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The Customer’s Buying Process – Systemic Marketing™ Part III

Tire Sale
Tire Sale
Tire Sale Sign

There tend to be two schools of marketing. The creative and the scientific.

Imagination and mathematics.

Right brain, left brain.

At least, it looks that way on the surface.

Marketing Yin & Yang

Some highly effective marketing uses evocative imagery.

“Melts in your mouth,”
“Cleans like a white tornado,”
or “Where’s the beef?”

Some is a bit less exciting.

“click here to learn more,”
“save 13 cents on your next purchase,”
“Dear Fellow nature lover.”

But truly effective marketing uses both. First the math. Then the imagination. First the who, and what. Then the how and why. And that makes sense, doesn’t it?

A marketer identifies the target market, measures responses, and calculates ROI. Then he provides the creative team with very specific direction: “Here’s what we know about the prospect, what we believe to be her motivation, and the offer we’re going to present.

The creative folks, the copywriters and art directors, focus on that customer profile. They detail our prospect’s life. They account for her time, her activities, and her choices. They find correlations in her other purchases.

And then they create “We are Farmers, dum te dum dum dum dum dum,” or “What it feels like to chew 5 gum.”

But it always starts with detailing, and measuring the buying process.

Tread Wears, “Blowout Worry” Accumulates

Eventually, the tread wears down on every tire, and every automobile requires replacement tires.

In most cases the wear happens gradually.

An early stage buyer notes that wear is accumulating on her tires. She’ll file that observation away into her subconscious as something that will need attention sometime in the future.

Her subconscious will, through reticular activation, allow tire ads to pass the mental filter which helps her to tune out the thousands of advertising impressions she’s subjected to each day.

What Runs Through The Shopper’s Mind?

At minimum (“Humm. Tires are showing slight signs of wear.”) she knows she can put off the purchase decision. Not feeling any pressure to buy, but aware that it will eventually become necessary, those lower price offerings from Mr. Tire Store Owner will appear more attractive and better hold her attention.

As the tread continues wearing, she’ll think less about price, and worry more about safety. As you might expect, the closer she gets to “OK… I’m scared to drive any farther on these tires,” the less price acts as the primary motivator.

Then there are those cases in which the tire catastrophically fails. When that happens, she will make a purchase. Probably today.

Purchase Trigger

It may be growing worry. It may be performance failure. It may be because she’s leaving in a week to drive across three states on her family’s vacation. It may be that she came across an unexpected tire sale. It may be an unexpected salary bonus. But something will happen that causes the owner of that car to decide it’s time for new tires.

We call that event a purchase trigger.

A trigger is a change in perception on the part of the shopper.  Its the realization that the actual discomfort of NOT owning has become greater than the perceived discomfort in making the purchase.

Triggers happen to different shoppers at different times, but all shoppers experience similar triggers.

That’s the fact which allows us to design customer acquisition programs.

Once we determine a strong appeal to an early stage shopper (say… reduced price), that appeal will be equally attractive to a different early stage shopper next month. Yet another completely different early stage shoper will be attracted with that same appeal the month after that.

Likewise, the appeal which works to attract this month’s late stage shoppers (perhaps safety, or guilt about safety) will work with other late stage shoppers later this year.

And when our primary appeal meets with a prospect’s strongly felt need, it acts as a trigger, moving that prospect to the next step, perhaps all the way to completing the purchase.

What Steps does the Shopper Take?

The specific shopping steps will be slightly different for every business. Some purchases are made on a whim. Others require research and the approval of a committee. Some buyers initiate purchase orders. Others simply pay cash.

Our tire shopping prospect likely goes through nine separate steps to buy tires.

Tire Customer Buying Steps
Tire Customer Buying Steps

The Sales Process is Always Similar, but Never the Same

So far, we’ve described the buying process, which begins with the shopper feeling a need.  Is the selling process the same?

Usually, its not.

The selling process begins when the seller identifies the buyer as a new prospect, and attempts to get her to engage.

And other than advertising, the seller has no control over communication with the prospect until she identifies herself.

In our tire purchase example the buyer has already taken five independent steps before the  seller knows she exists.

But detailing the customer’s steps between the first interaction with the seller, and the completion of the purchase, are what allow us to standardize the process.  It’s what allows us to set our marketing on  “Cruise Control,” when we’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 detailing your customer’s shopping process? Drop Chuck a note at [email protected]. Or call him at 304-208-7654.


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Reach vs Frequency – Systemic Marketing™ Part II

curb number
curb number
Curb Number

A young man shows up at your door.  For only ten dollars he’ll paint your house number in florescent paint on the curb in front of your house. Feeling no need for glow in the dark numbers on your curb, you pass on the offer.

The next day a different young man makes a similar offer. Again, you refuse.

He’s followed that afternoon by a young woman with virtually the same offer. Will you buy from her?

Believe it or not, you’ve just determined whether frequency or reach is of greater importance as a driver of sales.

Reach Trumps Frequency

In Systemic Marketing™ – Customer Acquisition on Cruise Control, we discussed the advantages of creating a a Marketing Cruise Control, a system to increase your marketing efforts in slack times and keep your company operating at capacity.

But the first decision is how to increase those efforts.

For decades media planners, buyers, and salespeople have argued whether it was more important to reach more people with your message (offer), or to deliver that message with greater repetition to the same people.

There are good arguments for both, but common sense will guide us to the following conclusions:

1. The more relevant the message, the more likely people are to notice it.
2. The simpler the message, the less repetition necessary for a prospective customer to “get it.”
3. Once a prospect has decided to purchase (or not), additional exposure to the message (during this purchase cycle) is pointless.

What should our original young man do to sell more fluorescent numbers? Go door to door on your block again? Obviously he should choose another neighborhood and make his offer to new potential customers.

And likewise, if you’re going to set up a Cruise Control system for customer acquisition, you won’t prompt additional sales by again offering the same people what you sell.* You’ll need to boost the number of people who receive your offer.

How to do the Boost

Don’t increase the number of ads in the same section of the newpaper you’re currently using. Put your new ads in a different section.

Don’t run additional ads in the local TV six o’clock news. Run new ads in the 10 o’clock news. Run new ads on another TV station’s six o’clock news.

1. Add a schedule on another radio station, or another TV station.
2. Add another section of the newspaper. Or another paper.
3. Post a billboard in a new neighborhood.
4. Send postcards to a fresh list.
5. Telemarket to a fresh list.
6. Expand the radius around your business and distribute more door hangers or flyers or yard signs in neighborhoods you haven’t been “working.”
7. Increase your pay per click budget.

You may be tempted to pull ad dollars from the media outlets you’ve been using, but if you unhook the engine, how long can we expect that train to keep rolling? And substituting an unknown return from a new media outlet in the place of the known ROI of a tested outlet only increases risk.

Systemic Marketing™ maximizes cash flow by eliminating speculation.

Everyone Has Opinions

Media people, printers, and your brother-in-law may feel qualified to opine about your marketing. Especially when you’re adding media to expose your message to additional prospects.

Your new media representative will want to make a strong positive impression in hopes of keeping more of your business. The printer will assess your need for additional flyers, or direct response packages as an opportunity. They will offer to produce new and/or different ads. Don’t let them do that.

By the time you’ve implemented a Marketing Cruise Control, your message will have been tested, refined, and polished. Everything from the offer to the choice of words to the colors, fonts, and images will be selected because they work better than those you tested them against.

And testing always works better than opinions when you’re fishing for customers.

Your Guide,
Chuck McKay

* OK. This is not completely true. But increasing the frequency of the message costs much more than it generates in additional sales for reason number three above. Most of the people exposed to your message will be those who’ve already decided whether or not to buy.


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

Got questions boosting the number of people exposed to your message? Drop Chuck a note at [email protected]. Or call him at 304-208-7654.


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Customer Acquisition on Cruise Control – Systemic Marketing™

Cruise Control
Cruise Control
Cruise Control

Imagine that you’re driving your car through the countryside. The road becomes slightly inclined, and your car begins to slow. You press a bit more firmly on the accelerator, and the car picks up speed again.

But then, you encounter a rather steep hill, and your car rapidly slows. You mash the pedal down, but the car feels sluggish, and takes a while to respond. Fearing a stall, you downshift to a lower gear. The engine picks up speed, the car begins to accelerate, and you successfully ascend the hill.

What happened to your fuel economy during this hill climbing incident? Can we agree that it suffered?

That’s because human beings are not particularly good at recognizing change. Until that change is obvious, we don’t adjust. Then, in order to restore the optimal conditions, we frequently over adjust.

Sometimes operating at peak performance is more a matter of luck than judgment. If only we had a device which would speed our reactions…

Enter the Cruise Control

The driver clicks the “set” button and a small comparator constantly checks the actual velocity against the desired velocity. The slightest change activates the throttle linkage to maintain the set speed without any intervention from the driver.

A good cruise control system aggressively accelerates without overshooting and maintains constant road speed, regardless of the mass of the vehicle, the weight of the passengers, or the road’s degree of incline.

Is Cruise Control a Convenience?

Yes. Yes it is. Cruise control offers convenience. It offers other benefits, too.

Use of such a system:

a) requires less attention of the driver. It requires less intervention by the driver.
b) adds a degree of predictability allowing better planning of rest stops and arrival times.
c) makes the trip less costly by maximizing fuel efficiency in miles per gallon.

Why doesn’t everyone use a cruise control?

Pretty much, we all do. At least when it comes to driving.

It’s advantages are so strong, and so desired by drivers, cruise control systems have become standard on nearly every new automobile.

Why Isn’t Cruise Control Standard in Marketing?

A cruise control for marketing would offer the same advantages to a company.

a) It would necessitate less attention from the “driver” – thus, less of the driver’s intervention.
b) It would allow for greater predictability in planning.
c) It would operate more efficiently, and thus produce higher ROI.

It sounds like a good entrepreneurial idea, doesn’t it – automating customer acquisition, much as an entrepreneur automates every other process in his company?

Cruise Control Flowchart
Cruise Control Flowchart

The answer is a qualified, “yes.”

Seasonal businesses can’t control the seasons. Extravagances will be subject to swings in the economy. Emergent responders can’t predict emergencies. But for a great many businesses, marketing cruise control is a very real possibility.

It has to do with the way potential customers are identified.

Revealed Targets, Non-Revealed Targets

Targeting involves defining and identifying the shoppers who are most likely to purchase. The ultimate identification reveals your potential customers names and addresses. This is possible if your target has, for example, subscribed to a magazine, lives in a particular neighborhood, or must be licensed with a legal entity.

Non-revealed targets are not identified as individuals. Non-revealed targets might include Country music fans, people who like Italian cooking, or parents considering hiring a tutor for their child.

Revealed targets can be contacted directly. Non-revealed targets are best reached through mass media.

Its much easier (and cost effective) for a marketing cruise control system to send offers to additional individual prospects.

What if Your Business Ran At Full Capacity?

Any company which will find an advantage in constantly running at full capacity will benefit from a Cruise Control system for marketing.

  • A pediatric dentist with an empty chair several hours each week.
  • A heating and air contractor with too few maintenance contracts.
  • A furniture store with inventory turning too slowly.
  • A jeweler with unpredictable demand for repairs.

And, of course, any owner preparing his business to be sold in the next few years.

Marketing Cruise Control is part of the Fishing for Customers Systemic MarketingTM system, which we’ll be discussing over the next few weeks. After all, it only makes sense to catch the limit 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 setting up a Marketing Cruise Control system for your company? Drop Chuck a note at [email protected]. Or call him at 304-208-7654.

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Danger in the Discount

MP3 Player
MP3 Player
Generic MP3 Player

Can you imagine a more idiotic challenge than to see which business can use up it’s investment capital and be forced out of business first?

Its what happens each time a new business opens with no strategy other than to sell at a lower price.

Dropping price doesn’t work. Long term, it never works. And in the short term it can’t create long term customers.

Let’s create a hypothetical example:

John finds a Chinese source for an 8mb off-brand MP3 player, which he can buy in quantity for $10 each. John checks eBay and finds the comparable offerings are priced at $40 each.

Wow,” says John. “Those other sellers are being greedy. I’ll mark mine $30 each and sell a TON of ’em.” He estimates the cost of shipping, discovering it will cost roughly $6. John decides to charge $10 for shipping “and handling.”

Thinking he will quickly sell all 100 units at $20 profit, plus a $4 shipping markup, he’s counting on taking in $2,400, and making a net profit of $1,400.

John invests $1,000 dollars, purchases 100 players, and is now in business. He lists them on eBay for $30, plus $10 shipping and handling.

John is right. There is a demand at that price point. He sells 16 the first day and 17 the second.

On the third day John makes no sales. Worried, he browses eBay to figure out why.

What’s this? This guy “Tom” has the same player listed at $27.  Worried, John drops his price to $25, and sells five more before, again, his sales abruptly stop. He finds Tom’s eBay store is still selling them at $27. Puzzled, he digs a bit deeper and discovers “Bob” now has ’em for only $22.

John ponders. “Well, I’ve made some money on these. I think its time to get out of the MP3 player business.” He drops his price to $15, offers free shipping, and expects to blow out the remainder and retire.

John sells 16 more before his sales again stop. He checks. Tom is reacting to the new competition by selling his players at $11 each.

John cuts price below his cost, and offers his last 27 units at $8.50, plus free shipping. Another 19 are sold before “Andrew” offers the same player for $7.50, and free shipping.

Tired of losing money, John contacts Tom, Bob, and Andrew, and offers his last 27 units to them for $270. None of them take him up on the offer.

John cancels his eBay account, and determines everyone on his Christmas list will get an MP3 player for Christmas.

Shall we calculate John’s profit on this venture?

John's P&L


John could be considered a dabbler. A great many eBay sellers are.

Some, on the other hand operate real businesses. Look at the feedback scores. Nobody gets to thousands of transactions as a dabbler.

People like John are not the folks Dun & Bradstreet speak of when they report 6 out of 10 businesses with 20 employees or less don’t make it past their first year, and 9 out of 10 don’t make it to their 10th anniversary.

Going Out of Business sign
Going Out of Business

D&B goes on to say that only 10 percent of all of the business failures in the US file for bankruptcy. The rest close voluntarily because operating their companies turn out to be way too much work for the meager income they provide.

The biggest cause of insufficient income?

Pricing too low.

Why?  Because all of a new businesses operating costs are higher.

A new businesses can’t BUY inventory at a lower price than the big box stores. It can’t ship at a lower price. And it doesn’t spend enough on advertising to buy in the bulk required to get reduced pricing there, either.

Combine higher operating costs and lower profits with discounted pricing, and you have a situation my friend and colleague, Jeff Sexton, refers to as the “race to the bottom.”

With lower price as your selling strategy, you’re competing with at least eight other ventures already in the process of going out of business.

What’s the Solution?

Raise your prices.

C’mon, McKay,” I hear you asking.  “Just how do you suggest I raise prices in a bad economy when all of my competitors charge so little?

Ah.  Fair question.  We’ll discuss that in a couple of days, as we continue 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 pricing for profit? Drop Chuck a note at [email protected]. Or call him at 304-523-0163.

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Your Favorite TV Ad

Honda Pilot
Honda Pilot
The car in question.

I like group a capella singing. I love group a capella sound effects.

My favorite radio commercials of all time are a series for Trop ArcticTM All Season Motor Oil produced in the late 70s.  A group of exceptional jingle singers imitated the sound of a railroad crossing, complete with warning bells, locomotive sounds, and a perfect doppler effect as the train roared by.

That was radio in 1979.  In 2011 there is an equally well done television ad.  Its running right now.

Have you seen this ad?

An SUV drives down the highway. Three boys in the back seat. Three girls in the middle seat. A pair of adults (Dad and Mom?) in the front. The blonde boy in the middle of the back seat starts making mouth noises.

“Bum bum.”   (high) “Bum bum.”   (low) “Bum bum.”   (back to normal) “Bum bum.”

As he repeats, the leftmost girl in the middle seat opens up with “ah-ee ah-ee ah-ee ah-ee.”

The kid directly behind her holds up his soft drink cup, empty of soda, and rattles the ice.  Cut to Dad simulating downward a bass glissando.

Bam! The eight people in the car are now each performing their respective parts of a song intro which is becoming very familiar. Kids are fingering their shoulder belts as if they’re playing guitars, and as the camera pulls back to show a full view of the automobile, the passengers all burst into the classic Ozzy Osborne, “Goin’ off the rails on a crazy train.”

Have you seen this ad? If not, I’m sure you will. The ad is scheduled to run during “Dancing With the Stars,” “Big Bang Theory,” and“The Biggest Loser.”

Shall we make some predictions?

People all over America will claim this is their favorite ad. The RPA agency of Santa Monica will win awards. And sales of Ozzy’s catalog will spike before Christmas.

This ad won’t sell cars

Here. I’ll prove it. Show of hands – who knows the ad of which I’m speaking? Oh, a bunch of you. Let’s see… one, two, three… twenty-seven, twenty-eight, two hundred nineteen, a few more…

Now, keep your hand up if you can name the car.

Oh. My. Nobody?  Nobody remembers the car being advertised?

And that’s the issue, isn’t it.

In my favorite radio ads the singers pause the sound effects several times to sing out boldly, “Trop ArcticTM, All Season Motor Oil. Long live your caaaarrrrr.

Thirty years later I still remember those Trop ArcticTM ads.

But vast numbers of viewers who will claim this new TV ad is their favorite, won’t know who to thank for the entertainment. An automobile manufacturer who probably spent half a million dollars to produce this ad, and several million more for TV airtime, will not receive the highest and best use of his advertising dollars.

Because we don’t remember the name of the automobile. We remember “Crazy Train.”

This is a catchy, very well produced, and very bad ad. Please don’t create ads like this if you’re fishing for customers.

Your Guide,
Chuck McKay

PS. Oh, you really can’t remember the make and model of the car in the ad, and it’s driving you crazy? Here’s thirty seconds of some pretty well done TV.

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

Got questions about creating ads which help customers to remember your name? Call Chuck at 760-813-5474. Or “E” him at [email protected].

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Focus on Customer Value to Survive the Coming Shake Out

Out of Business Sign
Out of Business Sign
Out of Business sign

There’s a shake out coming.

Historians will call this a period of consolidation, in which businesses are eliminated, or acquired through competition.  They will have had the benefit of time.

You and I will remember this as a time of small businesses going out of business.

If your company presently competes with 9 others, and there’s only enough business for six, three will close their doors, or sell out to a competitor.

Of the six remaining, two will barely keep the doors open, three will settle into a comfortable status quo, and one will thrive.

That one will understand how to deliver customer value.

Customers who grew up in times of plenty, loose credit, and purchases on a whim have mentally shifted to a time of considered purchases. They seem to be asking “Do we need it? What must we give up to get it? How good will it be?”

Changing consumer attitudes

Sales are off.  However, goods and services are still being purchased.  Automobiles break down regardless of the economy. Kids still outgrow shoes. Appliances still need repair.

But now every purchase gets considerably more deliberation.

This does not mean you need the lowest price. I promise, price is one of the less important factors in a buying decision.

Hundai Accent
Hundai Accent

Need proof? The Hyundai Accent, at $10,705, has the lowest MSRP in the country.  Do you drive one?  You don’t?  Humm.  There must be reasons other than price on which you based your purchase.

In fact, a 2010 J.D. Power study indicated that only 38 percent of buyers chose their car due to price, while 52 percent said their choice was due to the way they were treated on the lot.

And those 38 percent who focused on price?  You can understand why they said it was important.  When a shopper can’t see any difference between our offerings and those of our competitors it only makes sense to buy the less expensive of apparent equals.  Plus, out of all the factors which influence her decision, price is the easiest to understand.

But don’t believe she’s looking for cheap.  She’s not.  She’s looking for value. Simply stated, value is what the customer gets for what she pays.

Let’s illustrate with a couple of examples from the Great Depression.

Blue Plate Special

Blue Plate Special
Blue Plate Special

Running a neighborhood diner is an exercise in timing. Run out of banana cream pie before people stop asking for it, and you lose sales.  Prepare too many, and they spoil.  Few things are as depressing to an owner as calculating lost profitability awhile watching six slices go bad. During the depression, before refrigeration became cheap, the “use by” dates were much more critical.

And cooking up all of those things which might spoil if we don’t use them will only create more servings of foot to join those unsold pie slices. Unless…  Unless…

Unless we can increase demand for that particular dish.

Here’s an idea: let’s offer a good sized portion of wholesome food at a reduced price.  Customers won’t cares that the offer is for our own benefit. Most won’t care what we select for the entree, as long as its a genuine value to folks aware of every penny they’re spending.

The blue plate special was a strong value-based strategy which worked well 80 years ago. Could it work again today? I suspect, yes.

The Two Pants Suit

Men's Suit
Men’s Suit

This one is pure genius. A jacket and trousers (and sometimes vest) don’t make a suit of clothes. Making them all from the same fabric does. Wearing mismatched fabrics only draws attention to the fact that the wearer doesn’t have a suit.

The useful lifetime of a suit of clothes is usually limited by the trousers. They wear out, or are otherwise damaged, far before the jacket shows normal signs of wear.

The solution? Make a second pair of pants from the same fabric, and double the useful life of the garment investment.

Will people pay more for that extra fabric and tailoring? Yes. Yes, they will. Ask them to pay 20 to 30 percent more for twice the usage, and see how quickly they line up to buy.

And that’s why we stress value, rather than price.  Sometimes to be considered value, one does reduce price. Other times real value requires paying more.

Shoppers want:

1. More

2. Higher Quality

3. For a Longer Time

4. A Reduced Price

Pick one. Better yet, pick two. Survive the shake out by making your choices those which your competitors do not, can not, or will not offer.

Price always comes last. Location, brand familiarity, and business reputation can all be more important than minor price differences – an in a competitive selling situation, those differences will tend to be minor.

And a bit of imagination can certainly help to showcase what’s important to a shopper.

Five Guys Bounteous French fries

Five Guys Fries
Five Guys Fries

Is there a more competitive niche of the restaurant business than burgers and fries? And yet, one of the hottest players in this industry is Five Guys, who’s French fry servings are legendary.

They put your fries in a large styrofoam cup, filled to overflowing. The cup goes in a paper bag, and they pour in more fries, until the already generous serving size has more than doubled.

It’s value.  Is it inexpensive? No, the average ticket for a burger, fries, and beverage at Five Guys is about $11 – roughly double that of McDonalds. Customers not only pay it, they brag about the place to their friends.

KFC’s Containers

KFC Reusable Containers
KFC Reusable Containers

While other fast food restaurants package their meals in disposable paper or styrofoam containers, Kentucky Fried Chicken is now sending side dishes home in Tupperware® or Gladware® styled re-usable containers.

Serve from them. Re-seal leftovers in them. Wash them. Use them for other leftover items.

They probably cost KFC a few pennies more. The company gets points for customer value, and bonus points for being environmentally conscious.

Gallery Furniture
Gallery Furniture

Gallery Furniture Delivers

If a customer lives within 100 miles of Houston’s Gallery Furniture, they can expect same day delivery and set up by store employees.

Buy it today, have it in your home tonight.

They even call 30 minutes ahead to let you know when they’ll arrive.

Sometimes value has nothing to do with price.

Rexel Electric Becomes Destination

Rexel store
Rexel store

When my friend and colleague Mike Dandridge took over the Rexel electrical wholesale store in Midland, Texas, he installed a Senseo® Coffee Brewer and a cross section of gourmet coffees. Dandridge baked chocolate chip cookies throughout the day in a convection oven.

He piped comedy albums into the background music system, installed plantscapes throughout the store and Christmas lights around the counter. Dandridge placed Mr. Potato Head and Etch A Sketch, along with other toys at the counter.

And, of course, he focused on excellent customer service.  Over the next three years Rexel sales more than quadrupled.

Did Rexel try to undercut Lowes or Home Depot on the price of electrical supplies?  No.  They understood the value in the shopping experience.

Exceptional value, as perceived by shoppers, is rare, which is what makes these such great examples.

We assume the differences in our offerings are significant to our shoppers. We assume the “value added” we stack on top of our products and services are appreciated by shoppers. All too often, we’re wrong. What happens when the “extras” we draw their attention to aren’t even on their radar?

If they want bells, don’t give them whistles

Value is the price she expects, compared to the price she pays. Stack on more and more things she doesn’t care about and wouldn’t pay for, and instead of adding value, we merely clutter the dialog with irrelevancies.  We risk becoming irrelevant if we don’t understand to what our shopper pays attention.

Do we know what she values? How sure are we that we know?

survey clipboard

I’d suggest we ask.

List the attributes you suspect are important, and ask your customer to rank them from most to least important.   She can’t rank those attributes equally, and you can put  this information to immediate use.

Ask her about delivery and set up, documentation, portion size. Ask about entertainment, speed of service, problem resolution, free refills, courtesy of staff. Maybe even ask about price.

But limit the choices to five or six in order to get her to complete the survey. How many customers need to complete it to be useful?  It doesn’t take that many, actually. We only need a basic understanding, not statistical predictability.

25 to 40 completed surveys will provide a solid insight into what shoppers consider important. Knowing which bait works best is important 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 articulating your value, and making sure your customers appreciate it? Drop Chuck a note at [email protected]. Or call him at 304-523-0163.


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Buddy, You Don’t Offer Enough Value

Value Added
Value Added
Value Added

Are you familiar with the term, “velocity of money?” You’ve maybe heard it said that a dollar changes hands roughly seven times before it parks in a savings account or a long-term investment. Velocity is the relative speed at which the changing happens.

A dollar that enters the community in January and circulates through six other hands by April is evidence of a very different economy than one which enters in January and finally parks in August.

Right now, money is changing hands at the slowest rate in decades.

Unemployment is high, but employment is still much higher. For every person without a job in this country, seven are still working, still wearing out clothing or streetwear for men you can buy online, putting miles on cars, buying groceries, paying rent, and tithing to their churches. They’re still spending, but at a greatly reduced velocity.

The people who are spending are carefully considering each purchase. They’re not buying cheap. They’re buying value. Cheap is price compared to other similar offerings. Value is actual price compared to expected price.

Value, over and above.

I’ve recently had conversations with three independent practitioners in the financial industry. One is a stockbroker, one a fund manager, and one a financial analyst. They each asked the same question: “How can I meet more high income investors?” The stockbroker summarized his goal as: “I can’t make any money dealing with the people in this community. I want to find clients so wealthy that I can back my pickup up to their door and shovel the money directly into the truck bed.

There’s a major flaw in his thinking. High net worth investors already have a broker, or a fund manager, or a financial analyst. The professionals they choose to work with were carefully vetted before the relationship got underway. And, should they ever become disillusioned with their current advisors, they will look for someone who offers a greater value than the current advisor does.

What value does our stockbroker friend offer investors?

Pretend you are a high net worth investor, and you have a $2 million portfolio. Will you trust your money to an advisor who’s clients are primarily in the $250,000 range? Or will you want to be the smallest account managed by an advisor who’s average client has a $200 million portfolio?

There’s an implied competence in someone with whom much bigger investors have already trusted their money. As the new guy on the block, if you’re not already working with those clients, you’re going to have to offer something other advisors don’t.

Can you be the only advisor who meets with his clients quarterly, or semi-annually to re-evaluate their immediate and longer term goals? In a rapidly changing economic landscape, frequent attention may be of value.

Can you be the advisor who out performs the market by three or four points? Can you do it consistently? Can you offer proof of that?

Can you specialize in super-serving a niche market? Self-employed professionals? Single women? Law enforcement employees? What does your understanding of their specific circumstances ad to your value?

Value – the operative word for the decade.

Are you in retail? Do people come to you to shop? What do your customers get that no other retailer offers them? Do they recognize that value? Could you articulate it in two or three sentences?

Are you a service professional, selling your plumbing, painting, or air conditioning expertise? Why would a customer find your service more valuable than other service professionals? Can you explain that in a typical elevator speech?

Do you operate your own professional practice? What can your architectural clients, your dental patients, your legal clients expect you to provide that other professionals don’t offer? Do they already understand your value? How do you know?

What value do you offer?

Its a critical question for the next decade. People are still spending. They’re not looking for cheap. They’re looking for value. Without it, you’d best hunker down and hope you can keep enough cash coming in to keep the doors open. If you have real value, but need help explaining and projecting that value to the marketplace, my direct number is 304-523-0163.

The ability to state it simply, and to communicate that value to your potential customers is critical in this decade as you fish 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 articulating your value, and making sure people know it? Drop Chuck a note at [email protected]. Or call him at 304-523-0163.

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Presumed Prospects, Identified Prospects, and Core Customers

Media Choices
Media Choices
Media Choices

Martha was THE media queen at a large, St. Louis based advertising agency in the late 70s. She personally placed several millions of dollars with local media.

The St. Louis radio stations, television stations, newspapers, outdoor companies all came to kneel before her throne and pay homage.

For, you see, the ad budgets she tossed to local media reps as if she was feeding scraps to her pets, could make, or break, a media rep’s sales goal.

And Larry couldn’t get in to see her.

He’d called. Left messages. Sent flowers on her birthday. Arranged madrigal singers to serenade her office during the end-of-year holidays. But, no matter what could not get Martha on the phone, or to pencil him into her appointment book.

Until October of 1972, when Larry had a 15 foot banner made that said: “C’mon, Martha. Give Larry an Appointment. Call 314-228-7xxx.” He hung the banner on the building across the street, so that each time Martha looked out her third floor office window, she saw it.

Martha is an Identified Prospect

When prospects are identified, we have their contact information available.  Instead of sending a letter to “occupant” and hoping someone reads it, we address that offer to a specific person.

Instead of running a 30 second TV ad to reach the whole viewership in hopes enough of those viewers might be interested, we pick up the phone, dial a particular prospect, and ask.

Presumed Prospect:

The prospect goes to her mailbox, and retrieves an envelope from Smiling Ralph’s Auto Emporium addressed to “Occupant,” or maybe “Resident.” The letter says, “Dear Neighbor, its time for Smilin’ Ralph’s Legendary Upgrade Your Ride sale, this Saturday at Smilin’ Ralph’s.”

Identified Prospect:

The prospect goes to her mailbox, and retrieves an envelope from Smilin’ Ralph’s Auto Emporium addressed to her. The letter says, “Dear (prospect’s name), your 2006 Chevy Silverado is worth $15,575 toward the purchase of a new Toyota Tundra 11 Crewmax at Smilin’ Ralph’s.”

The General Public is Too Vast

If Ralph sends letters to the general public, he’s sending them to people who don’t drive; to people who just bought a car; people who will not buy a pickup; people who will not buy any foreign-made vehicle, and people who simply can’t afford one.

The more non-buyers Ralph can remove from the Presumed Prospect list, the greater the percentage of sales which result from offers he presents to those remaining.  This has the effect of driving advertising down cost per sale. All of his advertising becomes more efficient.

So, instead of sending the Occupant letter to everyone in town, Ralph uses some combination of geography, demography, and psychography to eliminate as many non-qualified prospects as is practical.  Its Ralph’s goal to to spend no money to reach people who won’t buy.  Its his hope a significant number of the remaining Presumed Prospects will.

We prefer to know more about our prospects, than less.  We like efficiency.

Like Ralph, we look for similarities in age, income, event attendance, radio listening, magazine subscriptions, and other purchasing habits among our current Core Customers. We systematically eliminate groups of people from our Presumed Prospect listswho don’t match the profile.

Of course, the ultimate in knowing “more” is to have their names, addresses, and previous purchase information.  This moves them from the Presumed Prospect list to the Identified Prospect list.  Getting those people to self identify is the primary function of two-step advertising.

So, Identified Prospects Are Better?

Not better. More efficient.

C'Mon Martha Banner
C'Mon Martha Banner

Larry was willing to pay to hang a banner in Martha’s view because he knew she was a buyer. A big buyer. His risk of spending to reach a non-buyer is zero.

The cost of the banner may make it questionable as a good investment, but the sheer size of the anticipated payoff made this one worth the gamble.  Of course, banners aren’t the only medium.  And they are costly.

Compare the cost of Larry’s banner with the much smaller cost of a local radio ad.  Ah, but radio presents another problem.  To schedule that ad, Larry would have to know which stations Martha listens to, and the time she listens. He needs to know whether she is paying attention, or if she’s chosen that exact minute to return a phone call.

Odds are high Larry won’t pick the right time to schedule his ad.  He’ll hedge his bet by purchasing ads on more radio stations, over greater periods of time, and for several more days.  Maybe Martha will hear one of them.  And unless Martha picks up the phone and calls him, Larry won’t even know when she’s heard it and he can stop paying for additional ads.  Yeah, radio’s an expensive way to reach one single person.

OK.  Larry could rent a billboard and put his message on it. Oh, wait a minute. Which route does Martha take to work? Does she drive, or take the bus?  Will she be more likely to notice the message going to work or coming home.  Larry is right back in the unenviable position of needing to buy a lot of boards, too.

And television?  Larry doesn’t know which television programs she likes or which of those she’ll choose to watch at the time he’s scheduled the ad to run.  Even if he did, can Larry be sure she won’t choose that commercial break as the best time to raid the ‘fridge?  Come to think of it, doesn’t Martha sing in her church choir?  On which night do they rehearse?  Is that the night Larry chose to run his ad?

Newspaper?  Which paper?  Which section?  What size ad?  How many days?  Which days?  Looks like a significant budget for newspaper, should Larry choose it.

Mass Media is a Terribly Inefficient Way to Reach a Single Buyer

But, odds are Martha isn’t the only radio listener / television viewer / outdoor or newspaper reader. She’s likely one of many. How many depends on the station (or location, or circulation), and the time of day (or placement).

How many of those other people may be prospects? Ah. Good question. That sort of brings us back to the basics, and back to the concept of Presumed Prospects, doesn’t it?

As a general observation, the more we know about a shopper / potential buyer, the more it costs to expose that shopper to our message.

This concept is important.  I’m going to repeat it. It always costs more to reach a highly-qualified prospect than one who’s marginally qualified, or not qualified at all.1 But, the more qualified that prospect is, the more likely she is to buy.

So, like nearly everything in advertising, the way to determine the best advertising program for your business is to try a few and compare.  The cost of each ad isn’t really relevant.  Divide the number of dollars resulting from advertising driven sales by the total cost of the advertising.

The Exception

Cash Register Receipt
Cash Register Receipt

We know far more about existing customers than about any Presumed Prospects or Identified Prospects. Well, we should.

People who’ve already bought are most likely to do so again.  Since you already know each customer’s name, her address (or e-mail address) and what she bought, you can craft an individualized offer and deliver it for the price of a stamp.2 (You do know this information, don’t you)?

There’s a grocery two blocks from my home.  If 30 days goes by and they don’t record any purchases from me, coupons for the exact brands I prefer appear in my mailbox. They offer me 30 cents off six cans of Campbell’s® cream of chicken soup, and ring up a hundred dollars or so of other groceries on my next trip in.

And, our relationship is invisible to that grocery’s competitors. No one knows they sent the coupons but them, and me. And maybe my Postman, but he’s not telling.

Customer Data Screen
Customer Data Screen

Do you have a system to capture the pertinent customer information from each sale?  You need one.  You need to identify the characteristics of your Core Customers and apply those to the Presumed Prospect lists.

I promise, better database management leads to more predictable successes 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 creating a customer database?  Drop Chuck a note at [email protected]. Or call Chuck at 304-208-7654.

1. Martha and Larry are real people. I heard the story from Larry, years after he retired. After three days of her friends, colleagues, and other media reps calling to ask, “Well, are you going to give Larry the appointment?” she did. And, not surprisingly, she eventually placed a schedule.

2. When you send offers to your core customers, call it “Core Mail,” to distinguish it from Direct Mail.

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How to Instantly Make a Poor Customer Impression

Restaurant Breakfast
Restaurant Breakfast
Restaurant Breakfast

Roger met me at a local family restaurant. With the ease of old friends not having seen each other for months, we slipped into a “catching up” conversation over breakfast.

I casually asked, “How’s your food, Rog?” Roger paused, considered, and told me, “It’s quite good.

I pointed to the ceiling fan roughly ten feet to my left, and said, “Notice the dust build-up on the fan?” Roger confessed he hadn’t. I directed his attention to the rear door, and asked, “Can you see the cobwebs on the Exit sign from here?” Roger admitted that he could.   I pointed out the filthy black build up on the air return vent next to the kitchen. I’ve come across many coffee, home, and kitchen reviews, in which, at least one had mentioned about this oft neglected and badly maintained part of kitchen.

Again I asked, “How’s the food taste now, Roger?” He replied, “Not as good.

I wanted to know why. Roger looked at me, and disappointedly told me, “If the front of the house is this filthy, I can only imagine how disgusting the kitchen must be.

Critical Non-Essentials

Dr. Paddi Lund
Dr. Paddi Lund

One wouldn’t think restaurants have much to do with dentistry, but there is a commonality.

People don’t have any specific knowledge as to whether the practitioner they see is any good at dentistry. They aren’t qualified to judge his education,  experience, or even the quality of his fillings.

But, they do know how to recognize that the florescent lights in his hallway are flickering, and that he’s out of paper towels in the men’s room.

Australian Dentist, Paddi Lund, named these little signs that your business is properly attended to as “Critical Non-Essentials.”  They are items which have no effect on the service one provides, but have tremendous influence on the opinions of  customers about the quality of the work performed.

The florescent tubes and paper towels are non-essential to the practice of dentistry. They are critical to patient assessment of the dentist’s competence.

So the patients conclude a dentist who won’t keep his practice equipped and stocked with the basics can’t be a very good business person. By extension, he’s probably not a very good dentist, either.

Clean return air vents are non-essential to food service. They are critical to the customer’s assessment of food quality. Services like cosmetic dentist Colorado Springs have vacuumed carpets and tidy shelves are non-essential to fabric sales. They are critical to customer assessment of fabric quality.

Interestingly, it isn’t just the critical non-essentials that form people’s opinions of our businesses.

One Man’s “Untidy” is Another Man’s “Creative.”

We expect novelists to work in cluttered offices. Neat, tidy, everything-in-its-place organization would be out of character. But an attorney working in a disorganized, untidy office projects incompetence.

And florescent lights hanging by chains from the ceiling are perfectly appropriate for a warehouse shopping club, but woefully inadequate for a jewelery.

In general, softer surfaces, subdued colors, wall treatments, indirect lighting, and less noisy showrooms prepare shoppers for higher prices. They also help customers to “rank” us within our professions. And then they compare us to our competitors.

A carpeted store with wallpaper, indirect lights, and soft music will project better quality merchandise than a store with cement floors, painted cinderblock walls, and loud echoes of forklifts.

But, if that second store is impeccably clean, while the first store’s windows are grimy and restroom trash baskets are overflowing, you can predict where people will prefer to shop.

Consciously or not, people judge our competence both by their expectations of our profession, and by those critical non-essentials.

If those non-essentials are so important, why doesn’t everyone pay closer attention to them? Mostly because the change from excellent to unacceptable is so gradual.

And when businesses are running as lean as most are today, there simply isn’t anyone assigned the responsibility of checking the volume of the background music or the dates on the magazines in the waiting room.

We Need Systems

If each business had a list of assignments that was checked before they opened each day, and periodically throughout the day, it wouldn’t much matter who was on duty, would it? The work of the company would be done, and those non-essentials which contribute so much to each business’ image would be attended to as well.

If you don’t have a checklist, create one. Do it today.

When I’m evaluating a new client (and his competitors) I use a proprietary list of over 100 points at which customers come into contact with the company. Mine is organized by our five senses.

What contributes to imperfections customers could see, hear, or smell? What will they touch? What can they taste?

What will contribute to your customers first impressions? Their last? Does their experience end at check out? In the parking lot? Or when you follow-up after the sale?

Your checklist may resemble that of other businesses, but it won’t be identical. How could it?

What About Customer Referrals?

Even if you never “wow” a customer, over time, what do you think will happen if you never disappoint?

Does your company use such a system? Join the conversation, and tell us about it.

If not, I’d suggest you start one today.  It makes your job much easier 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.

Questions about identifying critical non-essentials in your business  may be directed to [email protected]. Or call Chuck at 304-208-7654.

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Pattern Recognition and the People Meter.

Rush Limbaugh
Rush Limbaugh
Rush Limbaugh

Pattern recognition is quite likely a survival mechanism.  As human beings, we naturally look for cause/effect relationships in the things which surround us. “Ogg teased the mastodon. It snatched him up with its trunk and crushed him. I don’t want to die. Therefore, I’m never going to tease a mastodon. At least, not up close.”

Of course, sometimes we make mistakes.  Though we try to assign one, not every effect has an obvious cause. “Ogg ate the frazzlesnatch berries after dark, and got a tummyache. I don’t want a tummyache. Therefore, I’m never going to eat the frazzlesnatch berries after dark.” This particular effect (the tummyache) seems silly now that germ theory provides an easily testable alternate cause (germs).

We have a deeply rooted need to understand, which produces an equally powerful “want” to believe. We look so hard for reasons that we accept hazy evidence, questionable schemes, and even false reports. We want to believe we have the answers. We just can’t help it.

Back to germ theory.

Pasteur uncovers germs. Creates vaccine for rabies, and for anthrax. Invents a method to prevent milk from making people sick. Do people immediately abandon the “don’t eat frazzleberries after dark” theory? Don’t count on it.

As each of us gains experience with the world, the frazzleberry ideas, combined with the mastodon ideas, and other ideas, become intertwined into our belief systems. And sometimes, accepting the evidence of germs means, not only abandoning the frazzleberry theory, but also calling into question dozens, maybe hundreds of other observations and conclusions.

This is painful. First, because thinking is hard. Second, because admitting that we’re wrong is harder.

So, other doctors in the early 1860s snorted at “Nutty Louey’s” germ ideas, refused to wash their hands, and spread disease from patient to patient. And when finally confronted with overwhelming evidence? Cognitive dissonance kicks in.

And yes, this does have advertising applications.

Obliquely, we’re discussing belief systems.

But in reality, we’re talking about testable evidence.

We can easily test for germs. We can’t so easily test for the existence of UFOs, the Tri-Lateral Commission, or the exact date of the Rapture.

Every day we’re presented with change. And each of those days, we try to make sense of those changes.

Here’s one change. According to a report from the Arbitron ratings service, Rush Limbaugh’s ratings have dropped 33 percent since October. Sean Hannity’s are down 28 percent in that same period.

Premiere Radio, which distributes both shows, has said the ratings slippage doesn’t worry them, since Limbaugh and Hannity are still the two biggest talk shows in America. Don’t believe them. About the worry part, I mean. Do believe that even with the ratings reduction Limbaugh and Hannity are still numbers one and two.

Progressive leaning pundits suggest the new ratings numbers are public backlash against right-wing opposition to anything Obama. Conservative Pundits talk about short-term ratings bounces being temporary, and point out that Limbaugh is still Number One.

They are all mistaken.  You and I, Dear Reader, will discuss the real reason those ratings have changed.

Those listeners never existed.

Since its inception in the late 1960s, Arbitron has tabulated written diaries in which survey participants recorded the stations and programs they watched or listened to. Since its inception, the listening diary has been flawed. It was designed to record TV viewing in the days before remote controls.

Let me describe the process.  A person got up off the couch and actually walked to the TV to change the channel between ABC, CBS, and NBC. Leaving the open diary on top of the set was simple.

Step one: Actively consider program choices.
Step two: Pick one from the three available networks.
Step three: Write choice in viewing diary.

Rinse and repeat half an hour later.1

But, for as long as there have been winners and losers in the ratings battles, there have been questions about the validity of the diary methodology – ranging from Bolton Research‘s Study of Arbitron Ratings in the early 1980s to Arbitron’s own Non Participant studies.

I remember watching one of Ted Bolton’s presentations in which he played videotapes of diary keepers saying such things as “I usually listen to the rock station, but I felt guilty about supporting them so I listened to the Christian station all week.” Another interviewee said, “I filled out the diary for the whole week the day I got it, ‘cause I had already decided who I’d be listening to.”

We’ve long suspected that people are concerned about what we think of them. Even anonymous people. Now, with PPM data, we have evidence.

Portable People Meter
Portable People Meter

For the last couple of years, Arbitron has been phasing out the paper diary, replacing it with the Portable People Meter. Instead of asking people to describe their behavior, Arbitron is measuring their actual radio listening.

The first national PPM results were measured in September, 2010, and released in October. (Humm. October. Beginning of new methodology).

What is this new data telling us? Diary keepers over-report familiar stations, heritage stations, and those which have simply used the same call letters longer.

We used to believe the average listener listened to 3.2 stations per week. Now, the evidence is that they listen to double that number.

Based on diary keeping we used to believe people listened more (and more intently) in the morning. Now, we know listening is pretty much the same in each major daypart.

And formats? Not surprisingly, the stations which do best are the mass appeal stations. Quite surprisingly, light rock and adult contemporary stations have significantly more men listening than previously thought. (It’s harder to claim you’re a major sports radio fan when the meter catches you listening to Céline Dionne).

Other winning formats are oldies, news, and country.

The biggest losers under PPM measurement? Smooth jazz, some Spanish-language stations, and talk radio in general.  Limbaugh and Hannity listeners, specifically.

Now what?

Now, we adjust.

Electronic measurement has no bias. As Irwin Ephron has stated so well, “There is no “Truth” in audience measurement. There is only validity, bias, sample-size, economics and judgment.

Science ultimately affects opinion, and advertising dollars always flow to where the listeners are.

I don’t expect Harley dealerships to start advertising on the “lite” stations, but I predict you will soon notice more car dealers advertising on the soft rockers.  And Rush Limbaugh’s advertising rates will decrease as station owners, disappointed that the audience they believed listened to their radio stations is only two-thirds as big, begin a slow shift away from conservative talk.

What about you? Will your advertising choices be affected by the new PPM information? Perhaps they should be, if you’re going to successfully fish for customers.

Your Guide,
Chuck McKay

Marketing consultant Chuck McKay
Chuck McKay

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

Questions about interpreting the new ratings data may be directed to [email protected].  Or call Chuck at 304-208-7654.

1 Then there’s the whole issue of keeping an accurate diary when one listens in the car. Did we ever really believe a rush hour commuter kept a diary open, and pulled to the side of the road to write down each time she punched the station button?