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THE DIP BLOG by Seth Godin




All Marketers Are Liars Blog




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« May 2007 | Main | July 2007 »

Marketing Fear

Marketing with fear is a powerful tool. Fear is a universal emotion, it's viral and people will go to great lengths to make it go away.

Some items can't be marketed without fear. Seat belts, for example. They're not convenient, good tasting, fun to use or profitable. Fear works great in this case.

An essential question to ask, though, is who benefits? In the case of seat belts, the use of fear directly benefits the prospect, because using seat belts not only decreases fear (peace of mind) but improves safety. It gets a little dicier if you're selling a placebo--increasing peace of mind without increasing safety (a $30 warranty at the cash register for a $16 item is not a smart financial investment, though it may help you sleep better.)

Threat2_copy What if the marketer not only doesn't create peace of mind, but intentionally destroys it for his own benefit? Sometimes, fear is used as a marketing tactic even if it doesn't benefit the prospect at all. That's because news organizations like CNN and various organizations and politicians can benefit. Craig sends us this photo of a convenience store hoping that fear will sell some duct tape.

Without terror, you can't have terrorism.

Most and least

Traveling yesterday, I realized that there are two popular strategies for service delivery. One is a coping strategy and one is a marketing strategy.

You can deliver the lowest permitted amount, or you can work to create the most remarkable experience you can imagine.

Stop for a second before jumping to the conclusion that the latter is always what you do.

When I pay a bill, I don't put more money in the envelope than I'm billed for. And I don't put more stamps on the envelope than the USPS requires, even if I'm in a particularly generous mood. Living life like Spinal Tap (always at 11) is inefficient if not impossible. Very often, we find ourselves doing the least amount of work permitted because, after all, we have more important things to spend our time on.

Smart marketers understand two things. The first is that you must pick your battles, deciding in which areas 'most' matters and living with 'least' the rest of the time. The second contradicts that and makes this a lot more complex: Least spreads.

You've seen this in countless organizations. A few people get in the habit of least, then a whole department does, and the next thing you know, it's an entire airline. Least is contagious.

Really smart marketers understand this: the best way to fight the contagion is to pay what it costs to eliminate least everywhere you look. It's ridiculous to expect most in all things (your postage bill will get out of hand), but I think it''s possible to work to stamp out least.

The Verizon guy who turned down the iPhone

Given the mass hysteria, it's probably not so good to be Denny Strigl this week. He's the COO at Verizon quoted with pride about turning down the iPhone deal (Verizon turned down iPhone's advances.)

The reason you need to care about this: Almost everyone is like Denny.

Most innovative business people who dream of bizdev imagine that they can be just like Steve Jobs. Come up with a super idea, a useful service, a great gizmo and go to an industry leader. Sign lots of NDAs and go to lots of meetings. Demand that they change their ways in order to make your wonderful innovation a game changer, something that will fix their broken industry and make you both a lot of money.

Hey, Steve Jobs himself couldn't do it at Verizon. The list of big companies that didn't jump on game changing ideas is huge. Almost as long as the list of great companies you didn't buy stock in when you had the chance.

The iPhone/AT&T deal is almost certainly the exception that proves Godin's law of bizdev: No is the default answer. The spreadsheets and the marketing team and the CFO and the lawyers have no trouble at all defending the status quo, because, it's their status quo. They created it and they like it that way. Bizdev deals like this almost always fail because the potential for upside seems too small compared to the mammoth disruption that organizations imagine will beset them.

Plan on going under, over or around instead.

A great book for smart friends

...who don't necessarily know the web as well as you do. Mark Fraunfelder of boingboing wrote it and it's really useful. I built a lens about it: RuleTheWeb on Squidoo. When you find a useful link in the book, go ahead and add it to my list.

Positives, not negatives

Doug points us to: Verizon to prospective iPhone buyers: 'Stay near a plug'.

It's basically a memo designed to help Verizon reps denigrate the iPhone. I think this is bad marketing. If someone is going to switch carriers and you've done your best to denigrate their choice, you've not only lost a customer, you've also lost credibility and respect going forward. (Because your criticism of the phone is also criticism of my judgment.)

What I'd try instead? How about this:

"The iPhone will cost $500, plus a new battery next year, plus $50 a month. If you spent that money with Verizon, you could have x, y and z..."

Then I'd spend the rest of the conversation selling x, y and z. I'd talk about a superfast network and a more reliable coverage area and all the cool gimmicks and features in the phone I can buy for $350...  (Remember, before now, all you could talk about was cheap phones, not great ones. Apple raises the ceiling).

The iPhone is a gift for every cell phone marketer in the world. Why? Because it creates a problem where there was none before. Now, a cell phone is not just a phone. Now, a phone is worth spending money on. So, since Apple created that 'problem' in my mind, how are you going to solve it?

How to make a million dollars

One popular method is to make a dollar in profit from each of a million people. Or a penny from a hundred million. This is the China strategy. It almost never works.

It almost never works because the challenge of reaching that many people is just too great. It's too risky and too expensive. Doesn't matter that you're only hoping for a dollar or a penny. The price isn't the challenge, it's the difficulty in spreading your idea.

Far easier to make a thousand dollars from each of a thousand people, or even $10,000 from a hundred organizations. You can focus on a small hive of people, a group that talks to itself. You can push through a smaller dip and reach a level of recommendation and dominance that makes incremental sales far easier.

And you can learn much earlier in the process if you've gotten it right or not. Because you're making more per sale, you can spend the time necessary to figure out what really sells and modify your offering sooner in the process.

The irony is that many products and services that have reached huge masses of people actually have significant margins (Windows, for example, or a cup of Starbucks). They got the best of both worlds because first they focused on winning small communities over and that led to the larger market.

The brand that saved baseball

Why doesn't Puma or Adidas (or even Nike) pay the management of the SF Giants to bench Barry Bonds before he hits the record? Now you'd have a brand that really stood for something.

Why don't local businesses buy $50 worth of quarters now and then and feed all the meters in town... just put a little flyer under the windshield wiper.

Once you change the rules, the sponsorship opportunities are endless.

[Brandon has a warning, though, for anyone thinking about parking meters.]

Selling advertising

Wenda Harris Millard is leaving Yahoo. That's as good as an excuse as any to talk about what it means to sell advertising to big advertisers.

Sooner or later, just about every media plan (especially those online) includes the line, "and we'll sell advertising." More often than not, this is a pipe dream. Here's why:

There are two kinds of advertising and this leads to two kinds of ad sales.

The first kind is the rational kind. Yellow Page ads, direct mail and Google AdWords fit into this category. This is advertising that works, if 'works' is defined as, "pay $3 and make $4." With measurable direct advertising, you can count on profit-minded small organizations to give it a try (small buys) and if it obviously makes money, to buy some more. While it helps to have a salesforce, it's not essential (if the ads are really and truly money makers). Most media companies end up with this sort of advertising, and most of them fail, because the advertising just isn't effective enough to be this obviously profitable.

[Most advertising takes skill to turn a profit, and most advertisers don't have any. So, there are people who make a profit with AdWords or with Squidoo offers, but not everyone. It's just too hard to build a medium so effective and so well-priced that anyone with a typewriter can turn a profit.The challenge is to have enough people make money that others are drawn to the medium and invest the energy to actually get good at it.]

The second kind of advertising is the glamorous kind, the kind that people think of when they think of the Super Bowl or Time magazine or of profitable ads that are worth selling. These are the ads that built Yahoo, the ads that built NBC and the ads that so many entrepreneurs and media moguls are counting on. These ads don't sell because they work. They sell because they are sold.

Let me be fair: they work if we define 'working' as: pleasing the client, pleasing the agency, increasing brand goodwill, and building, over time, a groundswell of awareness and brand respect that ultimately leads to profits. A Chevrolet ad on the Super Bowl doesn't generate 2 million dollars in profit. No way. But, perhaps, over time, $100 million worth of Chevy ads turns into a billion dollars of profit. It's vague, it's tricky and it's political.

Jerry, who I used to work with, and Wenda and others understood the investment, patience, malarkey and magic that goes into selling an irrational, expensive item to people who pretend to measure but really don't. I never really figured that out, and my guess is that most people with that line in their business plan haven't figured it out either.

Reasons and excuses

Most organizations need a good reason to do something new.

All they need is a flimsy excuse to not do something for the first time.

And they often need a lawsuit to stop doing something they're used to.

Fall into the Gap

Today, I visited a Gap store for the first time in a while. We all know that they've been having trouble, and it was interesting to see how they're responding.

They're closing about 50 stores net this year, trying to make their business match the market. At the same time, it was pretty obvious from my visit that they're working hard to save money on sales staff, store designers and other expenses. It took me twenty minutes to check out. In the old days, it would have been two minutes. My reading of the Dip is that nickel and diming is a dumb strategy.

They should close 200 or even 500 stores and keep the very best people from each store, redeploying them to their best stores. They should invest in those great stores, invest in design, in targeted marketing. In other words, instead of shrinking themselves back to greatness, they ought to avoid the nickel and diming and go back to what made them great in the first place.

When your current strategy isn't working, doing the same thing, but just a little less of it, doesn't make a lot of sense, imo.

« May 2007 | Main | July 2007 »