I was reviewing some old material today and I came across an insight that I want to share. Andy Kessler, an ex-hedge fund manager, identified three key items that he looks for in any business; they are:
- Big market
- Unfair competitive advantage
- Ability to leverage that advantage through their business model
While you may or may not be looking for outside investment, these are three important items to keep in mind. Here’s my take:
- Big market – Are there enough potential buyers who are suffering from the problem your company promises to solve to enable you to achieve your goals? Are there enough potential buyers who can become aware of your solution, without having to be ‘convinced’?
- Unfair competitive advantage – Are you a prescription drug? What is your compelling value proposition? How are you unique (BTW, unique is defined as having no like or equal; unparalleled; incomparable)?
- Business model – What is your method for going-to-market and monetizing your value proposition?
I’ll write more about this in future posts. Share with me your answers and I’ll be glad to give you my feedback. My e-mail address is email@example.com.
My speaking schedule requires me to travel regularly to destinations I have never been to before. Travel to an unknown place is obviously more exhausting than traveling to the familiar ones. The most exhausting part of traveling to a new place is commuting to and from the airport. This is where I (and others like me) always get the feeling of being lost without knowing for certain whether or not I am.
Recently, I was in Houston, Texas, driving from a presentation back to the airport. One of the participants gave me very good directions (information) about how to get there. I left my speech feeling confident. That confidence faded quickly as I started worrying that I may have missed a turn or an exit. Mind you, I wasn’t sure whether I missed anything; I was just concerned. Every couple of minutes, I received even more information about where I was in the forms of road and exit signs. Every bit of information that I received further aggravated and confused me. In a moment of exhaustion, I shouted, “I miss my GPS.”
That was the moment I realized the power of Global Positioning Systems (GPS). The power of GPS lies, not in the fact that it tells me where I am, but in the fact that it tells me where I am in relation to where I want to be. That relation provides context, and that context (or how all of the information about where I am impacts me) empowers me and gives me confidence.
Our marketing efforts should be no different. Too often, in an effort to get people to ‘understand’ what their company does, sales and marketing people pile on more and more information in an effort to ‘explain’ things. This information is analogous to the detailed directions and the road signs I saw in Houston. It lacks context. Without context, customers get confused when they are presented with something new and unknown. They have no “GPS” to determine how the information about this new thing relates to their needs (or where they are going). As they attempt to make sense of the information, they latch on to those pieces they are familiar with and tend to disregard the rest. Without a context, prospects, left to figure things out on their own, will see no difference between what you offer and what they’ve seen before. Any value the company could have provided is lost. This serves to commoditize the offering – leading to a vicious cycle of confusion, frustration and, ultimately, compressed margins.
The goal of all communication with clients and prospects should be the creation of knowledge. Knowledge is information understood, specifically, information and how it relates to me and the results that I want. You might say that knowledge exists at the intersection of information and context. Those sellers that give buyers a way of knowing not only where they are but also exactly how far they are from where they want to be, will on the road to accelerating their sales cycle and expanding their profits.
April’s issue of Fast Company magazine has a great column by Made to Stick’s authors, Dan & Chip Heath. Polarize Me (subscription required) focuses on the idea, “if you want people to like you, [you must] first decide who needs to hate you.”
The Heath’s take on the fear of marketers to be disliked as this fear takes the edge off all communications and creates a dull-brand world. The column is well worth the read (it’s worth buying the magazine itself).
I’m still catching up on my reading. Today, on a train to New York City, I finally had an opportunity to read Warren Buffet’s letter to shareholders. Here are some of my favorite insights:
- A lesson on the dangers of commoditization and how prevalent it is — Here’s a telling fact: Of the ten non-oil companies having the largest marketing capitalization in 1965 (titans such as General Motors, Sears, DuPont and Eastman Kodak), only one made the 2006 list.
- An insight virtually any CEO could learn from — So I’ve taken the easy route, just sitting back and working through great managers who run their own shows. My only tasks are to cheer them on, sculpt and harden our corporate culture, and make major capital-allocation decisions.
- An insight on a purchase Berkshire made, and instructive of what value creation really is — It’s a business without magic except for that imparted by the people who run it…The result: ISCAR makes money because it enables its customers to make more money. There is no better recipe for continued success.
- Don’t miss the section where he talks about the trends impacting newspapers, it’s instructional for an executive or salesperson in any industry.
Check it out, it’s worth the time to read.
CBS gave Katie Couric more than $15 million per year to lure her away from The Today Show, in an effort to make a splash and get CBS Evening News out of the basement. Last week, CBS News announced they would be replacing her current executive produce, Rome Hartman, with Rick Kaplan. In summarizing the challenges evening newscasts have in attracting an audience, Kaplan said:
The three network newscasts, which have been losing audience share for a generation, face much tougher competition now from cable news, the Internet and other new media.
“It was easy then [in the days of Walter Kronkite] to make your program compelling because people had no information until Walter said, ‘Good evening,’ ” Kaplan said. “Today they come armed with an extraordinary amount of information. We all have a responsibility to push these stories ahead.”
This same observation can be made about your salespeople and your marketing. It used to be much easier to be compelling, because your customers and potential customers had no information until they came into contact with you. Today, they have more information than they know what to do with. If you want to go-to-market and avoid commoditization, you must make sure that you are creating value, rather than just providing information.
A very interesting article in USA Today today: Apple Buffs Marketing Savvy to a High Shine. It’s must read material for anyone looking to accelerate their growth. Here are the highlights:
“Apple’s arsenal of attention-getting tools holds lessons for any company: design cool, innovative products. Have a streamlined product line. Invest in memorable ads. Work your customer base to make customers feel special and create word-of-mouth agents. Most important: keep the world and media surprised, to generate gobs of attention.”
The article highlights seven lessons:
- Make innovative products.
- Keep it simple.
- Create truly memorable ads.
- Find an enemy.
- Work the taste-makers.
- Offer surprises.
- Put on a show.
I have been preaching for quite some time that marketers need to stop focusing on their solutions, and start focusing on connecting with the problems they solve. In presentations I’ve been making to CEO groups around the country, I’ve been exhorting them to stop looking at their offerings from their own perspective and to start looking at them from their customers perspective, from the unique problems their offerings solve.
There has been one industry that has continued to experience success that did not seem to take this advice. Often times, I’d be asked about this exception. The exception was the consumer products industry. Coca-Cola, Proctor & Gamble, Kimberly Clark, etc. seemed to follow the industrial aged marketing philosophy of ‘telling and selling.’ All I could chalk it up was, ‘the exception the proves the rule.’ Now, I realize they are no longer an exception.
In a speech to advertising agencies, Stengel “described a major cultural shift” that must turn marketers “into a starter of conversations and a solver of consumer’s problems, rather than a one-way communicator.” He says, “It’s about bringing a relationship mind-set to everything we do. He cites a ‘trust-starved world’ and implores company’s and advertisers to build experience ‘with – not just for – customers.’
In the video of his presentation (which you can view from the article), he says:
“Building relationships through our brands is the future of marketing. It’s not about new media models and tools; it’s about engaging with people in a two-way relationship. It’s about seeking to understand the other person, rather than control their actions.”
If this isn’t the death-knell for industrial-age marketing tactics, I don’t know what is.
When I travel on business, I stay at a Westin. When I fly, I’m more and more likely to choose Continental if I can. Why? Well, Westin has their ‘Heavenly Bed,’ which is the most comfortable bed I’ve ever slept in at a hotel. And their showers are great.
Most hotels give you so little room in a shower that it’s a constant battle to keep the shower curtain off of you. The Westin put an outward curve (going away from the shower) in their curtain rod. It makes me feel like I have all the room in the world. I can’t imagine the rod costs them more than a few bucks – and it makes a difference.
Continental has added a neat little feature on their website. When you check in you can select to have your boarding pass faxed to you. This is great when I am staying at a hotel and do not have access to a printer. Again, I can’t imagine that this feature costs Continental much money.
Here’s what I really can’t figure out. In today’s commoditized world, why hasn’t every other company copied it? The shower rod and the fax feature are two little things that demonstrate that Westin and Continental actually understand what their customers deal with. That attention to the ‘little things’ completes the promise they make and I remember it.
Now, are either of these features, alone, enough to get me to buy from Westin or Continental instead of the competition? Of course not. The Westin has to be reasonably priced, the rooms have to be clean and comfortable, and the people have to be courteous. But I’ll tell you, it’s that shower rod that compels me to first look for a Westin when I travel on business.
Have some little things made a difference for you lately? Visit www.imaginellc.com and tell me about your experience or send me your comments by clicking the “Contact us” button you’ll find there. (I apologize for this two-step reply process, but it’s the only way to avoid the spambots)
It always happens. We finish developing a company’s message, we’ve put together some of their initial packaging and the owner calls us up to say something like:
“I was showing our new graphic overview to my [fill in the blank] (wife, friend, graphic design expert, etc.) and it didn’t go over as well as I thought it would.”
And thus begins one of the greatest contributor’s to ineffective messaging and packaging.
Good messaging; no, make that great messaging is geared to a specific audience with a specific viewpoint and specific worries. The tighter your focus is to specific issues the more appealing it will be – and the more impact it will have.
For example, when we help companies develop messaging, we spend a significant amount of time getting clear on who we are trying to communicate with, and what their worries, issues and problems are. Then we identify how the client addresses those issues, which leads to the development of their message, and the packaging that goes with it.
A great message (and the only messaging that will work consistently is great messaging) is not designed to appeal to a generic audience. A great message is designed to drive desired actions within a certain group. Therefore, when you ask someone who is not emotionally involved in dealing with the issues you address for their opinion, their reaction – positive or negative – is not indicative of anything.
All sales and actions occur at an emotional level. The very act of asking the question, “What do you think” triggers the logical brain and thereby makes the results of the question moot (from a business perspective). I realize this may not sound intuitive, I can only tell you that it works.
HERE’S THE MORAL: Only test your message on “checkwriters.” My definition of a checkwriter is someone who is dealing with the issues you address, and is in a position where they can actually say yes to a business proposition – and pay you for it.
Lori Colman has an interesting post on B2BMarketingTrends. She writes that Innovation is the Antidote for Creeping Commoditization. I encourage you to read it because she makes some nice points about the importance of commoditization and how to identify signs of it in your company.
There are, however, two points, where she misses the mark. The first is in the very claim that innovation is an antidote for commoditization. Most innovation actually has the effect of further commoditizing an offering. Why? Because all most innovations do is increase complexity. This increased complexity further frustrates and overwhelms customers who were already having difficulty understanding how the original product would improve their life. The innovation you add becomes another thing they don’t understand. In the process of trying to understand, buyers are forced to simplify. As they simplify, the innovative differences you’ve presented to them become more and more meaningless. When the customer reduces your offering to the lowest common denominator, it is difficult for them to see any difference between you and the rest of the market. This drives them to commoditize your offerings even further.
The second point is in her concept of what a ‘brand’ is and the importance of ‘differentiating’ your brand. She says:
Identify the basis for differentiating your product from all the similar products in its category. Analyze product features and product quality. Look at service and support systems.
This is the classic mistake that companies make. They try to ‘differentiate’ themselves from others based on product or service attributes. What they fail to realize is that the product or service is the very thing that is being commoditized! This leads to messaging and sales efforts that focus on the offering. When that happens, customers commoditize.
The difference, especially in B2B offerings, lies not in the offering itself, but in the expertise and knowledge a company has in applying their offering to solve customer problems. I call this ‘wisdom’. It starts with understanding your customers better than you customers understand themselves. When innovation is focused on solving customer problems, rather than ‘making offerings better’ it is a great start to avoiding or escaping commoditization.
The idea that companies control their brands or that they can control whether or not they differentiate themselves is an old, industrial-age based idea. Today, customers control your brand – the best you can do is to put everything you’ve got into enabling customers to give your brand a compelling, positive meaning.