Finding victory over the deceptive demons of the marketing mind

Finding victory over the deceptive demons of the marketing mind

Feb 13, 2019 | Communication, Customers

 

Years ago I heard the great social researcher and author Hugh McKay describe every persons view of the world as the sight they see from behind the bars of their own experience, background, training and ideas.

The more developed are all these barriers, the more and thicker the bars between you and the outside world.

For marketers setting out to engage those who are most unlikely to be like them, this creates a dilemma.

How do you remove the bars, and see the world as your prospective customer would?

The demons in your mind will try and convince you that the world is as you see it, and at the very least, they will allow only a modest number of modifications without a significant level of discomfort to you.

Human beings connect easily to those who are most like  them. This is a unifying factor of evolutionary biology. It ensures that as we evolved, the small communities in which we evolved could be secure, or at least as secure as possible from the beasties lurking in the undergrowth.

While we may understand at a logical level the nature of those we are setting out to influence, at a primal level, we struggle to align our thoughts and words to theirs, we remain wedded to our own instinctive patterns and prejudices.

We all value truth, love, and life, but the means of expressing those values will be different. In understanding and relating to the differences, despite our own deeply held views, lies the marketing gold of true empathy. It all comes down to the language you use. Not just the verbal one, which is  the default, but the whole range of non-verbal channels, which according to many studies contributes more than 50% to the interpretation the receiver makes of the message.

Trying to sell renewable energy technology to someone who believes fossil fuel is the only answer to the consistent delivery of baseload power is challenging, as is trying to convince a conservative Christian that same sex marriage is OK.  

Overpowering that lurking demon that demands you see the world of your customer in a particular way is fundamental to being successful.

 

Photo credit: Sculptures lurking the shadows collection

 

 

 

How to find the ‘Zig’ when others are ‘Zagging’.

How to find the ‘Zig’ when others are ‘Zagging’.

Feb 11, 2019 | Change, Customers, Leadership

 

Being a part of the herd may be comfortable, but it is rarely sustainably profitable at levels greater than the cost of capital.

Finding points of differentiation, the means by which you can be distinctive preoccupies most thinking marketers, those factors that customers value that attract them to your offering rather than going up the street.

It also means, by extension, that you have made decisions about the nature of the market segments or niches that you wish to serve.

By definition, if you are setting out to be all things to all people in the hope that you will not alienate anyone, you cannot also differentiate, as it means that you are not distinctive in some meaningful way that adds value to specific types of customers.

Differentiation covers more than the value proposition and copy on your website, it follows through to the visual elements of your branding, and most importantly, the behaviour of your employees, channel partners and stakeholders. By reflecting the few factors that will make those ideal customers react to your differentiated offering in a niche they inhabit is a valuable building block. Everyone is familiar with the  cliché ‘a picture replaces a thousand words,’  which is never truer than when communicating a differentiated offer to specific group of users in a defined market niche. A graphic artist will call it a ‘Visual identity’ and it is worth the investment to refine it.

One of the best known ‘Ziggers’ is the recently deceased Herb Kelleher, co-founder and CEO of Southwest Airlines. Southwest retained an unbroken 43 year record of profitability in an industry that had wild fluctuations in profitability, and many of those airlines that set about killing Southwest in the early days are themselves now history, like Pan Am, or in and out of Chapter 11 like United.

Southwest focused on simplicity and their customers. When others employed spoke and wheel routing, they went point to point, as others added services like allocated seating and differing classes, Southwest did not, and they flew just one type of plane (Boeing 737) , making servicing easier, and while everyone else went to war with their employees, Southwest turned theirs into apostles for their employer.

Differentiation is more than being different, those differences must be of sufficient value to some customers, that they would  not go anywhere else.

 

   

 

 

How to quantify your Customer Value Proposition

How to quantify your Customer Value Proposition

Jan 21, 2019 | Customers, Marketing, Sales

 

 

The value proposition to a customer is the means by which you converted them to being a customer.

Unless you can demonstrate value to them, in excess of any alternative, including doing nothing, you will not convert.

When you think about it, there are some pretty consistent variables that can  be massaged into some sort of quantification of a proposition. While it will never be perfect, it will be better than nothing when assessing the power of your marketing collateral, or perhaps assessing alternative wording.

Having a powerful value proposition is not enough, you must communicate it clearly and effectively to those who may be interested. You also must understand that ‘Value’ is a qualitative term, and will change with context and circumstances.

There are 7 variables I commonly see:

  • The strength of the purchase intent of the lead. This will vary enormously on a whole series of parameters, and will vary from time to time. For example, a need expressed to convert IT processes to the cloud from your own server might be a good idea, whose time has come, but when your server blows up, the need increases geometrically. The better you understand the drivers of the purchase intent the better able you will be to make a judgement,
  • How closely your proposition matches the need being expressed. When you are trying to sell a 4X4 and the lead is a single bloke who hates camping, you will have a challenge on your hands. Better to offer him the sports car.
  • Differentiation. When you are the only one in the market niche, selling to those who need your product becomes easier. When you are one of a number of undifferentiated alternatives, price becomes the major distinguishing factor, and that is never good. Conversion becomes a race to the bottom, and the greatest risk is that you win too often and go broke.
  • The clarity of the value proposition to the lead. This is where most fall down in the execution. Look at 100 websites, and see if you can locate the value proposition. While we are learning, the clarity of the proposition to a visitor to a website, which is now the first port of call in almost every purchase beyond the regular and mundane, will be terrible. The key to remember is that the lead, after reading the headline copy on the site, must be able to tell you why they should buy from you, and not someone else, assuming they are in the market you service.
  • The level of friction in the sales process. Increasingly as we go on line, friction in the process is becoming more and more important. Off line purchasers are increasingly expecting on line frictionless processes. In B2B sales, the friction is often institutional, the bureaucracy of procurement simply gets in the way. Effective Key Account Management is essential in these circumstances.
  • The incentives used to counter the friction. Most often financial incentives are the primary ones used, but tying them to another is common, for example ‘this special lasts only until Sunday’ or ‘Only 5 left’
  • Uncertainty caused by the purchase process. Human psychology seeks safety, and that resides in the known, and with the crowd. Asking a lead to do something different increases the risk to them, and the riskier they perceive the solution, the less likely they will be to convert.

So, to the equation.

Conversion potential = Purchase intent + need satisfaction + Differentiation + proposition clarity + (process friction – incentives) + uncertainty.

The way to put numbers on each of these parameters would be to weight each of the parameters in your particular circumstance, then score your lead on a 1-5 scale. The ‘w’ in the formula is the weight you give to each of the variables.

CP = wPI +wNS +wD + WPC + (wPF – wI) + U.

As an exercise, look at your own landing page and score it as a potential customer would when seeking a solution to an itch.

Image credit, again, to Gapingvoid.com

Your three most valuable assets are not on your balance sheet.

Your three most valuable assets are not on your balance sheet.

Dec 5, 2018 | Customers, Management, Strategy

 

The first is the value of your brands, the second is your customer list, the third is the ‘culture’ that exists, a fragile qualitative asset which is a vital part of commercial sustainability.

A balance sheet is a snapshot in time of the financial value of your business. It is based on standard accounting practice which fails to recognise the non financial assets that may be present.  Some may include an element of ‘goodwill’ but that is usually just an accounting treatment of the difference paid for a business compared to its tangible asset backing.

The value of a business is the future cash flow that will come from providing goods and services to customers. While that cash flow does come from the tangible assets of the business, in these days of ‘knowledge work’ most of it comes from the three sources noted above, not included on the balance sheet.

A professional services firm has very few tangible assets. A few desks and computers, they probably lease their premises, and their most valuable assets walk out of the office every afternoon.

In the case of a B2C business, your customers are generally different from your consumers, which just serves to increase the relative value of your brand. Consumers make the vital choice of which product to purchase, the intermediaries, wholesalers and retailers are just anticipating what choices they might make, and profiting from the arbitrage.

An acquaintance sold his business some months ago for a tidy sum. The business had been established for a considerable time, was successful, and he had kept up  the level of investment, particularly in his employees, so that it had every prospect of continuing to be successful.

The new owner closed it down.

They took on a few key employees, but locked the gates, broke the operating leases, and sold off the remaining assets.

All they wanted were the customer lists, along with what was in the heads of those few employees who had the direct relationships with the key customers, and the potential scale that was on offer with the elimination of a competitor.  The whole value of the business was tied up in the Intellectual Capital of those in the business, and the manner in which it delivered value to customers, not in the hard assets recorded in the balance sheet. However, in failing to recognise the value of the culture in the business which they destroyed, they ensured that the transaction would be a financial failure over the medium term.

Be sure you understand the full value of those assets not on your balance sheet, and invest in them, as ultimately, they will be the core of the value of the business.

 

The most common cause of the failure of medium sized businesses.

The most common cause of the failure of medium sized businesses.

Nov 19, 2018 | Customers, Strategy

  Businesses fail for a lot of reasons, lack of cash, their product becomes redundant, competitors emerge at a cheaper price, distribution is not as anticipated, inadequate sales skills, and many others. However, all these failures have a common root. They were not important enough to the few who might have really cared enough to give them their business. They try to be all things to all people, and even the most successful company of the last 25 years, Apple, cannot pull that off. What on earth makes you think you can? The key to success is to do less. Relentlessly prune everything you do until there is nothing left but the stuff that is really, really important to the few, that you do better than anyone else. That combination stops those key target customers going anywhere else. Saying ‘No’ is the hardest thing any medium business has to do. However, it is also amongst the most important things. Stand for something genuinely meaningful to the few, and deliver relentlessly to them. Forget the rest. Header credit. My thanks once again to Hugh McLeod at Gapingvoid.com  
How to swim in the profit pool

How to swim in the profit pool

Nov 5, 2018 | Customers, Strategy

 

Every industry is an amalgam of value chains, demographic, behavioural, and geographic segments of customers and suppliers.

Inevitably, some of these segments are more profitable than others for a range of reasons. Therefore it makes sense to understand where the profits in your target value chain are being made currently, and where those profits may move to in the future.

There are two challenges here, the harder is seeing the future, but the second, identifying where the profits are now, should be easier.

Apply the Pareto principal to all the segments in the whole value chain, and you will inevitably see that at each point, Pareto rules.

It therefore follows that your best strategy is to identify the areas where your value proposition can add value to the 20% that deliver 80% of the profit.

The king of this strategy is Apple, who control about 15% of the volume of mobile phones sold, but accrues 85% of the profit available in the market.

Who are the 5% of customers who truly value something only you can offer?

Find them and you will be swimming in the profit pool, with little opposition.