Nov 14, 2022 | Customers, Marketing
Last week I published a post that outlined the four essential questions for successful marketing. A number of people contacted me and said, ‘more detail please’.
So, here goes:
What problem can I solve?
Unless you can solve a problem for someone, why would they buy from you?
Albert Einstein, my senior marketing guru, said, amongst other things, “If I had an hour to solve a life defining problem, I would spend the first 50 minutes defining the problem, the rest is just maths’
So, do your research before you jump in.
The definition of how you solve the problem becomes your value proposition. In other words, how does what you do add value to the lives of those ideal customers?
If you cannot articulate that, you have nothing except price, and nobody wins a price war.
The solutions to problems come from being able to ask the right questions.
Seeing things others do not see, solving problems better than others, and sometimes seeing a potential problem before it is an acknowledged problem, highlighting it, and then solving it.
The classic case is the iPod. It was not the first MP3 player, and arguably it was not the best technically, but it did something no other mP3 player did. It put ‘1000 songs in your pocket’. It articulated the problem that the product solved.
While others all talked about their technical superiority, the stuff the geeks thought was important, Apple just told us what consumer problem they solved.
Who is my ideal customer?
Who is your ideal customer, the one who will not haggle the price, who loves the product you sell, and proselytises for you? Knowing that person in detail would be marketing and commercial gold.
Like all gold, it is hard to find, subject to all sorts of distractions and false starts, but immensely valuable when discovered, and discovery is usually incremental, rather than a ‘eureka’ moment. This means it is also a demanding challenge.
What is often also forgotten in the effort to define that ideal customer, is that every customer also has an ideal supplier, one who meets all their needs, delivering value in excess of the cost to them. It is a two-way street, and a relationship only prospers where there is value being delivered to both parties.
Defining your ideal customer is an iterative process, deceptively demanding, as it requires choices about who is not an ideal customer, and therefore excluded from primary consideration. Choices like this are challenging, but necessary, particularly for small and medium businesses which do not have the luxury of a big pot of marketing money. You must get it right or risk wasting limited resources.
Following is a list of 6 parameters you can use. Not all will be equally applicable in every situation, but it will pay to give each deep consideration.
Who: Is the demographics they may exhibit. Where they live, age, gender, education, job, and all the other quantitative characteristics that are available. These parameters are pretty much all that was easily available in any detail until digital tools came along.
What: are their behaviours. Do they go to the opera or rock concerts, perhaps both, do they travel overseas for holidays, what sort of causes, if any, do they support, are they likely to demonstrate their beliefs publicly, or are they just internal. All the sorts of things that offer a picture of how they think, feel, and behave in all sorts of situations.
Where: will you find them digitally, as well as in the analogue (perhaps real) world, and what means can you use to make a connection. Are they likely to be avid users of Facebook, LinkedIn, or other social platforms, are they comfortable buying online, do they ‘showroom’ digitally then visit the physical retailer, do they get their news from Facebook and Reddit, or more focused news sites, or even, surprise, surprise, newspapers, radio and magazines.
When: will they be ready to buy? Customers are rarely ready to buy when you are ready to sell. Understanding the customer buying cycles, particularly in B2B and a larger consumer purchase is critical.
Why: should they respond to your entreaties, to do whatever it is you are asking of them. What is your value proposition to them? What promise of a new and better tomorrow can you deliver? What can you deliver that is different and more valuable to them than any alternative? If you cannot answer these questions, it will come down to price, and winning a price war is a great way to go broke.
How: will you service the transaction, and the subsequent relationship that may emerge? This is usually down to questions about your business model and the ‘fit’ that has with the customer.
How and where do I apply Maximum Marketing Leverage?
Identifying the point at which you can apply Maximum Marketing Leverage (MML), or in other words, get the most productivity from your marketing investment is the point at which the previous three questions intersect.
Answering these three questions leads to conclusions on the fourth; how do I make a profit? Answering that requires a combination of introspection on your business, in combination with ‘exospection’, the examination of your business from an external perspective. The point where these two perspectives intersect is the best spot to apply marketing leverage.
Most will be familiar with the SWOT model of business analysis; this is one of many, and simplest of the many ‘Mental Models’ you can use to do the examination. Porters 5 forces, Balanced Scorecard, BC matrix, Business Model Canvas, and many others are alternatives. All have their pros and cons, but the key point is that you give due consideration to them, as they will identify and clarify your point of MML.
How do I make a profit?
Just as a successful young single male professional might opt for a red sports car, when 10 years later, with a family, kids, soccer practise, he might opt for a brick on wheels, you can have different business models to suit different circumstances and conditions.
Most small and medium businesses with which I have been associated give little if any thought to the business model, but it is of critical importance.
Are you retail, wholesale, franchised, subscription, digital, or some combination? All are different, working in differing ways, to allocate and absorb the costs and benefits that accrue. Being very clear about your business model and being able to anticipate if a potential customer will fit is in some circumstances, a vital component of making a profit.
The ‘maths’ leading to profit
All that has gone before, in Albert’s language, is the definition of the problem. Now we get to the maths, the way in which you apply the leverage.
Most small businesses rush straight to the tools of leverage without due consideration of the nature of the problem they want the tools to solve. However, once defined, pick a tool, or most often a combination of tools that best fits your point of leverage and apply them, recognising that there is no formula to give you the exact right answer. Therefore you need to be prepared to experiment to find the best outcomes. The process of experimenting will also give greater clarity to the 4 questions, which will in turn clarify the point of MML.
The choices you face are multitudinous. Digital, analogue, which social platform, how much should be spent on AdWords, does Facebook work, how to use the automation tools available, what about email, letterbox drops, and so on, and on, and on. 20 years ago, life was much simpler, there were few choices, but there was also very few of the tools available that enabled the identification of the point of MML, so experimenting was far more costly and risky than it is now, to the point where small businesses had very few options. Now you have plenty, the challenge is to use them in the best possible manner.
Good luck, and when you need to draw on deep experience, give me a call.
Header credit: The header cartoon is a repeat of the Tom Gauld cartoon used on the original post
Nov 6, 2022 | Change, Customers
Who will miss you when you are gone?
That is a question I often ask clients as they contemplate challenges such as the profile of their ideal customer.
Last week I was gone. Laid low by flu such that for the first time in the almost 15 years of writing and posting on StrategyAudit, averaging 2.5 posts a week, there was nothing.
Nada.
Part of the logic of regular posting is that those who follow you get used to a regular communication, it becomes part of their day to absorb the messages sent. Break the pattern, and you risk losing their almost automatic attention, and once lost, it is a hard pattern to re-establish.
Fair time to ask the question of myself, I thought.
Should not have done that, the answer is a touch depressing.
While StrategyAudit is little more than a pimple on the arse of the blogosphere, I did think there would be a few who missed the experience on strategy, marketing, and business improvement built up over a long commercial career that I put out there.
One person emailed me to let me know a link in a recent post was broken, and one other who I know quite well, rang to accuse me of ‘retiring’ without telling him.
There was the usual level of traffic to those existing posts that typically attract readers, mostly via Dr. Google, but often via referrals, which you can easily pick by the sudden peak of readership.
‘Who will miss you when you are gone’ remains a great question as you contemplate the investment made in marketing. It does pay however to have a thick skin as the answer may not be what you had hoped.
Oct 28, 2022 | Customers, Marketing
The J. Walter Thompson advertising agency is one of the prototypes for the ‘Madmen’ of advertising, the architype of the explosion of consumer advertising that occurred in the sixties.
The agency was started by James Walter Thompson in 1896, when the ‘advertising’ function was nothing more than a brokerage service for selling space in newspapers.
Advertising in those days, well before even radio and consumer magazines, had only newspapers as their communication medium. It slowly expanded into creating the ‘advertising product’ to make selling the space easier into the expanding range of communication options, all on commission.
Simple days.
Most success relies on simple things, breaking down the complex so they are easily understood. So it was with advertising in those early days, before we were blasted by ever increasingly complex offers and intrusive psychological hooks to sell us more stuff.
It is often useful to go back to these roots, to see what made for success early, what were the simple things that worked.
The ‘Thompson T-Square’ is one such tool in copywriting.
Every successful copywriter used it, a few simple questions to focus the mind on what was really important as they wrote the copy. At J. Walter Thompson, it was pinned to the wall of every copywriters office.
What are we selling?
To whom are we selling it?
Where are we selling it?
When are we selling it?
How are we selling it?
Simplistic yes, but also effective, and leading to the ‘four P’s’ of marketing, articulated by E. Jerome McCarthy in 1960.
Those simple questions lead to the consideration of the most effective articulation of value to the ideal customer, who would be receiving the messages in a manner that made them comfortable, and receptive to the idea of a purchase.
So, the simple answer to the question in the header is ‘Yes, every day”, it still works!
The header is an 1868 portrait of James Walter Thompson, courtesy of Wikipedia.
Oct 26, 2022 | Customers, Marketing
We live in complicated times, none more disturbing than the now regular breaches of data privacy and subsequent risk to the financial and personal security of individuals.
The recent spate of data breaches is probably just the beginning, but we, the general populace in the absence of any deep technical knowledge about data security, assume that those who collect our data do so for good reason.
Silly us!
This should never, but it seems always does include, ongoing marketing, and selling of personalised data, even well after we cease to be customers.
I have been a customer of Optus since their first days. I switched the day there was a competitive market born in 1993. They have all my communications business, which may be chook feed to them, but is a substantial hole in the monthly household budget.
The best Optus can do in the face of the breach, presumably enabled by minimum level investment in security, is send a form letter, full of assurances that all will be well. However, if we want to phone them, here is a number, but there might be a wait.
While the letter was addressed to me, at my residential address, the header was ‘Dear Customer’. They know my name, email, and phone numbers, and certainly can aggressively ensure bills are paid, so no detail goes unnoticed.
Surely Dear Mr. Roberts instead of Dear Customer would have been easy?
It might have been sensible for them to also list the services I hold with them, and give a risk assessment of each? Perhaps I do not deserve such a level of transparency?
Then, the signoff:
‘Sincerely. Your Optus team’.
No names, not even a duplicated signature of the cleaner, let alone anyone on a huge salary who might be taking any responsibility for this marketing clusterfuck.
I guess I will have to bite the bullet and change, be a part of the great communications customer churn. These nignogs spend tens of millions tapping into this churn, rather than shoring up the customer base they already have and reducing the churn. As an advisor to SME’s my advice is to cherish your existing customers, particularly those who are unlikely to change, even if just for the avoiding of the inconvenience involved.
When your business faces a crisis brought about by external factors that will impact customers, rule number one is be up front, take responsibility, accept the shortcomings that led to the crisis, articulate a recovery plan, and most importantly, personalise it to those affected.
Optus has done none of those things.
I am glad my super fund that also hides behind barriers I struggle to breach, does not hold any Optus shares. Presumably it is unable to given Optus is 100% owned by a Singaporean billionaire. Is this ownership, and the key place Optus holds in the communication infrastructure of this country a part of the problem?
Oct 24, 2022 | Customers, Marketing
Following on from a previous post about the value of information, it seems relevant to ask how long any value created lasts.
We are all familiar with the notion of the ‘1/2 life’. The time it takes for radioactivity of an element to decay by 1/2. Uranium 238 has a 1/2 life of several billion years.
What about the 1/2 life of information?
The 1/2 life of a daily newspaper is arguably 1 day, today’s news is ‘tomorrows fish wrapper’, and for 99.9% of blog posts, and most other so called ‘content’, it is about 2 seconds. This seems odd in what is supposedly the ‘Information age’. Why is the life so short, in most cases, and what make the difference for the 0.1%?.
The answer seems to be: It depends on the value of the information, and the ‘friction’ or resistance which is applied to its transmission.
Businesses, and most institutions are structured to be top down, in functional silos. This is a system that evolved before digitisation of information, which enabled the scaling of effort and the most efficient allocation of resources. A 20th century solution to the challenge of information transfer and leverage.
In the 21st century, with digitisation, the structures of the 20th century are redundant. They are simply too slow to be competitive in an environment where the action happens at digital speed on the ‘front lines’ of customer interaction. It takes too long for the siloed decision making processes to work, the customer has moved on to someone who is able to satisfy their need on the spot.
This change requires a wholesale change in the way our organisations are structured and the tactical actions that take place every day are managed.
What happens on the ‘front lines’ evolves quicker than the siloed information and instruction exchanges that worked well last century. We must turn our power structures upside down, and give the front lines the authority to make on the spot customer focussed decisions within a much broader remit than was previously the case. The risk if we do not is that customers will simply go down the road to someone more responsive.
This creates huge complications for organisations, as the status quo is upset. The power people at the top have worked for all their lives is diluted, and for those at the bottom, suddenly they are being tasked to take decisions that last week were being referred up the chain.
There is a driver of activity, always present, but to date well in the background for most, being the ‘operating rhythm’ of the market in which they compete. When their decision cycles are slower than the operating rhythm of the market, the market will go elsewhere, or at the very least, opportunities will be lost.
Getting ‘inside’ the operating rhythm of your competitors and the market more broadly, being able to respond quicker, is an emerging key to strategic success.
The 1/2 life of information is now in the hands of others, those who really count, by being customers.
