What is the value of habit?

What is the value of habit?

Jun 11, 2019 | Customers, Strategy

Yesterday I filled my car with petrol. There are a number of petrol stations near me, but I tend to use the same one, by habit, without any real form of comparative pricing with other stations in the area.

It is convenient, is in a backstreet, the bloke who swipes my card is pleasant, it is an independent, so I just assume the price is OK without checking. None of that stupid discount applied if you have a supermarket loyalty card, where you know the price is inflated to accommodate the discount, a practice I find is as irritating as it is immoral, so avoid them like the plague.

I wonder how many of his customers just use the place habitually, without checking prices as I do?

Consider the implications of pricing on the profitability of the station.

I will not try and do the maths, as I do not know the costs or the volumes involved, but two questions are relevant:

  • How many of the customers are regulars, like me, who do not check prices?
  • At what point do regulars, like me, check prices, weigh up the other factors that influence our behaviour, and move elsewhere?

Would it be worth knowing the answer to these questions, and managing price accordingly?.

At some point, you will lose the price checkers, those who  chase the cheapest price on the day, and seem to be prepared to drive around looking for the cheapest petrol.

How many added cents/litre will motivate a habitual user, like me, to actually check the comparative prices, and move to a less convenient station?

If I was running this petrol station, I might consider putting in a system that in some way recorded the regulars, those who seemed always to use the station, and those who just used it occasionally, and then experiment with the price elasticity of the regulars, assuming that the price checkers will never come in unless you are the cheapest  on the day

An added cent to the price would probably not be noticed by the regulars, not drive any of them away (poor pun there) but would drop straight to the bottom line. If the regulars were 60% of your sales, it might well be a great strategy. It gets rid of the lines at the pump, increases the chances for interaction at the cash register, and that extra sale from the grocery and confectionery lines, which is after all, where a lot of the profit hides. 

Every business, no matter what it is, should consider deeply the drivers of profitability in their business, and pricing strategies should be number one on the list of considerations.

 

 

Two crucial learning tools for SME’s

Two crucial learning tools for SME’s

Jun 5, 2019 | Marketing, Small business

Rationally analysing the impact of decisions made, or about to be made, is a crucial and challenging  task.

Most people instinctively overestimate their ability to generate favourable outcomes from a decision, and underestimate the difficulties of implementation.

In my local shopping strip recently, an optimistic young couple opened a pizza place. A few seats, for eat in, but too few to be called a restaurant. They clearly invested quite a bit of money, and being a local I gave them a try, and had a conversation at the same time. The owner had not really considered the fact that there was a long established, and heavily patronised pizza place about 3 minutes  walk away, with better parking, and that there was a very pleasant and cheap Italian restaurant that has Pizza on the menu just 4 doors down in the strip. This is in addition to the wall to wall promotion of  home delivery pizza by the big chains. Even in the face of those facts recited to him, he remained very confident that they would succeed, without any solid reason why that was to be the case. To my mind it was blind optimism in the face of overwhelming   odds, and while the pizza was OK, it was nothing special.

I expect it to close any day.

Tool 1. A Pre-Mortem.

Had he done a pre-mortem, he may have avoided the mistake.

Let me explain.

A pre mortem is obviously,  the opposite to a post mortem, conducted after death. In this case, it is conducted before the final decision is made to invest.

In a corporate environment, you gather the responsible people in a room before the switch is flicked and conduct a simple exercise, with a challenge. “The project proceeds as planned, but you are now a year into the future, and it has been a disaster. Examine the reason for that disaster”.

This sort of thinking assists in removing the blinkers, of curbing baseless optimism, and of mitigating the impact of the noisiest proponent of a project.

Had the young couple down the road conducted such an exercise, they may have anticipated what was obvious to an outsider, even with a quick glance.

Tool 2. A Post-Mortem

The second tool is obviously a post-mortem, done after death. In a commercial context this is often described as an ‘After Action Review’ or AAR. In this exercise, you examine what worked as planned, and what did not, for lessons to be applied in the future. Post mortems are common after a capital expenditure,  a review of the degree to which the outcomes of a Capex matched the forecasts in the capital plan, but they are rare in my experience in other areas of an enterprise. They should be an essential part of every activity, as only by examining the logic behind a decision  with the benefit of hindsight, can we learn to make better decisions.

When it would help to have someone around who does this stuff routinely, give me a call.

Header cartoon is again by Hugh McLeod of www.Gapinvoid.com. While you may not be able to be the only one in the world, be the only one in the street, or locality, or you will fail. When you cannot define your differentiator to the few who might care, you will be in real trouble.

How much is a seat at the creative table?

How much is a seat at the creative table?

Jun 3, 2019 | Branding, Marketing

The nature of the 24 hour marketing turnaround has led to piles of rubbish advertising. The ‘big idea’ of my youth, the search for that magic something that will engage and motivate  has been replaced by piles of small expressions that get left on the table.

Creativity requires time, curiosity, an awareness of what is around you, a tolerance for risk, and an irreverence for the status quo. These are no longer common in an environment of the 24 hour turnaround, but when you see an example, you notice it, remember it, and just perhaps it influences behaviour.

However, from time to time, someone  also takes advantage of the quick cycle and comes up with something creative, irreverent, and different, and it works.

As a young marketer, one of the key metrics was awareness. How much did we have to spend to generate a specific level of awareness?

The ad in the header was as far as I am aware, just on a few Ikea stores in Queensland. The cost would have been almost nothing,  the impact significant. Most poster ads go unnoticed, this one was noticed, and the new age tools spread it, which is how it came to me.

A terrific idea.

My favourite marketing guru, Albert Einstein quipped, amongst his many, ‘Creativity is intelligence having fun’

Somebody in Ikea was having a lot of fun!

 

PS. June 4.

It turns out the ad in the header was a ‘fake ad’ put out by a creative consultancy, Adrian Elton, in an effort to get the attention of Ikea management. 

I am sure it worked, as Ikea is not stupid. This is an example of a big idea, so lacking in todays churn of mediocre ideas passed off as content creation.

To win, reverse the sales funnel!

To win, reverse the sales funnel!

May 31, 2019 | Customers, Sales

 

There is no gravity in a sales funnel!.

 Prospects do not fall down a sales funnel in an orderly manner, defined by some marketers picture of their customer journey.

Prospects climb up a chimney that gets narrower and more difficult the higher you go. There are points of friction, decision points, diversions, and often life just gets in the way. When a prospect falls out, sometimes they return, at another time, to another place in the ‘chimney’, and sometimes are never to be seen again.

At each point in the climb, the marketer has to get a ‘mini-yes’ from the prospect. Are they going to continue the climb to a conversion? Or is the friction greater than their motivation to climb further?

There are 3 points of extreme friction you need to address as prospects climb

  • Why should the prospect engage with you? This may be a PPC ad, a download, simply looking at a second page on your website, or not throwing away that brochure you mailed them. This is the first major point of friction, and conversion rates at this point are usually in single figures.
  • Why should the prospect buy this product in preference to any alternative solution to whatever problem they are facing? Most problems have many potential solutions, and many suppliers, so you need to be able to demonstrate why the solution you offer is superior to alternative solutions.
  • Why should they buy the product/solution from you, rather than one of your competitors? If the only answer to this question is price, you have just lost.

We kid ourselves if we think of this process as ‘gravitational,’ exerting gravity downwards towards the transaction. The process is the reverse of gravity, there is pressure from many angles to squeeze prospects out of the chimney, and it takes sustained effort to support them in their climb.  

 

 

Solopreneurs still need a network

Solopreneurs still need a network

May 29, 2019 | Collaboration, Small business

 

The numbers of those running solo businesses has increased dramatically as the world has changed around us. Employment for life is a thing of the past, relying on your own resources has become  the common way to succeed.

Many do so as solopreneurs, for lack of a better term.

This does not mean they are reaching for the stars, it just means they are one of  the hordes of small enterprises offering services to others that used to be offered by corporations, have been outsourced, or not offered at all. The digital revolution has created many of them, filling roles and providing services that did not exist a decade ago.

The downside, and there is always a downside, is the isolation.

Human beings are social animals, we need others not just to get stuff done, but for our emotional and mental health, and yes, to create the next generation. Meeting partners in the workplace used to be where the most relationships began, but no longer.

As a solopreneur for  the last 24 years after becoming a corporate refugee, I have always acutely felt the loss of the social, supportive side of corporate life. The freedom experienced as a solopreneur is terrific, but it can get very lonely.

Rotary was started in 1905 in Chicago as a means for diverse professionals to meet, exchange ideas and experiences, and give back to their communities.  Meetings of like-minded people have occurred through history. From the earliest times, people gathered in common places to do business, exchange ideas, and gossip. The Greeks evolved the sophisticated processes we have scrambled and called democracy, the Romans gathered in the forum, artists gathered in Florentine workshops sparking the renaissance, Isaac Newton first exposed his ideas in coffee shops around London during the enlightenment, and the Salons of Paris spawned the impressionist movement.

We ‘network’ for business, to become known, liked and trusted, so others will refer us to their networks. It is a powerful motivation, now underpinned by digital tools, but at a deeper level, there is a range of psychological drivers that we as humans need, that are more powerful than simply getting a sales lead.

We need others to help think about the personal and commercial problems we face, to provide social and emotional support, gain insights from the experiences of others, challenge our thinking and automatic responses to situations, as a substitute for the service networks provided in corporations. 

If on top of all that, we can make a dollar by providing services to others, that is great, but the outcome of successful networking is human, not just commercial.

Header Photo is of the Queens Lane Coffee House in Oxford, UK, established in 1650.