A New Age of AdvertisingWritten on February 21, 2012 by Jon Bach
Over the last few days, I've been taking some time to update the documentation of the Puget Systems marketing and advertising strategy. I'm finding that what I am really doing is documenting the culture of the company, because the way we approach advertising is a good window on the way we run our business. We are sometimes asked "Why haven't I seen advertisements of your company?" That is a great question. What the inquirer is really trying to determine is whether Puget Systems is a legitimate, successful business. Most of the most successful PC manufacturers canvas heavily with advertisements, from magazine ads to website banners. Isn't Puget Systems successful as well? If Puget Systems is successful, where are our advertisements? In answering these questions, we have a great opportunity to talk about something that makes Puget Systems special.
I was talking with our office manager the other week. We were talking about times when we give away free upgrades, shipping, and labor...all costs that sometimes come up in the course of business, which if we charged for we would be "nickel and diming" our customers. He commented that in 2011 we spent more on ensuring an excellent customer experience than any year in the past. We also just closed out 2011 as the most profitable in our history. We're consistently exceeding our targets, and our annual growth is right where we want it (steady, but not more than we can keep up with). We decided that these things are related, and that we needed to consider this spending to be strategic to the growth of the business. What it boils down to is this: we would rather spend money on our customers, than on traditional advertising.
What does it mean to "spend money on our customers?" Let me provide an illustration. Puget Systems can easily spend $3000 on a full page magazine advertisement. With that same money, we can upgrade 5 customers to faster shipping if a build takes longer than we estimated, and upgrade 5 other customers to a faster video card if the one they order is in shortage, and give 5 other customers a free upgrade to 3 year warranty to help calm their concerns if their PC has problems soon after delivery...and we'll still have $1000 left over! I believe that the excellent experience we gave those 15 customers is much more valuable to Puget Systems than any traditional advertising we can do. If we can create 15 raving fans of our company, that is money well spent. Especially in the age of social media, people themselves are an amazingly effective marketing force.
The difference between those approaches is seen over the long term. Money spent on advertising can certainly bring in new business, but it is a flash in the pan. You see near immediate results, but the results also quickly disappear when the campaign is over. You have created no attachments to your company. You happened to put your company name at the right place at the right time, for someone that was already looking for a PC. If someone next month is looking for a PC, your company name is already long forgotten. Contrast that with a customer you have turned into a raving fan by providing a PC experience that exceeded their expectations. They'll be telling their friends and family for years. That potential remains in waiting. Their friend may not be looking for a new PC until next year, but when they do, the customer you invested in will still be there, ready to recommend your company with a passion. I love that this has been so effective for us. It is extremely satisfying when "the right thing to do" is also a successful method of growing your business.
By the way, of course we do some traditional advertising. We just spend a fraction of what I believe most companies spend. We are very conservative on where we spend, and we have tight controls in place holding that spending accountable to create positive ROI. We have some cooperative marketing funds from partners like Intel, which come with a long list of short-sighted requirements in regards to how and where we spend those funds. It is by far the least effective spending we do.