This Ad Is So Bad It’s Good

Ever heard that before? That an ad is so bad that it’s good?

Usually the person making the statement is someone who’s not responsible for creating, or paying for, advertising. (These are the same people who will also recite that the important thing is to “get your name out there.”)

Claiming an ad is so bad it’s good, generally means the ad is so obnoxious that it’s difficult to ignore.

Hummm.

Why try to make people remember the ad? Shouldn’t we be explaining that we can help them get what they’re looking for? If the presentation is so annoying or obnoxious that attention is drawn to the ad, it’s likely that people aren’t going to remember the rest of the message. They probably won’t remember your company, either.

Under these circumstances, that’s the best outcome you could hope for. The worst is that they’ll remember your company as the one that’s annoying and obnoxious.

So, what are the possibilites?

The good outcome is that you’ve wasted money on non-effective advertising.

The bad outcome is that you’ve managed to harm your company’s image.

Oops.

As for “getting your name out there,” there are already too many names floating around various media sources while being ignored by the marketplace. The brutal truth is that none of us needs any more names cluttering up our minds. That’s why we ignore most of what we see and hear.

Unless your name becomes associated with the solution to a problem that your prospect is already aware she owns, there’s NO advantage in getting your name “out there” either.

Instead, tell your prospect what you can do for her. Tell her simply and honestly. Tell her exactly what she should do next. And concentrate on helping her remember that you’re here to help her get what she wants.

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Lies Of Omission

Probably the best definition of selling I’ve ever heard came from Wizard of Ads© partner Steve Clark, who said: “Selling is the transference of confidence from the seller to the buyer.”

Well, advertising is selling, isn’t it? Therefore, advertising should create confidence in the prospective buyer.

Good advertising does. Much of it does not. Why doesn’t all advertising create confidence?

Because people assume that the advertiser won’t say anything non-complementary about himself, his products, or his services when he’s paying for the ad. The public is always going to be skeptical of anything an advertiser says.

Should they be skeptical? Can advertisers be trusted? Humm. Let’s look at some.

Can consumers trust an advertiser that doesn’t tell the whole story?

Is not telling everything a lie of omission?

Most ads are factual, but incomplete. Hardcore fraud is illegal, but consumers have learned to be suspicious of one-sided presentations. Many deceive by implication. Many deceive with “weasel words.”

And beware the “*.” Whatever follows usually means “forget everything else in this ad. Here’s how we still intend to screw you.”

Can consumers trust an advertiser that contradicts what they already know to be true?

According to Al and Laura Ries “The ground rules for a successful advertising campaign start with acceptance. Accept what your brand already owns in the mind and move on from there.” A few pages later in The Fall Of Advertising And The Rise Of PR they also said “The true function of advertising is to reinforce an existing perception in the mind.”

A statement that your beliefs are wrong isn’t going to persuade you to pull out your wallet. Any claim that runs counter to your preconceptions of the world is treated in your mind as a lie.

(Note: I’m predicting the failure of Coca Cola Zero. In the mind of the consumer Coke is “the real thing.” So how does the consumer’s mind perceive the “real Cola taste with zero calories? As the phony real thing?)

(Question: Are there too many varieties of Coke? According to Coke spokesman Scott Williamson “We work hard to minimize that by making sure all of our brands have distinct graphics and marketing.” Good work, Scott. Lie to me in a different type face.)

The keyword is verisimilitude – “the appearance of truth.” It’s not enough to tell the truth. You have to tell it in a believable fashion.

Are these claims believable?

“We’ll loan you thousands of dollars… even if you have bad credit.”

“Make thousands stuffing envelopes at home.”

“Buy my cash flow system and quit your day job.”

“If you have a job, we can put you in a new car.”

No. They are not believable. They don’t “ring true.” They have no credibility. Customers will conclude they’re probably lies.

And no one can change your mind, either. At least, not until they’ve acknowledged the validity of your current beliefs, and then given you additional information to help you come to a new conclusion.

Can consumers trust politicians?

Every politician basically says, “Trust me.” Few of us do.

Politicians know how to project the image of being expert, being sincere, and being on your side. Like many other advertisers, politicians flatter their targets by complementing their intelligence and taste.

Cartoonist Dan Perkins, (using the pen name Tom Tomorrow), takes on the absurdity of American politics in his weekly comic strip, “This Modern World.” Dan says that people naturally “distrust advertising and politicians.”

Can consumers trust an advertiser that lies by association?

Evidence has taught us that there are entire industries that habitually lie. And it’s not just highly capitalized energy companies or their big international accounting firms (Enron / Arthur Anderson).

“If you’ve been hurt I’ll fight hard to get you the money you deserve for your pain and suffering.” A Braun Research survey of 401 random adults in March of this year indicates that 79% of Texans believe advertising by personal injury attorneys encourages people to sue even if they haven’t been injured.

Can we trust the pre-views of coming attractions to deliver the movie we’re going to plunk down dollars to see? Can they give us some sense of what to expect? Or, do we secretly believe the movie industry would tell us anything to sell another ticket?

What about car dealers? Stock brokers who call us at home? Long distance telephone service providers who call us at home?

Can consumers trust an advertiser that speaks in superlatives?

Amazing. Astounding. New. Improved. Bigger. Stronger. Faster. Highest power. Highest quality. Most secure. Least expensive. Revolutionary breakthrough. Better than you ever dreamed.

Why can’t we trust people who exaggerate?

Because exaggerations are lies.

Can consumers trust an advertiser that speaks in vague generalities?

Quality, beautiful, efficient, huge, none better.

OK, what quality? How does one measure it?

How beautiful? How does one measure it?

None better? Isn’t that another way of saying “we’re the same?”

To gain credibility, be very specific. You can be specific and still engage the imagination. “The vaulted ceiling is eighteen feet at it’s peak – so tall even Michael Jordan couldn’t jump that high.”

Can consumers trust a braggart?

A Fosdick Ad Readership study of 14,000 business-to-business ads shows that ads boasting about the company were four times as likely to receive low readership scores.

Companies who talk about themselves are like the guy at a party who won’t stop talking about himself. Eventually people get turned off and leave in boredom.

Congratulating yourself automatically keeps you from speaking of things of interest to your potential customer. “We’re number one!” doesn’t work. “Here’s how we can help” just might.

Customers don’t care how long you’ve been in business, which associations you belong to, which awards you’ve won, or your size vs. your competitors.

As my partner, Roy Williams has said:

“Heads look down and hands begin to write every time I say it in a public seminar, so I always give people time to write it down. It’s one of those things that’s so obviously true that people are surprised they never thought of it on their own. “Bad advertising is about you, your company, your product or service. Good advertising is about the customer, and what your product or service will do to change the daily world of the customer. Talk to the customer – in the language of the customer – about what matters to the customer.”

Can consumers trust an advertiser that advertises in a biased medium?

DON’T advertise in media outlets that don’t match your goals or standards.

As a Democrat, would you believe anyone who advertised in a Republican newsletter?

As a Christian would you believe anyone who advertised on an atheist web site?

Can consumers trust you?

Today’s customers aren’t just buying what you’re selling, they’re also buying you. With all of the reasons not to trust advertisers, how can you be perceived as honest?

Start by reaching the customer through the most truthful channel of all – her own experiences.

Find things your customer has experienced, and refer to those things in your ads.

Promise a shopping experience that you can, and do, deliver. We call this the Personal Experience Factor.

Get satisfied customers to give you unscripted testimonials. These raw, unrehearsed, and totally believable comments from other people will always have more credibility than polished and produced messages from the business owner.

And then?

Tell the truth. Tell the whole truth. Even the non-complementary parts.

According to the Sloan School of Management at MIT purchasers will trust the recommendations of a sponsored web site if it’s clear the site will recommend competitors products. MIT’s professor Glen Urban calls this “trust based marketing.” “Give them as much information and advice as they need to make an informed decision,” Urban says, “even when it’s not necessarily in your company’s best interest.

The more truthful you are, the more comfortable, safe, and unthreatened potential customers are with you. They are more likely to purchase because they worry less about getting their money back, getting their purchase repaired, getting it delivered in a timely fashion.

Call it honesty. Call it believability. Call it sincerity. Call it verisimilitude. It all comes down to this: help your potential customers to trust you, and they will buy with confidence.

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Feel The Need, Part II

In addition to a couple of readers disagreeing that remote controls for car radios are designed for, and marketed to immature men, I also got this comment following last week’s essay on creating demand:

McKay, read your claim that advertising can’t create a market. Would you please explain Pet Rocks? Surely there wasn’t a market for them before they were sold? – Jill”

Pet Rocks get quoted every few years as an example of advertising that created demand for a product no one needed. That’s not really what happened.

In early 1975 a Los Gatos, California advertising executive named Gary Dahl had stopped for a beer after work, when his friends started complaining about the lack of time they had for their pets.

Dahl started riffing on his pet rock, which required very little attention. Gary’s pet never kept the neighbors up by barking. It didn’t chew on or shed on the furniture. It ate nothing, and never forgot to go on the paper.

His buddies cracked up, then went home to nurse their hangovers. Dahl stayed and started toying with an idea.

For the next two weeks he wrote a step-by-step guide to having a happy relationship with your geological pet: the Pet Rock Training Manual.

“Sit” and “stay” were fairly easy to teach. So was “play dead.”

“Roll over” usually required extra effort on the part of the trainer.

“Come” was determined to be impossible to teach reliably.

Housetraining was elegantly simple: “Place it on some old newspapers. The rock will never know what the paper is for and will require no further instruction.”

Dahl tried to find a buyer for his new book. No one seemed interested.

I did mention that Gary was an advertising man, didn’t I? As a stunt to promote the book, Dahl created actual pet rocks. He purchased Rosarita beach stones from a building supply store at a penny each, packaged them in gift boxs which resembled pet carriers complete with air holes.

He took them to the annual San Francisco gift show in August. Each book came with a Pet Rock. Neiman-Marcus immediately ordered 500.

Dahl quickly determined that the book was unnecessary. People seemed to want the rocks.

By the following month Dahl was shipping up to ten thousand per day. By Christmas he’d sold nearly one and one half million.

By January most daily newspapers had run Pet Rock stories – including Dahl’s claim that “each rock was individually tested for obedience at Rosarita Beach in Baja, Mexico before being selected and boxed.” He appeared on the Tonight Show twice and was featured in Newsweek.

A number of imitators tried to cash in on Dahl’s notoriety and rushed their own products to market, including Pet Rock Obedience Lessons and Pet Rock Burial-at-Sea Services.

Note: if you ever come across a “Genuine Pet Rock,” you can be assured that it’s fake. Dahl never used the term “genuine.”

They were, however, too late. By January the fad was over.

Yes, people use the Pet Rock as an example of advertising having created demand for a useless product.

I contend that the demand was already there, and that the rock wasn’t useless.
Remember the mood of the country in 1975.

As the 60’s came to a close Americans witnessed the daily killing of young men in Viet Nam as television brought the war into our living rooms.

A former Rand Corporation military analyst leaked the Pentagon Papers to the New York Times. We learned that our government knew early on that the war would not likely be won. We learned that they knew the war would lead to many times more casualties than had been admitted publicly.

We also learned that our President had been involved in an illegal break-in of the office of his political opponents.

Woodstock became acknowledged as the official end of unfettered optimism and free love.

The introspective singer-songwriter of the 60’s had been replaced by the cynical rocker of the 70’s.

The U.S. was experiencing a major financial recession.

We lined up for hours to fill our tanks as the first Arab Oil Embargo gripped the nation.

It was a grim time. By mid 1975 we needed a good laugh, and the Pet Rock provided one. The Pet Rock hit the market, peaked, and was over in that tiny window of opportunity which existed in the four and a half months between the August gift show and Christmas. Had Dahl had the idea two years earlier or two years later it would likely have been a total flop.

A joke is only funny the first time, though. The Pet Rock spin offs didn’t even get any chuckles. Since one laugh in such a grim time wasn’t enough, we quickly became enamored of toe socks, mood rings, Deely Bobbers, Wall Walkers, and streaking.

The Pet Rock was the beneficiary of timing, but it wasn’t useless. The Pet Rock was just silly enough that people could forget the dreariness of their everyday lives and have some fun.

And that demand for a good laugh already existed, even though people hadn’t expressed it.

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Feel The Need

Phineas Taylor Barnum’s most enduring quote is “There’s a sucker born every minute.” I suspect he was right. But then, Barnum never expected to see the same customer twice.

Hucksterism can create a sale, but it can’t create a market.

Advertising can’t create a market, either, because advertising can’t convince people to purchase something that they don’t already feel the urge to own.

Whether or not they are yet conscious of this urge, customers must feel the need to own the product or service, or nothing happens. I was watching TV with my sister when an ad for the Clorox® Bleach Pen® came on. “I need that” was her comment. She instantly knew that he “needed” a product which (in her mind) didn’t exist 30 seconds ago. Although she’d never articulated it, she’d already felt the need.

This has a couple of obvious implications. For instance, you can’t “test” advertising effectiveness by featuring items in your ads that aren’t selling on your sales floor. (Think about it: if your regular customers are passing on those items, telling more people about them isn’t going to move ‘em any faster).

Also, shouting “We will not be undersold. Call me NOW!” doesn’t make people want whatever you’ve got any more than they wanted it before being exposed to your shouting.

Advertising does not create demand. It can only direct people who already feel that need to buy from you rather than from someone else. My sister already felt the need to apply bleach to a tightly-controlled area. Once the ad brought her attention to the product, she purchased one within hours.

Example #1: Refrigerators

When refrigerators were new they were obviously superior to the old ice boxes. The first generation of these devices sold by satisfying the need people already felt to make their lives easier.

Unfortunately for retailers refrigerators are appliances which have an exceptionally long purchase cycles. Consumers don’t usually replace them until they break down.

We call such breakage a “triggering event.”

The trigger suddenly moves customers from “not interested” to “I need one… NOW.” (Probably the pressure of hundreds of dollars of food spoiling). Until the trigger they’re largely oblivious to the new models. Hold all of the tent sales that you want, only a very few people will have a broken ‘fridge today.

Note to appliance stores: since there is no possible way to predict when an appliance will break, make sure that customers think of you immediately after the trigger is pulled. Think Top-Of-Mind Awareness (long term; relational) advertising rather than Call To Action (short term; transactional) advertising.

Example #2: Feminine Hygiene Products.

During World War I personal toiletry supplies were nearly impossible to obtain at the front. Red Cross nurses in military hospitals started using the new cellular cotton bandages as sanitary napkins.

Until the 1920’s menstrual pads had been made of cloth and needed frequent laundering. But having learned of the nurses’ use of their product, Kimberly-Clark in 1921 started marketing a modified cellular bandage under the brand name, Kotex®.

Important point: although they created a whole new industry, Kimberly-Clark did not create demand. The demand for disposable sanitary napkins already existed. Since no one spoke of such things (Puritanism lives), the existing need hadn’t been articulated, or addressed by manufacturers.

Example #3: Remote Controls for Car Radios

Ever seen a remote control for an automobile radio? Most of the time the driver has to reach farther to pick up the remote than he would to reach the radio. Then he has to pull his arm back far enough to create the correct angle of application to allow the remote to function.

Does advertising sell these things?

Well, yes, but not to the general public. The general public does’t care. They don’t feel the need.

Car radio remotes are purchased by men (primarily) who haven’t outgrown the “Hey… lookit meeeee” stage. They felt the need to show off long before any manufacturer ever considered offering a new technological toy.

You can sucker someone to buy from you one time – if you’re particularly good at suckering. But without taking advantage of people, you can’t convince them to buy what they don’t want. And you’ll never convince them a second time.

Until they feel the need, they probably don’t want it.

Once they feel that need, we want them to think of you.


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Investing In A Bad Economy

The oldest rule in investing is “buy low, sell high.” You can apply the same rule to marketing your company.

Over the last 100 years there have been 20 recessions – ten since World War II. Simple arithmetic would indicate that we’re roughly two years away from the next one.

Why are we talking about a poor economy during this period of economic growth? For that matter, why are we discussing economics in an advertising column?

Simple. An economic recession is your chance to “buy low.”

Your opportunity is coming. There will always be another economic recession.

This is not a prediction of doom and gloom. It’s an attempt to draw your attention to an opportunity. Like the proverbial ant, you’ll be preparing for winter while the grasshoppers are playing.

When the economy heads south 75% of U.S. companies respond by cutting back, hunkering down, and trying to “tough out” the tough times. Advertising is the first expense that gets eliminated.

The overall level of advertising drops. Media feels the pinch and drops rates. This is the equivalent of buying stocks at the bottom of the market. Think of it as dollar cost averaging. Buy more as the price decreases.

There are two other advantages to aggressively advertising during economic recessions.

1) Your “share of voice” becomes multiplied as the advertising noise reduces.

2) Your “share of mind” is often uncontested for months at a time. During these times your more timid competitors will fall behind and likely never catch up.

Take a look at this graphic.

It’s a summary of the McGraw-Hill Research study of the 1981-82 economic recession in the U.S. The study analyzed 600 companies covering 16 different SIC industries. Year one on this graph is 1980. Year six is 1985.

You’ll note that the aggressively competitive companies represented by the black bar had only a slight edge over their competitors in the years leading up to the recession. Their sales growth was in the middle of the pack as the recession hit. But while their competitors cut back in year one, or year two, or both, they continued to invest in getting their message out.

These firms grew nicely during the recession, but the real news happened in the two years following the end of the economic downturn.

Two years into the recovery, the competitors who did cut back had all stalled out at levels the aggressive companies had blown past during the recession. By the end of 1985 the companies that didn’t cut back had grown a whopping 256%.

During the recessionary period 1989-1991 Kraft salad dressings, Jiff peanut butter, Bud Lite, Coors Lite, Pizza Hut, and Taco bell were in the aggressive group which increased advertising expenditures. Jell-O, Crisco, Hellman’s, Green Giant, McDonalds, and Doritos cut back on advertising during this period. Predictably the first group had showed growth during the recession ranging from 15% to 70%. The second group’s sales dropped 26% to 64%

During our last economic downturn, while aggressive marketers such as Proctor and Gamble took advantage of reduced media rates to expand their advertising program, K-Mart decided to decrease advertising during September and October, 2001.

The result? K-Mart sales dropped a resounding 5% during October. By late fall the company had lost far more in sales than it had saved in marketing expense.

At least a dozen other studies ranging from 1923 through 1991 show nearly identical results. Meldrum & Fewsmith showed in a series of six studies that, for all post World War II recessions, those firms that kept advertising aggressively increased profits as well as gross sales during the recession.

It’s important to remember that during a recession consumers don’t stop buying. They become more selective. They look much harder for “value” in their purchases. They are going to buy from someone. They’re likely to buy from businesses that they know and like.

Make sure they know you.

The more visible you are, the more confidant your customers and prospects become. The more they are reminded of your legitimacy and staying power, the more they’ll be inclined to believe you’ll be there for them tomorrow.

Remember too that during any period of economic downturn your best customers become someone else’s best prospects. When you stop inviting them to do business with you, a more aggressive competitor may become much more attractive.

So, in addition to advertising heavily when the economy is soft, what else do you need to do?

1) Never take your focus off your customers. Cherish them, and make sure they know it. Make their Personal Experience Factor exceptional.

2) Media pricing is driven by market demand. Take advantage of the weak demand and the resultant drop in price to buy even more market presence without increasing your advertising budget.

3) Start learning now about relationship marketing, permission marketing, and database management. Learn the names of your customers. Learn their sizes. Learn their preferences. Make sure they know you, your values, what you stand for, and what you won’t stand for.

4) Define your core values. Continuously share them with your customers, and your prospects, through your advertising, merchandising, and public relations. This is your opportunity for true brand building.

If the recesion were to start today, what would you change about your marketing message?

How might that revised message play right now while times are relatively good?

How much of a head start would the revised message give you over your competitors? By the time the next recession hits, could you successfully associate those changes with your business in the minds of your customers?

Hummm.

What’s holding you back from making those changes right now?

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The Big Three And The Single Quarter Manager

WARNING: The following article contains bragging. (I’ll let you know when it’s going to get thick).

I was first introduced to the concept of the Single Quarter Manager in 1994 over lunch with Ben Rast; Senior Vice President of Morgan Stanley’s office in Columbia, South Carolina.

According to Rast, the Single Quarter Manager’s objective is to make himself look good in the short term, without ever considering the long term effect of his actions on the future of his company.

In an effort to boost cash flow he fires the Research and Development staff, along with the Maintenance staff.

He tells Sales that anyone who can’t meet his impossible sales goals will be joining their unemployed brethren from Maintenance and R&D. As you might expect, the salespeople cut every sleazy deal with every potential customer with no regard to the profitability to the company, without even regard for next quarter’s sales.

At the end of the first quarter, the Single Quarter Manager’s division boasts an all-time high profitability. In fact, the Single Quarter Manager has set such records that he’s immediately promoted to a corporate job at company headquarters.

Now, consider the plight of his replacement.

The division can’t sell any more stuff.

With the profitibility of these deals so low, they can’t show a profit offering the original products to any additional customers – not that there’s any additional product to be had. Between the sleazy deals pushing the demand curve and the breakdown of the equipment from lack of maintenance, there’s no extra original product to offer.

There’s no new product to offer existing customers, either, ‘cause the R&D staff departed without developing one.

The next manager of this division will fail in the most spectacular fashion, achieving the worst profitability in the history of the company.

Searching desperately for answers, the company will replace him. They will systematically replace at least two more just like him. None of the Single Quarter Manager’s successors will be able to turn the division around.

The company’s only solution is to hunker down, tough it out, and start growing new customers.

That takes time.

A lot of time.

I was reminded of Mr. Rast’s description in early June of this year when, like you, I first learned of GM’s “Employee Pricing For Everyone” promotion.

GM had just posted a loss of over a billion dollars. That’s billion, with a “B,” in the first quarter of 2005.

This was followed by a thirteen percent decline in May sales, which was blamed on the increase in gas prices.

Dealers had a three-month inventory of ‘05’s on their lots. With the downturn in sales, it appeared that those units might not sell before the ‘06’s came out.

How did GM’s management react to the May sales slowdown?

They announced a workforce reduction of 25,000 and a new sales incentive, which they called the “Employee Discount For Everyone.”

Ford quickly followed with a discount program of their own: “The Ford Family Plan.”

Then Chrysler piled on with “Employee Pricing Plus” which gave customers the same price as Chrysler Group employees, plus additional cash back of up to $3,500.

The programs, said one analyst of the auto industry, “represent a desperate and necessary move for desperate times.”

Now that,” said I, “is a spectacular example of Single Quarter thinking.”

It came as no surprise to me on Monday of this week to learn that in the first nine days of October, U.S. auto sales tanked. It seems that the end of September coincided with the big three domestic auto makers ending their summer “employee discount” offers.

“GM’s sales fell 57 percent and Ford’s fell 45 percent as sales in the U.S. auto industry dropped 33 percent from a year earlier.

“The aftermath of the employee-pricing programs is having a dramatic impact on automotive retail sales in October,” Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, said Friday.

“Ford’s chief sales analyst, George Pipas, said Thursday that October sales would likely fall because the employee discounts spurred customers to buy sooner than they might have.”

Arizona Republic, October 14, 2005

Really? (He said incredulously, with just a hint of sarcasm). Discounts spurred customers to buy sooner than they might have? Who’d have thought?

(Brace yourself; the bragging starts here).

Seems I predicted this maneuver, as well as its outcome, on pages 20-22 of Fishing For Customers And Reeling Them In.

I said:

“Pretend for a minute that you’re a small town automobile dealer. In any given month you’ll sell about thirty cars. That’s about the demand in your community for your brand of vehicle.

“Then your new sales manager has an idea. “Let’s do a ‘cash back at signing’ event. We’ll draw in record sales.” So you do the event and you sell forty vehicles this month. GREAT NEWS, HUH?

“Well, actually you got the thirty customers who would have purchased from you anyway, and ten more. Where did the other ten come from? Chances are there were not quite ready to buy, and the cash back convinced them to commit early. The extra ten customers may well have come from next month.

“So now your sales are lagging in month number two, and the sales manager says “We have to do it again. Remember how well that promotion worked last month.” So, you again offer the cash incentive.

“This time you sell forty-five units. The other twenty who would have been in the market in the second month, and twenty-five from the third month. Can you see where this is leading? At some point you’re pulling from so far ahead of the demand curve that no amount of incentives will convince customers to buy now.

“Then what do you do?

“You’re about to have the worst month in the history of the dealership. It’s just around the corner… and there’s not much you can do to stop it.

“And remember that these last few months of cash back at closing have cut deeply into your profit margins. We’ve already established that you must have full margins to remain profitable. You’re selling more cars and making less money. You’re also trapped on a treadmill that just keeps turning faster and faster.

“This is the problem with Call To Action advertising. And the longer you do it, the less effective it becomes.”

Fishing For Customers And Reeling Them In
Wizard Academy Press, 2004

In his April 11, 2005 column, Motley Fool’s Rich Smith pretty much agreed with me when he said “When Ford lists a car at $17,000 and then incentivizes it down to $15,000, it makes a sale more likely today with the consequence that that sale will not occur tomorrow.”

Ok. Rich and I recognized the danger of such short-term thinking. Done bragging. Now what?

How about two new predictions:

1. Deep discounts from MSRP will now become the way business is done in the auto industry. From this point forward, cars will not sell without a discount. (Hey, I remember life before cash back deals became S.O.P. for the industry. I predicted that they’d never go away either. Oh, wait. I already said I’d stop bragging. Scratch that last comment).

2. I wouldn’t recommend buying stock in Ford, or GM, or Chrysler. They’re all in for a long non-profitable stretch that sill be marked by further desperate moves from the auto manufacturers as consumer resentment toward them continues to grow.

You want evidence of that resentment?

  • This summer a Chevy Suburban half-ton, four-wheel-drive LT model, could be purchased by any of us for $9,798 off list. A Silverado 1500 extended-cab pickup could be had for $7,888 off list.
  • The Lincoln Navigator luxury 4×2 was offered at $9,012 off retail. Price for the Ford Escape became $4,212 off list price.
  • A fully loaded Town and Country minivan could be purchased for nearly $6,982 off list. The Dodge Durango sport utility could be purchased with zero percent financing for 36 months, and a $4,000 cash rebate.

The big three automakers have each effectively admitted that after shaving $7,000, $8,000, even $9,000 off the price of their vehicles, they’re still profitable.

If you’ve purchased a new vehicle in the last few years, do you now feel as if you didn’t even get kissed?

Will you ever pay full price for a car again? Will anyone?

Share This Article With A Friend.

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A Coffee Shop On Every Corner

I had a meeting with the owner of a coffee house in Spokane. We were talking about advertising. He asked an excellent question: “What message could we possibly use that would make people drive across town to buy coffee? There’s a coffee shop on every corner.”

I looked up and said “You don’t need people to drive clear across town. You have thousands of them walking by your store every day. Thousands. What we need to do is convince those people to walk in through your door.”

This is the difference between a transactional strategy and a relational strategy.

Transactional v Relational

Transactional shoppers believe that they know enough about the prospective purchase to make an intelligent decision. They’re mostly interested in getting the best price.

Relational shoppers worry that they don’t know enough and are concerned about making the wrong purchase. Relational shoppers are looking to find someone they can trust to advise them.

If a customer chooses to do business with anyone for reasons other than price, she’s shopping in relational mode.

Please don’t confuse “relational” with “relationship.” Perhaps she doesn’t know the store manager’s name. She’s never seen pictures of the cashier’s kids. She doesn’t even know whether the produce manager is married. She doesn’t have relationships with these people. She shops their store in a relational mode.

Maybe she chooses a grocery store for it’s produce. She doesn’t read the paper for the specials before she shops. She doesn’t bring “cents off” coupons to the store. She doesn’t even have one of their affinity cards which, at check-out, will be swiped through the till to “save you $6.23 this trip.” She is there because she likes their produce department. She’s shopping relationally.

Does she buy her gas at the station on the corner because it’s convenient? She’s shopping relationally.

Does she choose a dentist because he concentrates on elimination of pain? She’s shopping relationally.

If she watches Good Morning America instead of the Today show because she likes Diane Sawyer better than Katie Couric, she’s shopping relationally. (What? You don’t think that investment of your time has a cost?)

What if She Shops Transactionally?

That whole “We need a message strong enough to get people to jump in their cars and drive here the minute they see it (or hear it)” philosophy only works for businesses trying to force a specific sale RIGHT NOW. It’s a classic transactional strategy.

Those customers who might respond to such an appeal are operating in transactional mode.

Transactional shoppers are very price conscious. They will drive across town to find a better deal (perhaps not for a cup of coffee, but on anything that requires a significant financial investment on their part, they will).

The key to understanding transactional shoppers is to understand that they have no loyalty. They do business with you for this transaction only. Transactional shoppers consider the search for a great deal to be part of the fun.

The conventional wisdom tells you to drop price in order to grow market share. It doesn’t work. (Ever wonder why at least one of the major airlines is always in bankruptcy)?

So what does a business do in an attempt to drag shoppers clear across town? Right. They follow the conventional wisdom and drop the price. Often dramatically.

When successful, these transactional (call-to-action) advertisements generate a lot of traffic, and sell a bunch of merchandise. Unfortunately they make no significant profit, and give the shoppers no reason to ever come back. Many times these sales promotions aren’t successful. Perhaps most times they aren’t successful.

If you’re in a business with thin margins or if you’re selling commodities, like gas or donuts or coffee, what do you do? Drop the price below your costs? Lose a little on each sale and attempt to make it up in volume?

Reducing Price = Horrid Strategy

Reducing price is so unnecessary.

Most businesses have hundreds of shoppers driving past their businesses every day. Maybe thousands. Target those potential customers instead of trying to drag the transactional types across town.

You get the shoppers to turn in to your parking lot with when you implement a relational (top of mind awareness) ad campaign.

More specifically, this implementation has three requirements.

· It takes the commitment to make relational shoppers aware of you well before they need you.

· It takes the willingness to wait patiently until those people need what you’re selling.

· It takes the staying power to keep putting out your relational message. Day in, day out. Week after week.

Season after season you need to keep reminding people who you are, and why getting to know you is in their best interest.

And then, as those thousands of people walk by your business, a fair percentage of them will say “Hey, this is the place I’ve been hearing about. Let’s go in.”

When they become aware of the bait is the easiest time to hook ’em 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.

Need help choosing your most effective strategy? Drop Chuck a note at [email protected]. Or call him at 760-813-5474.

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Where Do You Hide When There’s No Place To Hide?

Perhaps the biggest change in the last decade is the growth of interconnectivity. New technology has empowered people.

Uh… let’s re-word that: New technology has empowered customers.

Whether you call it word of mouth or professional reputation, this personal experience factor has always driven repeat business, referral business, and even first-time business. But with the speed and power of interconnectivity, personal experience is multiplied exponentially.

What happens when your ads brag about your customer service, and customer dreads going on hold with your automated call center?

What happens when your customer finally understands that your “money back guarantee” is actually pro-rated for the number of weeks that she owned your product?

What happens when your angry customer makes the evening news carrying a placard which declares you to be a crook?

Where do you hide when there’s no place to hide?

Interconnectivity Example Number 1:

Blogs are cheap, easy, and nearly universally available. A blog allows anyone to post observations, opinions, or discoveries to the world and get the attention of any other person interested in the same topics.

And then for an investment under $200 anyone can be a “citizen journalist.” A cheap digital recorder and a cell phone with built-in camera are all the tools necessary.

Catch a talking head as he leaves the major media interview, ask the question, shoot the pic, and have it posted to a blog before the big boys have even finished postproduction.

When the major networks have no interest in a story, it only takes one curious blogger to check and publish facts. Other bloggers pick up the story. Eventually the major networks are forced to pay attention, too.

The president of a Louisiana parish tearfully told a national TV audience the heartbreaking story of a coworker whose mother was left to die in a flooded nursing home days after Hurricane Katrina immobilized New Orleans – but, as it turns out, the story isn’t true.

MSNBC reported the man Broussard was talking about is Thomas Rodrigue, who told “Dateline” that his 92-year-old mother was one of 32 elderly people found dead at the St. Rita’s nursing home. The New York Times reported the 32 residents, out of 60 total, died Aug. 29.

Reported WuzzaDem.com: “Broussard claims Rodrigue was talking to his mother for four days after she died, promising here some nebulous ‘cavalry’ was on the way. His story doesn’t jibe with the reporting of CNN, MSNBC, the New York Times, or even Thomas Rodrigue’s own account.”

Interconnectivity Example Number 2:

Time was that a young man could go away to college, raise hell, cut classes, get stupid drunk way too often, and clean up his act in time for graduation.

But even if Mom and Dad never find out, it’s getting way too easy for employers to completely check every job application. Suppose this young man applies for a job in which he’s not truly qualified, thinking that he can exaggerate (ok, lie) “just a little” on his resume?

Or if he asks out a lady who uses the Internet to check potential dates? With not too much effort she can examine our young man’s police record, check for judgments, and peruse public records for previous marriages and child support.

Privacy?

There is no such thing, despite the protestations of Google’s C.E.O., Eric Schmidt.

Some found it poetic justice when Eleanor Mills, a staff writer at CNET used Google’s search engine to find basic information about Schmidt. Schmidt responded by blacklisting CNET.

As more information becomes digitized it will become universally available. And make no mistake, once information about you, or perhaps more importantaly. once information about your businesss hits the World Wide Web, it’s going to be there forever.

We all live in glass houses. There’s no place left to hide.

Interconnectivity Example Number 3:

Think your advertising is the only thing that influences potential customers? Uh, no.

The web is becoming the great source for information exchange. A customer who feels abused enough starts his own web site: (YourBusiness)Sucks.com. Think the legal system will defend you? The courts have ruled that merely using your name in a derivative domain is not copyright infringement.

Will this immediately affect business?

Probably not.

But, as more and more people become dissatisfied with any business, and they post their dissatisfaction, the collective volume of negative will eventually become public knowledge.

I personally know a small town car dealer who’s owned the place for eight years and is still feeling the resentment of the town toward the previous owner. Once negative word of mouth builds to critical mass, the business may never recover.

Conclusion:

People expect your ads to be complementary to your business. They know you’re paying for them.

They also tend to believe total strangers willing to share experiences. (If you didn’t believe that, you wouldn’t ask for testimonials).

In the old days (before interconnectivity), a dissatisfied customer was likely to be lost in the advertising noise. Now customers are ignoring ads in ever increasing numbers and paying much more attention to each other.

I’m not suggesting that you should always give in whenever there’s a conflict with a customer. I am suggesting that you can’t get lost in the numbers anymore.

When there’s no place left to hide, the promises you make in your ads had best be delivered on your sales floor.

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Advertising And The Renaissance Man

I turned over some copy to a client. The client’s wife went to work improving it. She systematically removed all of the specific points I’d made and replaced them with clichés. She insisted that the phone number be included several times. Finally, she was emphatic that we use the business street address rather than the “next to” directions, because she “didn’t want to give them any free advertising.”

I argued. I explained. I implored them to let me do what I do well. They informed me that they were the clients.

They’re right. It’s their checkbook and their final decision.

I resigned the account.

Oh, I do understand the urge to do it yourself. In high school I taught myself to play guitar, then built my own 12-string. After recording in commercial studios, I designed and built my own mixer, my own compressor, my own microphones. They worked. Perhaps one could say surprisingly well. I don’t use any of them any more.

As I became more descriminating I became less enchanted with doing it myself. The commercially available equipment worked better, was less expensive, and could be depended on for more satisfactory results.

Eventually I completely changed my mind about doing everything myself. It seems that I purchased a pair of radio stations, and in the process of being totally responsible I learned that not to use a specialist is a false economy. (Or incredible arrogance).

Oh, it’s a great concept: be so versatile that you can do every job at your company.

However, when you’re busy producing an ad you can’t be simultaneously responding to a customer complaint. When you’re making a sales call you can’t be simultaneously covering for a sick disc jockey. When you’re repairing a broken transmitter you can’t be simultaneously developing a new listener promotion.

I finally figured out that when I tackled a piece of broken equipment it could take me as long as ten hours to finish the repair. Some of that is lack of practice. Some is me second-guessing my own diagnostic skills. Either way, when it comes to electronic repairs I’m slow.

On the other hand, when I hired a local electronic technician he finished in two hours instead of my customary ten. I paid him $15 per hour. (Hey – it’s an old story).

Hummm. I spent ten hours saving my company $30.

I effectively “earned” $3 per hour.

Surely I could do something worth more to the company than $3 per hour.

I could have made another sales call and earned more than the technician’s $30. I could have spent a couple of hours creating a new sales promotion that would have generated several hundred dollars in new revenue. I could have made any number of more productive choices.

But, there I was holding a soldering iron and feeling proud that I didn’t need to spend $30 of my company’s money.

There may be satisfaction in being a “renaissance man,” but there isn’t much money in it.

So let me try to make this point one more time. We can file it away for use with some future client:

“Dear Mr. Client:

“You understand the technical work of your business, floral arranging. It’s obvious that you also understand the business of selling flowers.

“You don’t, however, understand the marketing of that business. That’s why you called me.

“Good copywriters write, and re-write, and then re-write some more. Then they begin to polish. They agonize over every syllable. They explain precisely why the words they chose to carry your message were not just good, but were in fact the best choices available.

“Good copywriters only make it look easy.

“A good copywriter can explain why one verb will resonate with your potential customer, and another will pass by unnoticed. A good copywriter will know when to use industry terms and when to use everyday language.

“With the exception of those businesses built on a core of marketing, (catalog companies come to mind) most businesses don’t understand why those word choices are so critical to their success.

“An advertiser who re-writes a professional copywriter’s work is the equivalent of a $3 per hour electronic technician. Worse, actually, ‘cause it’s obvious when the tech plugs the broken equipment back in whether or not it’s been fixed.

“Mr. Advertiser, when you “improve” your own ads, you’ll never know whether you’ve really fixed them, will you?

“Sincerely,
Your Copywriter”

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Politics, Religion, and Advertising

Two years ago I got a different cell phone, with a new number. I had trouble remembering it until my wife pointed out that it’s composed of the month and year that I turned twelve, the year I graduated high school, and the year I was born. Since then, I’ve never forgotten it.

This is an excellent example of how memory works. In order for any new information to stick when it hits our minds, we associate the new with something we already know. All successful memorization is associative.

So is all decision making, which is an important point for advertisers. Each person’s opinion is built upon what she’s already accepted as fact, and can retrieve from memory.

Sometimes she will accept new information and come to a new conclusion, which appears to contradict the earlier opinion. It doesn’t. The old opinion was based on the old information. The new opinion is based on additional information that complements the old.

And when she is presented with new information that contradicts the old? She refuses to accept it. This does not compute. It must be a lie. As marketing guru Al Ries said in his recent Advertising Age article, The Sad And Unnecessary Decline Of Saturn:

When you believe in something, what you generally do when faced with facts that seem to contradict your beliefs is to fault the execution, not the strategy.

Conventional wisdom dies hard. You can defend any strategy by pointing out flaws in its execution.

In other words, I choose not to believe what you’re telling me.

This is the primary reason it becomes pointless to argue politics, religion, or new advertising campaigns.

As advertising practitioners, the key point is: people refuse to accept any new information that contradicts their existing beliefs. Those beliefs become a big filter for new ideas.

We call this big filter the Personal Experience Factor. When the new advertising campaign didn’t work, did the ad fail because people don’t know about Mr. Advertiser? Or because they do?

Every contact Miss Customer has with Mr. Advertiser builds her Personal Experience Factor. Every new bit of information is filtered through that Personal Experience Factor. A lot of new information never makes it thorough the filter.

Mr. Advertiser makes claim of great customer service. Miss Customer hears claim, remembers her last visit to Mr. Advertiser’s business, and thinks bull stuff.

From that point on, not only will Mr. Advertiser’s claims fall on the deaf ears of Miss Customer, but she may well start sharing with her friends her personal experiences at the hands of Mr. Advertiser.

When I worked at a News/Talk radio station in Columbia, South Carolina, we had a staff of about 30, pretty much evenly divided between the genders. In the space of a few short months through three major news stories I saw first-hand how perception of the news was affected by people’s previous experiences.

  • The Clarence Thomas confirmation hearings had opinions divided according to gender. Without exception men believed him, women believed her.
  • Lorena Bobbit’s trial, and her subsequent acquittal, had all of the women in our office standing and cheering. Our female news director shouted “There IS justice.”
  • The O.J. Simpson verdict split the bias along racial lines. Whites believed him guilty. Blacks believed him to have been set up.

We all saw the same evidence. We came to different conclusions. Why? We all drew from different Personal Experiences as we weighed the evidence and made our conclusions.

When new evidence contradicts your Personal Experience, then the evidence must be a lie. When it reinforces your Personal Experience, it’s likely true.

Most women have had experiences with unwanted sexual advances. It’s easier for women to draw upon those experiences and say “That’s happened to me, just the way she described it. Most men have had, shall we say, more limited experiences in these areas. It’s harder for them to say “Could be true, because they’ve never shared that particular experience.

A great many black Americans have had the experience of being stopped for “driving while black,” or know someone who has. It’s not out of their realm of experience to imagine someone being profiled.

Most whites have never experienced the police automatically assuming them to be suspects. It’s harder for them to imagine the police pulling anyone over to ask what they’re doing in this neighborhood.

What experiences has your customer had in dealing with you? Should it surprise you that her perceptions are not yours?

Does she listen to you brag about your incredible selection while finding you don’t have anything in her size?

Does she drive all the way across town for your advertised special to find that limited to quantity in stock means you only had three at this price?

Does she hear all about your commitment to customer service while listing to the recorded on hold message as she waits 22 minutes for someone to help solve her problem?

Is your advertising failing because Miss Customer doesn’t know about you, Mr. Advertiser, or because she does?

One thing for sure, she won’t change her opinions about you until she starts having different personal experiences.


People not only won’t accept that which contradicts what they already believe, but they will also find reinforcement all around them for things they do choose to believe.

Here’s a quick non-scientific poll you can conduct among your friends.

First question: Who’s responsible for the mess in New Orleans?

Second question: How did you feel about this President before the hurricane?

Here’s my prediction: People who were fans of Mr. Bush prior to the advent of Hurricane Katrina will blame local authorities. They will be angry that New Orleans’ Mayor and Louisiana’s Governor have both criticized the President.

Those who were not fans of Mr. Bush before the disaster will use the apparent disorganization on a lack of planning at the Federal Level, and on the general ineptness of the Bush Administration. None of them will change their minds as more facts become available.

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