Best Practices Aren’t

If I had a nickel for every time a client asked me to tell them about marketing best practices, I could match The Donald’s proposed charitable contribution.

I try to explain that there is no such thing as a best practice. The truth is:

1. What works for one company won’t necessarily work for other companies. A so-called best practice is dependent on a firm’s strategy, organization structure, quality of their technology apps and infrastructure, composition of its client base, the quality and composition of its product line, and a gazillion other factors. For another company to simply say “oh, we’ll do what they do because it works for them” is short-sighted.

2. What works for one company may not really be their own doing. The factors that influence the success of a business practice go beyond the internal factors listed in #1. The state of the economy, hell, even the weather may be as much a determining factor of how successful a practice is as anything the company itself does. If true, the so-called best practice isn’t likely to be sustainable.

3. What works for one company may not really be working as advertised. Marketing measurement is a mess in most large organizations. When a so-called best practice produces a 100% ROI, who really measured and vetted that claim? The consulting or technology firm that worked with the company? What costs were included in the ROI calculation? Have the top line results been replicated in other campaigns, channels, product lines, etc.?

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This last point is why benchmarks aren’t particularly reliable, as well.

At a meeting with a client today, one exec asked me about the benchmark among banks for acquisition cost per customer.

His question has no accurate, reliable answer. For starters, there is no common definition of what costs are included under the umbrella of acquisition costs.

If that wasn’t enough, not all customers are created equally. A company that spends 150% of the industry average to acquire customers that are twice as profitable as the market average isn’t under-performing.

In addition, I would argue that a bank’s potential marketing cost per new customer could go as low as zero. Want proof? Raise the interest rate paid on checking account deposits to 5%. Within a week, you’ll have a million new customers without spending a penny on advertising or marketing.

You’ll lose more money on those accounts than you dreamed possible, but your acquisition cost will be best-in-class.

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I’m tempted to blame the obsession with best practices on Silverbulletitis:  A condition in which the sufferer expects easy answers and solutions to difficult problems. 

But I know that’s not always the case. I’ll just have to continue educating the masses that best practices are just a figment of their imagination.

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9 thoughts on “Best Practices Aren’t

  1. Amen! I have been making this same argument for over a year with my colleagues. I refuse to use the term anymore, preferring “successes” or “successful practices” to highlight that there is nothing “best” about it; just that it helped some company or organization somewhere reach a goal.

  2. I chuckle when I see the words “Best Practices” used.
    At best (haha!), they are simply “Better Practices” than the individual, team or company did before.
    Original thought, feel and actions (of people) can be best in the moment, yet cannot be commoditized.

    Thanks for the originality, Ron, and for keeping it real :)

    Lisa

  3. Ron – I think that your argument is that applying Best Practices mindlessly through a ‘cut and paste’ approach is unlikely to be successful. However, there is much value in understanding Best Practices and leveraging them to the organization’s environment in a way that enhances performance.

    Perhaps the issue isn’t all connected to Best Practices per-se, but rather to Marketers (and other executives) not doing their jobs (well)? ‘Copy & Paste’ approach may work for some, some of the time, but it will not work for all, all of the time.

    PS: you are spot on regarding on the customer acquisition metrics – the following is a summary of a study by Andera and CoreProfit regarding Customer Acquisition Costs: http://bankblog.optirate.com/how-much-do-you-spend-on-customer-acquisition-are-you-sure/

    • Serge — I would wholeheartedly agree that there is value in understanding how other companies do things. But to label their practices as “best” practices is a subjective, and potentially misleading, assignment.

      • Ron – completely agree. In fact, most companies, and in particular small businesses such as Community Banks and Credit Unions, have no option but to rely on consultants and / or analysts for Best Practices. In my experience, Best Practices are developed based on observations and deep expertise across many organizations… not simply a ‘Copy & Paste’ from the “flavor of the month”.

        It is important to understand that Best Practices represent strategies & tactics that were deployed in the past. They are typically very relevant for functions that are not subject to constant change (such as Operations) but much less interesting (and perhaps much less relevant) in areas where innovation and test / measure / improve tactics are standard modus-operandi (such as in the case of marketing) for the reasons you and Jim Marous so well articulated.

  4. I guess the same applies for ‘what response rate are the best performing banks getting?’ relating to a marketing program. :-) Variables like market, competition, brand, product features and benefits, timing, audience and offer still make a difference. I run into this challenge each year when the DMA publishes their response rate book.

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