4 crucial questions to unlock the power of your advertising.

4 crucial questions to unlock the power of your advertising.

 

 

Last week I provided a template for a Customer Value Proposition. The template works well, but ‘Customer Value Proposition’ is a piece of marketing jargon which just means making a promise to your customers.

This presupposes that you actually know who your ideal customers are, and what sort of promise would be attractive to them.

In the January February 2024 Harvard Business Review there is an article called ‘The right way to build your brand‘ written by Roger Martin and two Co-authors. The article sets out research that proves the hypothesis that making a specific promise to customers is more attractive than a generic claim of some level of excellence. The specific promise is about the benefit a customer will receive with use of the product. A generic claim to greatness is just about the product.

It does not surprise that the first is more powerful than the second.

‘Your promise is your strategy’ is a sub headline towards the end of the article. When you think about it, the observation must be right. Strategy is a process of influencing factors over which you have no control in such a way that the subsequent behaviour of the customers benefits your enterprise rather than an alternative. Making a promise of performance in delivering an outcome desired by a customer is about the strongest driver of short-term behaviour I can think of.

Delivering on the promise, will build trust.

Right at the end the authors ask four crucial but simple questions that can be used to determine if a proposed advertising campaign is worth investing in:

  • Is the campaign based on a clear unambiguous customer promise?
  • Were customer insights used to identify a promise the customers value?
  • Is the promise framed in a way that is truly memorable?
  • Were product marketing, sales, operations, and customer service involved to ensure the promise will be consistently fulfilled?

To me, this sounds like a comprehensive framework by which to decide if a proposed communication campaign is a worthwhile investment.

 

 

 

 

The second best word to close a sale.

The second best word to close a sale.

 

 

The best word in sales is ‘Free’, it will close more often than any other, by a long stretch. However, being free also implies there is no value to the buyer, and in any event, it is not really a sale, as there is no money involved. At best a ‘freebie’ is a ‘bait’ of some sort that may lead to a sale.

As a freelancer, I am tempted often to give away a lot of time and advice for free, partly to demonstrate expertise, which may lead to a sale, and partly because I am asked, and am able to do so to help. It is also partly because I find it difficult to just say a flat ‘No’

Recently I had some assistance from a professional to address a health problem. It was someone I knew quite well, and have helped a bit in the past. As I turned up for the appointment, I was asked if I had some time afterwards so the professional could, as it was stated, ‘pick your brain‘ in a specific area where I have deep expertise. As it happened, I did have the time, so said it was OK.

The upshot is that I gave away an hour delivering expert advice, while paying full tote odds for the appointment and professional advice I had gone there to obtain.

Stupid me.

I should have used the second most powerful word in Sales.

‘No’

It is hard for us to say ‘No’.

We all like to be liked, we like to be asked, and to be seen as an expert, and we do not like to be seen as ungenerous, or even a jerk.

However, is my time and expertise of any less value than the professional I was talking to?

As humans, we also want what we cannot have, wanting something just out of reach is a driver of behaviour. Saying ‘No’ moves the opportunity to learn something,, or get something that is just out of reach further away, making it more attractive, and adding to the perceived value of that something.

Watch what happens at contested auctions, as the price goes up, those remaining in the bidding become more desperate to win.

There are many ways to say ‘No’, but the essential element is that it must be clear.

If you apologise, say ‘Sorry’, the door remains open, and you feel a little guilty, when there is no need for you to apologise.

If you say ‘I can’t’ does that mean you cannot now, but might at another time?

If you offer a range of excuses, the ‘No’ remains ambiguous, and everyone is confused.

Remembering that ‘No’ makes you more attractive, you do have options.

  • Just be firm and say ‘No’ I do not do that.
  • Redirect. ‘No’ I do not do that, but here is someone you could ask.
  • Redirect back to you. Again, several sub options:
    •  ‘No. However, email me a few simple questions, and I will try to answer them quickly.’
    •  ‘No, but I do offer calls up to 60 minutes for $XXXX fee.
    • ‘That is a complex question, usually only answerable after a detailed examination, for which my project fee is $XXXX.

Use one of these, and the chances of some sort of conversion are real.

Unfortunately, in this case I did not follow my own advice, and so know that the hour I spent outlining the solution to the problem will not be valued and implemented, so we will have both wasted our time.

At least, I got a blog post out of it, so maybe there was some value after all?

 

 

Retailers cost of living party trick.

Retailers cost of living party trick.

 

 

Every time I go through a supermarket checkout, I find myself surprised at the total of the bill. Should be used to it by now, but no, I’m not!

The two supermarket gorillas, Coles and Woolworths have both released their annual results in the last month, and shareholders, which via superannuation is most of us, should be very happy.

Woolworths pocketed $1.6 billion on significantly increased margins, and Coles managed $1.1 billion on similarly better margins. The percentages are way above those generated by peers in developed countries, for the simple reason that they are an oligopoly and leverage that power to generate profit. Aldi has made an impact and continues to do a good job of ‘keeping the bastards honest’ but the fact remains, profit comes from market power. It is also fair to acknowledge that both have done a pretty good job of optimising their current operations, which also contributes to those juicy profit numbers.

Supermarket retailers, and other retailers in a position to exercise market power, are in two businesses that together make a powerful business model:

The first is renting retail real estate to their suppliers.

The second is selling products to consumers.

Both are transactional, with constant negotiation between the retailers and their suppliers. Sadly, there is an unequal distribution of power between the retailer and the supplier, so the use of price on both sides of the equation by retailers has become ubiquitous.

They extract maximum ‘rental’ for the shelf space, while being relatively unconstrained at the checkout by competitive pressure.

As a result, suppliers are screwed down so hard that even the very best of them have trouble returning the cost of capital, and price competition that benefits the consumer is a myth.

The price-based promotion programs deeply embedded in the psyche of both retailers and their ever-decreasing pool of suppliers destroys brands. Over the time I have been watching, the supplier margins from which springs the innovation that keeps categories fresh and interesting to consumers, has disappeared.

Retailers are lousy marketers. Ask one to explain the drivers of purchase and they have only one answer: price. Anyone who has ever bought anything knows that is rubbish.

For long term commercial sustainability of both retailers and their pool of suppliers, there must be a balance between tactical promotion and the innovation investment that generates category and brand growth, and there must be serious competition.

That no longer exists. Marketing and behavioural research over many years is unequivocal. Healthy markets need both.

Retailers have used price as their only tool because they can. In the process they have killed off almost all proprietary brands, replacing them with house brands, which are no more than carbon copies. There is no longer category or product innovation, and no suppliers willing to invest in brands, just a conga line of copycats.

The cost-of-living crisis facing many consumers today will become a strategic crisis for the retail gorillas as they fail to evolve their business model.

 

 

 

How to ruin a great idea

How to ruin a great idea

 

Ideas are usually great because they do one of two things, sometimes both:

      • They focus on a deep and genuine need, obvious or not, to the casual observer.
      • They remove a problem that causes irritation.

Great ideas have a common characteristic: they are focussed.

They do one thing exceptionally well. When you spread the impact, so they do more things less well, the utility of the original idea is diluted.

The ‘Penknife’ is a classic example. It evolved when writing was done with a gooses quill and ink. The quill required constant sharpening, so the small ‘penknife’ evolved. It folded, was small enough to be safely carried in a small pocket and did an admirable job of sharpening the quill.

As a kid, I had a penknife, it had a blade, corkscrew, a bottle opener, and something my dad told me was a tool for removing the stones from a horseshoe. Not all that useful for a kid living in Sydney in the 1960’s. One of my friends had a Swiss army knife that had a cutlery store contained in a body that was several times the size of my modest penknife. As a 10-year-old, I was envious of his Swiss army knife, and lusted after one until I recognised it did nothing well. It was also bulky, and the most used tool, the knife, was difficult to open.

So it is with many products, an innovative idea is ruined by added features that may be ‘sort of’ useful to a few, but just get in the way of the single function for which the tool was developed.

Ask yourself what is it that people are willing to pay for?

We needed that penknife; we do not need the horseshoe cleaner. There is a cost to adding it, which must be recovered in the price, but suddenly the knife is less useful for its primary purpose.

Sometimes, the feature laden penknife can hide the feature that if separated into a specific product might be extremely useful. My penknife had that corkscrew. It was not much value to me as a 10-year-old and did not work very well. My father had much better corkscrews that were designed for the job he wanted done and did it well.

Beware of feature-creep it might destroy your great idea.

 

The two drivers of Brand Salience

The two drivers of Brand Salience

 

The best place to start this discussion is some sort of definition of ‘Brand Salience’. To me it is the extent to which your brand comes to mind. This might be unprompted, as in ‘what brands of beer can you name? That first question may be followed with a prompt such as ‘which of these brands are you familiar with? A brand with strong salience will be identified quickly, those with none will remain anonymous.

A common phrase in marketing is ‘build a brand’. The actions taken by marketers to address this often-mouthed objective differ. There is no template to build a brand, but there are well established principals.

Most young marketers would struggle to think past Instagram and Tick Tock, believing the way to build a brand is to do stuff that gains attention and eyeballs. The reality is that doing so barely scratches the surface of what is required.

Building a brand is a long-term proposition, inconsistent with the very highly targeted digital capability we now have. Building a brand requires that you create and leverage distinctive visual, verbal, and aural assets. On encountering one of these assets, a current or potential customer has the brand immediately brought to mind.

The first task is to identify any distinctive assets your brand might have on which to build. In most cases this is after years of zigzagging and bouncing around. The potentially distinctive assets of most brands are a bit like the jumble in the bottom of a kids toy box. Lots there, bits and pieces, but nothing that has been picked out and made really distinctive.

As a marketer it is your task to pick those pieces and build them into a distinctive asset of the brand.

The Ehrenberg-Bass institute has developed by grid that captures the essence of all the above by reflecting two factors: Fame and Uniqueness.

  • Fame quantifies the percentage of category buyers brains where the brand has an immediate and salient link to the brand asset being tracked.
  • Uniqueness quantifies the brands level of ownership of that asset versus competitor brands.

The challenge for marketers is that to build such a matrix that has real relevance can cost a lot of money. It is one thing to do an audit of an existing brand, entirely another to audit a market category to identify holes in the competitive profiles which can be leveraged.

Understanding the factors that will drive distinctiveness that are relevant to the consumer is the first point of call. There is often the debate about the role of creativity in determining what is distinctive and relevant, and how that distinctiveness is captured by the combination of visual, aural, and verbal characteristics.

For example, what I regard as being a truly great example of Australian brand building is Meadow Lea margarine. While it is now relegated to the discount bins through stupidity and poor brand management, the tagline ‘You ought to be congratulated’ would bring ‘Meadow Lea’ straight into the mind of most Australian women over 50. Early in the process of building Meadow Lea, qualitative research identified that women were still doing most cooking and housework while increasingly holding down a job and managing the family. They were sensitive to criticism in all these areas, and were looking for acknowledgement. Meadow Lea acknowledged the emotional need and addressed it by telling them they deserved to be recognised and congratulated. The advertising captured the essence of that acknowledgement, visually, aurally, and verbally. Over the course of a couple of years Meadow Lea went from being one of many brands of margarine, to being absolutely dominant. I would suggest that the remnants of that brand salience remains. 30 years after the idiots who inherited Meadow Lea after the usual multinational financial engineering occurred and the advertising stopped, most still correctly associate ‘you ought to be congratulated’ with Meadow Lea.

Typically, the steps to build a brand cost a lot of money in advertising, and importantly in the initial stage of identifying those elements that can be built into distinctive brand assets.  Most small businesses do not have the resources to even begin. However, two points are relevant:

  • If you are a local plumber, accountant, architect, whatever you may be, you need only be distinctive in your local market, however you define that market.
  • AI is throwing up tools that locals can use that promise to deliver at a relatively modest cost, and with some marginally compromised accuracy, the sort of understanding previously only possible after big investments. Mark Ritson, Marketing Prof at large recently wrote a very useful post in which he labels this data as: ‘synthetic data’.

Thinking strategically and acting creatively is the foundation of identifying, building and leveraging distinctive brand assets. You should try it!

My thanks for the catalyst of this post, and the outline for the header graphic goes to the Ehrenberg-Bass Institute for marketing science.

 

A marketers explanation of DIFOT, and its difficult sibling.

A marketers explanation of DIFOT, and its difficult sibling.

 

When you want to improve something, find a metric that drives the performance you want.

Pretty obvious, as most of us subscribe to the cliché that you get what you measure, while remembering Einstein’s observation that not all that matters can be measured.

Ultimately, what the customer thinks is crucial to success. Therefore, measuring the performance in meeting the customers’ expectations is always a good place to start measuring your performance.

Amongst my favoured measures is DIFOT.

Delivered In Full On Time.

That means not only the full order delivered on the day it is originally promised, with no errors of any sort, from quality of the product to the delivery time and accuracy of the ‘paperwork’.

DIFOT is a challenging measure, as it requires the collaboration and coordination of all the functional and operational tasks required to deliver in full on time.

As you fail to reach 100% DIFOT, as most do most of the time, at least at first, the failures are used as a source of improvement initiatives.

There is very little more important to the receipt of that next order than your performance on the previous ones. Never forget that, and measure DIFOT.

Hand in hand with DIFOT, you should also measure inventory cover.

The sibling.

You can improve DIFOT by simply increasing inventory when selling a physical product. Demand is inherently difficult to forecast, as it is the future, and entirely out of your hands. The challenge is to prevent your warehouses multiplying, and clogging the operational systems. The ideal situation is ‘make to order’, the ultimate shortening of the order to delivery cycle time.

The most common and very useful measure of inventory is ‘Days cover’. How many days of normal, average, forecast sales, whichever you prefer in your circumstances, do you have on hand to meet demand? This measure is extremely useful on a ‘by product’ basis, but when applied as an average across multiple lines with differing demand levels, can become a dangerous ‘comforter’.

Counter intuitively, the products that cause the most problems are the smaller volume ones, and new products. In both cases, demand is harder to forecast. The swings from out of stock to excess inventory can be erratic, particularly when a production line is geared to the larger volume runs of an established product as a driver of operational efficiency.

To achieve a 100% DIFOT while controlling physical inventory over an extended period is the most difficult operational challenge I have come across. As a result, it is amongst the most valuable to keep ‘front and centre’. The twin measures of DIFOT and ‘Days Cover’ are a vital element in addressing that ultimate challenge of customer service.