” These were actually used along with powerful copy and were highly successful.
“Building for the Future” was the kind of message that generates a huge yawn. Yes, building usually means for the future unless you are building a tent and there was no case made as to why this building for the future was particularly different than any other institution that is building for the future. It generates little excitement and certainly is no reason to loosen the purse strings of potential donors.
The campaign that did work for the building campaign was “When a Building Says Thank You.” It went on to review some of the special features of the building and how it would be used. It specifically used testimonials from people who would benefit from the new building and ended with the slogan: “You’re Welcome” with an invitation to visit the site.
The message for the disadvantaged children similarly fell short of tugging at the emotions of the reader. People are fed up with help this or help that ads. The campaign that did work was: “The Children of Summer” with faces of smiling children and happy scenes from camp.
The evidence is clear that people nowadays respond to messages that are more upbeat, demonstrate stability and offer the confidence that the institution is properly managed. Potential donors are also interested in leveraging their money, which means that they want to know that they are part of something far bigger. They respond well when it is part of a movement where people in their social and income strata are also involved.
It takes a bit of research to determine who the target audience is, as it is with every marketing effort. For example, previous donors may wish to know how past efforts fared. To the extent that they are confident that their previous contribution was wisely used, they will repeat the donation.
Donors are very concerned about the proper management of money. They want to see wise choices that include frugality when necessary. A donor wishes to know that if an institution is in need of money, that it has done its share of belt-tightening.
At a recent seminar in Washington DC, a leading expert in fundraising guessed that most people want to help the disadvantaged. But he noted they want to make sure that their money is used to provide the support not to pay for the infrastructure of the organization. It is for that reason, he noted, that the focus must be on efficiency, which means that the organization makes the case how it is spending most of the money for the actual cause.
The expert also focused on the buzzwords citing examples how the difference of a word here and there was the difference between $66,000 for one institution and $1 million for a similar institution. What a difference a word makes!
Posted by Menachem Lubinsky on January 3, 2010 under Recession |
It may seem a bit odd that instead of addressing some of the latest developments in the ongoing recession, I will focus instead on problem solving. Here’s why: A small husband-wife business located in a thriving community in Upstate New York came to see me on whether to close their business. “We are just overwhelmed with problems,” said the exhausted wife. The upside of shutting down the business would be that it might end their “problems” but the downside was that they had no plan for the future, which means that it would only be creating new problems.
So I decided to invoke a lesson in problem solving I had learned a long time ago from clients that just had problems with something. In most cases, when people say they have problems with a situation, it is important to ask them specifics as to what they are. When they do break down their concerns, in many cases an issue suddenly becomes more manageable but more importantly it allows for some intervention to solve the problem. You can’t possibly solve anything if you are not aware of what it is that you are dealing with.
Ironically, it was a car salesman that once taught me that lesson many years ago. I happened to be in the lot when a woman complained about the car she had bought several days earlier. “This is a lemon,” she argued, “and I would like my money back.” The salesman calmly asked: “I understand, but could you be specific about what’s wrong with the car?” She thought for a moment but eventually said: “The air conditioner doesn’t work and the car jerks forward after I stop at a light even as I accelerate slowly.” The salesman patiently retorted: “Why don’t I have the A/C checked out and then take the car for a test ride.” It turned out that some minor adjustments solved both problems and the woman was satisfied. This is a good lesson in customer relations.
The couple’s problems included a worker who might have been “stealing” them blind, a competitor that had allegedly stole the name of a brand they created for a similar item, and a large account that seemed to have abandoned them and they weren’t sure how to get them back. Systematically, we explored each of these concerns. We discussed the worker at length and ultimately concluded that a worker that had prematurely retired at 57 years old should be brought back. He seemed to be trustworthy and when he was in the business, had a good handle on inventory. I recommended a lawyer that could go after the competitor and suggested ways to get the large client back.
The connection to the recession is that they somehow blamed their problems on the recession when in reality it had absolutely nothing to do with the economy. Their reasoning was that they needed to hire someone with a lot more money, would likely have to invest in a new line with money they did not have and they saw no prospect of replacing the large client during an economic slump.
Now three months later, the new (old) worker had stabilized inventory and the business suddenly found cash it never knew it had. The peace of mind that he was not robbing them blind, as they put it, was an important factor in the revitalization of the business. After a lawyer letter, the competitor had agreed to change the name of the brand they ostensibly stole, once again giving my clients exclusive access to the brand. With a bit of help, the husband went to see the large client, something he could not get himself to do until now. The large client admitted that he had been severely impacted by the recession and had found someone who gave them a much better deal but he did miss the quality of the goods. He agreed to restart ordering albeit at a lower level than before.
It is obvious that too many businesses find themselves on the brink of closure because they do not exercise the same type of problem dissecting as was done with the small business. To some people any combination of problems can become overwhelming, to the point of throwing in the towel.
Sure there are problems that can be all-consuming. A business that finds itself under crushing debt could be a case in point. A business that has some debt could possibly renegotiate the debt and set up a payment plan for the future. A business that is experiencing sluggish sales can look to line extension or other ideas to use its same customer base to expand sales.
Problem solving may be difficult for any person that is close to the situation. It may be necessary to involve a consultant that can help identify the problem and then begin to look for solutions. In many instances, the mere identification of the problem is enough to give the person with the problem an idea of how to solve it.
It is easy to blame the recession for problems in a business, which may or may not be true. It is important to identify the problems as a means of dealing with issues that can help a business not only survive but grow. The recession should never be used as an excuse.
Posted by Menachem Lubinsky on December 27, 2009 under Recession |
The letter to donors of a well-known yeshiva began with a reference to the recession: “As you know, our yeshiva was severely impacted by the recession, forcing the administration to make some difficult choices.” The body of the letter spoke about the yeshiva’s excellent program, its faculty and so forth. It wasn’t until the last paragraph, perhaps what you might call “the punch line,” that the letter again invoked the recession.
“We are once again appealing to your generosity to help us cope with this recession which threatens to force us to make further cuts that will no doubt affect our educational excellence. We are hoping that you could increase your pledge of 2008 to avoid such a dreadful possibility.”
The administrator who shared the letter with me wanted my opinion as to why the letter had not generated any appreciable response. He thought that the letter was an honest and straightforward appeal for help in difficult times. His immediate reaction was that “people just don’t read letters,” an argument I have frequently heard from others defending poor grammar, structure, and content of a letter.
I am totally opposed to the theory that “no one will read the letter anyways,” whether it is for a yeshiva or a marketing letter. I have written on numerous occasions that to adopt such an attitude is to look down at your target audience and to insult their intelligence. Besides, whether people express it or not, they do respond to well-written letters.
Perhaps the yeshiva letter quoted above could have acknowledged that they weren’t the only ones that were victims of the recession. A letter I received from a prominent Jewish social service agency did just that: “I know that like most Americans you are facing the challenges of these difficult economic times. But while you are doing the best you can to address these challenges, you are also eager to help others avoid being crushed by this economic downturn.”
The social service agency letter went on to cite several cases of people who were devastated by the recession, ending with a very moving sentence: “When this recession is over we will look back at our strength and resilience to have survived some difficult days, but we will be even more fulfilled with the thought of how we helped people less fortunate than us pull through.” The agency reported that it managed to match last year’s revenues, which is no small feat in a deep recession.
Perhaps the yeshiva letter was correct in volunteering the fact that the yeshiva was not waiting for outside help to cope with the recession. It spoke of having made some “difficult choices,” which could be construed as trimming their budget. But the letter was short on specifics and did not give the reader the comfort that it was doing everything to avoid falling into a deeper financial bind. While the opening and close dealt with the effects of the recession, the middle paragraphs appeared to be business as usual. Indeed, the administrator admitted that he had used “cut and paste” to construct the letter.
On the other hand, the social service agency used a professional writer to construct the letter from scratch and used many current cases that made the letter believable. It certainly did not adopt the attitude that the letter would not be read.
A letter I obtained from a friend that he had received from another yeshiva on the eve of Chanukah was perhaps a classic example of a letter that should not have been written. The introductory paragraph was more or less a greeting about Chanukah, but the second paragraph was totally written with poor judgment.
“Our board has asked that you consider adding at least $200 to last year’s pledge, which will add up to the $150,000 the yeshiva needs immediately to pay vendors. If you cannot pay this sum at once, please indicate on the above form your intention to pay out this money over a year or two.”
The rest of the letter was no better, but I wondered why the letter was ever sent. My fried had no connection to that yeshiva other than receiving occasional fundraising letters from them. Even if it were addressed to parents, it would be a poorly written and perhaps totally insensitive letter.
So is this marketing? Of course it is. If you want a potential customer (or donor) to respond, you have to be extremely sensitive to their current situation. Phrases like “we recognize your…” or “We know how difficult…” go a long way in connecting with the reader of the letter, just as the social service agency did in acknowledging that the reader was also coping with difficult times.
I know that many not-for-profits are looking for ways to deal with the shortfalls of this recession. There are many creative ways to address the ongoing crisis in fundraising. Perhaps a good way to start is with the letters sent to donors.
Posted by Menachem Lubinsky on December 20, 2009 under Recession |
So who will blink first? As the holiday season was drawing near there appeared to be a test of wills of who will blink first, retailers or customers. A week before the calendar deadline, some 20% of Americans said that they had not as yet commenced with their shopping. An additional percentage admitted to only having completed the task “minimally.” So what were they waiting for?
Sure, we are all aware of “last minute people,” in almost every aspect of life and they certainly exist when it comes to shopping, but was there an underlying reason and how does it relate to the ongoing recession? The answer seems to lie in the fact that customers believe that retailers are more desperate than ever and as a result will be forced to do some deep discounting. They read all of the earning reports and pronouncements by company executives and are convinced that the retailers will come around. If they wait it out, the prevailing feeling is, they will be able to afford items that they might not be willing to pay for today.
Retailers, however, sense that despite the continuing recession and relatively high unemployment, customers in general are feeling better about the future. They really are prepared to spend more, is the reasoning here, so why loose money on someone who will pay the full price. They are always watching the cash registers and know exactly when to press the panic button.
For better or worse, the customer ultimately wins. A leading retailer played the game a bit by offering deep discounts on some items but keeping the lid on high prices for luxury items. The prevailing thought was that they could probably buy the less expensive items at a discount house, so why not compete with those discounters on the cheaper goods. The discount stores on the other hand were also fully cognizant of this idea but they were perhaps even a step ahead by still offering the discounts on the non-luxury items and even slashing prices for the more expensive items.
The success of stores like Target was precisely because the conventional retailers were hedging their bets and coaxing consumers into paying regular holiday prices. Target probably concluded that even losses from discounts on more expensive items could be made up through volume. The popularity of the discount stores is largely due to their mode of operation, which is buying in bulk at extremely low prices, relying on volume, and making do with smaller margins due to volume.
For the small retailer caught in the middle of all this, it poses enormous challenges. For one, they do not have an option of drastic reductions lest they jeopardize their own profits. Their selling points are what small retailers always bring to the table: personal service and a focused design and layout of the store. In a recession, it becomes more difficult to hold onto the customer but by carrying unique and different items, a certain class of consumers will come forward.
Business is trying to figure out just where consumers stand on the recession. The frame of mind of the customer is critical to business. As Detroit marches on towards recovery, the psyche of the consumer is paramount. Is the customer ready to buy a new car? Do they feel that the recession has bottomed out and are they more confident about the future? In Detroit’s case, getting a good buy on a car may not be nearly enough. Customers are concerned about the stability of the manufacturer and whether they will be able to get service and parts.
It is interesting that we may be in a period when it may difficult to answer some of those questions. There is a sense that things have improved somewhat, but then you read about how shaky Citicorp is. You hear that people are more confident about the future; yet the unemployment figures are still high at about 10%. You know that housing is picking up somewhat; yet many people cannot get a mortgage. The banks still seem to keep a tight grip on lending.
One Manhattan department store opted to stay away from heavy discounting, but did offer favorable credit terms for those with the store’s credit card. They invited cardholders to make purchases now while not being obligated to pay until February 15th without any interest penalties. At least one bank voluntarily postponed foreclosure procedures for a month. The object there was to demonstrate compassion and social responsibility in the face of the continuing recession.
My own observation is that the worst of the recession is over but that the recovery will be a lot slower than the optimists think. I believe that retailers did not discount earlier because they noticed an appreciable increase in consumer spending and because they always have time to lower the prices. The customer will still win because when the discounts do come, they will be deeper than anticipated. The reason: the retailers are trying to goad that 20% to spend their money.
