Clicksharp Marketing

A well-diversified business has different revenue streams with different profitability profiles. Is your marketing department flexible enough to mix and match?

An attorney friend was telling me this morning about how law firms are often presented with two opposing business models: the high-ticket, low-volume work and the low-ticket, high volume work. Come to think of it — what’s so special about a law firm? A lot of businesses diversify the exact same way:

• HP, Dell and other printer manufacturers sell those sharp looking devices for next to nothing — but did you notice how much the ink cartridges cost?
• Hotels typically offer a wide array of promotions to cut room prices and dig into their margins… let’s celebrate with a six dollar muffin from room service!
• Gas station attendants like Robert (below) pump out a ton of gasoline — but what’s with those extortionist prices on snacks & soft drinks?

Gas station pumps ring up big dollars –
but the Twinkies inside are what paid for
Robert’s million-dollar smile.

As consumers, a little awareness of these business models can make us infinitely smarter about where we spend our money. As marketers, the goal is to stay in business, and this hybrid revenue model should be pursued at all costs. But how can you do this without the risk of overexposure?

That’s where digital media come in. With an unprecedented ability to attach numbers to unique promotional efforts, a well-diversified digital campaign will give you all the reach you want, combined with all the control you need. Your cash cow businesses can be ramped up through seasonal down-cycles. Then your big innovations can be pumped up when things are rolling nicely.

It’s not always that easy with traditional media. Newspaper and magazine ads often need to ride out a minimum period of time. Billboards — same thing. Traditional brand building? Forget about shifting your dollars around until those expensive focus groups have paid themselves off.

Ultimately, it’s all a game of balance. You want high margins, but you also want the work to be pouring in. But changes in your business, the competitive environment, and the economy at large will always keep things in a state of flux. Having at least part of your marketing agenda on a digital platform, you’ll feel like you’re running on air, instead of wearing cement shoes. We can’t see Robert’s shoes — but we can take a guess.

~~~~~

Paul Burani
Clicksharp Marketing
New York, NY

This entry was posted on Tuesday, May 13th, 2008 @ 8:07 am on the category Marketing Theory, Small business. You can follow any responses to this entry through the RSS 2.0 You can skip to the end and leave a response. Pinging is currently not allowed.


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