Go Long: Why Short Term Marketing is Ineffective for Establishing Brand Equity
Short term marketing is not only an unsustainable marketing approach; it can actually be detrimental to a brand’s value. The fundamental difference between short term marketing and branding is similar to the difference between transactional sales and relationship sales, just on a much broader scale. The short-term approach is more useful to stimulate a sudden spike in interest or sales, but if it is the backbone of an entire marketing strategy a company will miss out on countless opportunities and potential to build brand equity. A long-term approach aims to forge a relationship with a company and its consumers. This relationship gives potential customers more value without asking anything immediately in return. With a stronger brand, the company will then be able to run campaigns at a much lower cost per acquisition.
Similar to the Lean Startup business development process, a brand evolves to its full potential through iterations based on consumer and market reactions. By focusing on short-term marketing, companies often spend precious resources to create a value proposition that may be appealing to the customers of tomorrow. Instead of eating a large marketing cost with a short-term strategy, companies can use a long-term approach to be able to gauge campaign effectiveness in a much more efficient way. By cultivating loyal users, companies can test campaigns and even reach out to their ideal buyer persona. These champion users can be a springboard for marketing ideas and product pivots, and also help spread the word.
Customer Trust Takes Time
The difference between a short term transaction and setting the foundation for a relationship is the degree of trust between companies and their consumer. A customer may trust your product or service enough to make the first transaction, but that is only the beginning. You want to establish yourself as an authoritative, but more importantly, trustworthy character. This requires creating a relationship that goes beyond the scope of a single transaction.
The digital age has proven how incredibly impactful word of mouth is. Consumers trust Yelp reviews and social shares more than a million-dollar ad campaign. The reason that social media infiltrated buyer habits so quickly is because the average consumer has spent decades being spoon-fed promotions disguised as information through self-promotional companies. The smart companies have responded to this massive shift in buyer behavior by becoming a trusted source of information for potential customers. After being educated on the various options, customers are more likely to see you as the obvious, and most trusted choice. It only takes a handful of extremely positive interactions with customers to establish a positive long-term reputation for a company in the digital age.
Since trust can be shattered at any moment, companies must go above and beyond to exceed consumer expectations or at the very least set an unwavering engagement standard. A primary focus on short term marketing leaves customers seeking the next best deal for future purchases from other competitors. Not does this “race to the bottom pricing” neglect your long-term brand, it’s bad for business.
Building Brand Equity is the Best Investment a Company Can Make
Investing into a short-term marketing strategy can be compared to leasing a car. Each month, you invest (pay your lease) in hopes of a return (using the car.) You keep an eye on your ROI, and as long as it’s positive things look good. But let’s say you start to experience diminishing returns for the following months. You could switch leases to a different car (short-term marketing strategy), but then you’d be overlooking the underlying issue. You may have received some value in return for your investments, but that value stops coming in the moment you stop paying.
On the other hand, establishing a long-term marketing strategy with the focus of creating a relationship with your potential customers is like buying a car. Sure, it might be more expensive in the short-run, but once you finish paying it off, you retain some value. You may experience some diminishing returns with this strategy as well, but the power is in your hands to maintain and readjust as necessary.
Long Term Relationships Are the Only Reliable Way to Capture Lifetime Value
The advent of social media has made it more possibly than ever before to form intimate relationships with your consumers. Companies have the ability to reach out to their customers on a mass scale without dumping thousands or millions into a hit or miss marketing strategy. Not only is this much more measurable and cost-effective, but companies are able to segment their potential customers into manageable, intimate groups. Companies can even focus on a specific platform such as Pinterest, Tumblr, or Snapchat to create content and give value to their users in a way that is much more expensive, if not impossible, to do through short term marketing.
Since short-term marketing is ineffective in creating a long-term relationship with customers, it is naturally more expensive in the long-term. A new customer costs an average of six to seven times more than continued business from an existing one. Creating a foundation for a long term relationship is much more possible through a long-term branded focus, but it is only the start. The relationship must be nurtured in ways that could actually be accented with a short-term marketing strategy, but it cannot be nurtured through a short-term marketing strategy alone.
Pairing a short-term marketing strategy and a long-term approach to building brand equity is the perfect one-two punch to establish a loyal base of customers, create immense amounts of value for users, and establish a company as a leader in its respective industry. The long-term branded focus will require more work and will be much more expensive on the front-end, but if you care about capturing the entire potential lifetime value of a customer it is absolutely necessary and worth it.
