I use the word “first” because I’m sure there are other cardinal sins that marketers commit, but at the moment I want to focus on one that is particularly egregious. So what’s the first cardinal sin of marketing?

The first, and arguably most outrageous, cardinal sin of marketing is to sacrifice long-term objectives in order to achieve higher than usual short-term profits.

A good example of this sin would be the recent mortgage meltdown in the financial sector; to quote the Harvard Business Review for a moment:

Arkadi Kuhlmann, ING Direct’s founder and CEO, is one of the most creative business leaders I’ve ever met. But he was able to distinguish between get-rich-quick industry fads and real innovation. “Every person who tries to do real innovation is going to be tempted by money, greed, acceptance, being in the middle of the action,” Kuhlmann says. “But at the core there is one fundamental difference: I know why I’m here. I want to make a difference. If I was into this just for making money, being a big accepted banker, I would have been tempted. But that’s not why I’m here. I am trying to build something that changes the business, that allows me to stay on the right side of the discussion.”

In HBR’s “Why the Mortgage Meltdown Hasn’t Burned These ‘Square’ Lenders” Mr. Taylor enumerates a list of lenders and major financial institutions who were not tempted with the promise of a quick buck, Mr. Kuhlmann of ING Direct being one example.

These “square” lenders are not getting burned by the current mortgage meltdown because they didn’t deviate from their core mission and stuck with their long-term objectives. Sure, these institutions may not have enjoyed the record profits of 2005-2007 like Bear Stearns and Lehman Brothers did, but foregoing those three years of great profits followed by the most infamous spree of financial bankruptcy since the savings and loans crisis seems like a good idea in hindsight, doesn’t it?

The Two Consequences of the First Cardinal Sin

There are two things that can happen to a business when it commits this first cardinal sin of marketing:

1. A company that commits this sin can permanently damage the trust between itself and its customers by deviating from its promises. This makes it increasingly more difficult to acquire new customers and retain old ones.
2. A company that commits this sin can find itself jumping with both feet into a market environment that it doesn’t completely understand. This can ultimately lead a company into a situation where costs begin to overrun expectations and in some instances, revenue.

The second of these two consequences has afflicted the financial sector first. Major financial institutions, like Lehman Brothers, jumped feet first into the sub-prime mortgage market and made a risky gamble based on a flimsy assumption: that the average retail value of homes in the United States would remain above $250,000. The assumption held up for three years and Lehman Brothers had great financial postings during that span of time, but as soon as the housing bubble burst and the average price of housing fell below the assumed level these institutions became insolvent.

As a result of this failure, these same financial institutions subsequently incurred the other consequence of this cardinal sin: the customers no longer trust the firm. Do you think that high-net worth individuals who had millions stashed away in financial instruments owned by the Lehman Brothers are going to reinvest back into that organization even if Lehman restructures following its bankruptcy filing? Hell no.

So let this be a lesson to all marketers out there, regardless of industry: never sacrifice your long-term objectives in favor of short-term profits. It’s not worth it.

If you enjoyed this post, make sure you subscribe to my RSS feed!