Grocery Shopping, Rising Tides, and Maintaining Market Share

Presented for your consideration two very similar conversations.

The first never happened. (Well, technically, I did call a few friends and irritate them with the opening question).

The second most assuredly did.

Conversation #1:

Q: I think I need to cook. What should groceries cost me? 

A: Huh?

Q: What should I have to spend on groceries? I haven’t been cooking. I need to.

A: How in the world could you expect me to answer that? There are too many variables.

Q: I asked Bob. He said, “$200.”

A: Will you cook for yourself, or your family, or do you intend to have guests? How big is your family? How many guests? Will you cook one meal or several or all of them? What foods do your family like? How much variety is important to you? How do you feel about leftovers?

Q: You’re making this way too complicated. Just give me a number.

No one would take the “what will groceries cost?” question seriously. As ridiculous as it seems, though, the quite similar “what will it cost to advertise?” question is common.

The following exchange took place about a week ago between me and the absentee owner of a shop which sells handbags and accessories.

Conversation #2:

Q: I think I need to advertise. What should ads cost me? 

A: What?

Q: What should I have to spend on advertising my store? I haven’t run any ads in months. I need to.

A: I have no idea. There are too many variables.

Q: I asked Bingo Radio. They said “$1,000.”

A: Why do you think you need to advertise?

Q: Business is off a bit. I probably need to spend a few bucks to bring customers back to my store. I have an ad we used to run. I just want to know what it should cost.

A: How will you know that your ads are working?

Q: People will come in and sing my jingle to get a discount.

A: Has that worked for you in the past? Because I’ve never seen an audience react positively to “mention you heard this ad.”

Q: You’re making this way too complicated. Just give me a number.

There’s an old saying that a rising tide lifts all boats. Even the leaky ones. Even those which aren’t ship-shape. Even those which are too unsafe to be allowed out of port. The tide doesn’t care.

For the last couple of decades the financial tide has kept leaky, non-ship-shape, unsafe businesses afloat, too. Money has been cheap. Credit has been easy. And it seemed that anyone with an idea could find someone to finance it, purchase inventory, rent a location, and open for business. And as the financial tide kept rising, operators of these marginal businesses were able to sell enough to stay in business.

And why not? Money and credit were not only easily obtained by business, but also by shoppers who bought stuff they didn’t need with money they didn’t have, just because they could.

And now comes the reckoning.

Three years ago when the economy was robust the companies which did the best job of marketing themselves doubled or tripled in size. Today, phenomenally successful marketers are working to repeat last year’s sales. Most companies are shrinking. And too many small businesses don’t even have a marketing program.

For operators who understand the minds of customers, we now live in a time of great opportunity. The loss of sales volume across both retail and service industries has taken a corresponding toll on the media. Today’s advertising prices are a bargain. For the first time in my experience, even the price of your Yellow Pages ad is now negotiable.

But, a great price on an individual ad doesn’t include meaningful content for it’s message. Messages which pulled well two and three years ago aren’t working any more. And a bargain price on an ad which says nothing salient is a shameful waste of money. Today’s most important question isn’t “Where should I advertise,” it’s “What do I say?”

Our handbag shop owner has noticed that business is off. Fewer people are buying, and she suspects that “advertising” might solve her problem, but she has no understanding of how it works. In her ignorance she’s asking questions as silly as the “what do groceries cost?” dialog above. She has no plan. She doesn’t even have a goal. Worse yet, she doesn’t understand why either is necessary.

My prediction? She’ll waste a couple of grand trying to make customers do what she wants them to do, rather than providing what those customers want. Her store will fight to stay open through forth quarter of this year, hoping to pick up some big sales for Christmas. Those sales will not happen. Following a liquidation sale in January her store will close, permanently.

It’s not the bad operators that I worry about.

It’s the under capitalized, non-niched, owner operated small retail or service businesses. The companies which deliver real value for their customers, but haven’t created a marketable position for themselves.

Too many of these operators will effectively become twenty-first century sharecroppers. One hundred years ago they’d have borrowed the money for seed. They’d have planted, and prayed for rain. They’d have worked long, hard hours hoping for a large enough harvest and a market price that would allow them to sell their crop, pay back the loan, and have enough left to feed the family the coming winter.

In a number of conversations with small businesses over the last week the theme which keeps repeating is “I need working capital. I need to be able to purchase inventory.” Credit lines have dried up, and these operators are hurting. Not because they’re bad operators, but because the rules of the game have changed. Assuming they find new sources of capital, there will be limits on how much they can borrow and how quickly it must be repaid.

Get used to the new rules. We won’t be going back.

What can we expect from these new rules?

Every economic downturn shakes out the poseurs, wipes out the frauds, and toughens the survivors. A few will adapt to the new marketplace reality, and thrive.

  • Those who thrive are the operators who will learn which items to stock. They will meticulously keep an adequate inventory while simultaneously avoiding items which won’t quickly sell.
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  • They’ll keep a close eye on customer count, perhaps in increments as small as fifteen minutes, in order to hold labor costs in check.
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  • They’ll learn exactly who their customers are, and exactly what is important to them. Every advertising message will attract new customers and persuade existing customers to shop more.
  • Their companies will be smaller, leaner, and incredibly efficient. And their relationships with those customers will become much more personal.

    Great companies are born of adversity. Are you ready for greatness? Shall we get started?

    __________

    Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about effective advertising in this economy may be directed to ChuckMcKay@ChuckMcKayOnLine.com

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    Speed up cash flow – Surviving The Recession – Part 6 of 7

    Cash flow is tied to profit and loss, but makes allowances for lags which happen between the sale, and payment clearing your checking account.

    The problem of a slow economy can work to your advantage if your suppliers grant you credit.

    It can be fatal if you offer credit to your customers.

    For the next few months its going to be critical that you have an accurate forecast of your company’s cash flows, and keep tight control over all of your customers.

    Those folks who owe you.

    Have you checked your customer’s credit history, recently? You should. All of them, including those who have (so far) paid on time.

    Those with questionable payment history can be expected to delay their payments again during a cash crunch. Be prepared to cut back on their credit lines, and keep a close eye on potential defaults.

    As soon as you detect a problem, get them on the phone. It’s much harder to ignore a phone call than a collection letter. Besides, your diplomacy will be even more appreciated in a one-to-one conversation.

    Ask for a specific day that you’ll receive payment, and telephone your client again if payment is not received when they promised. Most will pay to avoid another call from you, and another explanation.

    Speed up the process.

    You can help your financially healthy customers to want to pay faster by offering a 1 to 2 percent discount for payment within two weeks. Perhaps you could go as much as 4 percent for those who pay in cash at time of purchase.

    Include your invoices with each shipment of goods, if possible. If not, be sure to send them on the same day.

    The Internet has become another powerful cash management tool. You can speed the billing process by e-mailing your statements and invoices (not to mention that you’ll save on printing and postage).

    Accepting credit cards on-line or over the phone can also speed the process and reduce costs.

    Collecting.

    You’re probably already computerized, but have you explored the credit controls and debtor reports that are usually built into accounting software? Get familiar with these tools, and use them.

    It’s as bad to dun customers who have paid on time as it is to ignore those who haven’t paid and are past due. Whomever on your staff handles collections will need real-time data to keep customers from taking advantage of potential inefficiencies in your operation.

    Do what you can to preserve customer relationships, but recognize that there’s no benefit in maintaining a relationship with someone who can’t, or won’t, pay. And even your best customers may themselves have genuine cash flow difficulties. Be very careful not to extend too much credit and let them get even farther behind. Once the amounts owed appear impossible, even your best customers will become discouraged and stop trying.

    If payments are lagging, consider a collection agency. Some will work for a percentage of the amounts they collect. Others will offer specific services for a flat fee.

    Paying.

    Now, go to your own suppliers and ask for extended payments. Ask for better terms in the form of lower prices, lower interest rates, or longer payment periods.

    Renegotiate any leases or other contracts which will soon be coming up for renewal. Consider reducing the amount of space you’re leasing.

    Should you be changing long distance carriers, or looking into VOIP technologies?

    Your personal credit.

    Small business loans become much harder to acquire in tough times. You may be able to tap into your good personal credit to inject the liquidity needed to keep your company afloat. Keep close tabs on both your company and your personal credit ratings.

    Perhaps you’ll find yourself in a short-term situation, and a one-time infusion of cash could make a difference. If your margins are high enough that you could discount your prices, maybe you should be looking into outside financing (factoring). This is a process in which you discount your accounts receivable and sell them to a factor (a short-term lender), for cash. Since this cuts into your profit, use it only as an emergency measure.

    Whatever you call it…

    This economic downturn is likely to affect your business. Keeping enough cash on hand to pay all of your obligations, even those you don’t expect, may help your company survive.
    __________

    Chuck McKay is a marketing consultant who helps customers discover, and choose your business. Questions about helping your business thrive during an economic recession may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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    Adjust Your Staffing – Surviving The Recession – Part 4 of 7

    As much as we dread any economic recession, there are economists who insist tough times force us to become more efficient, and that’s a good thing. Perhaps this is most obvious when it comes to staffing.

    In many retail businesses, and nearly all service businesses, people are the largest cost item. That’s because in addition to wages and benefits, they spend your operating capital and consume other resources.

    And, its common to add excess people during good times. You can’t afford to overpay in payroll.

    It’s time to carefully evaluate your staff.

    Sort your people into four groups – A, B, C, and D. This sort has nothing to do with rank. A great cashier may be more valuable than a so-so executive.

    Your A group are the excellent employees that you couldn’t get along without. Tell them how important they are.

    The B’s are good, consistent performers. Tell them, too, that they’re important to your company’s future.

    The C group are average. Determine which of them can grow into the B list, and make sure they understand that their jobs are secure as long as they stay focused on helping your company through the rough times.

    The D’s are under-performers. They, along with the C’s you can’t grow, should be cut immediately.

    And be sure to look at your management team. Can you combine jobs by reallocating work? High-paying unnecessary jobs should be the first to go.

    What about your sales team? A good salesperson is golden in any economy, but more so when sales are so critical. Carefully evaluate your non-producing salespeople. Are they improving? Then consider them a valuable investment in your company’s future. If you don’t see that happening, cut them quickly. Its likely that your sales stars can take over any billing clients that need attention.

    And remember, too, that attitude is critical in coming months. Negative employees, those that fight change, and those who’s favorite word is “can’t” are all people you can’t afford any longer.

    Do it, and do it all at once.

    Make all of the necessary terminations happen at once.

    Do not explain why the terminated employees are gone, but make sure the rest of the staff has specific reasons that you’re keeping them. Make sure they know they represent your company’s future.

    If there aren’t enough talented, motivated people remaining after the cuts, consider hiring temps, or even outsourcing some of the basic functions.

    Now it’s time to be a superior boss.

    Teach your people how to do their jobs better. Catch them doing it right, and make sure the praise is sincere. As they become more successful, so will you.

    Involve your whole staff. Make brainstorming of both cost-cutting and revenue generating ideas part of your group routine.

    Lead by example. Be the first one in each morning, and the last to leave. Never take off early on Friday, or take excessive lunch breaks. Never justify any behavior that you don’t want your employees emulating.

    And always tighten your own belt, first. If employees wanted to make sacrifices, they’d have started their own businesses.

    __________

    Chuck McKay is a marketing consultant who helps customers discover, and choose your business. Questions about helping your business thrive during an economic recession may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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    Focus on Revenue and Customer Service – Surviving The Recession – Part 1 of 7

    Concentrate on Business.

    At the base of the brain stem, in the primitive part of the human brain which controls breathing, sweating, blinking of the eyes, and other forms of involuntary action, is the amygdala.

    This tiny region of nerve cells is the part of the brain responsible for the four “Fs” of human behavior: Fight, Flight, Feed, and Reproduce.

    To many of us the uncertainty of the economy feels dangerous. When the human animal feels threatened, the amygdala kicks into overdrive, provoking survival behaviors. Under these conditions people look for security. They reconnect to their core values.

    But, this is key: during turbulent times, people don’t stop spending. They shop harder for value.

    How are your customers responding to fear of the unknown?

    Are you selling to other businesses? During a recession your business customers will still purchase equipment, services, or even advertising – especially when those have been proven to generate revenue. They will be much less concerned about brand building, and much more focused on making the cash register ring.

    Do your business customers appear reluctant to buy new equipment? Then change your value proposition. Let your customers know that your mission is to protect their investment by making sure their equipment runs as efficiently as possible for as long as possible.

    Are you selling to consumers? Tell your hard-core economic value story first. This is what will get them to consider your offering. Then bring in your core values, as well as the other value-added elements.

    In hard times people are especially focused on doing the best they can for their families. Provide high value, AND make them feel good about doing business with you, and you’ll find your customers showing loyalty to you that they won’t show your competitors.

    With less money in circulation, focus on revenue.

    Contemplate smaller jobs that wouldn’t normally excite you. In a slowdown your staff is likely to have less to do. Keep them busy with whatever business there is. Lose the “OK, we’ll even do this, now” attitude. You’ll be competing for those jobs, and the competition is likely to be stiff.

    The rules of how business is done are changing. Focus your attention on maximizing revenue and on leveraging your intellectual capital. How much do you need to be in control? Think about outsourcing work that doesn’t create revenue. Consider, too, that it’s almost intern season, and help can be cheap.

    Contact your customers and ask for referrals. Tell people you need more work. If they believe in your competence, they’ll come through for you. Don’t worry about looking as if you’re begging for work. You ARE.

    Service those customers.

    With fewer customers you’ll be tempted to reduce the number of customer service personnel. Many of your competitors will. Don’t do it. Of course now is the time to cut expenses, but not in ways that touch the customer.

    As Richard D. Hanks of Mindshare Technologies has said, “Be the business where a customer can actually get served quickly. Have the call center with the shortest “on hold” wait times. Let your business be the one that doesn’t skimp on portion sizes, quality ingredients, packaging materials, or add-ons. Be the business that surveys customers on service satisfaction and continuously improves based on customer feedback. Let your business be known for urgency, responsiveness, and quality.

    The most important thing you can do.

    Listen.

    Listen to what your customers are telling you. Watch how they’re behaving. Consider what it feels like to be your customer in this economy. What would you do in their situation?

    Now, help them to do it.

    __________

    Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about helping your business thrive during an economic recession may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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    Bad News For Business Owners

    The economy is in trouble. Which loosely translates as people are spending less.

    We’re all feeling the pinch. That’s obvious. And though no official source will admit it, we’re now in the middle of the recession of 2008.

    But there’s also good news.

    The average recession in this country lasts 11 months. Which means in about another six months we should start seeing signs of improvement. (I wasn’t kidding when I called this “the middle.” There’s only another half a year to go).

    The obvious question to small business owners is “How do we get through the next six months?

    Over the next week, I’ll be posting a series of steps you should take to keep your business healthy. On second thought, forget “should.” You need to implement each of the seven items on this list. They are:

    1.Concentrate on business and customer service.
    2.Cherish your existing customers.
    3.Accelerate your advertising and PR.
    4.Adjust your staffing.
    5.Lower your profit margins.
    6.Speed up cash flow.
    7.Cut overhead. 

    These recommendations are simple.

    Not easy, but simple. They are plans and processes that can help your business to actually thrive, provided of course, you’re willing to be proactive when all those around you are hunkering down, hoping the unpleasantness will end soon.

    Which will be your choice?

    Meet me here tomorrow. We’ll talk.

    __________

    Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about helping your business thrive during an economic recession may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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    Bottled Water, Fresh Fruit, and the Price of Gasoline

    Are you in retail? Have your sales been affected by gas prices?

    I just eavesdropped on a conversation between the managers of two local stores.*

    They both noted that store traffic has decreased, and the telephone is ringing much more consistently, since the price of gas passed $3.50 per gallon. People are now calling to confirm inventory before they drive to the store.

    There’s no doubt that, as surely as it’s effecting the rest of our economy, the price of gas is effecting retail sales, too.

    There’s also no doubt that this is a time of great opportunity for those businesses who recognize what’s happening, and have the courage to take immediate action.

    The change in consumer behavior will be short lived.

    People will return to their old habits.

    How do I know?

    Because they always do.

    When the Mother Earth News was a fledgling publication, people worried about protecting the ecology. Later they joined the conservation movement, then the environmental movement. Today, they’re enlisting in the green movement.

    Roughly every decade the name changes. And every decade new people get involved. The old people are only willing to discomfort themselves so far.

    Green is a great promotional tool.

    Unfortunately, it runs counter to our consumer-centric way of life.

  • Have you seen the ads from the bottled water company claiming their thinner plastic bottle has less impact on the environment? Do you secretly wonder if people truly worried about the effects of plastic in landfills would drink tap water? They aren’t. They don’t.
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  • The Toyota Yaris gets 40 mpg with a standard gasoline engine. The Lexus LS 600h L is a hybrid which gets 22 mpg. Care to bet how many people are so concerned about the price of gas that they switch from the Lexus to the Toyota? They aren’t, and they won’t.
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  • For that matter, wouldn’t repairing the existing car rather than buying a new one be the ultimate in recycling?
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  • People worried about the cost of gasoline should logically move closer to their jobs, wouldn’t you think? Today the average home-owning family demands another bedroom, another bath, an attached two car garage, and at least 800 square feet more living space than they did 50 years ago. Will they give up those larger suburban homes to economize? They aren’t, and they won’t.
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  • Purchasing bedding, draperies, or carpets made of recyclable fabrics reduces the demand for new natural fibers by as much as 15 percent. More than 15 percent, and they wouldn’t be able to make the resulting fabrics fire retardant. Will people risk their families’ safety to recycle? They won’t, and they don’t.
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  • Do we really need fresh fruit in January? Apparently we do, even if it’s flown in from the southern hemisphere on giant transport jets with excessive “carbon footprints.” In any economy, some people will pay a premium to get exactly what they want.
  • Please don’t misunderstand. I’m not passing judgment. Frankly, my job is to help sell fruit in January. I’m merely pointing out the realities of human nature. People are willing to accept only a certain amount of discomfort before they revert to form.

    $4.19 a gallon? Drivers will get used to it.

    Some of us remember when gas was $0.25 per gallon. We remember the grumbling when it hit $1.00. This story has been replayed a few times, and people always adjust. They will not change their consumption patterns for homes, bottled water, fresh fruit, or even gasoline… it will just take them a bit to grow accustomed to the changes.

    What’s driving shoppers’ fears today is the speed at which prices are increasing.

    How can shoppers explain what’s happening? Most can’t. And that inability to articulate leaves them simply threatened enough to invoke survival behaviors. People scared (consciously or unconsciously) for their family’s survival look for security. They hunker down and wait for the threat to pass. In the short term, they’ll spend money reluctantly, and only when they must.

    But they will continue to buy.

    Turn this highly-predictable behavior to your advantage. As my dear friend Tyler Engberg told me back in 1971, “There is great money to be made at times of confusion.

    Capitalize on confusion.

    As long as people perceive a problem, you’ll gain market share by offering a solution.

    Ad another body to your payroll if necessary, and cater to your customers survival fears. In your advertising, invite people to save gas by shopping with you.

    Offer to check your inventory in order to be sure you have specific items in stock before your shoppers make the trip.

    Offer order fulfillment and save them the trip. Confirm that you have the goods in stock, then take your customer’s credit card numbers and ship items to them at their homes or offices.

    And, for goodness sakes, learn their names.

    But if you intend to do these things, move quickly.** As soon as shoppers adjust to higher gas prices your competitive advantage goes away.  You need every advantage when you’re fishing for customers.

    Your Guide,
    Chuck McKay

    Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

    Got questions about retail strategies for to counter high gas prices? Drop Chuck a note atChuckMcKay@ChuckMcKayOnLine.com. Or call him at 304-523-0163.

    __________

    * One of those managers was my wife. She, the other manager, and I were all having lunch at the same table. As much as I find a certain appeal in assuming the James Bond persona, I wasn’t sneaking around spying on my retail brethren.

    ** Need help crafting such ads? Come to the Boom Your Business Seminar in Nashville August 1 and 2, and catch Chris Maddock’s Ad Writing 101. Can’t make it to Nashville? Call me.

    __________

     

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    Military Positioning as Marketing Strategy

    Your company is the newcomer. You’re the young upstart that has innovated, and is generating significant buzz. How can you expect the leader in your business category to react?

    The expression “level playing field” implies a fair contest. In battle, as in marketing, a level field is the last thing we want. Military strategists from Genghis Kahn to Douglas MacArthur have all understood the advantages of taking the high ground. We’re not referring to any moral superiority, but rather to the literal highest point in the physical terrain of the battlefield.

    The first army on the field claims the high ground. And field position makes up the bulk of military strategy.

    Look at the high ground advantage geometrically. There is only a narrow angle at which shots fired uphill can hit their intended target. But shooting downhill opens the enemy to exposure from three or four times as big an area. The easier target will suffer greater casualties.

    In the 80s marketers studied the writings of Carl von Clausewitz and Sun Tzu and tried to apply battlefield strategies to marketing “warfare.” The parallels work on a superficial level, and the illustrations can make key marketing concepts come to life.

    I offer one such illustration.

    Imagine two military sections (small squads of 12 soldiers), each under the command of a sergeant. One firmly entrenched at the top of the hill. The other trying to take that hill.

    They each take aim and fire. The attacking section, shooting through the narrow aperture provided by the terrain, hit about 20 percent of the targets they shoot at. The defenders, without such limitation, manage to hit 60 percent of the time.

    After the first volley, seven of the twelve attackers are shot (60 percent of twelve bullets), leaving five standing. Only four of the defenders were wounded (20 percent of twelve, rounded), leaving eight.

    The second volley takes out three more attackers, leaving only two standing. One additional defender is wounded, leaving seven.

    The third volley wipes out the attackers with no additional injury to the defenders.

    It works this way nearly every time.

    Like the military parallel, marketing field position is largely determined by the first army in the field.

    Uh, lemme rephrase that.

    Marketing position is created by the first product in the consumer’s mind. This is why it’s critical that your company be first in the minds of your prospective customers. Its the reason the incumbent nearly always gets re-elected. Its the reason Coke still outsells Pepsi. Its the reason nobody sells more prepared chicken than the Colonel.

    How is marketing dominance achieved?

    The easiest way is to actually be first.

    That’s a rough requirement when your company is second, or third, or even farther down the list of competitors. Someone else already owns the high ground.

    The second way to claim a winning position is to create a whole new mental battlefield and be first to occupy it.

    If you can’t be the first lawn and garden equipment store in your community, be the first which doubles the manufacturer’s warranty. If you can’t be the first pawn shop, be the first that only deals in jewelry.

    Astute readers will recognize this strategy as specialization.

    One more point. The market leader also gets the benefit of the halo effect. Because the leader is so well known, it’s usually assumed that the leading company is “better.” Which means when people hear good news about your industry, they figure it’s news about the better known company.

    If you think about the ramifications of this for just a minute, you’ll have the answer to the original question.

    Copying for fun and profit.

    How does the established competitor defend his hill against you, the innovative new upstart company?

    By doing exactly what you’re doing.

    As long as the innovation is peripheral to the core business, the market leader can squash the upstart by simply offering the same innovation.

    Sadly, (for you) by duplicating, they’re also likely to get credit for the innovation, and you’re likely to be seen as a small copycat.

    But when your innovation IS the core business?

    Then you own the high ground on a brand new marketing battlefield, which places you first in the minds of customers who see value in your innovation.

    The best thing that can happen to you in this case is your competitor, the market leader, changes the way he does business to remain competitive. If his customers perceive that he’s abandoning his core business, he’ll lose a significant number of those customers.

  • If the established radio station with strong personalities shuts them up to take on the new “more music” radio station, the established competitor loses listeners who tuned in to hear those personalities talk.
  • When the established Chinese restaurant replaces moo goo gai pan or sweet and sour pork with spaghetti, tater tots, and cheeseburgers on the buffet, the established competitor’s image is diluted and less appealing to those customers prefer Chinese cooking.
  • As soon as the established overnight courier service, in an attempt to combat the new inexpensive courier, limits the cities to which the “overnight, or else” guarantee no longer applies, this established competitor will start losing market share among customers who’s jobs depend on guaranteed delivery.
  • Defending against innovation.

    If the new competitor’s innovation is only tangential to the core business, he should copy the upstart. If it’s critical to the core business, a savvy market leader shouldn’t overreact to the new competitor’s innovation. He won’t be able to stop it, either.

    Where’s the new high ground?  Which kind of innovation will your company offer your market?

    Innovation is critical when you’re fishing for customers.

    Your Guide,
    Chuck McKay

    Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

    Got questions about innovating or defending against innovation? Drop Chuck a note atChuckMcKay@ChuckMcKayOnLine.com. Or call him at 304-523-0163.

     

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    Marketing P.A.I.N. – Part 8, Message Frequency, Media Choices, and Tracking

    Marketing P.A.I.N. is a step-by-step guide to more effective advertising. I’ve made reference to the P.A.I.N. acronym, and since this is the last post in the series, I’d best explain it.

    1. Pinpoint your prospect’s specific pain to create a salient message.

    2. Acknowledge your prospect’s buying mode for credibility.

    3. Increase message frequency in the medium which best suits your message.

    4. Note and track all outcomes.

    In the first six parts of this series we increased the salience of your advertising by matching your message to your potential customer’s pain.

    In part seven we persuaded her to act. We added a strong dose of credibility to your ads by acknowledging her pain mindset.

    Today we’ll wrap up with the final two elements in the Marketing P.A.I.N. concept – matching the media (and determining how often to run your ad), and keeping records of your results.

    One repetition of any message is seldom enough.

    Have you ever helped a child to learn the multiplication tables? Then you already know rote memorization requires massive amounts of repetition.

     

    3 x 4 = 12

    3 x 4 = 12

    3 x 4 = 12

    You already had the child’s attention. How many repetitions would it take if you were trying to implant “three times four equals twelve” in the minds of casual bystanders?

    Similarly, your message is more likely to persuade customers to call when at least half of the audience has been exposed to your ad three or more times (in a seven day period). You’ll see this referred to as an average frequency of “3.”

    This doesn’t mean purchase three ads.

    Different people use media differently. It takes a lot more than three ads for the average reader/viewer/listener to be exposed three (or more) times in a seven day period.

  • Most people don’t read every page of the newspaper. If your ad is in the Real Estate section, and they only read the Sports section, they miss it.
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  • No one can watch every television channel. If your ad is on the ABC six o’clock news, the person watching the M*A*S*H re-runs on Lifetime won’t see your ad.
  •  

  • People see outdoor ads (billboards) as they drive at different times to different destinations. Your board at the corner of Main and Second will be missed by everyone who takes the bypass.
  •  

  • And radio? Most people listen in their cars, while they drive at those different times to different destinations. Your 7:20 ad will not be heard by people who don’t get in their cars until 7:30.
  • Any message in any medium?

    Mass media exists to communicate with large groups of people at one time. Though all media are capable of carrying any message, each excels in a different area.

    And at each stage of pain one medium becomes more efficient and cost effective.

    Your message position suggests the best medium to deliver that message. What follows is a guideline. Always do the math and keep track of the return on your investment.

    Stage 1 Media:

    Television, radio, newspapers, and outdoor signs are, by their nature, the most expensive media, and thus require more staying power. Use them when you have the potential to convert huge numbers of the public into customers.

    Television – If your message requires a demonstration, there is no better medium. Your production quality (film vs video tape, actors, lighting, etc) will be compared to national advertisers who frequently spend as much as a third of a million dollars on the production of their ads.

    Newspaper – Sometimes your message requires written detail, illustrations, photographs, maps, or lists of prices. Newspaper is an excellent medium for Transactional appeals, but it can also be a great way to build image. If your weekly ad looks like editorial content, such as a regular column, your reputation as an expert will grow each week.

    Radio – Reach shoppers emotionally through radio’s theater of the mind. Don’t be concerned about getting a deep voiced announcer. Sincerity, that is, perceived sincerity, is much more important than vocal quality.

    Outdoor – The most effective use of a billboard is for directions, like a huge “Turn Here.” Outdoor signs also make an excellent reminder medium for additional frequency.

    Stage 2 Media:

    At Pain Stage 2 your prospective customer will begin to notice signs, brochures, and topics of conversation that formerly had her eyes glazing over.

    Signage – Illuminated signs attract more attention. Simpler type fonts and very large letters are easier to read and understand when people are driving. Use attention-getting colors if they reflect well on your image.

    Newsletters – Frequency, great imaging, the ability to position you as an expert, and the ability to let potential customers get to know you and your staff as people, all make newsletters a powerful tool. Don’t do fewer than four, or more than twelve issues per year.

    Brochures – Create a separate brochure addressing one single pain for each product or service you offer. Don’t limit placement of those brochures to your lobby or showroom. How many other local businesses have customers who could benefit from what you sell? Work out a deal to leave your brochures in their lobbies and showrooms.

    Specialty Advertising – Refrigerator magnets, calendars with your name (and picture), paperweights, or pens will be useless without three important ingredients:

    1. Invest in something people will want to keep on their refrigerators, their desks, their dashboards.

    2. Include your message, as well as your name. It’s not enough to “get your name out there.”

    3. Don’t be clichéd. (Bent pens for chiropractors were novel fifty years ago. Today they are just sad.)

    Public Speaking – Put together a 17-20 minute talk about the problems your company solves. Local service clubs need 40 to 50 speakers per year for their weekly meetings. The business owner who shakes more hands will grow his company bigger, faster.

    Stage 3 Media:

    Stage 3 is the most profitable message position for most small businesses. Potential customers have considered several options, but haven’t purchased a solution yet. Your message may involve comparisons between your company and alternatives. These presentations do well in writing, but be sure to include illustrations, charts, or photos that reinforce your message.

    Direct Mail – Highly targeted, geographically limited, and response easily tracked, direct mail is the Stage 3 medium of choice. Like other media, direct mail needs frequency in order to maximize return. Most business owners try one mailing and give up. It’s not uncommon for the second mailing to the same group to get a better response than the first.

    E-Mail – Unless you have been invited to send e-mail messages to prospective patients, it’s probably best to avoid it. The spam image will be hard to overcome. But get people to opt-in to your mailing list, and you can eliminate printing and postage costs. E-mail is a great delivery system for your newsletter.

    Web Pages – Another electronic medium with minimal expense is your website, which has the ability to dedicate complete pages to specific offerings.

    Stage 4 Media:

    Within hours of experiencing the final trigger, people at Stage 4 will become someone’s customer. When they don’t have experience with anyone in your business category, people turn to the Yellow Pages and local Internet searches.

    Yellow Pages – Don’t waste your ad space by using your name as a headline or by talking about the number of years you’ve been in business. Your message needs to scream, “Stop hurting, NOW.” Done correctly, your ad itself may become the final trigger to call.

    Local Internet Search – Include the names of the communities you serve in the text on your Internet pages, so when someone Googles “Ft. Worth car stereo,” “Fargo men’s shoes,” or “Bakersfield appliance repair,” (whatever your city and business) your page will be part of the search results.

    Note too, that branding (or awareness) campaigns tend to work better in early stage media. Later stage media excel at delivering direct response campaigns.

    Community variables:

    In larger cities, direct mail delivered to a very small neighborhood may be the most cost effective choice for advertising your business. In smaller towns, the better choices may be radio, television, or newspapers.


    How much profit are you willing to give up to re-fuel the engine and pay for more advertising? It always comes down to ROI. When you’re considering a medium in which to advertise your business, ask yourself:

    1. Will your choice of medium deliver a “3” average frequency at a price you can afford?

    2. Will that advertising schedule provide your business with enough new customers to justify the advertising?

    3. What’s the value of each new customer? How much of that sum is profit for your business?

    If this produces a positive ROI, do more of it.

    If not, try another medium or a different media outlet.

    Keep improving your results by keeping detailed records of what you did, when you did it, and the outcome.

    Track the revenue per customer provided by each source. Some techniques bring customers with greater value than other techniques and other customers.

    In most cases, your first set of calculations will have to be done after the fact, but should definitely be done before you invest in another schedule.

    Also, remember that the size of your community and the number of competitors advertising their companies will affect the time it takes for any marketing to work.

    In conclusion:

    As a marketing consultant I’ve seen campaign after campaign after campaign fail from lack of direction and focus.

    I created Marketing P.A.I.N. to help small businesses achieve the highest and best use of their marketing dollars. Drop me a note when you’re ready to apply it to your own advertising.

    It’s my sincere wish that you see solid growth in your marketing ROI.

     

     

    Marketing P.A.I.N. Series

     

    Part 1, Relationships
    Part 2, What Do People Want?
    Part 3, Advertising the First Stage of Pain
    Part 4, When People Realize They’re Hurting
    Part 5, Testimonials and Comparisons
    Part 6, Make It Stop!
    Part 7, Tie It All Together

     

    Part 8, Message Frequency, Media Choices, and Tracking

     


    Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about choosing the appropriate medium to carry your advertising message may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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    Marketing P.A.I.N. – Part 7, Tie It All Together.

    Thus far in the Marketing P.A.I.N. Series, you’ve seen the value of talking to your customer about the exact discomfort she’s experiencing.

    You’re able to identify four stages of pain. You can help your customers to identify with your solution at each stage of pain.

    You know how to use that identification to help your advertising messages to cut through the media clutter to get their attention. You’ve learned to propose a solution appropriate for each pain stage.

    Is that all it takes to make a sale?

    Not quite. Although you now have your prospect’s attention, you still have no credibility with her. This is where acknowledgment of her pain mindset comes in. There are only two:

    1. People in a Transactional mindset believe they know everything necessary to choose the right solution for their pain. Transactional shoppers are primarily interested in prices.

    2. But people in a Relational mindset are well aware that they don’t know enough to make an uninformed decision. They’re seeking an expert they can trust.

    In every business category, roughly half of the customers fall into each designation. And depending on what it is we’re shopping for, we each are already both.

    Buy whichever gas is cheapest? Purely a transactional move. Choose to dine at Mario’s Spaghetti House because the waitresses all flirt with you? You’re as relational as they come – at least when it comes to spaghetti.

    No message can appeal to both pain mindsets.

    Did you notice that these mindsets tend to be polar opposites? The right thing to say to one is exactly the wrong thing to say to the other.

    To get the attention of Transactional shoppers, you could offer reduced fees, promotional sales events, or coupons. If you charge “too much,” you have no credibility with them.

    But Relational shoppers want to know you understand them, and that they can count on you to offer informed advice. Anything which indicates you are driven solely by profit, rather than concern for your customers, costs you credibility with Relationals.

    Examples:

    (click to enlarge)
    Either can be a profitable customer base, so it comes down to the kind of business you’re comfortable running.

     

    If you enjoy a fast-paced, “Wham. Bam. Next.” (oh, and “thank you”) style of operation, you may be able to compete on price to reach Transactional shoppers.

    But a more methodical, slower-paced, “get to know the customer” style of business necessitates appealing to Relationals, who are willing to pay higher prices, and are more likely to continue being profitable customers over the long-term.

    There’s an added benefit to getting the attention of Transactional patients. They contribute to “buzz” about you in the community. Relational customers are responsible for the more slowly growing “word-of-mouth.”

    Let’s tie it all together.

    Multiply four stages of pain by two pain mindsets, and it becomes obvious that there are only eight possible message positions.

    Look at how much more credible the message becomes when you catch the shopper’s attention (by identifying the stage of pain), and then present your message in accordance with the pain mindset she’s already inclined to trust.

    (click to enlarge)
    The marketing of every service business, of every retail business, of every not-for-profit can be described in one of these eight positions.

     

    Why only one position?

    Few businesses have the financial resources to simultaneously pursue two completely different markets.

    Since each marketing position resonates with a different group of shoppers, each position is ignored by other groups. Any impression you may have already made will not have been noticed by your second target.

    Once you’ve expended the resources to anchor your message firmly in a prospective customer’s mind, you’ll get the best return on your advertising investment by sticking to that position, and building on it.

    Please note: This does not mean that you can’t change the message, only that the message position – the stage of pain and mindset it addresses – remains the same.

    Choose the position with the greatest potential.

    You must decide whether you prefer to work with Transactional or Relational customers. And you must identify the stage of pain at which you choose to offer your solution.

    Which factors do you balance?

  • Which segment has the greatest growth potential for your business?
  •  

  • Is that segment big enough to support your business?
  •  

  • Will this result in the type of business you’d care to run?
  • Can you begin to see the power of the Marketing P.A.I.N. concept?

    When your local media rep invites you to become a sponsor of a new promotion, you simply need to compare the promotion’s focus against your eight position grid.

    If it matches, consider the investment. If not, pass.

    Once you’ve identified your position, you’ll instantly know whether any advertising you’re considering will help your business to grow.


     

    Your Guide,
    Chuck McKay

    Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

    Questions about focusing on the issues your customers care about may be directed to ChuckMcKay@ChuckMcKayOnLine.com. Or call Chuck at 304-208-7654.

    If you know someone who would find this article useful, please share it.

     

    Marketing P.A.I.N. Series

     

    Part 8, Message Frequency, Media Choices, and Tracking

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    Marketing P.A.I.N. – Part 6, Make It Stop!

    Suppose you go to bed Tuesday evening at the usual time, following your usual routine.

    Wednesday morning you sit up in bed, swing your feet over the side, and are startled as you put your feet into a cold, wet puddle of standing water.

    You discover that somehow, someone left the cold water trickling into the bathroom sink. It appears to have a clogged drain.

    You’re feeling the pain.

    Wow. In just moments you’ve just moved directly from Pain Stage 1 (no pain, no need for services) to Pain Stage 4 (make it stop hurting, NOW!).

    Screaming “I’ll get the mop. You grab the Yellow Pages,” you address the immediate standing water problem as your husband/wife/roommate opens the book to “plumbers” and sees this ad:


    Scanning to the adjacent page, this ad leaps into consciousness:


    Is there a difference between T.R. Johnson & Son’s ad, and that of Phillip S. Johnson Plumbing Co.?

    Pretty obvious, isn’t it?

    The first company seems to think their name is the most important information the customer needs. The second focuses on the customer’s emergent need.

    They may not be fighting an emergency, but by the time they’ve consulted the Yellow Pages, people are ready to buy. They’re fed up with suffering. They’ve concluded that they suffer from not owning what you sell.

    If these people have been influenced by your earlier advertising, they may look you up by name. If not, they’ll search through the listings for someone who can solve their problem, and solve it now.

    You won’t impress anyone as a problem solver if the headline of your ad is the name of your business, and that’s followed by a listing of brand names and services you offer.

    Stage 4 Messaging

    A lot of advertising consists of the very common “We’re wonderful. We’re the best” kind of chest thumping one would expect from car dealers or personal injury attorneys. Among those businesses which sell services, “We’ve been in business for 70 years,” is an all too typical statement.

    But, if it was your sink is running over, would you care how long anyone’s been in business?

    A much more salient message to a prospective customer at Pain Stage 4, is “Stop hurting, now.”

    Stage 4 pain isn’t limited to emergencies. What if your sink isn’t running over, but its not draining properly either?

    You still need a plumber. What’s the headline you’ll look for?

    Your pain is likely to be . . .

    . . . that you’ll need to take time off work.

    More specifically, it’s trying to schedule your day when you don’t know exactly when the plumber will show up.

    That pain, time deprivation, is addressed by this * plumber:


    Compare TV Plumbing’s ad with that of T.R. Johnson & Son.

    Which one would you call, if you needed to take time off work in order to make that call?

    Pain Stage 4 occurs every time someone needs a solution NOW!

    Stage 4 ads aren’t limited to Yellow Pages ads. There can be times in which a Stage 4 message works well to build your brand awareness in a Stage 1 medium. (Let’s be honest, sometimes the urgency isn’t caused by the specific problem, but rather by the customer’s circumstances).

    Woman: Didja fix it, yet? Didja fix it, yet? Didja fix it, yet?

    Man: I’m workin’ on it, alright? Give me a break.

    ‘Nouncer: All Pro Plumbing. For all the times you can’t fix it.

    Woman: Didja fix it, yet?

    ‘Nouncer: We can. Call All Pro, today.

    Woman: Didja fix it, yet?

    Man: Yeah, I fixed it.

    Plumber: Problem solved.

    Of course, there are Stage 4 pains which don’t involve plumbing issues.

    Urges as simple as “I’m hungry” are much more effective when you promise immediate relief, as in this classic Domino’s ad:

    Announcer: When Domino’s Pizza delivers, quality comes first. We custom bake each pizza with carefully selected, skillfully prepared ingredients. Taste the quality.

    Singers: Domino’s Pizza. Domino’s Pizza delivers.

    Announcer: Call now and we’ll deliver a hot delicious custom made pizza to you in less than 30 minutes. One call does it all.

    Recognizing the degree of pain is the first half of the Marketing P.A.I.N. strategy. Although it has taken us six installments to describe that pain, we’ll address the other half of the formula in the next post.

    Get ready to apply Marketing P.A.I.N. to your advertising messages and watch your ROI explode.

    Your Guide,
    Chuck McKay

    Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

    Questions about focusing on the issues your customers care about may be directed to ChuckMcKay@ChuckMcKayOnLine.com. Or call Chuck at 304-208-7654.

    If you know someone who would find this article useful, please share it.

     

    Marketing P.A.I.N. Series

    Part 1, Relationships
    Part 2, What Do People Want?
    Part 3, Advertising the First Stage of Pain
    Part 4, When People Realize They’re Hurting
    Part 5, Testimonials and Comparisons
    Part 6, Make It Stop!
    Part 7, Tie It All Together

    Part 8, Message Frequency, Media Choices, and Tracking

    __________

    * TV Plumber was created by Adam Strange, and featured in Ringing Up Profits in the Yellow Pages by Dick Larkin.
    You’ll find the T.R. Johnson & Son and Phillip S. Johnson Plumbing Co. ads in the current Verizon Yellow Pages directory for Huntington, WV.


     

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