The Precious Few

I once sat down with an energetic, younger chiropractor who was anxious to grow his practice. I asked how he brought in clients, and he showed me an impressive list of about 20 marketing activities. Even better, he tracked the exact percentage of client visits that came from each source. He knew what percentage came from referrals, print ads, radio ads and so forth. This was a businessman who took his marketing seriously.

As you might expect, more than 80% of his office visits came from the top 3 or 4 sources, which included repeat visits from existing clients, client referrals and the office sign that was posted on a busy boulevard. He asked for my impression of his overall marketing effort. I suggested the smartest thing he could do is focus. If radio ads brought in only 0.8% of client visits, why bother? Spend that money instead on one of the top 4 activities that clearly are working and bringing in many clients. For instance, institute a referral program to encourage more of it. Call on clients that have not visited in a while and find out why. In other words, focus your resources on the precious few activities that yield the best return on investment.

By the doubtful expression on his face, I don't think he liked the idea for fear of losing potential clients from the other sources. But a better question might have been how many clients was he losing by not focusing on the most profitable activities? By way of analogy, if a person could put money in a bank account that yielded 5% interest or another with 20%, which is better?

In a previous post, I wrote about focusing on the precious few (a.k.a. the 80/20 rule or Pareto principle). This idea applies to marketing, yes, but also to business and life in general. What a relief that we don't have do to everything! Life is already busy and complicated. It is enough to focus on the precious few things that really make the difference.

To a Bright and Great 2008

'Tis the season when winter's coolness fully arrives, the days are short and everyone looks to the holidays for a little warmth and cheer. It is also the time when we look back wistfully at the passing of another year. Wow, there it is and there it went! The changing of the calendar year feels significant, like a bell tower that rings out the grander cadence of life.

But this is also the time to look forward to the year ahead. Some like to make plans and New Year's resolutions. More power to them! Others like myself just want to put on sunglasses as we face forward, because it's going to be a bright 2008. Have a truly great new year!

Marketing on the Razor's Edge

While at the grocery store, I tried to find a general-purpose toothpaste, a box that said something like "Regular Mint Toothpaste." But there was nothing like that on the shelf. All the toothpastes were specialized! Each had a label proclaiming some unique benefit:

• Extra Whitening
• Luminous
• Breath Strips
• Tartar Control
• Anti Cavity
• Pro Health
• Sensitive

The Crest brand alone had umpteen different varieties. Then it occurred to me that the toothpaste manufacturers understand an important marketing concept:

The more focused and specific a value proposition, the better chance of selling.

By offering a variety of specialized formulations, the manufacturers sell more product in the end. While all customers want to brush their teeth, some also think, "I wish my teeth were whiter," or, "My breath could be fresher." They get hooked by these special formulations, and the sales add up. Now it appears the manufacturers don't even bother to offer a general-purpose toothpaste. It might require more work and cost to market so many varieties, but the strategy works.

I find the temptation is to think, "I want a catch-all product and message because I don't want to miss any customers." But actually the reverse is true: You will miss customers if your value proposition is not specific enough. It is not possible to be all things to all people, and the modern marketplace rewards specialization.

In short, meeting a specific need through a focused product and message is always an easier sell. Call it marketing on the razor's edge. Or in this case, the toothpaste's bottle.

P.S. Tip of the hat to Lance Teel at S1 for raising this issue with me recently.

Simplicity Is The New Sophistication - Part 2

As an illustration of simplicity, visit the web sites of Yahoo and Google. Both are Internet search engines with additional services like news, maps and e-mail. Their revenue comes from selling advertising for the millions of eyeballs attracted to their web sites. However, the look and feel of their home pages are very different:

• Yahoo has 3 advertisements, about 80 links and numerous graphics.
• Google has no advertisements, 17 tersely-labeled links and no graphics except their logo. It is mostly white space.

Which search engine is easier to understand and use? I think most people would say Google. Which attracts more Internet traffic? Google, many times over. If you look at its market cap (the total value of all Google's stock), it is $212 billion or 6 times more than Yahoo. Google is more successful than Yahoo, by any measure. A simple and clean presentation may not be the only reason, but it is clearly working for it.

Another example would be a car or home stereo compared to an Apple iPod. Both are music players. The stereo has a full panel of dials, buttons, knobs and levers, though most people do not bother to learn what all of them do. The iPod, on the other hand, features its trademark round disk with a button in the middle. It has pleasing lines and a minimalist, intuitive interface. The iPod has become a virtual fashion accessory. Here again, simplicity works.

In our modern, complex world, the challenge for all of us is to be simple - in our products, marketing and even way of life. Simplicity does not mean dumbing things down or making them boring. Not at all! You can have simplicity with color, excitement and pizzaz.

Simplicity is distilling ideas to their essence and portraying them in a clear, straightforward manner. It is being easy on the eyes, ears and mind. It is concentrated communication. No noise, clutter and frills. Simplicity is the new sophistication!

Simplicity Is The New Sophistication - Part 1

Have you ever walked down the street in New York City? It is breathtaking. Thousands of people walk along the widewalks, dressed and looking so differently and even speaking different languages. The wide boulevards are crammed with buses and taxi cabs. The air smells of exhaust, grime, food and perfume from passersby. All around you tall buildings touch the sky. Giant billboards displaying expensive watches and attractive models vie for your attention. Near Times Square, they mesmerize with blinking lights and glowing digital screens. It's Broadway, Wall Street, Greenwich Village, Chinatown, Little Italy! New York envelopes and draws you into its bigger-than-life. Nothing else is quite like it.

New York is also a metaphor for modern life. It is big, bold, complex, everywhere and overwhelming. You can't escape it - not for long - and it forces your total engagement.

In a New York City world, what kind of advertising stands out and captures people's attention? Is it the audacious, flashy, in-your-face billboards of Times Square, ever trying to outdo what came before? Perhaps. Many people think so and much marketing rolls down that noisy path. But let me ask you this: In an overstimulated and overwhelmed society, do people want more of the same? Or do they really crave the exact opposite of the New York City world? Something that settles and pulls them back into balance.

You can make a strong case for the latter - for advertising that is simple instead of complex and soothing instead of overbearing. Here is another way to put it: Simplicity is the new sophistication and serenity is the new excitement. If your products and marketing reflect these values, they will be different and stand out, and people will be drawn to them, like bees to honey, because they offer a welcome respite from the New York City world!

To Make a Point, Tell a Story

Think of one or two presentations you recently heard. What do you remember about them? Here are some things you probably do not remember: lists of bulleted items, flashy slides or catchphrases like "seamless" and "paradigm shift". Assuming you were awake, what you probably remember is a story. Maybe the presenter shared a personal experience or an interesting customer anecdote. Somehow that embedded in your mind and became what you took away.

Isn't it funny that the ways we are "supposed" to present (i.e. slides, bullets) no longer have the intended impact. Perhaps these tools have become cliche - worn out from overuse. But a good story never becomes cliche. People relate to stories. They connect with our life experiences.

So if you want to make a point, tell a story.

The 80/20 Rule Applies to Marketing

I am a big fan of efficiency. Not all the time, mind you. If I am hiking in the Sawtooth Mountains or having a drink with friends, I just want to enjoy the moment. But when it comes to solving a business problem, I want achieve it with as little time, effort and expense as possible. Life is too short to do otherwise.

That is why I like the 80/20 rule. Also known as the Pareto principle, this rule of thumb states that 80% of the outcome is due to 20% of the causes. It is one of those statistical patterns that generally holds true in life, whether you're talking about science, business, athletics or anything else. For instance, I bet 80% of your business revenue comes from 20% of your customers, plus or minus a few percent. Take a look - you'll see!

The 80/20 rule also means that a precious few marketing activities can have a major impact on your sales growth. You don't have to do everything, nor should you. Better to focus on those precious few - those 20% activities - that will yield the best return on your marketing investment. That is the most efficient solution to the challenge of marketing and business growth.

The question is - what are the precious few marketing activities for your business?

Drive Your Message Home

As depicted in this graphic, you can use the four vehicles of influence to drive your message home. By "home", I mean to your target audience. If you have a business, this might be a market segment or set of potential customers. It could be a community or organization if you are an advocate for a cause. It could be the whole country if you are running for president. Or it could be your spouse or a friend if you just want to change their mind about something. In other words, this is about influencing the world.

The previous two posts (here and here) described the four vehicles of influence: (1) experiences, (2) relationships, (3) stories and art and (4) facts and reason. All of them affect people's perceptions and behavior. When used effectively together, they are a powerful force indeed:

1. Fire on all cylinders - Engage all four vehicles in communicating your message. For instance, if you have the exclusive authorized Volkswagen auto repair shop for a city, you might include pictures of happy Jettas and Beetles in your ads (3), say how your services are trustworthy because of your authorized status (4), provide great services (1) and spend a few minutes getting to know your clients and talking "shop" when they visit (2). Now that is firing on all four cylinders!
   
   
2. Align message with vehicles - All four vehicles of influence should communicate the same message consistently. For instance, if a bakery advertises that it sells only moist, chewy bread baked fresh daily, but some loaves on the shelf are obviously old and stale, then the facts claimed (4) do not match the customer's experience (1). It would be better not to make the "baked-fresh" claim or not to sell day-old bread.
   
   
3. Take a balanced approach - If you are strong with some vehicles but less so with others, try to build up the weaker link. In looking at my own business, I think there are good marketing and educational materials (3 & 4), but I need to spend more time networking and getting to know people in the community (2). So I am focusing there.
   
   
4. Repeat - Communication is not a one-time event but a continuous process. It takes a steady flow of communication for people to "get" your message, accept it and remember it. So continue to engage all four vehicles. This is like an engine that fires on all four cylinders - again and again and again - propelling a car forward.
   

With these tactics in hand, you are ready to influence people and drive your message home!

EXPERIENCES Also Influence People

In the previous post, I discussed three modes and means of influencing people. The idea was to pinpoint the basic vehicles of influence. Well, I missed one: EXPERIENCE. Life experiences, especially very positive or negative ones, influence our perceptions and behavior greatly.

When I was about 8 years old, a sample bottle of Pert shampoo appeared in the mailbox. It was green and gooey and claimed to have shampoo and conditioner in one. I tried it (why not?) and liked it. It was better than whatever I was using at the time. So I continued to use Pert shampoo for the next 10 or 15 years - not because of what I read or heard about it, but because of the experience of the free sample. It left an impression and influenced my behavior.

So now we have a total of four modes and means of influencing people:

1) Experience
2) Relationships
3) Stories and art
4) Facts and reason

In the next post, I'll make practical suggestions about applying the four modes and means.

Three Modes and Means of Influencing People

What are the fundamental modes or means of influencing people? This question was on my mind this week, not only as a marketing question, but also as a life question. We all want to influence people - family, friends, co-workers, partners, customers, markets, the masses - to do something, to go somewhere, to not do something. How do we do it? What is the best way?

I came up with three basic vehicles of influence and ranked them in order of influence:

1) Relationships
2) Stories and art
3) Facts and reason

People we know have the most influence on us: father, mother, husband, wife, brother, sister, son, daughter, friend, colleague. If one of these people asked you do to something or gave a recommendation (assuming the relationship is generally good), you would seriously consider it, if only because of your relationship with that person. Relationships exert the most influence.

Stories and art move people, sometimes in profound ways. This is something I have come to appreciate much more in recent years, perhaps because of my handicap as an analytical/engineer type. Think of a great book, movie, song, speech, painting or vista that stirred emotions inside you and caused you to see something more clearly. Have you ever been to a concert where the music and showmanship swept the crowd into a frenzy, such as U2 or the Red Hot Chili Peppers? People talk about it for days and weeks afterward. Why? Because art moves people. Political and religious leaders understand this, and they tend to be some of the best storytellers around. The Bible itself is a collection of mostly stories, parables and poems. Some of the best pop art is found in advertising, because marketers know that art excites, engages and helps convince people to buy.

Facts and reason also influence people. Like Sergeant Friday doing a criminal investigation, we want "just the facts, ma'am." Our modern Western society likes to think of itself as purely rational and fact-driven, but I ranked facts and reason last among the three because I think relationships, stories and art carry more influence at the end of the day. We are, after all, still human.

Would you agree? Did I miss any modes and means of influence?

Look to the Large!

In a past job, I worked with a gentleman named Hans-Juergen who managed the company's sales and distribution office in Germany. He had a reputation for being strong-willed and getting into tussles with headquarters, but he was also a shrewd businessman, even inspiring at times. "Look to the large!" he once exclaimed in rough English at a meeting. I think he meant "see the big picture" or "don't miss the forest for the trees". This is good advice in marketing.

We tend to think a product is the widget that the customer takes off the shelf and buys, but it is much more. The "whole product" is everything a customer experiences when interacting with your business and owning a product. This includes the:

• Look, layout and cleanliness of the store
• Smile and pleasant demeanor of the sales person, or lack thereof
• Packaging
• Quality and reliability
  
• Price and terms
  
• Warranty policy and follow-on services
• Brand image as projected into the marketplace
• What other people say about your business (word of mouth)

These factors and more are part of the total customer experience. They affect how customers perceive your products and, ultimately, the sales and success of the business.

So if you want to offer a great whole product, take it from Hans-Juergen and look to the large!

Green Is Good

I attended an IBM conference and was amazed by how much they promoted the power efficiency of their computer systems. Yes, IBM has thoroughly embraced green computing. This is not a fad either – their enterprise customers are demanding it. Electricity costs for data centers have become so high that enterprises are actively looking for relief. Moreover, some data centers in metro areas are not able draw any more power from the grid because electric utilities have run out of capacity. To add new equipment they have to remove something else, lest they exceed their limit. So energy efficiency is now a practical necessity for computing.

The fact is we now live in the Green Era. Society, business and government are focusing more and more on reducing energy consumption and impact on the environment. And it does not matter if you are a skeptic about global warming or recycling. This mega-trend is well underway, and many factors drive it: rising oil prices, a desire to be energy-independent of dubious foreign regimes, alternative energy technologies, population growth, concern for global warming, appreciation for nature and a desire for cleaner air, water and land.

What does the Green Era have to do with marketing? Starting now, you have a window of opportunity to differentiate your products by going green. If you are a builder, you might get certified to build energy-efficient homes and tout it. If you drive a taxi, you could get a hybrid vehicle and paint an ad that asks, “Why ride yellow when you could go green?” And so on. Given the choice between two relatively equivalent products, consumers will increasingly pick the green one.

So remember that green is not just the color of the verdant earth – it is also the color of money. Green products save money by using less energy and resources. They also make money because people want them and will pay a premium. And they are good for the environment.

But the window of opportunity is not forever. Someday green will be normal and expected. It will be table stakes for having a decent, quality product. So do it while it is advantageous. Design for green, market green and live green!

Are Your Products Valuable or Cheap?

Would you rather advertise your products as valuable or cheap? This might sound like a trick question, but it raises an important point about how people perceive your products.

Consider these advertising messages:

"Labor Day Sale with 40% off select merchandise!"
"We have the lowest prices in town!"
"Act now and receive a 25% discount!"

They all emphasize how inexpensive the products are, in hope that more customers will come in for a good deal. This can be an effective way to generate more sales, but there is a risk in focusing too much on low price. Customers may come to see your products as cheap and not valuable.

Advertising trains people how to think about your products. If your primary advertising message is about how low the price is, how would people perceive your product? That it is a good deal, perhaps, but what else? Since low-priced products tend to have lower quality or fewer features, they might imply this is true about your product, even if it is not. Moreover, you are training customers to be motivated by its low price rather than its quality characteristics and the benefits it provides. If customers are not appreciating the quality, they are less apt to pay a fair price or to be loyal customers if someone else were to offer an even lower price.

As a coffee drinker and regular Starbucks customer for 10 years, I have never seen them offer a sale or discount on coffee drinks. They promote the quality and variety of coffee beans, always introducing new blends and specialty drinks. I don't go to Starbucks because it is the cheapest cup o' joe in town; I go because the coffee tastes good.

So it is better to advertise your products as valuable instead of cheap. Promote their quality characteristics and benefits, so customers buy for the right reasons, fully appreciate the product and are willing to pay a fair price. While it is okay mention affordability or low prices, don't make this the primary emphasis unless you have a true low-cost business model like Wal-Mart or JetBlue.

Be Unique. Be Specific.

We often see advertisements that proclaim the uniqueness of a product or service, such as:

"A dining experience unlike any other"
"The most unique photography"
"Retirement living redefined"

While I believe that being unique is a good thing, the problem with these ads is they stop there. They don't go on to answer the question, "In what way? How are you different?" They build anticipation without delivering the punchline. This leaves the audience sort of shrugging and wondering and unconvinced.

So by all means tell people how your business is unique. In fact, the tagline for Apropos is: "Be distinct. Be original. Be apropos." But perhaps we should add one more to the list: "Be specific." In that spirit, here are some ideas for completing the aforementioned ads:

"A dining experience unlike any other - gourmet French cuisine that is casual and affordable"
"The most unique photography - individual and family photos in natural, outdoor settings"
"Retirement living redefined - around an active lifestyle with golf, social events and travel"

Marketing Is About Them

Many think that marketing is about tooting your horn, showing off and strutting your stuff. "Look at me. I'm the best!" I would disagree. Good marketing is about "them" - the people you want to reach, your target market, potential customers and clients. It starts with putting yourself in their shoes and, in your mind, turning to face your business. What needs and wants do they have? How can your business meet them? What about your business is unique and valuable to them? Find a way to express the answers to these questions so that it resonates with your audience. Then get this message to them, over and over, until they are familiar with your business and start becoming customers. And before you know it, you are marketing with the best of them!

Listen and Play What's Not There

In my first semester at Babson College, all students were required to perform an original, creative work at a talent show attended by everyone. The purpose was to push us linear, type-A MBA students out of our element and teach us to think creatively and outside the box. Students were assigned to areas like acting, poetry and story writing. I was assigned to music, much to my dismay since I am musically illiterate.

We "musicians" then attended a class taught by a colorful man who wore a beret and no shoes. He said he enjoyed traveling to India to learn their style of music, and that he did not own a car so he rented one to drive to the class. The instructor proceeded to hand out our musical instruments, which consisted of simple, home-made contraptions that strummed or clacked or gonged. After some discussion, he gave us instructions for a group musical performance: "Listen and play what's not there." Then he turned out the lights.

At first there was silence in the room. Then someone played a note. Another followed and still more, until the room came to life with a variety of sounds that ebbed and flowed in rhythms that someone later described as "tribal". The music built slowly to a crescendo, died down, then built up again. It was a strange and enlightening experience. There was no structure, but somehow a coherent form of improvisational music emerged from a roomful of non-musicians sitting in the dark.

All we did was listen and play what's not there. As it turns out, this is good advice for marketing. It describes how to find an original, distinct voice that will stand out in a crowded market and be relevant. Come to think of it, this little instruction is also great advice for life!