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Why Small Businesses Struggle with Marketing
Gene Marks says it’s because they lack the best data—but there are things you can do.
Here are today’s highlights:
Corporate retreats are back
We seem to be experiencing both a labor shortage and a wave of layoffs.
Some businesses waited years for Covid loans that never came.
Those big bonuses Uber and Lyft used to lure drivers aren’t really working.
Gene Marks says that most small businesses need better data: “Marketing is all about return-on-investment, or ROI. Unfortunately, spending money on marketing isn’t like spending it on a hard asset. I have some clients who know that if they spend $100,000 on a piece of equipment for their manufacturing floor the increase in production will easily return their money in two years. But the ROI of a marketing investment is much more difficult to calculate. For most small and mid-sized businesses, marketing is a gamble, a trip to Vegas, a bet on a slot machine. That’s f**ked up. Bigger companies aren’t this way. They view marketing differently. Sure, they take risks. But most of the senior VPs I know take less marketing risks than you may think. They’re pretty sure of their ROI even before a campaign begin. Much more so than a smaller company. Why? It’s the data.”
“You could — and should — be mining your internal customer data that you’re keeping in your accounting and customer relationship management databases. You know these people. They’re your community.”
“And then you should complement this information with the services of a firm like Taradel who can not only provide additional prospects from multiple trusted sources but who will then do the marketing grunt work needed to leverage and then analyze that data.”
“Taradel has over 20,000 small business users and offers just about every built-in service that an advertiser could need — audience targeting, design, fulfillment, human support, and performance reporting so that a small business can launch local advertising campaigns with ‘matching’ direct mail, Facebook, Google, and email offers, just like the big brands do.” READ MORE
Corporate retreats are back: “Retreat planners say they’re slammed with pent-up demand from companies eager to gather offline after two years of remote work. After two years that tested many tech companies’ cultures — and eroded workers’ feelings of attachment to their employers — retreats can stoke new feelings of connection and loyalty, said Sean Hoff, founder and managing partner of the Toronto-based retreat planning agency Moniker. ‘It’s people talking about how they were on the fence about staying, or they were considering leaving [for] another job, and they completely felt reinvigorated [after their retreat],’ Hoff said. ‘All of a sudden, they’re willing to punch through a wall for their CEO.’”
“That demand is so urgent that a number of companies are holding their retreats this spring rather than waiting for the fall, which has historically been the big off-site season.”
“Hoff said he encounters companies wanting to plan a retreat for hundreds of employees with just a couple of months of lead time. ‘For a decent-sized retreat of 100 people or over, you’re looking at a minimum of six months,’ Hoff said.”
“Hotels can pose a particular challenge in the pandemic era, since many clients are opting to buy out an entire hotel for their retreat. Popular booking days — typically Thursday through Saturday — fill up quickly.” READ MORE
Here comes another push to get rid of managers: “This once unthinkable but necessary conversation around doing away with the middle-manager class has been kickstarted by the pandemic-driven rise of remote work. Many of these managers, who make up 17.6 percent of the U.S. workforce, are paid large salaries to act as a type of ‘workplace hall monitor,’ keeping an authoritative eye on everyone else. But as more employees shift to working from home, the need for this management oversight has massively decreased.” READ MORE
Some businesses waited years for Covid loans that never came: “In a new survey released Thursday by the Small Business Majority, a national network of small businesses and community organizations, about one-third of 201 small business owners polled who applied for an EID loan said they never got an answer, or any money, from the SBA. And now the SBA says funding for the program is likely to run out in the next few days.”
“After two weeks passed, [Jaja Chen and her husband Devin Li] checked in with the SBA and were told the advance grant was coming, Chen said. She said they had also been approved for a $20,000 loan, but turned it down since the grant was supposedly on its way.”
“But more than two years later, the grant still hasn’t arrived. ‘To this day, we have no idea what happened,’ Chen said.” READ MORE
A lot of employees are refusing to go back to the office: “Many white-collar workplaces are making similar retreats as their employees stubbornly stick to working from home while struggling with childcare, the grind of commuting and worries about rising Covid-19 cases. Bosses are wary of taking punitive action against those who aren't following their ambitious so-called RTO plans, fearing it will backfire in today’s tight labor market. That leaves them to reevaluate their carefully crafted strategies and reconsider what is a realistic long-term approach to in-person work.”
“‘We are seeing policies slip in real time,’ said Melissa Swift, the U.S. transformation leader at workforce consultant Mercer. ‘There was previously all this talk about how, for white-collar jobs, collaborating in the office was important. That’s slipping. Now, only the people who need to turn a screwdriver need to be in the office.’”
“Organizations that returned to the office in the first few months of the year now have loads of feedback from employees, many of whom are frustrated by commuting in just to spend half their day on Zoom calls.”
“That adds to two full years of data on how workforces remained just as productive — and often were more satisfied — while working from home, and emerging research from academics. The result is a groundswell of hard evidence that can convince even the staunchest remote-work skeptics.” READ MORE
We seem to have both a labor shortage and a wave of lay offs: “Companies which saw substantial growth during the Covid-19 pandemic are starting to take a more cautious approach toward hiring and spending. From Peloton Interactive and Meta Platforms to Twitter, Uber Technologies and others, corporate belt tightening comes as the Federal Reserve is raising interest rates, global stock markets have fallen, and concerns of an economic slowdown are mounting. Still, last week’s jobs report showed the labor market continued growing rapidly. And many businesses have struggled to fill jobs throughout the pandemic. Here’s a look at the companies that are laying people off, changing their hiring practices or cutting spending. “
“Carvana is cutting around 2,500 staffers, or 12 percent of its workforce after finalizing an expansion deal. The online car dealer grew substantially during the pandemic and paid for it through low-cost borrowing.”
“Scotts Miracle-Gro Chief Executive James Hagedorn said earlier this month that the company is targeting cutting its overhead structure by around 10 percent before the start of the next fiscal year.”
Wells Fargo has laid off people in its home lending department, a spokeswoman said, without disclosing the specific number of people affected.” READ MORE
The pool of Uber and Lyft drivers has shrunk and bonus payments aren’t necessarily helping: “Both companies said they planned to keep spending to lure drivers back to their platforms, which sent Lyft stock tumbling nearly 33 percent. Uber — which performed much better thanks in part to its sizable delivery business — said it didn't anticipate an increase in incentives (drivers were at a ‘post-pandemic high,’ CEO Dara Khosrowshahi said), but its stock still plunged 16 percent amid a broader tech sell-off. It was a sequel, albeit likely lower budget, to the movie that played out last year for the companies when they committed hundreds of millions of dollars in driver incentives.”
“It largely took the form of one-time bonuses and quests, like giving drivers $4,000 for completing 250 rides over the course of a month. Uber spent $250 million on the program in 2021.”
“One problem, multiple drivers told Insider, was people were quick to take advantage of the payouts and then bail.”
"’These super high-priced offers are not getting people to go, I'm gonna be a rideshare driver again. People go after that money, then they stop doing Lyft,’ said Steve Johnson, an Uber and Lyft rideshare driver in Colorado.” READ MORE
There are some lessons in the baby-formula shortage: “America’s baby-formula shortage has gone from curious inconvenience to full-blown national crisis. In many states, including Texas and Tennessee, more than half of formula is sold out in stores. Nationwide, 40 percent of formula is out of stock—a twentyfold increase since the first half of 2021. As parents have started to stockpile formula, retailers such as Walgreens, CVS, and Target have all moved to limit purchases. The everything shortage isn’t new. But rationing essentials for desperate parents? That’s a twisted turn in the story of American scarcity. Three factors are driving the U.S. baby-formula shortage: bacteria, a virus, and a trade policy.”
“After the recent deaths of at least two infants from a rare infection, the Food and Drug Administration investigated Abbott, a major producer of infant formula, and discovered traces of the pathogen Cronobacter sakazakii in a Michigan plant.”
“‘During the spring of 2020, formula sales rocketed upwards as people stockpiled formula just like they stockpiled toilet paper,’ Lyman Stone, the director of research at the consulting firm Demographic Intelligence, told me. Then, as ‘families worked through their stockpiles, sales fell a lot. This oscillation made planning for production extremely difficult.’”
“FDA regulation of formula is so stringent that most of the stuff that comes out of Europe is illegal to buy here due to technicalities like labeling requirements.”
“The U.S. baby formula industry is minuscule, by design. A 2011 analysis by USDA reported that three companies accounted for practically all U.S. formula sales: Abbott, Mead Johnson, and Gerber. ... we’re seeing what happens when we reduce trade with other countries for an essential good: We’re more vulnerable to emergencies like a bacteria-infested plant in Michigan.” READ MORE
Softbank is cutting its startup investments by 50 to 75 percent: “VC funding has slowed down markedly amid a turbulent market. After a heady 2021 for much of the industry, startups have turned to quick cost-cutting and layoffs. The Dow has seen the longest downturn since 2020 this week, while crypto markets also fell 10 percent between Thursday and Friday alone. Some entrepreneurs and investors have gone so far as to question whether the industry is approaching something like the dot-com crash, with VC David Sacks calling it the ‘Panic of 2022’ on Twitter.” READ MORE
THE 21 HATS PODCAST
Does firing people ever get easier? This week, Shawn Busse, Jay Goltz, and William Vanderbloemen discuss whether the old line about hiring slow and firing fast makes sense during a labor shortage. As William puts it, “What if you do have to hire fast? How do you do that? What if you do want to keep people even if you might have wanted to get rid of them before? How do you do that without ruining your culture?” Plus: How do you know it’s really time for someone to go?
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If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren