Archives for category: Marketing

In the most recent issue of the Journal of Brand Strategy, Casey Jones and Daniel Bonevac, both of BriefLogic, claim to have come up with a clear, irrefutable formula for how to define a brand:

Brand = Category + Differences

I pretty much disagree. This not only implies, but the authors state outright that a company can create and own a brand. You can read about the reasons for my disagreement in my previous posts on this topic: You Don’t Have a Brand and The Successful Brand Steward.

While they wholly missed the truth, they also didn’t miss by much. Here’s my fix:

Identity = Category + Differences

That’s a winner! Knowing who you are and how you compare is huge. This is the basis for a dialog with prospects and customers. Now you just need to work on your corporate culture.

You’re welcome.

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A brand―a trusted solution that meets the expected psychological and utility needs of the purchaser―is an important competitive differentiator. Having a brand means one’s product or service is chosen more frequently over similar solutions, and one can command a price premium, which results in greater profitability.

A brand, however, is not owned by the company that manages it—it’s the intellectual property, including service marks and trademarks behind the brand that are. Instead, the consumer who experiences the product or service elevates it to brand status, thus exercising “ownership.” [See previous post, “You Don’t Have a Brand.”]

What makes a brand, then, is the implied agreement by the consumer that the product or service delivers the desired experience repeatedly, so that switching to another solution is not a consideration (unless under duress). A brand is a primary choice, and often a secondary choice may not even exist.

To be considered a brand, a wide adoption must be in place in the target market; a brand is a social experience validated by other consumers. The market for the product or service does not need to be large—luxury markets are narrow segments of the population—but the penetration should be significant and profitable.

If the customer loses faith in the brand’s ability to deliver the expected or promised experience, and he/she instead begins to choose another solution repeatedly, then the original solution has lost brand status. If this happens on a large scale with an incumbent customer base, then the product as a whole loses brand status, suffers market share losses, and cannot maintain its pricing, for it has not maintained its promises and differentiation.

This risk is what makes a brand not just an intangible but an ephemeral asset, and therefore necessitates constant vigilance in brand protection measures.

The Brand Steward: A Definition

If the owner of the brand is the consumer, what is the company that owns the intellectual property? It is the “brand steward.” Although the company originated the product, its success was created by the purchaser. Certainly, a company must take great care to foster an environment that will give the product the greatest chance of success at brand status, but there is no guarantee of success, only preparedness.

The brand steward is thus entrusted with caring for an asset that is highly valued by a sizable consumer community, which wishes for the product to continue to deliver the same, or better, benefits. However, this steward is not a person—even though there are “brand managers”—it is the entire organization behind the product or service.

This organization is made up of various departments—executive leadership, R&D, manufacturing, sales, marketing, customer care—that must work together to continuously meet the promises offered by the product, and the expectations these promises have created within the customer.

Because brands are ephemeral, the entire organization is tasked with keeping the product alive and relevant within the expectations set by customers, so that the product will continue to be a primary choice for the longest time possible. Sales, marketing, and customer care interface directly with the customer on a regular basis, making these departments particularly responsible for carrying out careful brand stewardship activities. But R&D and executive leadership are equally important, as their work affects the direction of a product or service to which customers have attached brand status.

The customer may not always be right, but the customer can always damage the brand. As a consequence, the company stewarding the brand should make every reasonable effort to prevent a lasting poor impression in case of a brand experience failure by a customer. Further, the company should leverage failure into an opportunity that causes the affected customer to praise the company and its product to others. This is how brands are maintained.

Ultimately, not one person but the entire culture of a company stewards a brand.

Stewardship Roadmap

To innovate and keep a brand alive, a company must regularly engage in market research to learn how its product performs against customer expectations, and also to learn what additional value the customer would like to receive. These findings must then be tested against the brand’s ideals (its mission/mantra), compared against competitors’ existing capabilities, and validated for market acceptance within the incumbent customer base.

Sometimes the customer does not want change (“New Coke”), but customers often value continuous improvement, as long as these improvements are in keeping with the brand’s ideals and differentiating factors (iPhone 5)—the reason for why the product or service was chosen in the first place.

Sameness does not a brand make. Think evolutionary, not revolutionary.

Thus, in addition to collecting meaningful customer insights, a company must (1) have a framework against which to evaluate potential product changes, (2) the know-how to make those changes in accordance with customers’ wishes, and (3) the ability to communicate and support these changes. This entire process is called brand stewardship.

(1) The Positioning Journey

When the marketing department (often the customer/consumer insights division) has observed or learned of a new benefit the customer would like to receive from an existing product or service, the typical next step would be to test the possibility of adding this value (a feature) and costing out this process, including its effect on final price.

However, the first step should be an analysis of how this additional utility affects the perception of the brand. Just because someone has requested something, or a competitor has added a feature to its product, does not necessarily provide good enough reason to incorporate the same change into one’s own product. Parameters must exist against which the viability of an idea can be tested against brand perception

To do this, a company must understand itself, its product, and the competitive landscape. In case these analyses have not been performed in the past, basic strategy tools exist to help produce the answers to each of these questions. With these answers, the company can very clearly define the positioning of its product, enabling it to compete effectively, and better evaluate future product innovation and feature requests.

Positioning

In combination, SWOT, VRIO, and Five Forces analyses help a brand steward figure out (1) what the company itself is capable of, (2) how the product or service is presently positioned, and (3) what competitive forces the company is facing. These basic insights are critical to helping the company create the correct positioning and customer expectations that can help elevate a product to brand status, or maintain an already earned brand status.

Positioning is more than just deciding to produce a luxury or a mass-market product or service. The company must envision its customers and figure out why they would be attracted to the product. This is the most difficult step, because it involves making long-term strategic decisions that affect customer adoption and competitive positioning.

While the consumer will ultimately decide the positioning, value, and utility of the product that can lead to brand status, the company needs to get its initial positioning right―it must define the core essence of its offering to which a self-selecting audience will be attracted.

Positioning is not necessarily permanent, but it must be impactful the first time to permit future adjustments. Apple Computer did not start out as the world’s largest digital music retailer, but its original positioning as a computer design and manufacturing company which understood the wider implications of “personal” computing, enabled it to successfully transition the Apple brand into new markets, with even greater brand equity as a result.

Analyzing the Company: SWOT

A SWOT analysis is probably the most commonly used strategy tool, and examines the overall ability of a business. It asks the following questions of the company:

  • Strengths: What do we do well?
  • Weaknesses: What do we do poorly?
  • Opportunities: What can we exploit?
  • Threat: What external threats do we face?

The analysis process should include members from the aforementioned departments in order to get a wide variety and inputs to help create a complete picture. If necessary, an external facilitator should manage this process to keep potentially strong political forces at bay and to assist in collecting all valuable input.

First, the company needs to look inward and review its own strengths and weaknesses. What is the company good at, what are its core competencies? The answer can include any number of things, such as design, customer service, and patents. Where does the company underperform and how might those areas jeopardize the idea’s success? Again, any number of things can be identified, such as project management, distribution, and key employee retention.

Next, examining opportunities and threats takes into account external factors over which the company has little or no control. What opportunities can the company’s strengths create for the idea? Is its marketing better than that of its competitors? Does it have a more resilient supply chain with less country risk or pricing volatility? And what threats do its weaknesses expose it to? Does it have poor distribution that would keep it from rapid market penetration? Or does it lack the ability to scale customer service? Are some competitors simply better at some things, which could put the company at a market disadvantage?

The more precise and quantifiable the SWOT analysis, the more valuable its information and results will be for long-term strategy planning. Knowing one’s own strengths and weaknesses, as well as the external opportunities and threats that these strengths and weaknesses can exploit or create, is critical to successful product planning and potential brand success.

Analyzing the Product: VRIO

A VRIO analysis is not performed on the company (that’s what SWOT does) but on its inputs or outputs. VRIO is used to analyze the proposed service or product, or the requested change.

  • Is the product Valuable? Does it help meet a threat or exploit an opportunity?
  • Is the product Rare? Is it not already a widely available solution?
  • Is the product (in)Imitable? Is it difficult to copy or easy to defend?
  • Is the company Organized? Can it readily exploit the product and repeatedly deliver on all of its promises?

The obvious answer is that the more valuable, rare, and difficult to copy the product or service idea is, the more advantaged the competitive positioning will be. This is critical in evaluating any proposed change. How would such a change affect the value, rarity, or imitability of the product or service? Does it lead to homogeneity, or does it create further differentiation, driving VRI?

Any successful/profitable product will ultimately cause others to enter that market. The most difficult thing to copy, however, is not a product or a service, but the execution of that, which itself is driven by the corporate culture behind it. How well a company is able to defend its output over time is therefore a matter of how operationally well it executes—how well organized the company is, and how well it communicates internally.

The better organized a company is, the more difficult it is to imitate its success, and the better protected the brand is.

A baseline VRIO analysis needs to be crated first, so that any new product or service idea can be evaluated in context. If the new/revised idea maintains or increases competitive differentiation and can be brought to market cost effectively, a defensible competitive advantage with favorable economic implications will have been maintained or increased. The opposite needs to be avoided!

Analyzing the Competitive Landscape: Five Forces

A Five Forces analysis examines an industry’s overall structure and the competitive external pressures a company will face. It provides further context against which to evaluate the outcomes of the SWOT and VRIO analyses.

Five Forces includes the following points of analysis:

1. Research any direct competitors. The more unique an idea—tested or re-adjusted via VRIO—the greater the likelihood of the idea’s short-term survival, as few or no direct competitors will presently exist.

2. Quantify the risk of new competitors entering the space. Can current pricing be maintained in the face of cheaper competition? Is the product attractive or defensible enough (think patents or market share) to ward off new entrants wishing to encroach on its market share? What inputs can the firm dominate to keep competitors at bay?

3. Identify the possible threat of substitutes. Substitutes are dissimilar solutions with similar benefits (e.g., portable digital cameras being displaced by smartphones). What can solve the same problem differently? Will the product remain relevant in the face of competition by substitutes?

4. Determine the bargaining power of the company’s customers. How much power can customers wield to affect pricing? If a company is dependent on a few customers for most of its business―e.g., 80% of revenues generated by 20% of customers―its top customers can dictate what they will pay; unless the company has a monopoly, which is a situation customers will try to avoid by seeking out substitutes.

5. Determine the bargaining power of the company’s suppliers. Suppliers provide raw materials, ingredients, or components, but even the labor market itself can be a supplier if the product is intellectual property such as software. If a company depends on only a few suppliers for the majority of its inputs, these suppliers can charge whatever they want, because their pricing is inelastic.

As a first rule of thumb, the brand steward wants to occupy a market space with the lowest potential for both new competitors and substitutes. The more unique an offering or positioning, the fewer direct and indirect competitors will need to be dealt with.

As a second rule of thumb, the company needs to avoid buyer and supplier monopolies because of the risk such exclusive dependence poses to a company’s ability to generate significant profits that can be reinvested into brand stewardship. Management should seek many suppliers and customers so that none can create a bottleneck in production or dictate pricing that would jeopardize the product’s viability or a brand’s status.

In summary, brand stewards need to know:

  • What the company is capable of and what its limitations are (SWOT).
  • How the product/service is different, or needs to be differentiated (VRIO).
  • What the competitive landscape is and who holds power (Five Forces).

Once the brand steward has figured out the product’s uniqueness and competitive white space, product innovation or changes can then be better evaluated.

During this phase of brand stewardship a company is tasked with maintaining and further enhancing the positioning and identity of the product that the consumer has deemed critical—not that the company itself has decided is most important.

(2) The Customer Experience Phase

Marketing is the process of getting one’s product or service into the marketplace, noticed, and bought. Therefore this includes traditional marketing activities (such as promotion and advertising, which communicate positioning and create expectations), sales people (who further communicate positioning and create expectations), and customer care activities (which manage incongruities of positioning and expectation).

A sale is not truly complete or successful unless the customer’s expectations have been met. The customer care department’s role, therefore, is to help the customer avoid buyer’s remorse, making customer service and care a marketing activity in and of itself.

Marketing communication activities (including promotion and advertising), sales promises, and customer care activities must all fully understand the product’s positioning in order to carry out brand their brand stewardship responsibilities. Does the execution of sales and marketing tactics communicate the product’s intended brand ideals? Have the promises implied in the company’s positioning been carried all the way to the customer?

When any of these MarCom activities, including customer care, touches the customer, it is critical that they act and communicate in one voice with one message. Otherwise, if incongruities in messaging and positioning do occur, it is possible that customers will become confused and differentiation will be lost. As a result, brand perception will slip in status.

To manage and optimize cooperation and interoperation among sales, marketing, and customer care activities, one first needs to determine what gaps may exist in these processes.

The Services Gap Model

Brands can only come into being when the correct expectations are set and delivered. Executive management makes product feature and positioning decisions, which must then be communicated by the marketing department, implemented by the sales or services departments, and supported by post-purchase customer care activities. Here a variety of disconnects can happen. Is the promised experience envisioned by management, promised by marketing, delivered by sales, and supported by customer care congruent with the customer’s perceived experience?

The Services Gap Model provides a framework for understanding and improving service delivery, and thereby customer experience, which directly affects brand perception. Even when the item sold is a product, not a service, the framework remains applicable because intangibles that are perceived as services are always involved in delivering a good.

Services Gap Model

Figure 1: The Services Gap Model Triangle

Executive leadership makes “executive decisions” about a product or service; marketing encapsulates these as value propositions; sales communicates these value propositions to customers; and customer care deals with customers when the promises thought up by executive leadership, encapsulated by marketing, and communicated by sales are not perceived by the customer.

Clearly, communication breakdowns can happen at every level and juncture.

(1) How has executive leadership learned what the customer wants? Through direct interaction with the customer, or though surveys or other traditional quantitative research methods? If those who set the tone—who are responsible for defining positioning—have little to no engagement with real customers, then critical decisions related to product positioning (features and benefits) are made in an information vacuum, and often may not be customer-centric. If insights were gained through direct customer interaction, it is rather more likely that leadership will have a well-informed understanding of what the market really wants, as well as what the market does not need. This does not negate the need for aggregate market research, however.

Therefore, the highest echelons of the company must be involved with the customer, even if only from time to time, so that the true customer desires are learned, their solutions implemented, and the correct promises communicated back. This avoids or minimizes the occurrence of the customer having a different experience than was promised, which is important for maintaining brand identity and loyalty.

(2) Executive leadership and marketing (who encapsulate leadership’s value propositions) must also have a rapport with frontline staff, and must regularly inform customer-facing departments of what was learned during high-level interactions with customers, and how that might have affected messaging and positioning.

Further, by empowering customer-facing departments to remediate customer experience issues immediately, without frequent escalation, customers whose expectations were not met can still be converted into happy customers (or into happy non-customers who at least will not damage the brand’s reputation). This avoids or minimizes the occurrence of the customer perceiving a different experience than was delivered, which is equally important for maintaining brand identity and loyalty.

But communication is not a one-way street. If properly trained, frontline staff can listen to customer ideas and complaints, and report upward the best ideas and greatest failures as reported by customers. Therefore, frontline people are exceptionally well positioned to learn, summarize, and communicate important ideas and experiences from highly valued and profitable customers, as well as new ideas that may lead to additional product differentiation not previously considered. Those ideas will then need to be evaluated against the strategy frameworks discussed above, but the fact that these suggestions have come from existing satisfied customers gives them additional credence for consideration.

The two, communication and empowerment, may seem like separate issues, but both are focused on customer satisfaction, either by encapsulating and messaging the correct promises, or by fixing perception issues when promises were not met correctly the first time. This also helps avoid the very unfortunate occurrence of a customer’s experience being different from his or her expectation of that experience, and tests and validates the organizational capabilities of the company.

(3) Obviously, companies know that over-promising and under-delivering is the most assured recipe for failure. Few know that the opposite—under-promising and over-delivering—can be damaging, too.

Instead of trying to give customers the best experience ever, which should be a goal but not necessarily a stated promise, leadership needs set expectations in the positioning, marketing, and sales phases that can be met repeatedly.

When a firm temporarily over-delivers on product reliability, features, customer service, and so on, it has likely raised the expectations bar permanently. Disappointment will later ensue should the original—but now superseded—performance levels take hold again. For example, If 24/7 world-class service has been promised, then that expectation must be met. But if 18/7 world-class service has been promised and the firm delivers at a higher level, then customers will be disappointed if the company later falls back to 18/7 world-class service.

Therefore, brand stewards must make promises very carefully, and ensure that these promises are met continuously without fail.

So the Services Gap Model recipe is simple:

  • Customer experiences that are incongruent with customer expectations must be avoided.
  • All departments, including executive leadership, must listen to customers.
  • Internal communication about customer expectations and experiences must flow both ways, up and down.
  • To turn negative customer experiences into positive ones, employees must be empowered to resolve issues without frequent escalation.

The Customer’s Journey

So far we have discussed strategy schemes for competitive and strategic positioning wrapped in a customer-centric R&D and services approach. Next let’s discuss actual customer needs.

The customer’s thought process on purchases always boils down to the following:

  1. “I have a need or a problem.”
  2. “Is there a solution out there I already know and trust?”
  3.  “If not, let me do some research.”
  4. “This product/service is purported to be great/terrible/okay.”

Obviously, the potential customer will not reach step 3 if a default solution is readily available. However, should the potential customer reach step 3, it is critical that the brand steward has positioned and made available its solution in such a way that it seems the obvious next choice. This is no longer achieved simply by having dominant shelf space or an appealing advert in the Yellow Pages.

Since the advent of the commercialized Internet, traditional advertising has become less and less effective. The Web has given nearly every person the ability to perform research on products and customer satisfaction. And social networks have enabled instantaneous and asynchronous communication with trusted advisors (friends and family, colleagues, hired professionals) to receive product recommendations anywhere in the world.

Additionally, potential customers do not rely exclusively on personal relationships for product recommendations; they also rely on other trusted networks to aid in discovery and decision-making. For example, new mothers who are otherwise complete strangers may congregate at CafeMom.com to share experiences and recommendations. In-person Meetups (www.meetup.com) take place on an infinite variety of topics across the globe, allowing complete strangers to share their interests and passions. Customer reviews on Amazon.com and Zappos.com serve the same purpose of sharing product and service experiences. In any of these situations, the opinions of strangers are treated as expert recommendations that can at the very least lead to a one-time trial of a suggested solution.

This new landscape is why customer satisfaction—which can lead to customers becoming net promoters (rabid fans who promote and defend a company and its offerings)—is very important, and why incongruities between the expected and perceived customer experience need to be minimized or eliminated. This is also the reason why traditional advertising is becoming less effective, and authentic endorsements from trusted resources is the most effective form of marketing.

While advertising is still relevant, a brand steward’s responsibility is to be an active member of the communities that have embraced and are talking about its products. Red Bull Energy Drink is a prime B2C example of how a brand steward has become part of the community that champions its product. In B2B, marketing materials such as believable client video testimonials must be available collateral in places where potential customers perform their research before reaching to the company for further information—the least and last of which is the brand steward’s own website.

As the saying goes, you can lead a horse to water, but you cannot make it drink. Likewise, by being visible and authentic in the arenas and communities where customers participate and start their research, brand stewards can effectively enlarge the pond so that the proverbial horse no longer has to be led to it.

The other critical component is the long-term, post-purchase experience. Customers will forgive product mishaps if they receive the proper care and support. To win at this stage, management must have empowered frontline employees to resolve issues without the need for frequent escalation. Spending a little on customer satisfaction returns a lot in customer lifetime value. Or, to co-opt yet another cliché, a customer saved is a customer earned (perhaps even a net promoter).

Have You Been Listening?

Brand is the perception of how an offering is positioned and whether a buyer’s experience was congruent with his or her expectations. It is rare that a company is permitted by the customer to attempt a brand do-over, because customers don’t wish to relearn how they think about a product or service.

In the journey from evaluator to customer, people typically wish to make choices that represent little risk, especially as the monetary cost of these choices increase. It is therefore the brand steward’s responsibility to understand the customer and then incorporate that understanding into product design, delivery, and support. The innovation/improvement cycle can only succeed if the brand steward keeps this ultimate outcome in mind: that experience matches expectation.

If the brand steward (including executive leadership) listens only to customer complaints in the hopes of fixing them, then it is too late to listen to the customer. Listening is a broad and active process. Brand stewards need to listen to everyone who interacts with the customer, not just the customer itself.

Further, brand stewards should not listen only to downstream and in-house suggestions and outcomes, brand stewards also need to listen upstream: suppliers also need to become part of the conversation about customer satisfaction and continuous improvement. And the upstream also needs to be connected to the downstream: suppliers need to be enabled to listen to their customers’ customers. With this process, brand stewards can build a complete chain of information trust, and may discover additional efficiencies and opportunities for product or service enhancement that will deliver value to the customer.

Cheat Sheet

To steward a brand successfully, follow these basic steps:

  1. Create a multi-functional brand stewardship committee to collect and evaluate new ideas.
  2. Test and refine ideas against strategy frameworks to assure continued positioning and differentiation.
  3. Keep your promises: only make promises and implement as ideas when these can be delivered on repeatedly.
  4. Measure to see if the promised experience matches the perceived customer experience.
  5. Pinpoint areas in your processes and organization that have led to customer experience mismatches and develop processes to fix them.
  6. Listen and learn: participate in and add value to communities where large numbers of brand consumers and advocates aggregate.

One good thing about talking to smart people is that they typically know other smart people. After my interview with Jerry Rackley he introduced me to Stephan Sorger. Stephan is the VP of Strategic Marketing at On Demand Advisors, and also on the marketing faculty at the University of San Francisco and U.C. Berkley, where he teaches marketing analytics.

Earlier this year Stephan released the  textbook “Marketing Analytics.” The book is aptly named—it’s just that with the current hype surrounding “big data,” most readers will probably expect a book purely on that topic. A better title would have been “Marketing Analytics: How to Measure Everything,” because Stephan’s book discusses all the metrics that marketers should concern themselves with, not just big data. Little data matter, too!

As with Jerry Rackley, Stephan Sorger and I had a lengthy conversation regarding marketing, branding, and metrics. Below are several nuggets from that call.

The Book and the Framework

What I needed was a textbook where people who are not math experts could learn about what analytics could do for them. The most important element is establishing a framework by which to tackle a subject like that. The framework itself is in six sections, going from strategic to tactical.

The first block, or strategic side, is market analysis, which includes models and metrics such as market sizing, SWOT analysis, Porter’s Five Forces, market terminology, market segmentation, targeting, and positioning.

The second block is competitive analysis. Now that you have understood one side of the coin, which is the demand side, you look at the supply side. You look at what competitors are doing.

The next block is strategy and operations. What are needed to get analytics done? This includes understanding market entry and exit decisions, forecasting, predictive analytics, data mining, and so forth.

Block number four is the marketing mix, the four P’s: product, price, place, and promotion. I talk about individual strategic decision models and metrics for each of those four categories.

Block five is sales and support. That’s looking at the tools that people can use to facilitate sales and support, like customer lifetime value, the net promoter score, and so forth.

And the sixth and final block is what I call analytics in action. How can you really start a revolution inside your company? What things should you be working on today?

Three Sales Funnels

We actually have three funnels. The first funnel is from contacts to marketing qualifying leads (MQLs). How many people do we need to know about before we can actually get some expressions of interest?

The next funnel is from MQLs to sales qualified leads (SQLs), where the MQLs have now been nurtured to where we know something about how they are qualified. By studying that funnel, I can know more about what it takes to go from one to the other, and just as importantly, the ratio of SQLs to MQLs.

And the third funnel goes from SQLs to opportunities, meaning these are good, bona fide sales opportunities. The kind of thing that you want to actually get sales involved with.

I did this type of analysis for a CEO I worked for long ago. First, I started off having these huge fifty-page PowerPoints with lots of data: “Here’s our brand equity; our social media efforts, and so forth.” I quickly came to realize that the CEO didn’t look at any of that, nor did he care about it. He actually thought that was a waste of his time.

So I replaced the PowerPoint with a half-page weekly email: metrics for MQLs; numbers we got from a trade show; numbers of SQLs; numbers of opportunities. The CEO said to me, “These are the only emails I read. I just want to be clear, these aren’t the only emails I read from you, but these are the only emails I read from anybody in the marketing department, ever. So keep up the good work.”

Using Analytics to Drive Sales

Macy’s started doing some data analysis of stores in resort locations, and they found that the shopping behavior changes depending on the perception of the location.

For example, Hawaii. Macy’s initially thought that people would buy Hawaiian shirts, sunglasses, shorts, and so on. But customers weren’t—they went on shopping sprees. They bought suits and other expensive attire, because they were on vacation. They wanted to spend money!

Macy’s analyzed the data and realized this. They found that any sort of suits and fancy dresses were always out of stock because people were buying them up as soon as they came in. But no one had ever bothered to analyze those data.

Macy’s changed their collections, and that actually generated quite a bit of revenue.

Using Analytics Post-Sale

I used to work at Oracle, and we were conducting a big study as to what is a reliable indicator that customers are actually happy. Customers were asked to fill out customer satisfaction surveys, and they would mark all fives across the satisfaction board. Everyone was happy, and then the next month the customer would leave us. It was my job to figure out why this was happening.

The first problem I found was that the regional reps were assigned to gathering the satisfaction information. But the sales reps’ bonus compensation plan was based on customer satisfaction. So lo and behold they all came out with all glowing reviews. Once I realized this, I started looking for any correlation between satisfaction and anything else that we record. And there was only one metric: days sales outstanding.

If customers pay their bill on time, chances are very, very excellent that they like you and will continue to do business with you. If customers pay their bill late, no matter what they tell you, they are about to leave.

Presenting and Leveraging Data

I had the privilege of being at an absolute train wreck of an operations review. We had the heads of each department—marketing, professional services engineering, and so on—present to the GM of the division to (a) tell him what and how they were doing, and (b) typically ask for more resources.

I saw the engineering department head come up and just completely miss his opportunity. He told the GM how all the engineers are overworked, how the department is putting in huge hours, how things are starting to slip behind schedule, how the morale is low. He went on and on talking about people getting burned out, and then at the end, he pitched for more people. And the GM said, “No.”

And I couldn’t blame the GM because at that moment I would have said “no” as well. I would have said, “You haven’t talked about anything I care about.” In this case the GM cared about revenue. It was sadly ironic that the engineering department had the biggest impact on revenue of any group in the organization, but the presentation hadn’t captured that.

The very next presentation was from the head of professional services who had a dinky little organization. But she actually said “Number 1, here is how we can contribute to revenue. Number 2, here is the correlation between headcount and revenue, and as we add headcount, how the revenue goes up. But we’re getting increased demands, and at some point we are going to stop being able to increase our revenue. We’re going to have to stop incremental revenue, and it’s going to occur on this date right here.” She actually showed a graph of when that was going to occur.

And the GM’s reaction was: “What can I do? How can I help? How can we hire more people? Can we get a team to hire more people?”

Getting Started Simply

Remember, the CEO doesn’t want everything, he only wants what’s relevant to him. Spend your time on identifying the two or three numbers that the CEO wants. The number one thing that you can do immediately is to start segmenting your sales process into the three funnels. If you can do that, you’ll gain a lot more insight. You’ll see results almost automatically.

The other day an email came in from my friend Steve in NYC, who writes the Smoky Beast (weekly whisky reviews) blog with his wife, saying “we published our first interview with a bona fide master distiller.” Aside from reading the post, and additional whisky reviews, I thought to myself that I, too, know great people who are passionate about the same topic I am. And since I am a marketer I was obligated to steal Steve’s great idea.

I first became aware of Jerry Rackley on a Demand Metric webinar, where he was simply incredibly insightful (he’ll introduce himself below). After the webinar I reached out to Jerry, and to my joy, he responded. I’ve been following Jerry’s insights ever since, and was ecstatic when he recently referenced a blog post of mine on Demand Metric’s Analyst Perspectives Blog: Creationism Versus Evolution: A Branding Debate.

It was a no-brainer that I would reach out to Jerry Rackley to interview him on marketing. The following is a distillation of eight pages of our transcribed telephone conversation. A lot was left on the cutting room floor, but these nuggets of wisdom will inspire any marketer.

Who is Jerry Rackley?

I am the chief analyst for Demand Metric, which is a marketing advisory firm. In addition to that, in my free time, I get to be an adjunct faculty member in the marketing department at Oklahoma State University. I enjoy being in the classroom and working with students, and also really love being chief analyst and working with our members and clients on their marketing issues.

What do your marketing students need to understand today?

Some of the most interesting, rewarding marketing work is going on in small, hungry, lean companies where you don’t have the safety net of a large budget bank account to just run lots of experiments and try different things. Now you really have to figure out how to communicate, how to position, how to contribute and provide a return. If you don’t, the company can’t afford to have you. To me, that’s what I really try to make sure that my students understand.

How do you know your customer?

That’s the $64,000 question. Any effort of marketing, whether it’s content marketing or just any marketing, that doesn’t begin by asking, “Who is our audience?” or, “Who is this content for?” is destined to fail.

The problem is we marketers have all kinds of assumptions built in about our audience that we just don’t bother to back and check. Or we just think that we’re so smart that we don’t have to ask, we already know, because we’ve been doing this for a long time. We get in our own way. That makes it hard culturally to really do the things we should do to understand our audience.

The second thing that happens is that customers don’t reveal themselves as readily as they once did. If you look at any buying process, especially in the B2B world, the customers choose to remain hidden and self-educate much deeper in the buying process than they used to. They can do that because look at what marketers are doing: we’re putting all kinds of great content out there for potential customers to consume.

For those reasons, it takes a lot more effort to understand who our customers are, understand their preferences for communication, what sources of information do they trust, what biases they have. A lot of companies simply just choose not to take advantage of that knowledge either because they think they can’t or because they think it’s too difficult.

On content marketing.

A lot of companies buy into the notion of “we’ve got to be content marketers.” Great, do it. Then they just randomly start emitting content and they don’t necessarily think about what content is needed in each stage of the buying process. (1) What is needed in the need-phase when someone is just figuring out they need something? (2) What’s needed in the discovery-phase when they are actively out there looking for a solution?  And (3) what’s needed in the consideration-phase when they are trying to separate the wheat from the chaff?

Companies need to pay attention to the different kinds of content that customers are looking for in each phase.

In the Need-phase, third party content is always valued, so much more in this stage of the sales cycle. Peer input, analyst research and reviews are very much sought after. While marketers can’t directory author this type of content, they can create mechanisms and processes to facilitate its creation and capture. In terms of vendor content for this stage, things like eBooks, White Papers and educational webinars work well.

During Discovery the kind of content valued in this stage is still very light on promotional messaging, but heavy on being helpful! How-to guides and case studies are two examples of what works well. Both of these content types are very effective in video format.

Lastly, the Consideration-phase marks the point where the buyer stops expanding the list of possible solution vendors, and in fact begins narrowing the list. Content that is very helpful in this stage is anything that conveys critical success factors, user success (or horror) stories, content that effectively articulates differentiation as well as description and quantification of benefits.

Are there differences still between B2B and B2C marketing?

A lot of the principles of marketing apply across both, but B2C is still is about brand strength and awareness. B2B has a much stronger relationship component.

B2C players have very little chance of actually knowing their customers. When I say knowing them, I mean an actual real relationship and interaction like you and I are talking now. You know my name and I know your name and I know where you live and work and that kind of thing. That’s pretty unheard for the big B2C players. Yes, they’re going to know their customers demographically, but the bigger they are the less likely it is they’re going to have a real relationship. There are simply too many players between them and the consumer in the supply chain.

B2B on the other hand is an environment in which most of the time you actually know do your customer. You can have a face-to-face interaction, you have a relationship. While brand is still important—and brand is always going to be important—relationship strength can really overcome some brand weaknesses in the B2B realm.

That’s what a lot of B2B companies have figured out: we’re going to go establish relationships. We’re going to know customer needs better than anyone. We may not have the market-leading solution for each one of those needs, but we’re going to use all the influence we have through the relationship to secure business and serve the customer well. Many times, it does work very well as a strategy.

What excites you in marketing?

I think the thing that continues to excite me is when I see real genuine authentic creativity and pure marketing genius. We as consumers are subject to such a barrage of marketing messages, we kind of are numb. We see so many different messages in so many different forms from so many different places that we just kind of tune a lot of them out. When one actually gets through, when we allow one to penetrate our consciousness, that’s a pretty remarkable thing. I think that as marketers we all sit up and take notes. How did they do that? I think usually it’s because it was very clever, or in some cases their cleverness was exploiting an opportunity that was handed to them.

An example is the Super Bowl, the famous Oreo tweet that occurred during the Super Bowl. That was genius, but when you study it, it didn’t happen accidentally. I really admire the way that occurred. Oreo had a creative team on, I would call it, hot standby. These folks were sitting somewhere in kind of a war room during the Super Bowl. Of course, they were thinking social media, but they were ready and they understood there is a potential opportunity on a really big stage for us to do something. When they had the blackout, they put out that now famous tweet. It just skyrocketed in terms of the retweets. It was a huge success from a social media standpoint. I have no idea what it did to their revenues or their market share or anything else. It was brilliant, and they positioned themselves to do that.

Those kinds of things excite me. When I see someone who takes creative risks, and it’s very creative, I respect the fact that they’re not trying to serve up the same old thing that we’re used to seeing all the time.

When I was living on the East Coast, traveling to the West Coast posed no problems for productivity and alertness. Flying across country one would lose very little time, and due to the three-hour time difference, getting up early in the morning was also a cinch.

Now I live on West Coast time. AZ doesn’t play that Daylight Saving Time game, meaning, that for most of the year (March 10th to November 3rd; or as I call it, Conference Season) our time is actually equivalent to PDT, because we are always on MST, while the rest of you waffle back and forth.

Traveling to the East Coast is a chore. Often meetings and conferences start at 7:00 AM—especially when you are an exhibitor—meaning you have to get up at 6:00 AM, which is 3:00 AM your body clock.

That means, in order to get a good night’s sleep one also needs to go to bed [relatively] early. Going to bed between 9:00 to 10:00 PM East Coast time means my body thinks I’m trying to go to sleep between 6:00 to 7:00 PM per my body clock. That takes some coaxing.

I’ve never take prescription sleep aids, but do purchase “non-habit forming” OTC pills to help me get to sleep on those trips. So when my wife handed me a $3-off coupon for ZzzQuil (from the makers of NyQuil!) I thought I could save some money. I stopped taking NyQuil when they took out the sleepy stuff, and was excited to see I could get the sleepy stuff again from a brand that has previously served me well.

Here I was at the store holding a 24-count box of ZzzQuil (suggested retail price of $11.99) when I decided to look at the active ingredient: Diphenhydramine HCL. That sounded familiar… So I acted on a hunch, turned around and grabbed a box of Benadryl to look at it’s active ingredient: Diphenhydramine HCL. And at the exact same dosage: 25mg. Except that a 48-count box of Benadryl has a suggested retail price of $8.99.

It’s not difficult to figure out which the better deal is.

The question, however, is which is the stronger brand? Benadryl is definitely a strong brand name. It comes to mind immediately (unaided recall) when considering an allergy remedy, and the ingredient Diphenhydramine HCL is often simply referred to as Benadryl.

But why would Vicks be able to command a better than 150% price premium, when brand differentiation typically tops out at a 25-30% price premium for like products? Does it really have that much better brand recognition than Benadryl?

The answer to the question probably isn’t brand, but positioning. Without any empirical research I simply have to assume that Vicks plays in a market that solves short-term problems (e.g. flu symptoms) to which immediate solutions are needed, vs Benadryl, which handles long[er]-term problems (e.g., seasonal allergies) that also require a longer-term investment. I’ll pay just about anything to get over this cold quickly, but since there is no way to control the weather, seasons, and pollen, I’ll pay as little as necessary to remedy problems that will recur not matter what.

Additionally, I can tell you that OTC sleep aids are not cheap, so Vicks should be able to easily maintain pricing power with this brand extension. It’ll be worth watching how Vicks fares in that arena over time, and if enough people might catch on to the cheaper alternative. Benadryl (McNEIL-PPC, Inc., actually) might not be able to do anything—can’t openly compete against ZzzQuil—because they can’t jeopardize the positioning they’ve created for themselves.

Vicks’ only problem might be that if consumers learn of this and feel taken advantage they might vote with their wallets and pocketbooks against Vicks’ other brands as well.

At play is a possibly risky pricing strategy that has a chance to blow up and do larger damage than just cutting into ZzzQuil’s profit margin. On the other hand, Vicks might just be raking it in until then, and they might never get found out. And if Vicks does need to drop ZzzQuil’s price, that just might set off a price war in OTC sleep aids. Hallelujah.

Let’s get ready to rumble.

Lesson to marketers: know the risks you are taking and plan for the various scenarios.

The June 2013 issue of the Harvard Business Review contained a gem so powerful that it could rewrite creative advertising strategy overnight. “Creativity in Advertising: When It Works and When It Doesn’t,” is a summary article of a study that reviewed 437 TV advertising campaigns for 90 FMCGs over a span of five years.

The study found that creative ads not only perform better, but also actually do drive incremental revenue. You might think “Duh!” and also mimic a face-palm, but there are two very important findings here. First, rather than correlation, there’s now documented causation. Second, it’s the type of creativity that matters. Not all creativity is equally rewarded, some can actually hurt you, and its application is even product-specific.

Creativity is made up of five dimensions: Originality, Flexibility, Elaboration, Synthesis, and Artistic Value, and the most powerful combination of creativity is Originality + Elaboration. The article explains each dimension very well, which is why spending $6.95 on the PDF (if you are not already an HBR subscriber), is will be the best investment you have made as a marketer this millennium so far.

However, there is one giant caveat, which the authors are completely up-front about, but never delve in to: all the ads ran in Germany. What does that mean to you?

Stories abound about how ill-named products didn’t sell well when introduce into other countries, and it is now well known and documented that you can’t just move a product and advertising campaign from one country to another, from one culture to another.

A simple example is a life insurance TV campaign that ran in South America. The scene is set at night, and the camera is pointed at a bouncing car with fogged-up windows. Emanating from the car are certain sounds made by a woman that suggest that at present a very personal and private interaction is occurring; one that is known to occasionally occur in cars, but more often in bedrooms. As the camera ultimately reveals, the woman is performing CPR on her partner, which is a physically demanding act that would cause windows to fog up and the car to bounce suggestively.

The ad was successful in Brazil, because it is culturally relevant and appropriate. The ad agency (McCann-Erickson) than ran the same ad in Chile, where it cause outrage. What went wrong? Both countries are relatively close to one another, geographically speaking on a global scale, so shouldn’t they be similar enough culturally? Chile, it turns out, is a culturally very different from Brazil; it is politically, economically, and sexually a very conservative country. It didn’t matter that both nations are located in South America and had strong economic ties. What did matter is that they were cultural opposites.

So, how do you know that an ad successful in Germany would also be successful in the U.S.? More specifically, how do you know that the creative dimensions relevant to German culture map well to U.S. culture? How do you map culture to culture?

Luckily, there are culture assessment and mapping tools out there. The obvious one is the Cultural Orientation Indicator (COI PDF), developed by TMC, a subsidiary of Berlitz (the language people). It is actually a personal assessment tool. The COI focuses on the self and measures ten cultural dimensions, but I’ve used it to map countries’ cultures against one another. You’ll need to pay to gain access.

Here’s some example output:

Cultural Orientation Index COI

Cultural Orientation Indicator Sample Output

Another good tool—this one is free (!)—was developed by Dutch professor and researcher Geert Hofstede, and is available via the Hofstede Centre’s website. Here you can assess and compare cultures on six dimensions (quite different from the COI).

Hofstede-USA-GER

Neither tool lets you query for similar cultures, but you can select individual countries and compare them to one another. Also, neither tool will tell you outright if the five creative dimensions correlate across cultures, but it’s a better approach to leveraging HBR’s insights into creativity than simply trying to replicate your advertising creative across different cultures and hoping for the same results. At least you are now empowered to better assess whether creative dimensions that play well in Germany are also likely to translate well into other countries and cultures for which you have advertising responsibility.

The true power of HBR’s research will be revealed over time as people match cultures against the five creative dimensions. That is the Holy Grail.

If you want to learn how to do this well, and how to develop your Cultural Intelligence (CQ), your best bet is to reach out to the Najafi Global Mindset Institute at the Thunderbird School of Global Management and find out where you rank in the Global Mindset Inventory (YouTube), so that you can learn how to best exploit these cultural mapping tools.

Last week I attended BtoB Magazine’s “The Evolving B2B Purchase Process: Conquering Unpredictability with Full-Funnel Marketing” webinar. Very interesting research findings were presented, and the Q&A was excellent.

The last question in the Q&A drove me crazy, however: Where and how do we begin our marketing efforts for “…a relatively new brand with no awareness?”

It wasn’t the content of the question that bothered me—and the answer was very good—it’s the context that gave me palpitations, and almost caused me to scream “YOU DON’T HAVE A BRAND!” into my headset. Of course, in cyberspace no one can hear you scream, especially when you are on mute.

I hold in strong belief—and have previously stated here—that brands are not “made” nor “owned” by companies, but by consumers. Companies may own trademarks, but branding is a consumer’s mental process. Companies try to influence this process, yet ultimately they have no true control over it. Correlation of a consumer action to a marketer’s efforts does not equal its causation.

I’ve never been able to prove my belief. Finally, however, I happened upon a model that echoes my own conviction: McCracken’s Meaning Transfer Model.

In “Who is the Celebrity Endorser? Cultural Foundations of the Endorsement Process” (Journal of Consumer Research, Vol. 16, No. 3 (Dec., 1989), pp. 310-321; available on JSTOR), McCracken stipulates that “there is a conventional path for the movement of cultural meaning in consumer societies.”

While the article speaks to celebrity endorsements—how a personality imbues its persona onto a product—the model’s underpinnings rest on “cultural foundations” (read: psychology) shared by all of us (in the West).

There are three steps in the model. First, to pick the right celebrity “the advertiser identifies the cultural meanings intended for the product.” This speaks to product positioning—not tactically (conventional benefits) or strategically (competitive benefits), but psychologically. Think BMW’s “Ultimate Driving Machine,” versus Volvo’s safety and security positioning. Both are cars that will get you to where you want to go, but their positioning appeals to different audiences. This is where companies place their marketing chips for decades.

Next, “the advertiser surveys the culturally constituted world for the objects, persons, and contexts that already contain and give voice to these mednings.” The producer/advertiser seeks an individual/celebrity possessing elements congruent with the psychological profile they are trying to assign to their product. The advertiser similarly hopes that aspiration to these traits is resident within the target buyer. For example, Sebastian Vettel might be a good celebrity endorser for the Ultimate Driving Machine. For our purpose the object does not have to be a celebrity, but can be anything else that already carries the intended strong metaphorical meaning. Granite, for example, can represent the foundational financial strength that a bank wishes to emphasize.

Third, “the final act of meaning transfer is performed by the consumer, who must glimpse in a moment of recognition an essential similarity between the elements and the product in the ad…Consumers turn to their goods not only as bundles of utility with which to serve functions and satisfy needs, but also as bundles of meaning with which to fashion who they are and the world in which they live (Belk 1988).”

Just in case you didn’t catch that, while the meaning transfer steps are linear and sequential, 1-2-3, the meaning transfer motion is not. Meaning is not transferred from the producer into the product, and then from the product to the consumer. Consumers transfer their own meaning onto the product! The consumer has to be accepting and complicit in permitting the producer’s hoped for meaning—but the consumer may very simply attach an entirely unintended meaning, away from the producer’s intent. This is why consumer insights departments are so critical.

When consumers attach the same meaning repeatedly, and that action constitutes a preference over a product with similar tactical benefits, then brand-creation is in process, but not yet complete. A product is only a brand when it is chosen often enough, with high repetition, by a large number of people within the addressable target audience. Otherwise a product is just a commodity, regardless of price or positioning.

A good example of consumer brand ownership is Tropicana Orange Juice’s “rebranding” a few years back. A simple packaging change—the actual product inside the package had not changed—destroyed the meaning that consumers had themselves attached to the product. The updated look of the juice container was described as generic, and generic juice at a premium price was incongruent with consumers’ psychological needs. Ultimately, Tropicana was forced to retreat.

Most importantly, it means that companies must continuously research and learn why consumers are choosing their products, and then for the same product target the correctly personalized message at the right audience, in the right channel. Mixed messaging sends mixed signals that cause confusion and lead to brand erosion.

It also means that companies are not brand owners, they are brand stewards.

The other day, watching a program on human origins and evolution, I learned or the term persistence hunting. It’s a technique we humans devised to hunt and kill fast [meaty] prey. The gist of it is to pursue a target for so long until it too exhausted (e.g., heat shock) to escape any further, making for an easy kill.

There’s an analogous tactic in digital marketing called “retargeting.” Retargeting is dead simple. Potential buyers visit a vendor’s website, get cookied, and then get served ads for the vendor’s offering on other sites. In essence, marketers get to pursue potential customers to the point of exhaustion, until they’re finally ready to buy (get killed)—or so the thinking goes.

However, retargeting is missing a major point—it needs to be contextually relevant. Presently I’m getting pursued by Zvox, Watchismo, Hilton, and Medifast. Everywhere I go on the Web I’m being bombarded by ads for these companies’ products and services. But the ads themselves are not relevant to what I’m actually interested in at the moment. And that’s creepy.

While talking to Retargeter.com last week about possibly becoming an advertising client, the idea of being contextually relevant to the audience was a new one to them. While the claim that they reach 98% of the Web may be appealing to some, the idea of my stalking business prospects in their personal lives was repulsive to me.

Rather than retargeting on an opt-out basis, us marketers need to be given the choice of opt-in advertising; being able to choose specific sites where our ads would show, so that they make sense within the editorial context and frame of mind of our “prey.”

I don’t want to exhaust my potential customer with my commercial messaging. I want to befriend them.

At the heart of retargeting seems to be the primary need of the ad distributor to maximize their own profitability in the short term, without regard for the needs of me or my intended audience.

It would be such an easy fix.

Recent articles such as Marketing is Dead (HBR Blog) would have you believe that our profession is on the outs. On the contrary, of course, our job has always been to understand the buyer, matching benefits to needs in a meaningful and trustworthy way. The current misguided hype around the demise of marketing primarily comes from a misunderstanding of what marketing is: the process of getting a product to market and into the hands of buyers. This includes R&D, positioning, messaging, pricing, promotion, advertising, sales, and customer care.

Marketing is as much about the prospect as it is about the customer (or should be). And it’s not dead.

What has changed dramatically in the past few years are tactics employed in marketing, but the guiding principles have remained the same. To succeed in attracting buyers, there are three basic psychological concepts that marketers must leverage when developing messaging: cognitive fluency, social proof, and cognitive dissonance (the sequence changes to social proof, cognitive fluency, and cognitive dissonance if you are trying to establish yourself for the very first time).

Cognitive fluency basically means that something can be easily understood. And if something is easy to grasp that also signals to the brain that it is true—Occam’s Razor, or the that-makes-sense-to-me effect. This has profound implications on your positioning.

Let’s assume you have a product or service for which a category doesn’t presently exist. In theory you have a tremendous opportunity, because you can define and own a new category (think eBay). The unfortunate downside is that it actually takes a tremendous amount of resources—especially time and usually a lot of money—to do this missionary work successfully.

If you continuously need to explain your new category, you may be building up long-term brand equity should your business or product launch turn out successful. But in the interim, however, you are not enabling cognitive fluency, as potential buyers need to first spend countless brain cycles on making sense of your message. While they’re doing that they are not thinking about the benefits of your offering, and are thus significantly more likely to abandon the idea of engaging with you, since they are not building an emotional connection with your message.

That is because we humans naturally categorize, which helps us understand, only after which we can process further input. If I cannot very quickly categorize what you do, I simply seek other message that I can rapidly absorb and act on.

An easier approach that enables cognitive fluency is to pick an existing category, but carve out whitespace with that environment. Now, because the listener can rapidly categorize you, you can move the conversation more quickly, because you are being given license to explain how you are unique within that category. You are permitted to espouse on your unique selling proposition (USP, the thing that sets you apart). This is a fun conversation for both sides to have as all involved in this exchange of ideas and knowledge can contribute to the conversation, either by asking intelligent questions, or hopefully providing meaningful information.

The litmus test for cognitive fluency is not whether your product is easily explained, but if it’s easily understood.

Social proof has been in the marketing news a lot lately. That’s because it works. Social proof is the very basic concept that if you yourself are not familiar with something, but others you trust are and are happy with that product, you are significantly more likely to try the product. “If it’s good enough for Person X, it’s good enough for me.” Examples include movie recommendations, VC investment decisions (why you need to have a strong board), automobile purchases, etc. The list is literally endless.

Beware, however, that social proof can be used surreptitiously to move buyers to a purchase without that “proof” itself being true or validatable. Having only “4 more of [something] in stock” may or may not be true, but having only “two tickets left at this price” is almost always an outright lie. This feeling that an offer may cease to exist because others are seemingly acting upon it triggers a natural acquisition instinct; scarcity a market can make. While the proof itself isn’t really social—as it involves strangers, it is more societal or communal—some marketers hope to create then exploit a buyer’s emotional reaction.

Marketers are well advised to be truthful in their social proof messaging, lest lies and deceit reveal themselves at a later time to cause brand equity erosion. Don’t trade-short term gains for long-term profits (read: customer loyalty).

Fred Wilson (AVC.com) summarized the importance of social proof in his seminal Marketing blog post where he wrote that “marketing is for companies who have sucky products.” The point is that aside from needing to make sure that you actually have a good product, equally important is that your first customers (“Innovators”) are ecstatic about it. This will (a) make them share their experience with others and provide you with the most powerful marketing of all, word of mouth (e.g., social proof), and (b) provide you with truthful customer testimonial (e.g., social proof) on which others can safely base their purchasing decisions.

Crossing the Chasm” (HarperBusiness, 1990) relies entirely on social proof. The next group of buyers only ever buys because the previous group—on whose recommendation the current buying decision hinges—has successfully adopted the product.

Social proof = trust = reduced risk.

Cognitive dissonance refers to holding competing or incongruent thoughts in the brain at the same time. Apparently that’s a feeling—almost an emotion—which people don’t like. But it also makes the brain think—literally. Most of the time the brain is at rest, helping the body perform autonomic functions. Every once in a while the brain actually signals to us that we should be paying attention to something; that’s the thinking part.

Cognitive dissonance causes thinking because conflicting beliefs must be resolved. The cognitive dissonance theory states that we change our attitude toward one of the conflicting beliefs to once more achieve harmony. However, in marketing the approach is that both conflicting beliefs are indeed true, and what must change is our attitude toward the outcome, which we previously thought untrue or impossible. For example, you can perspire profusely but still smell great, or you can drink coffee that whitens your teeth.

And that’s a powerful ally in messaging. Your USP must evoke “positive” cognitive dissonance by promoting a benefit that was previously considered a trade-off. But this USP must also be true! If your USP does not deliver on its promise, word will get around quickly and your competitors will crush you.

A USP that creates positive cognitive dissonance and actually delivers on its promise unhinges the competition in such a way that it cannot easily combat your claims.

Positive cognitive dissonance = yes, you can have your cake and eat it, too.

Marketing Psychology

All three concepts highlight why a strategic approach to marketing is so critical. Without a good understanding of the buyer’s perception of your product you will never be able to categorize yourself in a meaningful manner that enables cognitive fluency. Without happy customers you will not experience social proof. And without a USP that enables positive cognitive dissonance you will not set yourself apart from your competition.

Steve Patrizi's New Marketing & Sales Funnel

Copyright Steve Patrizi

Don’t gotta say more than that (but you can read Steve Patrizi’s post here). Pairs well with The Seller’s Compass™.

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