Oct 18, 2024 | Communication, Customers, Marketing
The sales funnel, often depicted in materials promising a path to riches, has profound flaws.
It implies two misleading concepts:
Gravity: The notion that business arrives at your door via discrete steps in a gravity-driven funnel is nonsensical.
No customer focus: Until the bottom of the funnel, where deals are signed, the emphasis is on marketing tactics rather than the customer.
Success demands that a customer is willing to pay for a need to be filled, an itch scratched, or an aspiration fulfilled that’s worth more than the price paid. Value must be created for the customer.
Even for everyday consumer goods, not everyone is in the market all the time. For most products, consumers are only occasionally in the market. In B2B sales, buyers may only appear once a decade, and they’re often not the ones who ultimately make the decision to buy and authorise payment.
These factors lead to the conclusion that the standard templated sales funnel is fundamentally flawed.
My alternative, displayed in the header, is more realistic. It shows progression through a sales process powered by the quality of attraction at each point. It starts with the customer being in the market only occasionally. At those times, you must be included on their list of possible solutions, usually weeded down to a shortlist for further investigation.
At each stage, customers face friction, go/no-go decision points, as they move towards a transaction. Your marketing collateral and overall impression contribute to overcoming this friction. For example, a potential car buyer will suddenly notice many shortlisted brands on the roads simply because they’re now aware of them.
This process is called the “frequency illusion” or its formal name: the “Baader-Meinhof phenomenon” (A scary name for those over 65.) It involves two related psychological concepts:
- Selective Attention: Once aware of something, your brain automatically looks for it, making it more likely to be noticed.
- Confirmation Bias: Encountering the thing you’re now aware of, your brain notices it, making it seem more prevalent.
Templated sales funnels tend to oversimplify the complexity of a customer’s journey towards a purchase. They rarely accommodate the differing behaviours of potential customers, lack recognition of the reasons one prospect drops out, and others circulate between stages as they reflect on the purchase. They completely ignore the impact of competitive activity and offers that may emerge, and tend to emphasise quantity over quality of prospects gathered.
By starting at the exact opposite end, where the potential customer lives, you should be much better able to craft marketing collateral and action points that reflect the real position in a purchase journey of a prospective customer.
Sep 27, 2024 | Customers, Marketing
‘Marketing’ is a word used and misused widely. Perhaps that is because there are so many definitions around, including my own: ‘The generation, building, protection and leveraging of competitive advantage’
After 45 years of marketing, I have gained some experience. Often it has been painful, coming from the unexpected. Distilling all those lessons into a few headline statements has been a mission to help others.
Not all you try will work.
Marketing is about the future, trying to shape behaviour of your customers to remain with you, entice others to try you out, or for them to do something new. As a result, not everything you try will work. This is an unchanging truth irrespective of all the resources devoted to any project, or set of initiatives.
The customer is not always right.
Some customers, often many that are chased most seriously, simply do not matter. They will cost to capture and keep more than you can ever make from them. However, the right customers are always right. The challenge is defining who they are, recognising their pain points, gain points, articulating the value you deliver, and focusing resources on them.
Digital marketing and it’s ugly brother social media is not a silver bullet.
More often than not, relying on digital in the absence of other wider strategic considerations will result in you shooting yourself in the foot. Digital marketing in all its forms, is just another tool in the toolbox. Like any tool, it can be used well or badly depending on the context of use, and the skill of the user.
Customers articulate your brand better than you do.
Meaningful conversations around the board table that seek to define what your brand means to customers is nowhere near as effective as getting the meaning straight from the horse’s mouth. Your brand is what your customers say it is, not what you might wish for, believe, or what some consultant says is ideal. It is almost certainly not what your partner says it is.
Trends go both ways.
The positive trend in your market, your sales, customer attitudes and all the other things tracked will at some point turn and become a negative trend. Nothing lasts forever. Relying on a trend to continue driven simply by its own momentum is a dream. It might be OK in the short term, it will never be OK in the long term. Your task as a marketer is to identify the drivers of the trend you can influence, and do so, while acknowledging those you cannot control, and responding to them.
Success comes from being different.
Different requires risk, going against the grain and the crowd, and often internal naysayers. Success rarely comes from just being the same as others but slightly better. Being incremental can result in you holding your place in an ever-increasing pace of change occurring in every market, but it will never allow you to break the mould and build anything remarkable. It is remarkable that creates real success. The forces arrayed against being different are so powerful that it is an extraordinarily difficult path both for an individual and an enterprise. Perhaps that is why we focus attention and eulogise those few who do break through and generate something truly different
Addendum December 31, 2024.
Playing around with some AI tools, I stumbled across one called infography https://app.infography.in/ that turns text into infographics.
For fun, I tried it on this post, originally published some time ago. 30 seconds, and it gave me the infographic below.
Mar 22, 2024 | Customers, retail, Small business
Anyone dealing with Australia’s two supermarket gorillas knows how hard it is.
You know the old adage:
Question: Where does a 400 kg gorilla sleep?
Answer: Anywhere they bloody like!
Over the 45 years I have rubbed up against them, beginning as a young bloke when there were a number of now disappeared alternative retailers, it has only become harder. However, the rules of dealing with them have not changed much, just become clearer and more cut-throat.
Some years ago I did a presentation to the CEO’s of the SME group of companies who were members of the food industry lobby group AFGC. Looking back on that presentation, republished in several places, it is clear little has changed, certainly not for the better for battling SME’s.
My advice to those I work with also has not changed much, and can be summarised as:
- Have a solid commercial foundation before you contemplate the challenges of distribution through supermarkets.
- Never forget that retailers might be your customers, but they are not your consumers. At best they are a massive barrier between you and your consumers.
- Be relentlessly focussed on your long- term strategy, while recognising retailers are only the means to that end, not the end itself.
- Unless you are clearly differentiated from others, particularly in the minds of consumers, you will be a retailers breakfast.
- Know your numbers intimately. This is the barrier upon which most are wrecked, they have insufficient control and understanding of all their costs, margins, risks, and cash flow.
- Be very willing to say ‘No’ and live with the consequences, as they will almost always be better than the consequences of saying ‘Yes’.
These basic rules, and several others were the topics of conversation in a podcast with Chelsea Ford, published yesterday. The links to the podcast on Spotify and Apple are below.
🎧 Spotify: https://lnkd.in/dWzMN5mN
🎧 Apple Podcasts: https://lnkd.in/dq7yWGJZ
Feb 12, 2024 | Branding, Communication, Customers
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.
Dec 13, 2023 | Customers, Marketing
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?
Nov 27, 2023 | Branding, Customers
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.
