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THE DIP BLOG by Seth Godin




All Marketers Are Liars Blog




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« June 2008 | Main | August 2008 »

Are they ready to listen?

Most marketers forget to ask this critical question.

When I was pitching for investors in Yoyodyne (1994/1995) I met with many of the biggest VCs on the East Coast. Same company, same pitch, very different results.

In retrospect, the reason was simple, and it didn't have a lot to do with the way I presented our company. Firms that had funded Federal Express and insurance companies and patented chemical formulations weren't ready to hear about an Internet company in 1994. It didn't matter what I said, they had decided before I showed up. Fred Wilson and Jerry Colonna, on the other hand, had a different worldview. They were choosing to pay attention.

A few years before that, I had published a book about a political issue. An activist's handbook. I had 20,000 copies in my garage when I found out about a large march in Washington. I bought an outdoor booth and trucked the books down to DC. I stood on the Mall in my little booth and watched more than 250,000 people walk by in less than two hours. Every single one an activist. Every single one a demographically perfect match for my handbook. After 100,000 people had walked by and we'd sold only one book, I lowered the price from around $10 to $1 just to prove my point--that it wasn't the book and it wasn't the price, it was the ability of the audience to listen that mattered. This group, in this moment, was there to march, not to shop.

Most people, most of the time, steadfastly refuse to pay attention.

The tragic mistake of demographics and media planning is that they overlook the single most important issue: is the person you're talking to ready to listen?

The web doesn't care

When I first started talking about Permission Marketing ten years ago, marketers asked, "sure, but how does this help us?"

A decade later, marketers look at Wikipedia or social media or the long tail or whatever trend is finally hitting them in the face and ask the same question.

Here's the essential truth:

This is the first mass marketing medium ever that isn't supported by ads.

If a newspaper, a radio station or a TV station doesn't please advertisers, it disappears. It exists to make you (the marketer) happy.

That's the reason the medium (and its rules) exist. To please the advertisers.

But the Net is different.

It wasn't invented by business people, and it doesn't exist to help your company make money.

It's entirely possible it could be used that way, but it doesn't owe you anything. The question to ask isn't, "but how does this help me?" as if you have some sort of say in the matter. You don't get a vote on whether Google succeeds or whether your customers erect spam filters.

The question to ask is, "how are people (the people I need to reach, interact with and tell stories to) going to use this new power and how can I help them achieve their goals?"

12 proven ways to get your post to the top of digg

Well, that was one of them. Put a number in your headline and do a list.

You know, there are a ton of tactics that you can use to increase readership. Plenty of blogs will tell you what they are.

And Rickie Lee Jones knows full well how to record a top 40 record.

Except she doesn't. She chooses not to. She chooses to make a record she loves, instead.

Some politicians know all the tricks. They know how to get a crowd on its feet, every time. And yet, the best politicians don't use the tricks every time. They slow it down, or get serious, or avoid pandering.

One difference between creating something you believe in and creating something that's popular is that popularity seekers follow established steps. Do this, do that, do the other thing... lots of traffic. Do this, do that, do the other thing, a quick boost in Google. DT, DT DTOT and get a standing ovation...

The problem with this, that and the other thing is that you end up with a career filled with it. Instead of creating long-lasting art, ideas that matter and things that spread organically, you end up with a bunch of calculated mini-hits.

Wilson Pickett was a master at creating hits. He had an astonishing output--50 R&B hits. That's amazing. It's one way to make a living, one path.

The other path is to be Van Morrison. To blast open rules, not to follow them.

Write what you believe, not what sells.

The Long Tail and the Dip

Profitpockets583_2


When you launch a new product or service, you have a choice.

It's tempting to go for the bestseller list, to create a mass market hit. This is the box labeled 1 on the tail above. Everyone wants to be here. It's where ego meets profit. A home run. Pixar lives in box 1.

In order to have a bestseller, you must reach the unreachable. Most of the people who buy a bestselling book buy no other book that month, or even that year. The very nature of the top of the list is that you're reaching not just the frequent purchasers and the passionate, but those that only show up for the hits.

The second pocket is labeled, conveniently, #2 (not because it's second best, merely because it's the second one I'm mentioning). This is the profitable, successful niche product. Roger Corman's horror movies, say, or Vandersteen's $3,000 stereo speakers. Not a product for everyone, certainly, but among those that care and are choosing to pay attention, a fantastic choice.

The reason you can make money in the niche pocket is that it costs far less to compete here. First, because there's less competition and the competition is less fierce, and second because it's cheaper and easier to reach your target market because they're choosing to pay attention.

There's a spectacular amount of overhead associated with a mass market hit. You need to buy shelf space and hype and promotion and noise in order to momentarily have a shot at stardom. If you don't push your way into this arena, you'll be ignored.

The third pocket is to own the long tail, to make a small royalty on a huge range of products. That's CDbaby and iTunes and the Garrett Wade tool catalog.

And The Dip? The Dip really kicks in when you're comparing the first pocket to the second.

If you want to compete with all of those folks shortsighted enough to shoot for the big win, you need to invest a great deal of time and money. And very few make it through the Dip... there are far more movies like Speed Racer than Iron Man. Speed Racer got stuck in the trough. It wasn't the best in the world, it wasn't the one the masses chose to see, it lost. Hundreds of millions of dollars spent, but not enough time or talent invested to get through the Dip.

When the masses went to see a movie in June of 08, they had a choice. Naturally, they chose to see the movie that was the best available, the one they wanted to see the most. If you're the third best choice, you lose.

The alternative? The makers of Speed Racer could have spent less money and made a movie aimed at pocket 2, a niche movie where they could have easily made it through the Dip, easily overwhelmed competition for that niche, easily become the best in that world.

Bruce Lee wasn't the best movie star in history. But he was the best kung fu star in history. Different dip.

The most common misconception about Long Tail thinking is that if you don't succeed at pocket 1, don't worry, because the tail will take care of your product and you'll just end up in #2. That's not true. #2 isn't a consolation prize for mass market losers. Mass market losers are still losers. In order to become a mass market star you make choices about features and pricing and quality--and if you lose that game, there's no reason to believe that those choices are going to pay off for a different market.

The long tail doesn't offer a consolation prize. Instead, the wide selection (in every market, not just digital ones) is a collection of smaller long tails, each with its own dip, each with its own winners (and losers). Pick the biggest market you can successfully dominate, the biggest slice where you can get through the Dip and be seen as the best in that world.

There it is again

Chris Anderson of Wired had the insight and guts to discover one of the two most important natural laws of the Net, give it a name, explain it and teach it to the rest of us. The Long Tail is a natural law, the sort of thing that just keeps showing up. Every time I crunch a set of numbers, every time I examine something happening online, I see it again.

(The other one? Metcalfe's Law, which explains the network effect. It's sort of like the long tail, but flipped in the mirror. The more people who connect to a network, the more it's worth--squared. Facebook and fax machines are both network effect businesses).

A lot of people don't seem to understand a key implication of the long tail: Given the choice, it's better to make a hit.

If you have a choice of cutting a top 10 record or making a track of Jamaican polka music for iTunes, go for the hit.

If you have a choice between being on page 30 of the Google results for "Bolivian sushi" or the number one match for "buy life insurance", go for the latter. No brainer.

The problem, of course, is that you don't have a choice. You can give the hit a shot, but it's awfully crowded at that end of the curve.

The implications of the long tail have nothing to do with this false choice. What it explains in a powerful but subtle way is:

  1. Collecting many many products among the tail permits you to amalgamate a market that may be just as big or bigger than the short head. But you need a lot of them. Squidoo is my proof--a profitable site with no real short head. So are eBay and YouTube and dozens of other places. Which is going to be worth more in ten years: the leaky boat of a network TV franchise or the relentlessly growing collection of long tail video at YouTube?
  2. Within the long tail, there are micro long tails. The long tail permits entirely new micro-markets to emerge (exercise clothing, for example) and within that market there are hits and then the tail. It's sort of a fractal curve of new markets living within markets. (Simple example: Amazon enabled an entire eco-system of books on presentations and graphics to emerge).

Aside: In the last few weeks, I've gotten a ton of email about an article in the Harvard Business Review and a companion slash piece in Slate about the Tail. A professor tried to poke some holes, and in my opinion, missed the entire point. The long tail is so clearly a force that the real work is in refining the definitions and expectations of those that are affected by it.

If you don't want to get email

...don't send email.

Donotreply_2

If you send a note to 100 or 1000 customers/clients/prospects/shippers/parents (whatever), be sure to give people a way to reply! I think this is especially important for small organizations or small subsets of lists... Amazon and eBay and others get a bit of a pass.

If it's important enough for you to send to me, it may be important enough for me to write back.

I know it's horribly expensive and inconvenient to work your way through the replies, but aren't the replies exactly what you need to see? What an opportunity.

Email is medium all onto itself. It's the only medium where the human voice appears the same whether it's 'live' or 'recorded' and where there's an expectation that all interactions are two-way.

Here's what you do:

1. Send the email to your permission list, an announcement that's anticipated, personal and relevant.

2. Set up a "reply to" that's a different address.

3. In the email, at the bottom, give people a web address where they can go to give feedback, or give them an email they can write to that will be read by a real person.

4. If they hit reply, the replyto will automatically send the note to the right person.

Getting rigorous about viral video

Mike has a fascinating post categorizing many of the most viral videos of our time.

When a field gains steam, it seems as though everything is sort of random or magical (what does McDonald's have in common with Delmonico's? Not much). While Mike's categories might not resonate with you, I think it's a fascinating place to start the analysis.

Should small businesses whine?

I bought some clothes from a merchant via Amazon. The company that I ordered from shipped the wrong item. I sent it back and was told it will take three or four weeks to process my return. A month!

I wrote back, asking why it would take so long. The response, "Thank you for your inquiry. To answer your question we are NOT an big company like Amazon we are actually a small company, That is why it does take us a little longer than others."

Of course, you'd think a small company could be faster. More important, you'd think the company would realize that I couldn't care a whit about how small they are... I just want good service.

If your small company can't deliver a better experience (in areas people care about) than a big one, why on Earth should someone do business with you? I'm not saying you must have faster service, a bigger website, lower prices and twenty-four hour a day phone support. I'm saying that for some of your customers, you have to be monstrously, demonstrably, better.

The web is a great equalizer. A tiny business can have a better website than a huge one. A tiny business can do better customer support than a big one. A tiny business can write a better newsletter than a big one. Maybe not for everyone, but everyone is for the big companies. The passionate minority is happy to embrace the small company. As long as they focus and don't whine about it.

Small is a weapon, not an excuse.

Scarcity

Iphone190_2 One day, you may be lucky enough to have a scarcity problem. A product or a service or even a job that's in such high demand that people are clamoring for more than you can make.

We can learn a lot from the abysmal performance of Apple this weekend. They took a hot product and totally botched the launch because of a misunderstanding of the benefits and uses of scarcity.

First, understand that scarcity is a choice. If you raise your price, scarcity goes away. If your product is going to be scarce, it's either because you benefit from that or because your organization is forbidden to use price as a demand-adjustment tool. I'm going to assume the former. (But I riff a bit on the latter toward the end)

Why be scarce?

  • Scarcity creates fashion. People want something that others can't have.
  • Lines create demand. People want something that others want.
  • Scarcity also creates word of mouth, because people talk about lines and shortages and hot products.
  • And finally, scarcity drives your product to the true believers, the ones most likely to spread the word and ignite the ideavirus. Because they expended effort to acquire your product or service, they're not only more likely to talk about it, but they've self-selected as the sort of person likely to talk about it.

The danger is that you can kill long-term loyalty. You can annoy your best customers. You can spread negative word of mouth. You can train people to hate your scarcity strategy (Apple did all four this weekend).

Take a look at the guy in the photo. That's the goal. He feels great. He's a hero, at least for a moment, all because he stood in line all night. He gets to talk about it and others (not everyone, but enough) aspire to be him next time. You reward the tribe and you build the tribe at the same time.

The problem is that our kneejerk way of dealing with scarcity is to treat everyone the same and to have people 'pay' by spending time to indicate their desire.

Waiting in line is a very old-school way of dealing with scarcity. And treating new customers like old customers, treating unknown customers the same as high-value customers is painful and unnecessary.

Principle 1: Use the internet to form a queue. If you have a scarce product, you almost certainly know it's scarce in advance. Instead of taxing customers by wasting their time, reward the early shoppers by taking orders online. A month before sale date, for example, tell them it's coming. If you sell out before ship date, that's great, because next time people will be even quicker to order when they hear about what you've got. (And you can do this in the real world, too--postcards with numbers or even playing cards work just fine.)

A hot band that regularly sells out on the road, for example, could put a VIP serial number inside every CD or t-shirt they sell. Use that to pre-order your tix.

Principle 2: Give the early adopters a reward. In the case of Apple, I would have made the first 100,000 phones a different color. Then, instead of the buyer being a hero for ten seconds, he gets to be a hero for a year.

Principle 3: Treat different customers differently. Apple, for example, knows how to contact every single existing customer. Why not offer VIP status to big spenders? Or to those that make a lot of calls? Let them cut the line. It's not fair? What's fair mean? I can't think of anything more fair than treating the people who treat you well, better.

Principle 4: When things happen in real time, you're way more likely to screw up. One of the giant advantages of the Net is that you can fix things before the whole world notices. Try to do your rollout in small sections, so you can fix mistakes before you hurt the very people you're trying to embrace.

Principle 5: Give your early adopters a forum to celebrate. A place to brag or demonstrate or show off or share insights and ideas. Amplify the heroes, which is far better than amplifying the pain of standing in line.

Imagine what the Apple and AT&T stores would have been like this weekend if they were filled with happy customers who had pre-paid, pre-registered and were just dropping in for three minutes to pick up their (very coveted) phones, walking up the VIP line, past all the others just waiting for a chance to buy one...

Hot restaurants in New York violate all five of these principles on a regular basis. So do sports teams and stores that have lines out front in the middle of winter. What a waste.

Even colleges do it. They pretend they've got a meritocracy, but in practice, it's a high-pressure lottery with enormous financial and stress overhead involved.

Yes, there are times when scarcity is mandated (the TSA at airports, for example, or food rations at an emergency site). I know that there are plenty of ways to deal with this scarcity as well. Ways to treat your customers (and yes, they are customers) with more respect, to communicate the situation more clearly and to architect the environment so that people are grateful, not stressed out.

Smart marketers understand that scarcity (intentional or not) is a tool, one that can be used to enhance the story, not detract from it.

What do you do when your systems break?

If you want to enrage customers, just sit idle while they rage against a broken system at your organization.

Someone shipped me a package from Indiana more than two weeks ago. UPS shipped it to my old address, mis-sorted it, shipped it back to Indiana, mis-sorted it before returning it, shipped it back to NY, mis-sorted it, shipped it back to Indiana, mis-sorted it, shipped it back to NY (I'm not making this up and I'm not exaggerating) and yes, it's now on it's way back to Indiana. Maybe.

There have been a dozen phone calls by the shipper and myself to UPS. And every time, the agent and the supervisor insist that there is nothing they can do and that all the correct buttons have been pushed. When pressed, they acknowledge that something appears broken, but "my hands are tied."

Stuff happens in every organization that has a system. You can't eliminate it. The question is: what do your people do when they see 'broken.' What do you encourage/permit them to do?

I'd install a BROKEN button. When you hit it, you can do anything and everything to fix the problem. Train people when to hit the button and then trust them to do the right thing.

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