Fishing For Customers

Category: Uncategorized

  • Borrowed Interest

    Have you ever seen a poster from across the room that has the word “SEX” at the top in 72 point type? You walk across the room to read the smaller print, which says “Now that I have your attention, let me tell you about the advantages of….“

    The first time this happens you probably feel foolish that you were drawn to this poster. The second time, you don’t bother walking close enough to read. Why is that?

    Is it because you don’t want to be noticed reading the poster? You don’t want people laughing when they see that you’ve fallen for it, too?

    Or is it because the information on this poster holds nothing of interest to you?

    As an advertising tactic, this one is flawed. It tries to capture attention without ever qualifying the reader as a potential customer. It wastes the reader’s time and the advertiser’s resources.

    What Value Is Attention?

    Some advertisers believe that getting the reader / viewer / listener to notice their message is such an important step that they apply no common sense to their messaging. They attempt to piggyback their communication on to some other device, some other attention grabbing message.

    Is Are You Smarter Than A Fifth Grader? the hot television program this season? You can safely predict a slew of local advertisers (and probably a couple of national advertisers as well) will create ads playing off of the show.

    These are the same people who jumped on the Where’s the Beef? bandwagon. They fell in line to ask Got Milk? Got Insurance? Got Teeth? Got Real Estate? They keep trying to catch the “next big thing” because they aren’t saying anything of significance.

    Less obviously, but equally as badly planned, are those that have no tie in at all.

    Borrowed Interest

    I spoke to a plumber a few years ago who wanted to incorporate the Superman character into his ads. Why? Because he thought it would be “cool.” Aside from the obvious copyright violations, what does Superman have to do with plumbing?

    Don’t try to associate your business with things that aren’t relevant to your business.

    Don’t show your kids, your grandkids, or your pets in your ads. They won’t help you sell anything.

    Don’t talk about which church you attend, where you went to school, or which organizations you support. There are no significant numbers of customers who will choose you for those reasons. (I almost wrote none, but I toned it down to avoid the e-mails telling me that half of someone’s business comes from their support of the Chamber. It doesn’t).

    Then There’s The Superbowl

    No, not the ads which run during the broadcast, but the “Superbowl of Savings” theme that the local car dealer will inevitably use in the days leading up to the game.

    It’s the furniture store employees in football jerseys telling you not to “go long” without the new sofa, to “huddle up” with a furniture store employee. That you’ll get an immediate “signing bonus” if you take delivery this week.

    Blech.

    Isn’t the objective to make your message stand out from the crowd? Then stop being non-memorable by looking like everyone else who’s borrowing a theme.

    How Do You Get Shoppers Interest?

    You get the genuine interest of qualified buyers by being relevant to those buyers. By talking to them about their needs, their concerns, their problems. By helping those people to solve the very real issues in their lives as they perceive them.

    Are you a plumber? Don’t talk about the Jaycees. Talk about cleaning up to leave the bathroom spotless after your service call. Talk about your commitment to being on time. Talk about how you’ll affect the lives of your customers.

    Good ads appeal to the people who want what you sell. It’s not necessary to get the attention of any non-buyers.

    Good ads are not about what you sell, they’re about the people you sell to.

    You won’t need to borrow any interest if you communicate the things that buyers are interested in hearing.

  • Sperry, Hutchinson, and the Hotel, Part III

    In Sperry, Hutchinson, and the Hotel Part I and Part II we looked at the history and common pitfalls of customer loyalty programs.

    So far, I’ve been less than enthusiastic. Not about the concept, you understand, but about most of the programs in use as we commonly see them implemented. There are two customer loyalty programs, however, that I believe work well.

    One is transactional in nature, and one is relational. They each take a major commitment to massive amounts of work. They each must be customized for your company, and once done will never fit any other company.

    As you design your loyalty program. . .

    The most important metric you need to track is customer retention. How many customers are defecting? How many keep coming back?

    The second most important metric is profitability. Your program should never allow unprofitable customers to become eligible for rewards.

    Remember the advice of Michael Leboeuf in The Greatest Management Principle in the World: behavior that gets rewarded, gets repeated.

    If you want to retain customers, let them feel rewarded for doing business with you. If you want to retain customers, don’t merely talk retention while rewarding your salespeople for “prospecting.”

    The Club Card – The Transactional Solution

    Points systems worked well when one company had them and the others didn’t. When everyone has them, they’re just an expensive cost of doing business. But let’s take a second look at those magnetic club cards offered by many of the nation’s grocery chains.

    The club member swipes the card through the stores’ credit card reader. This simple act not only identifies the bearer of the card, but also gives the store valuable information about the member’s purchase choices.

    Consider the possibilities. The MegaLoMart discovers through data mining that Chuck has no particular preferences when choosing paper towels, or charcoal briquettes, or soft drinks, but he always buys Campbell’s Cream of Chicken soup. Do you suppose that a customized offer of Campbell’s Cream of Chicken at a savings of 30 cents a can might get Chuck back into the store? If I bought six cans under this offer, the store would have given up the profit on six cans of soup in order to get me to spend another $150 on other grocery items.

    Would the soup offer work for everyone? No. Only those people who were brand loyal to this specific company are likely to respond. But a well programmed computer system, looking for such predictable choices could find, and customize, different offers for each of the store’s best customers.

    And since a program such as this is fully customized, no competitor could offer it – at least, not in the same way.

    How much would it cost to individualize offers to your best customers? Perhaps more importantly, how much will it cost to let your competitor do this if you don’t?

    The Small Business Model – the Relational Solution.

    True customer loyalty is to a differentiated brand. To inspire loyalty, you must stand out from the pack.

    True customer loyalty is relational in nature. As relationships grow, we’re more comfortable, and less likely to do business with strangers.

    Small businesses will always have an advantage in relationship building. The natural one-on-one help that entrepreneurs automatically offer their customers is difficult for large companies to duplicate.

    Relational loyalty isn’t ensured by a rewards program. What ensures relational loyalty is everyday operational excellence.

    Don’t stop at learning your customers’ preferences. Learn their names. Learn their children’s names. Learn their birthdays. Learn their sizes, their color preferences, and how often they purchase.

    Then, treat them like the valuable people they are. Send them birthday cards. Ask their opinions. Yes, these things cost money. What will they spend with you over the next several years? Most customers not only tend to buy more over the years, they buy more expensive products. The longer they stay with you, the more profitable they become.

    As markets mature, the smartest operators will shift their focus from new customer acquisition to building relationships with the good customers whose business we’ve already earned.

    And one more thought.

    The simplest and most direct way to earn customer loyalty is to recruit loyal customers. If you find the right customers to begin with, your retention rate will increase without spending any more money.

    Some customers prefer you to your competitors. Some customers want long term relationships. Some customers are more profitable than others. Some customers spend more and require less service.

    Look for customers that have one or more of these characteristics, then earn their business with superior service.

  • Sperry, Hutchinson, and the Hotel, Part II

    We ended Sperry, Hutchinson, and the Hotel, Part I with a promise of Chuck’s personal hotel story, and posed this question: Can you buy customer loyalty?

    Let’s start with the hotel story.

    I have business in Austin every few months. A couple of years ago I started staying at a hotel on South Interstate 35. It was convenient. The staff was always nice. And they had free, high speed wireless.

    Now truthfully, their wireless had issues. At one point I had to explain to the night auditor how to re-initialize the router. But, as I said, the people were nice, and it was close to the places I needed to be.

    As I checked out at the end of my third stay, the desk clerk handed me a punch card with three of twelve punches already marked for the three nights I’d been a guest this trip. He told me they were implementing a new loyalty program, and explained that after twelve paid nights, the thirteenth was free.

    Remember, the card was not a factor when I decided to stay. I was satisfied with my previous visits, and would have chosen this hotel again anyway.

    But, there is something powerful about the word “free.”

    I kept the card.

    Last month at the conclusion of another Austin trip, the manager on duty ran my Visa, printed the receipt, and informed me that since I’d booked this stay on-line they couldn’t punch my card.

    I swear, until that very moment, the card had been of minor consequence, but she was taking away my punches. I got indignant. I informed her that I had booked online every time I stayed at her hotel. I wondered why this had never been an issue in the proceeding three years.

    She told me it was “policy.”

    I understand that I’m being petty. I know this is an emotional reaction, rather than a logical one. But truthfully, I feel that I’ve been wronged. And much as I’d like to think I’m above making purely emotional decisions, until I get an apology (and my three punches), there’s an excellent chance that I’ll be looking for a new hotel for my next trip to Austin.

    Loyalty program? I had chosen the hotel before they even started their loyalty program. I made the choice without any additional incentives.

    Hotel incentives are common. They range from free continental breakfast to refrigerators in the room. And once those incentives have been offered, they become part of the negotiation. They were what the hotel was willing to do offer in order to get your business, and what you can expect them to deliver when you accept their offer.

    Consider a couple of this hotel’s competitors.

    Motel 6 offers a clean, comfortable room, with free color TV and free local calls.

    AmeriSuites promises that every room will be a suite. They commit to a microwave and refrigerator in each room, high speed Internet access, free hot breakfast, and available meeting rooms.

    If you accept the Motel 6 offer, you won’t expect a microwave and refrigerator, or high speed Internet, or hot breakfast. You won’t even expect to find a hair dryer or clock radio. Will this disappoint you? Probably not. Motel 6 never promised these amenities.

    But since they did promise television and telephone, you may justifiably feel that you didn’t receive all you had been promised if you check in and don’t find them. (Translation: “I have been cheated.”)

    Remember in Sperry, Hutchinson, and the Hotel, Part I we noted that since all major airlines now offer frequent flyer miles, and since none of those airlines dares to eliminate their frequent flyer program, they’ve effectively become trapped into a “keeping up with the Joneses” marketing program that doesn’t promote loyalty.

    Frequent flyer programs not only don’t lead to additional future sales, they don’t even induce additional current sales.

    Do any loyalty programs work?

    Perhaps. How should we define “loyalty?” By the time we’ve eliminated sentiment and devotion to family or sovereign, the dictionary leaves us with “faithfulness to commitments or obligations.”

    Humm. Is a customer ever obligated to do business with us? Perhaps loyalty is the wrong term.

    The original loyalty programs did what they should have. They rewarded the company’s best customers for continuing to do business with the company.

    Sperry and Hutchinson’s Green Stamps rewarded cash payments. The bigger the payment, the bigger the reward. Frequent flyer programs originally rewarded the airline’s most profitable business travelers for flying that particular airline.

    But as soon as programs like these become commonplace, they no longer differentiate your business. They no longer attract your most profitable customers. Instead, they allow your least profitable customers to sell out your least profitible services. They become just another cost of doing business. And make no mistake; loyalty programs cost a lot to maintain.

    The hotel in my story discovered their loyalty program killed profitability when it was combined with other offers (in this case, on-line discounts). They solved for their poor planning by refusing to honor the agreement. I promise, this will cost them more than one free room night somewhere down the line. I can’t be the only person who books online.

    If we don’t call it a loyalty program, can we still keep our best customers choosing to do business with us?

    Yes, we can. Some are complicated and require committments to technology. Some are amazingly simple and you should be doing them anyway.

    We’ll examine those solutions in the final installment of Sperry, Hutchinson, and the Hotel.

  • Sperry, Hutchinson, and the Hotel, Part I.

    Are customer loyalty programs a good thing for retail? Should you have one? Do you participate in any? In part two of this article, I’ll tell you a story about a hotel’s loyalty program from my own experience, and share with you both rational and emotional conclusions.

    You will, of course, decide for yourself.

    My story starts with a hotel in Austin, but the story of loyalty programs goes back to 1896, when Thomas Sperry and Shelly Hutchinson came up with an idea to improve retail cash flow.

    Sperry and Hutchinson sold S+H Green Stamps to retailers, who gave them to customers that paid in cash instead of using store credit.

    The First Loyalty Program

    Customers flocked to stores that gave stamps. Filling stations, gift shops, and grocery stores gave them as bonuses with every purchase, based on the dollar amount of the purchase.

    Eventually shoppers saved up books of stamps and redeemed them for gifts from the S+H Green Stamp catalog. Stamps could be redeemed for anything from furniture, to appliances, to life insurance. During the 1960s the S+H catalog was the largest publication in the US, and the company issued three times as many stamps as the US Postal Service.

    S+H made money selling the stamps, and even more money because so many stamps were never redeemed. (Note to loyalty program planners: paper gets lost. Computer records don’t).

    During the recession of the 70’s when customers were afraid that each dollar they spent might be the last for a while, and retail sales were taking a beating, retailers cut every available cost of operation. The ongoing expense of Green Stamps became hard to justify. When the competition dropped the stamps and lowered prices by the same percentage, thrifty shoppers voted with their feet to forgo the reward and take the lower price.

    By the time Sperry’s and Hutchinson’s heirs sold the company in 1981 only about 100 stores were still offering the stamps.

    Why is Customer Loyalty Important?

    Fred Reichheld, author of Loyalty Rules, says an increase of customer retention of only 5 percent can result in a 75 percent improvement in customer value.

    Reichheld cites other values from customer retention including greater sales, higher profitability, better word of mouth, and the ability to identify service problems earlier.

    It’s no wonder that retailers are so enamored of customer loyalty programs.

    Punch Cards

    The simplest loyalty program is the wallet-sized card which can be punched or stamped with each purchase. Buy eight sandwiches and the ninth is free. Stay a dozen nights in our hotel and the thirteenth is on us. Sorry… the hotel story helped to shape my view on loyalty programs, but I’m not quite ready to tell it, yet.

    A variation of the punch card is the magnetic card which gets swiped in the credit card reader. It provides discounts on selected items to members of the store’s loyalty club. At least, that’s what they want you to believe. The actual purpose is to record data on your personal purchase habits, in order to tailor future offers that you’re more likely to respond to.

    Improve your punch card response rate.

    Professors Xavier Drèze of Wharton, and Joseph Nunes of USC’s Marshall School of Business have concluded in a paper titled The Endowed Progress Effect that people are more likely to buy eight sandwiches to get the free one if you increase the total required to ten, but give them three punches on their first purchase.

    To quote the study: “By converting a task requiring eight steps into a task requiring 10 steps, but with two already complete, the task is reframed as one that has been undertaken and incomplete rather than not yet begun. This increases the likelihood of task completion and decreases completion time.“

    Are you rewarding the wrong customers?

    Many credit card companies are now offering airline miles when you apply for, and are granted their card. It’s a variation on those first three punches on the ten punch card.

    But again and again it’s been statistically shown that the least loyal customers are those who are drawn to you because of special pricing. The special pricing usually kills profitability. The last thing you should attempt is to make an unprofitable customer loyal.

    Does this hotel offer airline miles?

    Are you a member of any airline’s frequent flyer program? Several of them? Do you use them all? So, which of the airlines are you loyal to? Or, like most of us do you shop for best price and purchase that ticket?

    When all of the competitors use the same rewards, we’re back to a level playing field. Frequent flyer miles are now part of the airlines’ cost of doing business. Having one won’t increase sales, but not having one may actually decrease them.

    Can you buy customer loyalty?

    Or, more specifically, can you purchase customer loyalty with premiums and discounts?

    This is the basic flaw in the whole concept of customer loyalty programs, and a hint of the conclusions to expect in Sperry, Hutchinson, and the Hotel, Part II.

  • Managing the Gap, Part Deux

    From my “in” box:

    Chuck;

    I always look forward to your articles. I don’t always agree, however. And today, I’d like to argue one point with you that you mention in your Managing the Gap article.

    You stated that “Without advertising, you’ll be primarily conducting business with people who just happen to pass by and see your sign.”

    That leaves out a couple of things.

    1. Sales staff. I have seen a number of businesses that do very little advertising but have an aggressive sales staff bringing in good numbers. While you may say that a sales staff is a form of advertising, I would instead say they are a form of marketing.

    2. Same with a company’s PR. PR is not necessarily “advertising.” It is however, marketing.

    3. Networking. Again, not “advertising,” but a form of marketing.

    Just my two cents:)

    Norm Minnick
    Total Marketing, Inc.
    www.totalmarketinginc.biz

    Hi, Norm:

    I should never make statements like the one you quoted without first qualifying them. You’re absolutely right. “Without advertising, you’ll be primarily conducting business with people who just happen to pass by and see your sign” is at best incomplete (if you’re feeling generous). As it stands, it’s flat out wrong.

    Aggressive selling and PR are obviously factors in growing new customers. Networking is slightly different, but again, I agree. It is a form of marketing.

    To be sure that we don’t have different understandings of what these terms mean. Let me share mine.

    • Marketing. – everything a company does to acquire new customers and maintain relationships with them. The goal is to match a company’s offerings of products or services to people who need, want, and can pay for them.
    • Advertising – calling attention to a business, a product, or a service in some public medium in order to induce people to purchase. It’s generally accepted that advertisements are announcements paid for by the seller.
    • Networking – making new contacts and spreading the word about yourself or your company. Usually this implies meeting one to one.
    • Public Relations – the actions of a company to promote goodwill between itself and its buying public.

Now, lets address the points you made in your e-mail.

Point One: salespeople. I suspect you’re referring to outside sales. Sales clerks, who wait for customers to enter the business, are going to be dependent on either walk-in traffic, or on advertising, for the same reasons I put forth in Managing the Gap. There will also always be referral business, if those sales clerks provide a remarkably good customer experience.

An outside sales staff’s function is to seek out new customers. Outside salespeople will be much more important to your bottom line when your business depends on relatively few purchasers, who spend proportionally larger amounts in each transaction. Sales of services immediately come to mind. Think of a typical insurance broker’s office. The walk-in traffic will be miniscule compared to the number of sales it takes to keep that office open and thriving.

Outside sales wouldn’t work well for a grocery store, though. Businesses which rely on large numbers of customers, each of whom makes relatively small purchases, still won’t be able to trade their advertising for direct sales.

We can conclude that the value of outside sales is inversely proportional to the size of the typical purchase.

Point Two: public relations. Again, I agree. Public Relations is not advertising, but it is marketing. Public Relations is what you do with your reputation to attract new customers.

Some PR companies spend a lot of time and effort getting stories written about their clients in the major media. They justify the value of the story placement on the equivalent cost of purchasing advertising time or space. Frankly, I think stories that carry the credibility of the news medium are worth far more than their advertising equivalent.

Unfortunately, no one can predict when an editor will find such a press release useful and newsworthy. This makes Public Relations as a publicity mechanism highly limited.

A company’s ability to grow its customer base through its PR efforts faces the same limitations as a company trying to grow through outside sales – too few opportunities to convert mass impressions into multiples of new customers. If the business relies on a few customers to make large purchases, it may do quite well with Public Relations as its exclusive driving mechanism. Businesses which depend on large numbers of customers, though, will require large amounts of exposure.

Marketing professionals whom I respect disagree with me. Al and Laura Ries in The Fall of Advertising & The Rise of PR, for instance, make the bold claim that great brands are not built with advertising, but rather with PR. At a national level, they make a compelling case. I’ve seen very few local businesses, though, that could qualify as great brands.

Point Three: networking. By “networking,” did you mean attending networking events? We both likely know people who use networking events quite effectively. Much like outside salespeople, they need to forge relationships with folks who make somewhat larger purchases, or who will make multiple purchases over a reasonable period of time.

For companies who deal with hundreds of customers in small dollar increments, networking is too inefficient to drive sales.

I truly suck at networking events. Perhaps if I were better at them, I’d be more enthusiastic. Though I don’t attend the events, I am constantly networking. Being open to people who cross my path, and staying in touch with them, has proven to be the best way to create my own luck

Norm, I appreciate you bringing up these points. Until I gave it more thought, I hadn’t realized that “The value of outside sales is inversely proportional to the size of the typical purchase.” I suspect I’ll be quoting myself on that one.

Best regards,
Chuck

PS – we didn’t address Professional Reputation – the assessment by the community of the quality of your work, your knowledge of your trade, and your honesty and integrity. Maybe that would make a good discussion topic sometime soon.

Share This Article With A Friend.

  • Managing the Gap

    “All advertising does is try to convince people to buy things they don’t want and don’t need.”

    Ever heard that? If you have, it was probably a statement made by an employee. A non-sales employee of some large company. A non-sales employee who doesn’t understand commerce and has never been involved in attracting new customers to the company which employs him.

    Owners of businesses (as well as their salespeople) instinctively know two things:

    1. you can’t convince anyone to buy what she doesn’t need (at least, not more than once), and

    2. without advertising, you’ll be primarily conducting business with people who just happened to pass by and see your sign.

    Nobody buys anything she doesn’t want or need. What? That can’t be right. People don’t need tattoos. They don’t need newer cars. They don’t need the latest hot video game.

    Kind of arrogant, isn’t it, to assume that just because you don’t feel the need, that no one else does, either?

    The only reason a purchaser buys anything is because she feels a lack in her life. Advertising only speeds up what would have happened anyway by helping Ms. Prospective Customer to recognize her feelings of dissatisfaction, and to help her to learn about ways she could eliminate the gap between what she has, and what she wants. No gap, no reason to buy.

    As marketers, our job is to manage the gap.

    What makes up the gap? What’s the difference between the customer’s ideal and her reality? How can purchasing from you satisfy the need she feels? How can purchasing from your competitors satisfy her? Inside her mind, where do you and your competitors rank in your ability to eliminate that gaping lack she perceives in her life?

    Those questions inevitably give rise to other questions:

    • Can she articulate what it is she feels? (A problem well stated is, after all, half solved).

    • Do you know her perceptions of you? Of your competitors?

    • Does she understand the ideal state, that is, does she know how good it could be if she purchased from you?

    The gap is always based on perceptions, and feelings. If she doesn’t feel the need, she won’t buy. What can you do to help her to understand what it is she’s feeling, and how buying from you will satisfy the need she feels?

    Could this “managing the gap” concept provide a key to creating your own powerful marketing program?

    Share This Article With A Friend.

  • The Smaller your Focus, the Bigger your Profits

    I understand how you feel. I do.

    You’re paying for your advertisement to be seen / heard / read / viewed by 40,000 people. And the cost of reaching that many people is sooooo high, that you’re going to add copy points, then add more copy points, and then add even more in order to make sure you say something which will appeal to all of them.

    That would be a mistake.

    I do understand that you’re trying to make the biggest impact with those dollars, but it’s still the wrong thing to do. There is nothing you can say that will appeal to 40,000 out of 40,000 people.

    Consider this: if you were able to successfully persuade one half of one percent of those people to come do business with you, you’d come away from this advertising schedule with 200 new customers. If you’re like most businesses, you couldn’t possibly handle 200 new customers – at least, not all at once.

    Would you agree that under most circumstances for most businesses, 25 new customers from one advertising schedule would be a phenomenal success? Then stop trying to talk to the other 39,975, and tell those 25 exactly what you can do for them.

    Odd, isn’t it? The more you narrow your focus, the stronger your message becomes.

    Don’t be afraid to specialize. Don’t be afraid to get very specific in your advertising.

    Share This Article With A Friend.

  • Location, Location, and the UVP

    Does your business have a Unique Value Proposition (U.V.P.)? The strategy I’m about to share requires one.

    DO NOT attempt this if you can’t articulate a very compelling reason for people to conduct business with you, rather than with than a competitor.

    You’ve, no doubt, heard that there are three critical considerations in real estate. They are, in order, location, location, and location. There are also several philosophies involving the selection of that location, especially as it applies to choosing one for your business.

    One school of thought is to go where there are no competitors. Another is to go where all of the competitors are.

    I suggest that the difference may come down to your U.V.P.

    I’m visiting a major southern city in the U.S. My client is considering a location for his new retail store. We’ve looked at, and considered, several.

    One is particularly attractive to us. It’s at the intersection of two streets which are primary arteries for the community. Within a block of this intersection are four other businesses which are my client’s direct competitors.

    If we can negotiate an acceptable lease, we’ll be the fifth competitor.

    Several advantages to this location become obvious, once you think about them.

    1. This intersection has become known to the public as the part of town where one goes to conduct business with someone in my client’s industry. If a shopper doesn’t know exactly what she wants, it’s easier to get her to go where she more choices.

    You’ll note that most large cities have a “restaurant row,” or a several car dealers in a two or three block area. They all tend to do better than the lone restaurant or car dealer on some other thoroughfare.

    2. This location eliminates fourteen of the eighteen direct competitors from the minds of shoppers passing by. As a potential customer drives through this intersection, and notes that four competitors exist at this one place, she’s not as likely to actively be thinking of the fifth on the South side of town, the sixth on the North side, or the seventh near the courthouse.

    Where it counts, in the mind of the shopper, it’s easier to compete with only four other businesses at this location, than it is to compete with eighteen others scattered across the city. (As they say, out of site, out of mind).

    3. It’s much easier to get people to walk across the street to comparison shop than it is to get them to come see you at a place they’ve never been, when you are new and they have no relationship with your company.

    4. One of the primary purposes of advertising is to help people remember who you are and why they should seek you out. Won’t you have to spend substantially less to do so when thousands of potential customers drive by your store, and it’s signage, daily?

    Enough traffic already passes through this intersection that four direct competitors have been able to run successful businesses with minimal advertising.

    Despite these major advantages, there is a strong danger to this strategy. It invites direct comparison of your business to multiple established competitors. If you can’t hold up under such scrutiny, this decision could effectively kill your business.

    If you have a strong U.V.P. choosing such a location can be a powerful strategy. Without one, you’re all too often at the mercy of the competitor who does.

    You do have an easily articulated, customer-focused U.V.P. don’t you?

    Share This Article With A Friend.

  • Chuck’s 2007 Letter to the Ad Fairy

    Dear Advertising Fairy:

    Thank you for the wishes you granted last year. I’m happy that the “Lost another loan to DiTech” banker appears to be gone. And, although I’m still waiting for you to eliminate those stupid TAG Body Spray storylines that so blatently rip off the old Hai Karate ads from 1967, I’m confidant you’ll get to them soon.

    Ad Fairy, I hope you’ve dusted off your magic wand, ‘cause we’ve flipped the calendar over again and I have my usual five more advertising wishes for for the new year.

    5. The phrase “Now THAT’s what I’m talking about” will never be used again in any ad any time anywhere. In fact, let’s strike it from the vocabulary. OK, Ad Fairy?

    4. Instead of saying “This product has not been evaluated by the FDA,” natural male enhancement products will not be allowed on TV until evaluated by the FDA.

    3. X-Treme anything will no longer be allowed. Let’s find a new word. How about… um… Poofy? That could work. “Tonight on Poofy Sports….”

    2. Ads for ED medications will get past that pesky four hour issue.

    And my top wish for advertising in 2007?

    1. That Apple give us more “I’m a PC / I’m a Mac” ads.

    If they did that, then maybe other advertisers would catch on to the power of a simple explanation of benefits to the purchaser. If Apple lead by their current fine example, other companies might drop the “entertainment” thats being passed off as solid marketing.

    Perhaps that guy building the stand up comedy club in his back yard would simply consider the STARZ comedy pack for $12.95. Maybe then the Quaker Oatmeal To Go guy would stop cooking on the bus. With those examples could Carmen Electra quit throwing herself at the ordinary guy who dumped her in the Taco Bell commercials? And then would it be possible for Halls Sugar-Free Bursts not to be used to take the scratches out of an LP record?

    Could they all stop talking to me as if I’m mentally deficient?

    Hummm.

    While I think of it, let’s put Countrywide Finance and E-Harmony on the list of advertisers who don’t pander to, don’t talk down to, and don’t treat me as if I’m stupid. Ad Fairy. I wish them all greater success in 2007.

    But see what you can do with those TAG Body Spray ads, ok?

    Share This Article With A Friend.

  • Familiarity Breeds Relationships

    It’s an old folk saying. “Familiarity breeds contempt.”

    It’s a warning that we can learn too much about each other, and not like what we find.

    But, what marketer wouldn’t go to excessive lengths to create more and more familiarity with his company? After all, the more a potential customer thinks about a company, the more likely she is to ultimately buy from that company, isn’t she?

    Assuming a salient message, yes.

    Evidence indicates that when no one has a obviously superior product, customers tend to buy from the company most familiar to them.

    Market share tends to equal share of mind.

    This kind of advertising is used by brand builders, and is known as top-of-mind-awareness. The strategy? Constantly remind people of what the company can do for them, then wait patiently for them to need what the company offers.

    We call those customers relational. They’re most interested in doing business with companies they trust not to take advantage of them. Marketers hope to build brand recognition with relational customers because it eventually can lead to a long series of purchases from that customer. Brand building doesn’t insist on a sale today, but rather builds awareness today for sales tomorrow.

    Then there is the other school of marketing.

    Direct marketers also build brands, as evidenced by successful companies like Land’s End, or Eddie Bauer. But though their customers can be every bit as loyal, direct marketers aren’t willing to wait for “someday” to acquire those customers. They aren’t interested in the value of “getting their name out there.” They want the cash register to ring, now.

    Direct marketers study the numbers, and adjust tactics to gain minor fractions of advantage.

    Direct marketers use call-to-action ads, and assume each time the ad is run, the phone must ring. If the phone doesn’t ring, the ad is a failure. Direct marketers know that every dollar they spend has got to return more than a dollar, and they measure to know exactly how much more.

    To make that phone ring, direct marketers primarily target transactional shoppers – shoppers who are simply looking for a great deal today.

    A direct marketer closely watches the costs of customer acquisition, so he can stop sending those relatively expensive mailings to people who don’t respond to his offer. The individuals on his “list” either react in the first, second, or fifth mailing (whatever his cost ceiling) or they’re dropped from the list and they don’t hear from him again.

    But mass media can’t offer that kind of selectivity.

    You can’t change the physics of television broadcasting to prevent the people who didn’t buy from being exposed to your ad again. You can’t block the view of the billboard only when non-purchasers drive by (and by the nature of the medium the cost of customer acquisition wouldn’t change, anyway).

    Which is why direct marketers don’t often use mass media. They consider those non-buyers to be “wasted circulation.”

    And that’s a shame, because mass media provides great opportunities to cost effectively reach those transactional buyers. Of course, the same mass media provide great opportunities to cost effectively reach relational buyers.

    And eventually someone always asks, “Can’t we design an ad to appeal to both transactional and relational buyers?”

    No. We can’t.

    No ad can successfully appeal to two opposite purchase motives. The right thing to say to one is exactly the wrong thing to say to the other.

    Which prompts today’s question.

    On those rare occasions when a direct marketer uses mass media to attract transactional buyers, is it possible to achieve top-of-mind-awareness, too?

    Humm.

    Yes. Yes it is. A lot depends on how long those ads continue to run.

    Here’s why.

    Take an attorney. Call him, oh… call him “Hammering Henry.” Henry traditionally screams into the tube “I’ll fight hard to get you the money you deserve for your pain and suffering. Call me now.”

    Henry buys massive amounts of gross rating points. Henry is also the only lawyer advertising on television in his market.

    Over a period of time, when Henry’s ad is heavily repeated and no one else bothers to put any message on TV, who are accident victims likely to call? Which name is top-of-their-collective-minds?

    It’s Henry.

    Henry isn’t screaming at the camera in order to build the Henry brand. He’s simply doing his best to make the phone ring. He’s telling people who’ve had an accident to pick up the phone and call him NOW.

    But, over the months and years that he continues to advertise, how many other names will the average driver remember?

    By default Henry IS top-of-mind.

    Sometimes there will be a medium that none of your competitors advertises in.

    That medium could be the local television station. It could also be the local church bulletin. The medium could be a radio station or an outdoor sign company, then again, it could be a thirty second video running before the feature attraction at the local Cineplex.

    Assuming a salient message, if a specific targeted audience is exposed to that ad over and over and over, and no competitors bother to respond, a strictly transactional ad could capture the attention of, and be remembered by, relational buyers as well.

    Of course, as soon as competitors start advertising in the same medium, that natural advantage disappears. At that point, more than one solution comes to mind, all shoppers will respond to whichever ad which most closely addresses their needs.

    But to a small advertiser with minimal competition, this strategy of being the only advertiser in a business category using a particular medium, could be worth considering.

    Share This Article With A Friend.