marketing-strategy

Who’s driving the bus?

Who’s driving the bus?

\"\"Every business you\’ve ever worked with or for has a primary driving force.   It is this force that is driving the business forwards.

Often it is a reflection of the values their founders or leaders hold most dearly.  This drive is the cultural lifeblood of everything they do, it becomes the norm, \”the way things are done here\” mantra that they live (and die) for.  

At the sales-driven company, you\’ll see a massive focus on taking your product to market.  It\’s their job to convince, persuade, cajole and eventually win you over to their way of thinking.   If you\’ve worked for them, you\’ll hear chatter about \”the numbers\”, closing deals and not so much about the customer.   This approach works…sometimes.  It relies heavily on the influence skills of their sales team.  Customers are often seen as the means to the end.  Relationships are measured by what they get out of it.  

The product-driven  (or engineering-driven) firm focuses wholeheartedly on building the very best widget.  Their internal dialogue is all around features, capabilities, specifications and performance of the said widget.  There is a belief that bringing the best widget to market is the best road to success, and sometimes it is.  For firms like Ericsson and perhaps even Google, they\’ll often build great solutions to problems that don\’t exist.  Sometimes these will appear to outsiders as failures, but the breakthroughs they make, lay the foundations for future successes.  Product-driven firms build amazing products, then look for a market for them.  Their internal dialogue if often, focused on innovation, better ways of doing things and beating the competition to market with their brilliant new idea.

Marketing-driven firms often look the slickest.  They are always \”on message\” presenting a story to the market that communicates the value they claim to offer.    They are smart, focused on the offer, presenting a wafer-thin veneer of credibility to the market, often while their product people work furiously in the background trying to match the reality to the glossy brochure.  Get beneath the surface (as an employee or customer), and things are not so pretty.  Often these are the first who spend the most time talking about \”roadmaps\” with new features coming soon.  These are the businesses you\’ll see looking for that one silver bullet, the magic Facebook hack, shiny new branding or just about anything that avoids having to do the hard work of creating value for their customers.

Market-Driven firms, however, are different.  Their sole focus is on solving the problems that matter, to the people they exist for.  They are continually seeking more insights into the issues facing their market and finding better and more efficient ways of solving these problems.  They hear the market place, but perhaps, more importantly, are heard by the market place, and through their genuine engagement change the way they see the world.  They\’ll do the hard work of building empathy into their business systems, such that they understand the hopes, dreams, frustrations and feelings of their customers.  Being market-driven is hard work, but ultimately it lasts.

Choose your driver wisely, because ultimately they will decide where you\’re business goes.  

Should you put your prices on your website?

Should you put your prices on your website?

Your customers want pricing.

It’s a question that every small business needs to make when planning their website. There are many valid arguments for and against to putting your pricing online. To provide some clarity, we’ve busted a few myths that people tend to carry when considering the pricing question.

The #1 Reason you should publish your prices on your website…

 

If it matters to them, then make it easy.
Price is often an important decision-making criteria, so if publishing your price on your website makes it easier and faster for them to decide in your favour, why would you get in the way?

Publishing your prices doesn\’t show your value. It won’t improve your branding. What it can achieve is to assist customers on their buying journey, getting you closer to a yes (or no) decision.

Your website needs to sell as well as your best salesperson. If you don’t trust it to communicate the value you offer (which should be bigger than the price you charge), you’ll need to fix this much bigger problem.

Seven reasons businesses don’t put their prices on their website.

What if my competition sees my price points?

What about them indeed. Most serious players in most industries have a pretty good idea as to where they sit relative to their competition. Ask yourself, do you know roughly where you expect the competitions pricing to be on the next job you both quote on? If you don’t then you have some work to do on your competitive intelligence.

While their website is a good place to start, you could also ask your customers, their customers, industry colleagues or look at the cost structures they have in their business and make an educated guess as to where they should sit if they were to be making an acceptable margin. There’s no doubt that they’ll be going through a similar process when looking at your prices. If you are doing something unique, and have a fundamentally different cost structure, pricing your services can show that differentiator. If on the other-hand your cost structures are much higher than your competition and deliver no additional value to your customers, get down to work fixing these, or creating more value.

In short, price is everywhere today, and customers expect to see it, up front.

My sales strategy relies on customers calling for a price

Perhaps you think that you need the prospects to talk with you first so that you can demonstrate the value your product or service offers, before quoting them a price. This is an argument we here all too often from salespeople, and perhaps it is a little bit of self-preservation. If your website is well structured, it will prove to a visitor whether you can solve their problem and that the price you charge is worth every cent. Effectively the website is becoming a valued part of your sales team, creating value for your customers and streamlining the sales process. When a prospective customer finally does call you, they’ve already been pre-sold by the website and your sales teams role is to reinforce the understandings of the value you offer and close the deal. If a sales rep needs to speak with me, it’s because they think the product or service “needs explaining,” or that they need to “handle my objections.” Neither is a good excuse to waste my time on something that doesn’t need explaining or should have been explained thoroughly on the website. If you\’ve done the work to understand the objections and handle these before I raise them, then top marks, this is what a website should do.

What if they see the price and suffer sticker shock?

You’ll know from your own experience sometimes the price of a good or service is enough to send you searching for the nearest AED. Immediately your interest is crushed, and you’re walking (ok running) out of the short at top speed. It happens even faster on a website, just click that back button and you\’re out of there.

In any contexts, no price looks even more expensive, than a high one. Imagine walking into a high-end fashion retailer that had no prices, for most of us the message would be…if you need to worry about the price you’re not welcome here. For their target market though this would be the perfect signal.

My product/service is much to complex to be able to offer an online quote

Some services and products (like many that we offer) are tailored and priced according to each client\’s needs. In many of these instances, people don’t expect to see a price. What can work however is a price signal. Pricing signals can be explicit such as price ranges and from prices, or implicit, through the use of colours, style and design to convey a message. -When using price signals, make sure that they are consistent with the reality of your offering. You’re setting your customers up for a disappointment in for example making your cheap second-hand store look like a high-end antique store (or vice versa).

Cheap competitors will just copy my price

Sometimes businesses fear that a competitor, who offers an inferior product or service will see their higher price as a green light to increase their own prices. In the absence of any other quality signals, customers may be induced into thinking that the competitor is \”almost as good\” as a slightly lower price. If you\’ve done the work creating and demonstrating the real value you offer, don\’t worry. Do the work to help your target market discern the difference you offer. Build on your testimonials, prove your differences, and show the value you deliver. The \”cheap\” competitor, starts to look very expensive when the customer can see the value you offer,

My only differentiator is price, I can’t afford to give it out

If you feel that your service or product is no different from that which your competitor offers you have a problem. This is called a commodity. Commodities are regarded as being for all intents and purposes the same, regardless of who is selling them (think about fuel, wheat or iron ore). By being clear on what makes you unique, and better than your competitor, you avoid being seen as a commodity. In marketing lingo this is called your Unique Selling Proposition. If you don’t have one, get one. In almost every instance it\’s there, you just might need a hand teasing it out.

What about people shopping on price

If your website visitors are only shopping for prices, chances are they are not your customers. If you\’re only winning customers over because you\’re the cheapest, you\’ll lose them as customers as soon as someone else is willing to cut their margins deeper or adopt a lower cost business model. For these customers, including your prices on your website, Facebook page or Google Ads, is an excellent way of helping them to qualify themselves out, before wasting your time.

My product is ultra-premium and customers don\’t care about the price

If price really doesn\’t matter to your target customer, then don\’t include it on your website.  But before you make that jump, consider the fact that Rolex, Gucci, IWC and many other Premium Core and Super PRemium brands, do include prices on their sites.  Graff and Leviev don\’t but then again, when they start at USD$50,000 for a ring why would they, if you need to ask, you can\’t afford it.

So should you put your prices on your website?

There are lots of reasons not to put your prices out, and many of them might seem valid. The only thing that should ever matter when it comes to making the decision is what do your customers expect of you?

At Rethink Marketing we’ve worked with hundreds of small businesses in both consumer and industrial markets, offering products and services that vary in their complexity and price. We are yet to find a product (or service) that we can not provide a quote or at least signal a price range.

Indeed, we have most experiments we have conducted we have found that being up front, transparent and indeed open about pricing has boosted both the quality and quantity of leads generated. I guess the end customer is just rewarding our clients for their transparency.

Viral Marketing in Action

Viral Marketing in Action

Sometimes we come across a marketing campaign that is so brilliant that you can’t help but wonder if it was planned or accidental.  My wife received one this morning via an email from a friend, but we’ll come back to that later.Viral Marketing is by definition a marketing technique where by your marketing objectives are achieved by a  self replicating viral like process from person to person.  In the past we would have called this a word of mouth process, but today with social media the speed and spread of successful viral marketing campaigns has been supercharged.  Today viral marketing may take the form of emails, video clips, interactive Flash games, advergames, ebooks, brandable software, images, or text messages.I often receive a SMS message from West Suits in Perth when they are having a factory outlet sale.  The last line on everyone of these SMS messages is “tell yr m8s” which is a great way of encouraging people to share the news, amplifying the effects of the marketing effort.Sometimes though marketers (or perhaps non-marketers) manage to create a campaign which is so clever that no encouragement is needed to get the sharing in place.  One such campaign was a flyer  sent out to the email list of a small retailer in Victoria Park U-Chus.  The flyer was titled “Cooking with Poo“.   Whilst it isn’t stated anywhere on the flyer that the hosts name is Poo, I think this would be a fair assessment.We received the email in the 4th generation as one of 20 recipients.  As a very rough calculation, assuming that 50% of each generation decided to forward the email to a similar number of people, an initial mailing list of 100 people saw the message about this cooking class reach an astounding 85,775  people have seen this flyer!  Given the cost of mass media, and the difficulty that any business big or small has in cutting through today, a campaign that cost very little and touches 85,775 people has to be rated a raging success.

Viral Marketing Bunbury Perth WACooking with Poo – Viral Marketing Campaign

Does the Groupon model lead tourism businesses racing to the bottom?

Does the Groupon model lead tourism businesses racing to the bottom?

In a recent announcement by Groupon, after raising almost a $1 billion in funding, CEO Andrew Mason said “we will continue on our mission to change the way people shop locally and serve the world’s local businesses”.

But is Groupon, and other group discount sites, changing the way people shop for the better or doing it at the expense of small business?

groupon

There is no doubt that the Groupon business model has been a tremendous success, you just have to look at the amount of money they’ve made and how quickly they’ve grown to realize they are on to something big.

The growth has been a result of two important factors:

  • An economy that has pushed consumers (especially those in the US) into a mindset of extreme deal seeking.
  • Small businesses desperate to generate revenue at whatever cost.

But are there enough small businesses to make this model survive? In a word… yes.

When you consider that, on average, about 80% of businesses in the U.S. alone are small businesses with less than ten employees, there are a lot of potential customers to keep the likes of Groupon and other deal sites churning out the revenue for many years to come.

But the bigger question is whether or not these deal sites are really doing anyone any favours.

Part of my issue with group deal sites is not specifically the model but the hype and lack of clear understanding of the costs associated with these advertising models.

For many small tour and activity businesses, where the owner of the business does not necessarily have a business background, the seduction of acquiring hundreds of new customers without investing any upfront cash can seem too good to be true.

But, frankly, it is too good to be true and the downstream costs for a small business, once all the numbers are crunched, are perhaps not what a business owner might have expected.

You don’t have to look very far on the web to find stories of disgruntled retailers, spa owners, restaurateurs, and even photographers who have been stung by a Groupon promotion. What seems to be a common theme across all of these stories, however, is the lack of understanding of the true costs of running a group buy promotion and the impact it has on cash flow and future revenue.

Let’s take a look at the example of  a sightseeing tour as way of determining the costs of running a Groupon campaign for this particular business type.

  • A local sightseeing company with a 15-passenger van decided to try and attract new business by offering 50% off its $140 tour.
  • Groupon sold a very modest 250 coupons.
  • In this case, Groupon took 50% plus credit card costs as commission, so at the end of the day, the operator received $8,312.50 for $35,000 worth of tours and Groupon received $9,187.50.

Not bad, considering Groupon doesn’t have to handle fulfilment or customer service.

Group buying sites have suggested that the money spent on acquiring new customers should be looked at as advertising and not necessarily as the cost of sales.

For a small business whose profit margin is on average 5%, an advertising campaign that costs, in this example, $27,000 and brings in 250 new customers is not sustainable when you consider that locals (the primary consumers of group deals) are less likely to re-use a tourism based product or service again.

The other dilemma facing tourism related businesses is that there is little or no opportunity for upgrading or upselling their product. In most cases, the customer is only going to spend what the value of the coupon, so the business loses out on the up-sell potential.

Think about this for a moment, at 5%, this operator would have to sell $540,000 worth of tours to cover the cost of this one “advertising” campaign. This works out to about 3,857 full paying customers to subsidize 250 deal seekers.

Sobering numbers for a small business owner who has to spend his or her days trying to provide the best possible experience for their customers and pay the bills at the same time.

Now, don’t get me wrong, group buying sites have worked well for many types of businesses, I just think that before a business, especially a small tourism business, chooses to execute a group deal, they must look beyond the hype, do their research, and crunch the numbers. There is no such thing as quick cheap cash.

By participating in a group buy promotion a business is essentially extending credit to hundreds or thousands of customers for which they are now liable, at least until the coupons expire.

In the previous example, the company is adding $8,312.50 in revenue but they are also adding $35,000 in short-term liabilities for tours not yet delivered for the life of the coupon, that would give any accountant a mild heart attack.

The other side of this equation is the consumer and the affect that group sales sites are having on the perception of value of local businesses. Consumers don’t know the individual business’ costs or how much revenue they are making from each customer.

What many consumers will do is assume that you’ve built in enough mark-up to make the deal worthwhile because why on Earth would you run a deal like that otherwise?

Over time, this has the effect of eroding the perceived value of the service being provided and the service runs the risk of becoming, GASP, a commodity. No one wants their service to become a commodity.

Patrick Lefler through CustomerThink:

“The risk here is that profitable customers become conditioned to wait for sales and discounts–reluctant to ever pay full price again.”

In a segment dominated by small businesses, the in-destination tour and activities segment is an excellent target market to advertise on group buying sites like Groupon.

Considering, however, that over 85% of these businesses don’t distribute their products through sites like Expedia and Viator because they consider 20-30% commissions to be too high, it seems ironic to me that they would be willing to jump on a model that charges an effective commission of 75%!