Archives for the month of: August, 2012

There are two well established and universally accepted business-level strategies: cost leadership and product differentiation. Cost leadership lets you compete on price while still maintaining above average profitability (compared to your peers), and product differentiation lets you compete on benefits (personal utility) that purchasers will gladly pay more money for.

Think dish washing liquid vs. Rolex watches. Both compete in industries that address broad audiences, but Palmolive does not position itself as a luxury solution, and Rolex, even though it’s “just” at watch, does not position itself as a mass market product.

Price isn’t so much the driving factor—although income strata do play a big role—as needs and desires are.

Maslow's Hierarchy of Needs

Copyright Wikipedia

Mapping these products against Maslow’s hierarchy of needs (above), Palmolive sits between Physiological and Safety (eating off clean dishes means you won’t die from food poisoning, but also your neighbors won’t be impressed that you have clean dishes), and a Rolex watch is nestled in between Esteem and Self-actualization (any watch will tell time just as well, but this one reminds you and the people around you that you are awesome).

These strategies are not mutually exclusive; every company strives for cost efficiencies, differentiation, and market leadership of some sort. But either strategy requires markedly different organizational, operational, and marketing execution, which is why a company must decide how it wants to compete, what it wants to be when it grows up.

But what about the middle of the pyramid? How can you compete there when it’s generally assumed that if you don’t lead in cost or differentiation that you can at best earn average profits? There is a third strategy: Most Bang for the Buck (MoBaBu!). MoBaBu lets you cover the Safety-Love/belonging-Esteem spectrum.

Sure, Rolex might provide more bang for the buck when compared to Urwerk, a pretty good $75,000 watch (sorry, I haven’t done my homework on surfactants in dish detergents). But that’s not the point. There are broad categories where companies have established MoBaBu leadership. Hyundai in automobiles for example—they may only be 95% as good as Toyota or Honda in fit, finish, and performance, but at a lower cost and with a lot more features. You definitely get more for your $.

Come to think of it, that’s what Consumer Reports “Recommended” rating is all about.

MoBaBu isn’t just a mishmash of cost and differentiation strategies. It does require both elements, but most importantly MoBaBu requires customer insights, market foresight, and true leadership: a corporate culture of empowerment that creates and rewards engaged employees who communicate upward what they think the market can really benefit from.

MoBaBu shoppers are not on the cutting edge, but they sure can do simple value math, and retire comfortably because even though in their minds they never truly sacrifice, they still are thrifty. Marketers are well advised to engineer for this savvy subculture that has great spending power and is experiencing recession fatigue.

Is your organization structured to exploit this opportunity?

“Automation” carries many promises, all of which somehow revolve around efficiency (even accuracy is a measure of efficiency). Do more with less; do it better, faster, cheaper. Everyone wins! Marketing automation is just such a marvel—it’s the fire-and-forget weapon du jour. A very good one, but not without its pitfalls.

Marketing automation specifically refers to email marketing automation, as well as collecting the data and metadata this generates. Marketers get to script and automate an entire campaign, with full branching, which then unfolds as responses and non-responses occur. The promise is that human resources can then be deployed less toward lead nurturing, and more toward lead conversion.

Here are two recent marketing automation examples:

1) I recently made a reservation at a Westin hotel. I like that chain, the rooms are large and beds are nice. Several days prior to my stay I received an email requesting that I please respond with my estimated time of arrival. I responded saying I expect to arrive between 4-6 PM. Two days later I receive the exact same email with the same request.

2) My friend Ronald purchased an item from IKEA, but the box was missing a key component to finish assembly. He reached out to customer service via email, detailing his purchase (including a copy of the receipt), and asked to be sent the missing part. The response email thanked him for his job inquiry—he never applied for a job, he just wants his bookcase to stand up.

Marketing automation did exactly what it promised it would do: it made people at the Westin and IKEA more efficient because they could focus on onsite issues while the computer managed offsite issues.

Marketing automation also did the exact opposite to us recipients—it made us less efficient, made us mad, and endeared us less to brands we like to champion.

Lesson to marketers: Test, test, test. Monitor, monitor, monitor. And don’t waste my time.

Yesterday: It’s not what you know, it’s who you know.

Today: It’s not who you know, it’s who knows you.

Tomorrow: It’s not who knows you, it’s who knows you better than you know yourself?

Myth has it that one of the keys to business success is having a great elevator pitch. The Harvard Business Review just published a blog post on this: “Win the Business with this Elevator Pitch“.

You won’t.

It’s not that the guidance is poor as far as sales pitches go. But you won’t be selling anything on elevators. You can’t. And you shouldn’t try! A sales pitch requires that you’ve done your homework on the person you are pitching to (just like in baseball), otherwise you’ll just be spouting generic MBA-speak drivel. When everybody’s needs and motivations are unique, can you honestly be well-enough prepared to give the contextually appropriate pitch to each person you’d like to sell something to just in case you meet on an elevator? How many pitches will you need? A hundred? A thousand?

Don’t sell. Instead, elicit curiosity, then create a hero.

You don’t need an elevator pitch, you need an elevator speech (an elevator value proposition in MBA-speak) that will keep the other person thinking of you long after you’ve parted ways. For that to happen you need credibility (inherent authority), empathy (the ability to meaningfully relate), and then a mind-blowing value proposition.

The Goal (North River Press) by Eliyahu Goldratt, gives just such guidance, I just don’t think it was envisioned to be used on elevators. On the very last page, Dr. Goldratt proposes some very simple and infinitely powerful management advice. All you need to do to properly manage is ask three questions:

  1. What to change?
  2. What to change to?
  3. How to cause the change?

In other words:

  1. Identify the problem. (root cause)
  2. Propose a preferred outcome.
  3. Implement a solution.

And that’s your elevator speech. And you only have 15 seconds to deliver it—five seconds per paragraph. Back to credibility, empathy, and value. They map perfectly to problem, desired outcome, and solution.

  • Introduce yourself by name. Don’t use your title or company name, else the shields go right up because the person you’re talking to will immediately know you’re about to “pitch” something. (Sale lost.)
  • Establish credibility immediately by referencing a shared experience—event, person you know in common—that can establish you as a trusted resource, or by asking a question that you know affects the industry and causes pain, which positions you as an expert. You do this to be permitted the next step. (Else, no credibility, no next step.)
  • Reference others that have solved that problem. (Expertise.)
  • Instead of blurting out a solution, list the benefits others are realizing from this solution. Cite a statistic or figure that surpasses the industry benchmark for average performance. (Must not be about money, but must translate into money.)
  • Let your audience know you can help them achieve the same benefits (and make them a hero in the process).

Good sales people and solutions make their customers heroes. Bad sales people only care about themselves.

The premise of Angie’s List is extremely appealing: accurate reviews that you can trust, because reviewers pay to participate. This simple reversal of the usual relationship—where the vendor pays to participate, but users can post for free—significantly cuts down on fraud, or should.

My wife has been subscribing to Angie’s list for about six to nine months now. She has sourced many contractors to provide quotes, and has selected quite a few of them for regularly recurring engagements.

The relationship is fantastic until the time comes for the contractor to actually perform the job. Each one has either performed poorly, or not at all. Examples of failure include doing a job not in keeping with the quality promised; not returning for work after a schedule had been agreed to; or repeatedly missing the same first rescheduled appointment (because the contractor keeps not showing).

One contractor showed up on time, but had forgotten he’d already agreed to the job. He showed because he thought he was coming over to give an estimate instead of doing the actual work, after he’d already been by the week prior to give an estimate where he was awarded the job.

So far the failure rate is 100%. How can that happen, considering that real people are posting about real experiences with these businesses?

My wife and I theorize that that these businesses have become too successful too quickly. We make this assumption because many of the contractors have told us that most of their business now comes from Angie’s List. They actually make a point of telling us this to communicate “social proof,” to imply that it’s safe to buy because a lot of people have chosen this service and are very satisfied with it.

We are guessing that most haven’t yet learned to say “no” when they can no longer perform their jobs at their usual high quality. They like the money, but they can’t seem to grasp the importance of customer satisfaction—weird, when considering that their businesses grew because of customer satisfaction.

And that’s a real problem everywhere: thinking the sale is over when contracts are signed, and as a result putting growth ahead of customer satisfaction.

Last week CMS Wire ran a webinar called “Rethinking Web Engagement – Leading with Content Marketing.” On the broadcast Robert Rose showed a revised shape of the sales funnel; not funnel- but hourglass shaped.

Rober Rose Sales Funnel

Copyright 2012 Robert Rose

To readers of this blog, the concept that the sale is not complete and the brand in jeopardy until the customer is satisfied, is not new. But the visualization is a wonderful reinforcement and reminder that customers are our least plentiful asset. And they are the fulcrum around which our businesses revolve.

Word of mouth marketing is still the most powerful marketing out there, and that’s what Angie’s List is monetizing for itself. But Angie’s List seems to be misunderstood by contractors for preselling customer satisfaction, instead of reselling customer satisfaction ratings.

You can buy customers, but no business can buy customer satisfaction; you have to create it (and maintain it).

%d bloggers like this: