Off the Cuff: Make Hay While the Sun Shines!  Literally.

March 16, 2009

By Mark L. Venit, MBA

Each year, many apparel decorators go from 1st Quarter famine to 2nd Quarter feast — it’s a common phenomenon in our industry, though there are always exceptions to this rule. As peak season blooms with a burst of incoming orders, few companies consider expanding their advertising investments during the strong spring months. That’s because the majority of industry entrepreneurs believe in the conventional wisdom that you don’t need to advertise when times are good, and use that as a way to cut marketing expenses overall.

In this case, conventional wisdom is wrong.

Consider the wonderful possibilities that ensue by stepping up your company’s advertising through peak season and why such a strategy works. My point of view is that peak season is not only the very best time to advertise, it’s the very best time to increase advertising. It’s the ideal time to pick up new business from new accounts as well as, of course, getting expected orders and reorders from existing accounts. I regard high season as the opportunity for firms to do their most cost-effective advertising of the year and generate the highest possible response rate.

In addition to these good things, the ultimate advantage of the 2nd Quarter is that it’s the easiest time of year to thicken your market share at the expense of your competitors.

And why is 2nd Quarter is the easiest time of year to gain market share? Both quantitatively and qualitatively, your advertising dollars go farther in spring because more people are in the market for imprinted wearables and overall demand is historically the highest in spring.

With these factors working together, the return on advertising investment goes up dramatically, while cost-per-lead and cost-per-sale go down. Another aspect that works to make 2nd Quarter advertising and marketing campaigns more effective comes directly from your competition. I can safely predict just what your typical competitors will do to generate extra business in high season — absolutely nothing. As your competition continues to buy into the erroneous conventional wisdom, let them wonder why you’re laughing all the way to the bank.

Let’s look at the impact on your bottom line of generating additional sales in the height of the season.

If we divide the year into four quarters and sales were level in each quarter, theoretically you would do 25% of your business in any given quarter. We all know the math here doesn’t fly in the real world where you must consider historical selling cycles and the inherent seasonality of our industry. In fact, for most graphic products firms, the three months of spring represents a lot more than 25% of annual sales — for some, it’s nearly 50%.

The real math here is that by increasing sales by just 10% in peak season, you can boost annual revenues significantly and lower production costs on a per-unit basis.

Lower production cost? Yes, it’s true because, as you know from experience, when your shop is humming, you and your crew produce more work per hour per employee. In busy season, labor output and operational efficiencies go way up, usually to their best performance levels of the year. As a percentage of revenues, both your fixed costs and general overhead decrease during 2nd Quarter. If ever there’s a best time to bring in more work, it’s when you’re operating at peak performance levels.

And while there’ll be additional expenditures to increase your advertising, the bonus business gained in high season is among the most profitable money you’ll ever handle. A 10% boost in sales during 2nd Quarter may translate to as much as 15% to 25% more annual profit.

Additional dividends await in the 3rd and 4th quarters — namely reorders from spring business and new referrals from customers you picked up in 2nd Quarter. If the new customers you find this spring order only an additional 40% more in the course of the second half of the year, you will ratchet up your bottom line by several more points.

All this good stuff happens by intensifying your marketing in the spring, not curbing it.

The cumulative effect of a well-executed 2nd Quarter advertising program generates new customers in high season and, assuming you continue to market to them, builds a larger and more profitable account base.

The stronger your base is, the stronger and safer your company will be in the long-term. And the cost of maintaining this escalating account base is a small fraction of the cost of creating new accounts to replace old ones.

Does the current economic downtown mitigate my counsel above — absolutely not! Your competitors are predictably operating in the faith-based marketing mode –sitting by the phone and praying for it to ring. They’ll remain steadfast in their belief that advertising is an expense and, in 2nd Quarter especially, an unnecessary expense.

Well, they are correct in the sense that advertising is indeed an expense when it doesn’t work. When doesn’t it work? When done at the wrong time of year. When directed at markets not predisposed to buy from your company. When the message is ineffective or poorly drafted. And when the choice of media is poor.

A hard-and-fast rule in our trade about the critical nature of marketing is: Those who market, win; those who don’t, lose. Your competitors hope you don’t read this. 

Mark L. Venit, MBA, is president of Apparel Graphics Institute Ltd., Ocean Pines, Md., which provides management and marketing consulting and proprietary research to apparel graphics companies throughout the Americas and Europe. He also is the chairman of ShopWorks Software LLC, a provider of industry-specific business software. Venit teaches pricing, strategic marketing, salesmanship and other business management topics at the Imprinted Sportswear Shows. You can reach him at markvenit@cs.com.