We give ourselves too much credit

Yesterday I posted how we don't give our customers enough credit. That we underestimate the role our brand plays in their lives. This should not be confused with the other side of the equation. That is - that we over estimate the role our products play in the lives of our customers.

We love the products we make. We're pretty sure that everyone else who uses them feels the same. Unfortunately, there are a few problems with this.
1) We are all very poor judges of what other people think is important (don't pretend otherwise).
2) Our competitors love the products they make, and think everyone else feels the same way.
3) Our shared customer base is not buying your product. They are buying the product that fits them at that particular moment in time. To them it's not so much a choice, as social availability: its what I want at this time and it fits my current standards.

When we focus on our product our messaging changes to focus on immediacy, exploiting the weakness of the old or building a mountain of value around what is shiny and new. This increases sales by nudging consumers into a state of inadequacy. What used to pass as 'great' drops down in their standards to 'useless'. We shift their focus to filling that void with our new product. Unfortunately, this focus does nothing to build trust in a consumer base. It does nothing to stand out from our competitors. It fails to be truly different.

This may sound crazy, but people tend to enjoy feeling confident. They enjoy being praised for their decisions or comforted by their peers. The role your product plays in their lives is only as good as the narrow promise that product can make to them. Chances are, someone else's product can make a comparable promise (I mean comparable in the mind of your consumer - yes, I know your product is different, holds more value, blah, blah, blah). Shift that focus to your brand - as my last post describes - and you change the game to a relationship strategy over a product strategy. One where whoever has the most fans wins.

Of course to do this, you require significant confidence in what you are selling. Your product needs to be great. Your people need to be better. Every measure of consumer interaction has to be held to that brand promise. In the long run, this strategy will win. In the short run, you'll definitly piss off at least a couple of sales and product managers - but it will be worth it.

The sky doesn't fall - we just stop holding it up.

I was spoke to an MBA class last week on alternative media. I followed a colleague from CBS Outdoor - one of two major billboard companies in Canada. He mentioned how his industry, after years of profits and promising growth, had a major crisis after legislation was passed that banned the advertisement of tobacco. It turns out the tobacco industry loved outdoor advertising. They booked all the space they could get. It must have been great to sell this stuff back then - inflated demand due to a client not bound by price or consiense. But this all came crashing down. It hit the billboard companies hard. The industry was so busy focusing on its current success that it didn't foresee the possibility of change. They should have learned a hard lesson from the tobacco crisis: they're not in the billboard business, they're in the ad delivery business. I wonder if they have considered the trend arising from Sao Paulo, Brazil - where in 2007 the city banned outdoor advertising.

The tobacco crisis caused a change in the industry. It could be argued that this change should have occurred prior to the crisis. Didn't anyone notice all the advertising eggs were in one basket? You can't blame them - this is the way most industries think. Case in point: the newspaper industry.

The newspaper industry is in crisis as more readers go online and more advertising dollars go with them. Papers across the continent are disappearing. It started with the top heavy publications and has trickled to the local level. Newspaper journalists and lobbyists are scraping for solutions. Most are way off the mark. They continue to look at ways to bring the newspaper industry back to where it was. This can't happen. The world is not what it was. Time to think different. Take a step back from the tangible product you deliver and look at what value you provide. The value this industry has provided is not built in the actual newpaper. The value is in trusted local news delivery. The problem is that a decade ago would have been the time to recognize this, now millions of bloggers and online communities make it their daily mission to deliver trusted local news.

These two examples of industries blinded by success bring me back to a story I heard years ago. If we go back a couple of decades the rail industry is the legacy example of industries failing to understand their business. The rail industry was booming when it began. It moved people, food, products, and mobilized industries across the continent. Then the Wright brothers had to screw it all up. The introduction of commercial and consumer flight cannibalized the stronghold that the rail industry had on market share. Rail companies scrambled. Doom and gloom filled board rooms and rail yards. They have survived, but have not recovered to the silver lining of those early days. Maybe disaster could have been diverted. Just like CBS is in the ad delivery business and newspapers are in the trusted local news delivery business, the railroad was never in the rail business -it was in the transportation industry.

In hind sight it is easy to see the lost opportunity. But what opportunity are you missing because you're too focused on what you’ve always done (who cares that you are successful). What problems will your industry face because it continues to define it's value based on what last years profit told it.

You don't need to be in business for 30 years to understand that there is a great chance that tomorrow won't be like today - so why do we act/market/advertise/plan that way?

Restaurants, Rock, and Hair Cuts

Montreal's Taverne Crescent just swiped a page from London's Little Bay restaurants on how to market during a recession. Actually, I think it could be just 'how to market to the people you want as customers'. If you haven't heard the back story it goes like this:

Last week Taverne Crescent decided to introduce a pay-what-you-want menu. The idea was to increase traffic, take the pressure off the dining experience and serve customers who'll have a better chance at arriving and leaving happy. Plus, they'll get a little buzz on the side (like this, this and this).

London's Little Bay is a case study with some some success - 10,000 patrons and featured news stories for weeks. The trend in pay-what-you-want menu's has spread to dozens of restaurants around the world.

You can't help but read these stories and think of two thing: Radiohead and Nine Inch Nails. Both bands have generated their own amount of buzz for the pay-what-you-want model. Radiohead offered their album for a pay-what-you-want (more than $2), and Trent Reznor from NIN promoted Saul Williams' album as free or $5 (depending on quality). In a time when a $16 CD trickles about $1.60 to the artist, Saul Williams managed to sell about 30,000 copies to pocket $141,610 (over twice the revenue). Radiohead had massive success with Rainbows. They sold more records, merchandise and concert tickets then they did in the previous three albums.

When you have a band, restaurant or business that is comfortable enough to open up the price you've found the sweet spot in marketing.

Think about it.

How much would you pay for your telephone? For your car? For those brand name shoes? For a haircut? You might think your $30 haircut is worth $10 (but you still paid $30). You may spend $2500 on a huge TV, and feel that the buying experience was only worth $900. Would a consumer ever really choose to pay $2.99? Or would they just round it up to $3 (or down to $2).

This isn't about being cheap - it's about assigning true value to what we buy and more importantly what we sell. As marketers we love to assign "value" to the things we advertise. I use quotes, because "value" is one of those words that is plastered in every marketers vocabulary- without "value" your boss will probably be pissed. Everyone you market to only has a finite amount of money to spend. In most cases, no matter what you charge, they won't go beyond what they have to spend. Instead of pricing out what you need to make from a product, determine what it would actually be worth. Don't look through the corporate beer goggles of your brand - look at it as a regular consumer. What would someone pay you for your product if they could pay whatever they want?

This would change the game a bit wouldn't it? You'd probably change who you market to and how you talk to them?

I think this would help answer a lot of questions about why last quarters sales were down, why that last product was a bust, or what is wrong with our current strategy (for most of us it has nothing to do with the economy). Is what I'm marketing useful and is it worth it?

New is not always better

Improved is not always better either. As companies we often try to quickly improve on what we previously sold or serviced. The lure of doing a new product launch, the temptation to ignore the dismal sales of the old product, and hearing our new and improved product excitedly discussed within our company in a sort of messiah tone is a great pat on the back. However, sometimes that new and improved product is the wrong answer. Sometimes what's new doesn't actually matter to the consumer.

There are a lot of reasons why this may be the case - a poor product, high competition, mixed messaging, no market, the crap economy - all the excuses we tell ourselves when something doesn't go as planned.

One of the biggest reasons stuff that is new, improved and offers 'more value' rarely takes off is that there is no scale. What is it better than? Is it better than something I even care about? If it's improved, what does that even mean? Does the improvement relate to me and how I use your product?

Roger Dooley wrote a great article in Neuromarketing about the need for consumers to be able to compare and relate. This is less about choice (which is often debated as a consumer purchase trigger) and more about scale. If I know that x service gives most of what I need and costs me y, and x2 service gives me all of what I need want and costs me y2, then I can make an 'educated' purchase that leaves me happy and comfortable. I've left educated in quotes as Martin Lindsrtom will quickly point out that we rarely make a purchase based on a cognitive decision making process.

Roger uses the case study of the The Economist, which was trying to sell combined print and online subscriptions. Here are the results:

Offer A:

$59 - Internet Only Subscription (68 chose)
$125 - Internet and Print Subscription (32 chose)

Predicted Revenue - $8,012

Offer B:

$59 - Internet Only Subscription (16 chose)
$125 - Print Only Subscription (0 chose)
$125 - Internet and Print Subscription (84 chose)

Predicted Revenue - $11,444

Crazy. No logical difference between offers. The only difference - Offer B gives me more information to judge my decision. Not just that, Offer B actually persuades me to spend more on what I want rather than what I need. Classic decoy marketing. Often misused and overlooked in advertising and product launch marketing.

Lesson Learned:

1. We focus too much on the story we want to tell and to little on the story the consumer wants to be told.
2. Consumers aren't logical, so don't market as if they are.
3. The success of a new product has far less to do with the new benefit, and for more to do with how that benefit relates to your consumers view of your existing benefits.
4. Usually the last thing on a marketer or product/service managers mind - sometimes targeting the low hanging fruit is just better. This is about raising the floor instead of just focusing on raising the ceiling.
   

You already know that it is easier to talk to someone you know over a stranger. Apply that to your marketing and you'll end up finding a new standard for value and something that's actually relevant to consumers.

The Marketing Decision

Let's say you run a company. You're stressed. Business is slowing. You have investors, employees and customers all wanting to know how you're going to lead them through this recession. You're also brave. You're going to stay the course. You're just going to keep doing what you've been doing for the last 10 years.

This pressure to stay the course can be crippling? Isn't doing what you've been doing one of the things that has helped you slip into this recession?

Who will be better off:
1) The company who increases their imprint into the consumer mind in this time of uncertainty
or
2) the company that disappears until we all have money to spend?

Need an example? Think of Post Cereals and Kellogg's. Before 1929 Post was the leading cereal retailer in North America. The recession hit. They needed to cut back. Stay the course, but eliminate frivolous spending like marketing, advertising and branding. Kellogg's did the opposite. The Kellogg's brand became a point of stability in homes across the continent. It became the household name. Then the market turned around. People became consumers again. Kellogg's is still winning 80 years later. If that's not enough, check out the story of Purina, La-Z-Boy, Texas Instruments, Motorola, or the launch of Kraft's Miracle Whip - all brands that broke through the market during the Depression.

Use your circumstances as an opportunity and the excuse for uncomfortable and seemingly irrational change. Remember that the ideas that succeed wildly are the ones the experts deem to fail.

“The concept is interesting… but to earn better than a ‘C,’ the idea must be feasible.” ~Yale professor on conceptual paper that became FedEx.

Marketing During a Recession

The auto industry is a mess. The world is diving into a recession. Consumer sentiment is weary as people continue to cut spending. In this context would you change your marketing strategy? Would you innovate or cut costs?

For a quick lesson on Marketing During a Recession let's compare two companies from one of the guilty industries in this mess - the auto industry.

Situation 1:

The Local Name: Your the local market player. You've been around for years and you employ 8 million local people. This recession is starting to impact your ability to cope with the boat load of debt that has been accumulating over the last 10 years.

The Strategy: You need financial assistance - so you go look for handouts. In the meantime, you continue to advertise cheap financing. Consumers love cheap financing. It sells cars. Also, let's not forget about low, low, low prices. Consumers do love low prices. Other than that, you might put out a television ad promoting a tough truck that growls and climbs mountains (don't forget low financing).

The Result: For decades you've been losing market share. For decades you've made excuses on the reason why. Your consumer strategy hasn't changed. If you continue to market the same thing, in the same way, to the same people, why would you expect a different result? This is the simplest response, for a problem that plagues the majority of companies with history. Probably even yours.

Situation 2

The Import: Your a foreign player. Unlike the other 'foreign models' in the market, you're not considered a leader in luxury or quality. Your like the Nissan of the 1970's. Some people don't trust you but you're growing very fast.

Strategy: You know that in this tough economic time, people need to feel assured. Consumers want to know that the brands they deal with really represent people who have their best interest in mind - not an anonymous shareholder. So you talk to your consumer. You reassure them that your business is built on their loyalty. You improve the quality of your product, and even increase the pricing to match the value. Then you make that first gesture that says "we want your trust" (notice it doesn't say "sale").

The Result: You'd be Hyundai. You'd have just launched the Hyundai Assurance campaign - promising U.S consumers that you are there for them, even in these uncertain times. If they give you their trust and buy your car and suddenly find themselves without a job - you'll let them return it. While your competitors are blaming their problems on the people, you are building a generation of fans.

Gaining trust, speaking to your fan base and moving quickly to reassure all consumers is just good marketing. It just looks better in a recession because most companies cut costs and point fingers.