Understanding Your Customer’s Time Scope

September 24, 2010 · Filed Under Creating Demand, Sales Strategy, Value Proposition · Comment 

Most organizational charts are broken down, and viewed, from the perspective of position and authority.  While this can be very helpful in developing sales strategy, an even better way to break it down is by what I refer to as their “time scope.”

For some people, one week is a long-term, while others spend little time thinking about anything happening in less than two years.  Here is an example (albeit oversimplified) of how typical levels break down to time scope:

Level Time Scope
Senior Executives Beyond a year
Upper Management 6 mos – 1 year
Middle Management 3 – 6 mos.
Front Line Management 1 month
Front Line 1 Day – 1 Week

When you have a clear picture of your customer’s time scope, you’ll be able to gain insight into what it is they really worry about, where the value you can create lies, and whether the issues you are dealing with are big enough to get them to change their approach.

Looking at your customer from this perspective also aids you when you are selling to smaller companies where individuals (especially owners, CEOs, and other executives) play more than one role.  Knowing their natural scope can be a great advantage.

The longer your buyer’s time scope is, the more opportunity there is for you to create value and radically differentiate the results you can provide.  Shorter time scopes significantly limit, or even eliminate, any opportunity to differentiate yourself in a meaningful way.

Unless you are selling a pure commodity, your first “sale” is to ensure that you are talking with the person with the proper time scope.

The Key to Differentiating

August 30, 2010 · Filed Under Commoditization, Creating Value, Messaging, Sales Strategy · 4 Comments 
  • “That’s not how we do it in our industry.”
  • “I’m not sure I’m comfortable doing that, I’ve never done that before.”
  • “I’ve been working with my customer for several years, and I’ve never asked those types of questions.”
  • “Salespeople aren’t expected to do that in our industry.”
  • “We’ve never done that before.  How will I know it will work?”

These are just some of the most common statements that I hear every day from people who claim that they want to differentiate their companies from their competitors.

Let me remind everyone that differentiation is an ends – it’s not a means.  The critical component to differentiating yourself in the market is doing something different that matters.

90% of the time the activity that matters and makes you different will, initially, make you and the people in your company uncomfortable.  Think about it, if it were comfortable to do, it’s highly likely many others would be doing it.

Please do not misunderstand my point.  Merely being different is not enough to differentiate.  So, just because no one has ever done it before doesn’t mean that you should do it – but it’s a great starting point.

How To Win With Purchasing

Let me tell you a secret that all great Demand Creators know – purchasing or procurement is your friend. That’s right, Demand Creators love the purchasing and procurement function.

How? Why? Here are some reasons:

If you want to be one of the few (probably less than 5%) of salespeople who know how to gain an advantage, here are some important tips to keep in mind:

  1. Purchasers, like everyone else, are motivated by achieving business results. The problem for sellers is that the results they seek often are not in alignment with the purpose of the sellers’ core offerings. Your job, as a seller, is to first understand the results that they want, then demonstrate how you can achieve them.
  2. Purchasers rarely live with the pain that your offering is designed to solve. So, the more you talk about superiority and expertise, the less you are going to impact them. You must talk with purchasers about critical issues for them.
  3. Most importantly, you need to understand the people in purchasing are responsible for one primary function: purchasing the proper specs at the lowest possible price.

So, if you want to impact the decision without lowering your price, you must get the buying organization to change the specs. Simply put, if you change what it is that purchasing is looking to purchase, then the budget and the decision that purchasing makes will change as well.

To truly succeed when procurement is involved, you must influence the [decision criteria] that determine the specs. You must remember that procurement is not responsible for setting the specs – they’re responsible for fulfilling them. Other people, those who live with the pain, set the specs. Make sure you talking to them before they think they know what they want.

Please do not misunderstand this post. I am in no way saying that procurement is unimportant or should be avoided. They should be embraced and supported in the context of enabling your customers to achieve their critical results.

Differentiation Is Not Enough

May 26, 2010 · Filed Under Business Growth Strategy, Sales Strategy · 9 Comments 

Let’s be honest. While you may provide your customers with the “best” option, the reality is that they have more than enough adequate options. I put best in quotes, because today being the “best” in not enough to win.

Think about this:

  • I think Diet Coke is the best soda, but I’m okay with Diet Pepsi.
  • UPS is my choice for overnight delivery, but I’m okay with Fedex.
  • Starbucks is my favorite coffee, but Myorga Coffee is just fine with me.

If your product or service is merely the best among adequate choices, your market position is precarious. You’ll have to work harder and harder, for less and less – just like everybody else.

By the way, differentiation is no longer enough – to succeed in the future you must radically differentiate yourself. You must become a market of one. For example, we’re working with a company that provides strategic planning for a tightly defined vertical market. When we started working with them, their objective was to communicate how their strategic planning process is the best. Our advice was that if we focus the conversation on strategic planning, we lose. As long as their prospects can compare them to other strategic planners, there was no way to differentiate adequacy.

What we had to do was identify where and how we could become indispensable. We had to identify the problems that weren’t being solved by traditional strategic planning, and focus the message, the approach, and the process to solving those problems. This required us to more tightly define their market, to probe deeply into the results their clients desired, and to develop the tools to have the “what’s it worth conversation.”

The same is true for you. Stop asking yourself, “What can we do to be the best?” Instead, focus – maniacally – on where and how you can be indispensable.

Growth Barrier 1: Bypassing Your Competition

May 3, 2010 · Filed Under Growth Barriers · 1 Comment 

Several years ago, I created a tool to identify how well a company is positioned to successfully identify, capture, manage, and absorb profitable growth opportunities. I called this tool The Growth Barriers Diagnostic™ (you can take the diagnostic here if you’d like).

While the tool was created a few years before the “great recession,” it’s been equally effective in diagnosing growth barriers since. Last week, I had a deep conversation about the content of the diagnostic and what it means with a fellow CEO. I hadn’t discussed the diagnostic is such depth since it was created, and it reminded just how valuable the tool is.

I wanted to share some of the observations from my conversation, so today I begin a series posts that will focus on each of the 10 points in the diagnostic. Today’s focus:

I have bypassed my competition

One of the biggest flaws of modern day sales and marketing is that it causes business executives to view the world from a competitive perspective. I’ve always felt that great businesses (and going forward “great” is no longer a choice) became great because they ignore their competition. They use the energy that others lock up studying the competition to understand their best markets better than anyone.

If you think of companies like Apple, Starbucks (in its great days), or Cirque Du Soliel, you quickly realize they wouldn’t exist if they had focused on “differentiating their offerings” rather than delighting their best customers.

Two weeks ago, I wrote about The Shift sellers need to make to avoid being commoditized. The final shift occurs when sellers realize they sell results, and further they position their offerings so that customers look at it the same way.

When your customers view you and your offerings as critical to their results, you become indispensable and competition becomes irrelevant. When this occurs, you are able to enter sales cycles far earlier in the process (before competitors have a chance) and price stops being a driving factor in the purchasing decision.

As a matter of fact, you know you’ve bypassed your competition when you enter potential sales conversations before the customer fully understands what their problems are, or what solutions they desire. The customer relies on your deep understanding of them, their issues and your area of expertise to help them both define the problem and determine how to best solve the problem.

Now, score yourself on a scale of 1 – 10 (1 being that you are fighting the “commodity battle” virtually every time and 10 being that the scenario I’ve just described occurs 80% or more of the time). What can you do to move your score towards 10?

Moving Beyond Price Video

March 22, 2010 · Filed Under Business Growth Strategy, Creating Demand, Sales Strategy · 3 Comments 

Over the last six months, I’ve been writing about price and pricing a lot more.  It’s been my intent to help you identify ways that you can not only protect your price (and by extension your margins) but enhance them as well.

To further support that ideal, we’ve just finished our latest training video Moving Beyond Price.  This 30-minute video will introduce you to the critical ideas, philosophies, and actions that successful companies use to consistently and sustainably earn higher margins.  We’re going to be making available to the public soon for the (low, low :-) ) price of $24.95.

However, before we do that, I’d like to do two things.  First, I’d like to thank the most loyal of my readers, and second, I’d like to get some feedback to make the video better. To that end, the first 15 people who leave a comment sharing why they want to move beyond price or how they’ve been able to move beyond price will get a free copy of the video.  All I ask is that you provide your feedback after watching.

Here’s an excerpt of the video:

RSS readers click here to watch video

Beyond Price

Earlier this week, I wrote that the price you charge for your products and services is the signal that says more about you than anything you can do.  I also shared the formula for determining what someone is willing to buy something for.  Today, I’d like to go deeper into part of the formula, so that you can get paid more for what you do – even in difficult markets.

So for those of you who haven’t seen this formula, here it is:

Commodity Value  + Intelligence/Enterprise Value = Price

Now, take a moment and think about the factors or contributors that your prospects and customers should use to establish the commodity value (or fundamental value) and the intelligence/enterprise value (the factors that you or your company bring to the table).  Feel free to download the sheet below to use for this.

In my experience there are only five factors that drive the commodity value:

  • Distribution costs
  • Need (both the amount and the timing)
  • Supply or Access
  • Quality
  • What someone else is willing to sell it for

When I was at Merrill Lynch I used to keep a sign above my door that said, “Don’t confuse brains for a bull market.”  And don’t get me wrong, I’d much rather be a bad salesperson in a favorable market (i.e. lots of demand, tight supply, and not a lot of competition) than a great salesperson in a bad market (i.e. light demand, lots of supply, and intense competition).  But here’s the thing:

We have no control over the left side (commodity) contributors of value!

In my post Monday, I referred to Todd Sattersten’s ebook on pricing.  He discusses the choice companies have in setting their price and one of the interesting insights he provides is the difference in price and profit cell phone handset makers Nokia, Blackberry (RIM), and Apple experience.

Why does RIM get 4 times what Nokia gets for their cell phones?  Why does Apple get 50% more for the iPhone than RIM gets for the Blackberry?

I can tell you this, the difference lies almost completely on the right side (the Intelligence/Enterprise Value) of the equation.  It doesn’t cost Apple 50% more to make an iPhone than it costs to make a Blackberry.  And because of that, almost all of the price difference goes right to the bottom line.

Go back and look at the right side contributors for you.  What makes you a better choice for your prospects and customers?  Why specifically should someone buy from you?  Now, answer this question:

What are those contributors worth?

Are they worth 1%?  5%?  15%?   50%?  More?

Whatever it’s worth, remember that every dollar you earn from the right side of the equation is highly leveraged for you (it also works against you if you make price concessions).

Your job is to focus all of your go-to-market efforts on supporting the “what’s it worth (right side of the equation)” conversation instead of the “what’s it cost (left side of the equation)” conversation.

The Only Difference That Matters

A friend of mine is a regional sales director for a Fortune 500 (soon to be 100) company. His boss recently asked everyone at his level to provide a brief response to the question, what makes his company different/better than other providers. My friend’s response is one that all fast growth executives need to know and understand.

He said, “in a world where every product is the same, or at least perceived as the same, the only difference that matters is the salesperson’s ability to sell.  Our company is better because our salespeople are better.” Don’t view this as an oversimplified viewpoint. My friend sells a highly sophisticated solution. His company has several proprietary offerings that they insist matter. What he understands is that no matter how unique your offering is, a) if the buyer doesn’t understand how it’s unique, and more importantly, why that uniqueness matters and/or b) the buyer has alternatives (and they always have alternatives), then you’re not unique.

He is absolutely right. Today, if your sales effort isn’t superior in a meaningful way to the buyer, then your margins will be under attack. If your buyers don’t feel a difference between how you sell and how your competitors do, then they are going to assume you are the same, and price will become the driving factor. As a matter of fact, there is no acute symptom more directly tied to ineffective sales efforts than price increasing in importance in the decision and/or  your margins facing increased pressure.

Selling is the process of enabling buyers and potential buyers to, first, understand their problems and, second, to understand how one’s solution can solve the actual problem.  Selling is not telling. Selling is far more than the ability to make an energetic presentation or to tell a story.  While these skills are quite valuable, selling today is far more about diagnosing and consulting (not to be confused with “consultative”) than it is about the power to “close” or to overcome objections.

Selling and salesmanship, today, is about your ability to:

  • Provoke the awareness of problems within your customer base
  • Diagnose those problems in a collaborative fashion
  • Have the business conversations to help your buyer’s translate your offerings into their results
  • The ability to make them feel safe

The winners of tomorrow will be the ones who invest the time, the money, the energy, and the discipline into build a superior sales force.

Where’s The Story

February 8, 2010 · Filed Under Business Growth Strategy, Messaging · 1 Comment 

Once a year, people sit down to watch television and they’re (almost) as interested in the ads as the show.  That time, of course, is the Super Bowl.  As I watched the game and rooted for the Saints, I was struck by three things.

  • First, I was struck by how virtually everyone who wasn’t a Colts fan was rooting for the Saints.  Yesterday, they truly were America’s team.
  • Second, I was struck by just how boring and useless the ads were – again.
  • Third, it hit me just how much these two things have in common.

Why did so many root for the Saints?  They have a compelling story.  From the recovery of New Orleans, to the comeback of Drew Brees, to the characters on the team.  The Saints, simply put, were are a great story.

The ads – not so much.

It’s unfortunate, because it hasn’t always been this way.  Three years ago, I asked if your company would make a good TV show.  Last year, I wrote about the importance of a powerful back story.  There was a time that commercials did an excellent job of this.  In 30 seconds, a great commercial told a compelling story that enticed and engaged its audience.  Today, it seems as though commercials are trying to catch lightening in a bottle in the form of a catchphrase, rather than engaging the audience with a story.

To see the difference in commercials compare one of yesterday’s most popular commercials with a famous commercial from the 1980s.

RSS Readers Click Here to See Videos

Notice that while the commercial is funny, it doesn’t really tell a story. As a result, people may remember the punch line (Don’t touch my mama or my Doritos), but it’s highly unlikely they’ll remember the product (even though the product is part of the punch line).

Now look at this famous Federal Express commercial:

The Doritos ad has far greater production value, and I think we’d all agree that the Federal Express commercial is far more memorable – and impactful.  Why?  Because it tells a powerful story.

If you want people to notice you, stop focusing on features and start telling stories.  What do you think?  What’s your story?

Great Wine

If you follow me on Twitter, you know that I just got back from 10 days in Vancouver speaking with companies about Creating Demand.  I met and talked with CEOs and senior executives from a wide variety of businesses who are all taking up the challenge of moving beyond good to great with gusto.

On my last night there, I had a terrific opportunity to take in a Vancouver Canucks game with one of the executives.  He’d just begun a new endeavor for a major western-Canadian organization with the edict to build a powerful brand from the company’s resources.

So in between goals, (the Canucks won 3-2 in an exciting game) we discussed how he may be able to do that.  This executive came from the premium wine business, so we talked a lot about wine as well.

Returning to my hotel I realized just how much great wine can teach executives about great branding.  So if you like wine or branding (or, even better, both), I share with you nine lessons great wines can teach us about building a great brand:

  1. Great wine is the result – not the process.  There is not such thing as “wine-ing” (except when my kids do it, and it’s spelled differently) and there shouldn’t be anything called branding – a brand is an end, not a means.
  2. The people who drink the wine are ultimately the ones that decide what a great wine is.  It is your customers, and the people who come in contact with you, who decide if you are a great brand.
  3. All the publicity in the world does not make a great wine.  All the publicity in the world does not make your brand great.
  4. To be a great wine, the wine must deliver the goods. Just because the winery says the wine is great doesn’t make it great.  Just because your website says your brand is great doesn’t make it so.
  5. The most powerful marketing component for a wine is inside the bottle.  The marketing component that actually drives and creates your brand lies in what you do and/or deliver, not in your advertising, brochures, or logo.
  6. Wines have good years and bad years, and while good years help, great wines find a way to be great regardless of circumstances.  Great brands deliver regardless of circumstances.
  7. When a great wine becomes popular and the producer or bottler tries to exploit it by ramping up production to “sell more,” the wine inevitably loses its aura, its specialness, and it fails.  When businesses start getting traction and they exploit their brand to drive short-term revenues or profits, the brand loses its authenticity and inevitably fails.
  8. As anyone who enjoys wine knows, it takes a certain amount of time for a wine to gain its flavor, and you can’t short circuit that time. If you open a wine “before its time,” you lose.  Building a company that becomes a great brand takes time and you have to give it that time.
  9. Great wines age well. It’s not about being the first, it’s about being best.  Great brands age well. It’s not about being the first, it’s about being best.

What do you think of these lessons?  Do you have any to add?

The Beginning of the End For Google?

January 10, 2010 · Filed Under Business Growth Strategy, Value Proposition · Comment 

Okay, I admit it – maybe that headline is a slight overstatement.  Uhm, on the other hand, I’m not so sure.

Google (and Bing) have gotten a lot of press and attention for their real-time search function.  I have to admit that I’m quite impressed by just how quickly I post something with my name in it, and Google lets me know it’s out there.

But, I’ve got to tell you – I don’t like it.  Frankly it’s increased the noise level, without providing any real value or benefit.  Sure, I get the value it may provide for “brands” who are trying to “listen” to what others are saying.  And if someone starts saying something bad about you, knowing sooner would certainly help.

However, Google has always succeeded because it focused on benefiting the searcher, rather than the searched.  Google’s famous algorithm was tremendously valuable because it filtered a lot out.  It made my life (and the lives of millions of others) simpler and easier.

The benefit of Google was very similar to the original benefit of mutual funds.  When they came into existence (in 1929), their fundamental value was that they enabled people to make sense of a very complicated investment world.  Paying attention to every potential stock was (more than) a full time job.  Amateurs just couldn’t keep up with it.

So, mutual funds filtered the stock world for investors.  While the average investor didn’t have time to research every stock, they didn’t have to.  They could simply select a mutual fund – and the mutual fund manager did the filtering for them.  Mutual funds are one of the primary reasons that America became an investment culture.

This worked great until the 1990s.  That’s when more mutual funds existed than stocks.  The product designed to simplify the world by limiting choice became more complex than the world it was supposed to simplify.  It’s no wonder that the underlying performance of these funds deteriorated.

I’ve always lived by the philosophy that just because you can, doesn’t mean you should.  I think Google could learn from this as well.  While Google focused on more (and focused on matching its competition), I think they’ve opened the world up for a competitor that provides the very proposition that Google originally offered.

Fast growth companies can learn from this.  In today’s complex world, customers are looking to you to make some choices for them.  To filter the world a bit.  Sure, the decisions you make will annoy some (just ask Apple), but done properly they’ll delight a few.  The key to real growth – and real profit – in the future isn’t making everyone happy; it’s in delighting the few.

What do you think?

Are You Different?

December 1, 2009 · Filed Under Business Growth Strategy, Commoditization, Messaging · 3 Comments 

differentWhen I speak with CEOs across the country, I’m always amazed by how much attention is paid to differentiation.  I can’t really blame CEOs for this.  For years, marketing consultants and authors have been shoving the concept of differentiation down their throats with claims like “Differentiate or Die!”

The problem with the focus on differentiation is that it is an end – not a means.  Unfortunately, that hasn’t stopped branding firms and marketing agencies from packaging the ends and selling it as a means to justify fees.  As such, the whole concept has become fraught with complexity – and angst.

Differentiation is actually quite simple.  It’s the answer to a very simple question – “Are you different?”

If the answer is ‘yes’, then act that way.  If you are different and act different, you shouldn’t have to spend much time or effort differentiating.  Think about it, when you go to The Four Seasons, do you need them to tell you they are different from other hotels?  When you got your iPhone, did Apple need to convince you it was different?  How about Cirque du Soliel?

If the answer is ‘no’, then no amount of effort of differentiation will help.

What Bach, Beethoven, Bruce Springsteen & Eminem Can Teach You About Growth

November 2, 2009 · Filed Under Business Growth Strategy, Commoditization · Comment 

SymphonyThis post first appeared more than four years ago on this blog.  Recently, I’ve had several conversations with clients and staff that have reminded me of this post.  I thought it would be worth sharing with you again.  Here it is:

I just attended a conference where Boris Brott, one of Canada’s most famous symphony conductors was a keynote speaker. In his speech, he noted that in the history of music, there are only 12 notes. He also noted that most musical compositions only use 5.

Despite all of the creativity, the beauty, and the memories for which music has been responsible, it has a very simple foundation. I realized how much businesses could learn by looking at the composition of music. Every musical composition from the most nuanced, classical music, to rock, rap and reggae involve the same 12 notes.

Companies are constantly trying to “differentiate” themselves. They are constantly trying to “add value” and to “innovate.” Too often, companies make life complex for the sake of making things complex. They claim the complexity is necessary so that their clients and prospects will understand how they are different. The reality is the complexity just further commoditizes the business.

No one will mistake Beethoven’s compositions with Bruce Springsteen’s. They are clearly different, and they use the same 12 notes. Apply this principle to your marketing and product development. Simplifying can be the greatest differentiators of them all.

What could you simplify?  Where are you being unnecessarily complex?  What notes should you be playing?

Let Them Taste It

Accelerate SalesI’m from the government, I’m here to help you.
The check is in the mail.
Really, I promise you’ll get the benefits after you buy from me.

Truth be told, this is how 95%+ of businesses position themselves in the sales and marketing process.  I’ve written (ad nauseum) about the fundamental need to create value in all aspects of the sales and marketing process.  The problem is that merely claiming to be the best choice or promising that you’ll do wonderful things for people after they buy is not enough to capture the hearts and minds of people.  Claims are no longer enough to drive buyer behavior.

Instead of waiting for people to buy from you before they can get a taste of what make you different, special, unique and/or better; let them taste it from the very first time they encounter you or your company – and furthermore, let them continue to taste it all the way through the buying process.

This is why content marketing is so powerful.  Instead of promising expertise or superiority, you’re delivering it.  By doing so, you are reducing the perceived risk for the buyer (which in an environment like today is a BIG deal), and giving the buyer more control (thus increasing their confidence), all while you build marketing assets which increase in value, and give you leverage, over time.

Recently, I was working with a client who had seen a precipitous increase in sales cycle times and sales costs.  As we reviewed the problem, we found a significant increase in the number of opportunities that stalled towards the end of the sales cycle.  The losses had been excused away – it was the economy, the prospect was cutting back, no more discretionary budgets, etc.  As we reviewed their sales process, I discovered that they did a pretty good job up-front in establishing needs, but then fell back to the we-do’s.  The value proposition focused on superior workflow process design, and how that design decreases costs and increases an organization’s productivity.  As I said, they did an effective job of identifying cost and productivity needs, however, they left it to the buyer to believe their organization could help them.  I recommended that they stop promising better workflow design and instead start letting their prospects experience it – at every touchpoint.  It’s still early, but we’re already seeing an increase in sales and a decrease is cycle times.

Please note that what I’m talking about here goes beyond “sampling” (letting buyers try you out in some small, low risk fashion).  I’m not against sampling, per se, but I think a) it’s often done in a highly transactional, manipulative way, and b) it is not enough.  Sampling is what Kentucky Fried Chicken did when they made October 26 the “free piece of grilled chicken day.”  What I’m talking about is re-orienting everything you do – from your website to your advertising to all aspects of your sales approach – to be the embodiment of the experience you are promising, rather than merely a statement of promise.  As I shared in the recent webinar Making It Rain Even In A Drought, the lag time between the origin of a problem and the awareness can be quite long.  By sharing your wisdom you can provoke their awareness, accelerate the sales cycle and make your competition irrelevant (because you’ll be the only one there when the prospect/customer becomes aware).  The key is to stop selling your wares, and instead be helpful by providing your prospects a taste of your experience.

So, how do you (or can you) give your prospects a taste?  Leave a comment, I promise I’ll give you feedback.

Yesterday’s Strategies Do Not Equal Tomorrow’s Success

October 26, 2009 · Filed Under Business Growth Strategy, Creating Demand, Sales Strategy · 1 Comment 

Old RulesI met with the CEO of a small company in the Southeast recently who is really doing some interesting things.  She found a unique set of needs that weren’t being met and she is aggressively working to fill the niche.  This is a niche with tremendous potential in the both the consumer and corporate markets.  She’s doing an awfully lot right.  Chief among the “right things” she’s doing is that (for her size) she is fully funding marketing initiatives.  Doing almost $3 million dollars in revenue, she’s budgeted almost $400,000 for marketing (something few small businesses would do).

As I talked more with her about her growth strategy, I began to worry.  Every tactic she is funding is an old school marketing tactic.  She’s got her print advertising budget, she’s beginning to do television in certain markets. Of course, there’s the direct mail, and so on.  Now, she’s got the obligatory Facebook page, a blog that gets posts infrequently and she’s “on Twitter.”  But, she’s not funding those initiatives with either time, money, or strategic attention.  I commented to her that I’m concerned she’s doing all of the right things from “yesterday” expecting them to succeed tomorrow.  David Meerman Scott talks about these “old” tactics in an excellent keynote speech at the Business Marketing Association 2009 conference.  He asks, “Why do we keep spending so much time on the 3% and 20% tactics (traditional advertising and direct mail), and not the 80% and 100% tactics (engaging online)?”

She’s not the only one who is doing this.  Amazon (while doing a lot of things right in their core business) appears to be following yesterday’s path to success with the strategy they are imploring with Kindle (for an interesting read on this subject, check out Joe Wikert’s post about how Amazon is screwing up the Kindle strategy).  As best I can tell, Amazon is trying Gillette’s strategy to market dominance (with the obvious exception that they are not giving away the “razor” – in this case the e-reader device).  Gillette lived the strategy of “give the razor away for free and sell the razor blades.”  Of course, the strategy required that Gillette’s razors only work with their blades.  Amazon is trying to dictate and control all aspects of the Kindle platform.  As a Kindle 1.0 buyer (officially making me an early adopter), I initially fell in love with it, but have since found my love beginning to dissipate.

Why?  Primarily because it hasn’t changed since I bought it.  What I mean by this is that I have not been able to really make the device mine.  When it first came out, it was really cool that I could carry 200+ books and read them digitally.  Sure, I’d have to give up on the quality (as all the publishers did was a quick conversion from print to digital), but it was worth it.  Today, well, it’s the same thing.  The only improvements Amazon has introduced is a sleeker version and a bigger version, but to benefit from those improvements I have to buy the device all over again.

Radio Shack is doing it with their silly attempt to “rebrand” their stores under the name “The Shack.”  Apparently, the executives at Radio Shack realized that customers no longer found their store compelling so they launched a $100 million dollar advertising campaign (I guess that was all the money they had because they didn’t even change the signs at the stores) to make the stores “more modern,” rather than going through the hard work of making the business more compelling.  So far, it’s not working as “The Shack” has disappointed again.  Here again, Radio Shack thought they could “control” the message when they can’t.

Other companies, both large and small have learned that the key to success in the future is participation and engagement.  They realize that their buyers want to control, and today they have the power to control their environment.  They realize that sellers have to play by new rules.  They must create value in their selling efforts and they must be willing to listen to the market.  Apple does this in the unique way they control their platform (think the apps store), but I get to make my iPhone, well, mine.  Fiskers does this with how they’ve engaged their community of Fiskateers.  Zappos does this by allowing customers to rate everything, and small businesses everywhere are learning that the big bucks, top-down traditional advertising approach is no longer the most effective or desirable path to create high-value customer relationships.

Tomorrow’s success is about balancing the natural control providers want over their platform, with the control all buyers demand today.  While the rules to the game are still being developed, here are a few that are becoming clear:

  1. Control is an illusion.  The market controls.  If you try to take control away from your buyers, they will punish you.  This doesn’t mean that you can’t exert a tremendous amount of control over the experience your provide, it means that the experience must give your buyers the feeling of great control.
  2. The more people talk about your offerings, the better your odds are.  Sure, this isn’t a new rule, but the ability to support it is.  The small company I referred to here is spending a significant amount of money to make a splash, but is underfunding everything designed to support the conversation.  Rather than spending $100,000 on advertising that no one will notice, think about how that money could support on-going and new conversations.
  3. No matter how good your offering is, if you’re not making it better every day (EVERY DAY), it gets old.  So, figure out what you’re going to do that is great today, then make it even better tomorrow.

What rules would you add?

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