Wednesday, July 22, 2015

Lessons from a Closed Business

Last week a business closed in our city.  That's not unusual, unfortunately.  But this was a business I knew better than most.  I had even spoken with them about their business ten months ago.  I had been asked to visit them because they had some problems needing a remedy.  While that consultation did not lead to a contract, I kept watching them.  You see, they didn't -- as far as I could tell -- change their marketing tactics.  That in the end did them in after 18 months of operation.

I'm not about to write that if they picked up my contract that I would have saved their business.  However, I do think I understood some of their challenges and that advice would have helped.  Now they are a learning experience.  What did I learn?

(a) The business had an unrealistic expectation for a target customer.  In fact, they had three types of consumers in mind which were truly incompatible with one another.  Lesson: focus on one target.  Doing so will not confuse the brand message.

(b) The business spent too much money on unproductive promotions, such as sponsorship of softball teams.  With a single target customer they should have been able to direct marketing dollars to channels where that customer "lives."

(c) The business blurred its brand with conflicting signals.  Even their business name was at cross purposes with their line of products and services!

(d) The business never truly addressed the challenge of an inferior location.  They waited for the landlord to deal with better signage and location marketing.  But at the end of the day such a business must fend for itself and work their location.  Special invitational events might have helped enormously, along with marketing following from (a) above.

(e) The business made tactical mistakes, first dropping a "normal" line of service, then reinstating it (in desperation?) near the end.  They also maintained unusual service hours.  To some extent they telegraphed their problems and may have alienated customers.  Worse: the principals had no important experience in that type of business when they purchased the store.

This was a business that existed in a vastly competitive space and is common enough that mistakes shouldn't have been made: their solutions are known.  It's so sad to see a business die for not adhering to marketing fundamentals.  This story is a reminder to stick to fundamentals, especially being very precise about target customer, brand messaging, and thoughtful marketing tactics.

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