You’re The Customer Too, Dummy

We haven’t had a screed in a while in which I point out the on-going silliness of many of us in marketing, so let’s start the week with one! There was an article in the eMarketer newsletter about a recent study. I’m just going to quote it directly:

In an August 2018 survey of 103 ad agencies, publishers and marketers in North America conducted by Pressboard, 27.2% of respondents said they use an ad blocker to block ads on the websites they visit. These figures are similar to those found in the general population. According to eMarketer forecasts, 25.2% of US internet users will use an ad blocker in 2018.

Pressboard’s research showed that advertising professionals are more likely to rely on their friends than on ads when they decide whether or not to purchase a product. Nearly eight in 10 respondents (78.6%) said that word-of-mouth from friends influenced their recent purchase decision. Just fewer than 16% of those surveyed reported making a purchase after being influenced by banner ads.

I hope you can see immediately why this precipitated my response. It’s might be easy to shrug this off. I mean, what does it really say? Marketing and advertising professionals are humans too? How is that a surprise? Well, it’s not, but it does point out a fundamental problem. Apparently, when they put on their business hats and get to work they forget how they feel as consumers. After all, if they react badly to banner ads and rely more on word of mouth, why do they persist in figuring out how to invade the consumer’s website use in as many ways as possible? They use ad blockers because, to paraphrase Barry Goldwater’s campaign slogan, in their hearts, they know it’s right. The state of web marketing is akin to that of an Arabian bazaar or a NASCAR driver. Ad blockers at least make the web tolerable.

The message to any of us is that we’re customers too. We need to think like customers and not as marketers when we’re figuring out the best ways to interact with our audiences. How can we solve their problems? How can we deliver information that’s useful to them and not just scream at them? Keep that in mind and not only will your customers be better off, but you will be as well. Make sense?

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Everyone’s Got A Deal

A very wet Foodie Friday here but that won’t deter me from posting a few thoughts about what I think is a post-value world. What I mean by that is that value seems to be more of a given today that it did a few years ago. I also hope by now you’ve learned the difference between value and cost because your customers certainly have.

In the food business, you see this playing out in spades. Everyone has a deal, whether it’s $1 menu items or $5 foot long subs or free cheeseburgers from using an app to order. I suspect that many of these items are loss leaders. They certainly can’t be maintaining the margins which are already slim in the restaurant business. They’re designed to build traffic and that traffic will buy other, more profitable items.

The problem with this is the restaurant business is one where the supply has outstripped the demand. Chain restaurants are growing faster than the overall population and there aren’t enough hungry folks out there to support them all. Because deals are so prevalent, it actually frees the consumer to decide if they place more value on the price of the meal or if they value higher quality ingredients or better service or just the overall dining experience an establishment offers. More often than not these days, the price is less of a concern. Why? Because everyone’s got a deal!

What does this mean for your business? It means you’ve got to continue to get beyond thinking about cost in terms of how your customer values your product or service. The health of the business depends on more than a lot of customers. Fewer, more profitable customers seem better to me than a lot of slim-margin ones. Ask K-mart, whose profitability peaked in 1992,  if the low-margin, high volume strategy can work over the long term. Someone can always compete on price (Walmart).

The “deal” I try to offer to my potential clients is the highest level of value. That value is defined in THEIR terms, not mine. If all they’re after is a low price, I’m probably not going to be working with them. If what they want is a profitable result that advances them to their goals, well, that’s my deal. What’s yours?

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Filed under Consulting, food, Thinking Aloud

There’s No “I” In Storm

One more bit of thinking today as Hurricane Florence approaches the Carolinas. While it’s easy to see the eye of the storm in the satellite photos, the message here on the ground is that there is no “I”. Let me explain and tell you why it’s relevant to your business as well.

Riding this thing out seems to be a communal effort here. My neighborhood has a closed Facebook group and it’s been overwhelmed with offers from neighbors offering to help one another with everything from cleaning up yard waste to clearing storm drains to fixing generators. There are constant reports of where there is bottled water or gas available to buy (both are hard to find) as stores’ stocks are replenished. In short, while everyone is looking after their own storm prep, they’re doing so with an eye to the community as a whole.

That’s something that gets lost in business sometimes. Each of us is very focused on our own success and we sometimes lose track of the whole. I don’t just mean the entire enterprise (how well is the business doing) but also of our co-workers (how well are the people doing). Too many of us are selfish. We spend time self-promoting. We try to climb over others on our way up the ladder, not recognizing that doing so creates the envy and resentment that can poison an organization.

The truth is that while of course business is competitive, at its best it’s also collaborative. You can’t succeed, either as an individual or as a business, without the trust and support of others.

We’ll get through this storm just as we did the last one. That, in part, will be due to good preparation and help from one another. As with the storms that happen in business, it’s much better than trying to ride it out alone, don’t you think?

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Hurricane’s Comin’

I went to bed last night after watching my favorite weather forecaster give a rather dire outlook for this week. When I moved to North Carolina I opted for hurricanes over blizzards, I guess, and now it appears that one is headed right for us.

I ran out earlier to pick up a case of water bottles just in case the forecasts are accurate. The local Walmart had nary a bottle anywhere, and the long aisle of empty shelving reminded me that I wasn’t the only person who had this idea four days ahead of when this thing is supposed to pay us a visit. I’ve got lots of ice to hold the food and lots of wine to hold me so I think I’ll be fine.

On the drive home I thought to myself that it was pretty cool how everyone is going about their business and preparing. There weren’t any D batteries at Walmart either and there were lines at the gas stations I passed. People are trying, as we were constantly told in the Boy Scouts, to “be prepared.” Which leads me to today’s screed.

There is a hurricane headed for your business. It might not be on your radar yet or you may have red flags raised over your beaches, but you can rest assured that at some point a massive, devastating storm will hit you. The thing is that you need to have a disaster place in place and preparations made long before that time arrives. Was Chipotle ready for the massive e. coli outbreak? It almost destroyed them and they still haven’t recovered. What if the power grid fails for whatever reason and all of your refrigerated inventory must be thrown out? What’s the plan to deal with that and are there financial plans in place to recover?

You need a crisis response team and a disaster plan. Your key players from all your relevant business functions – operations, public relations, marketing, quality assurance, legal, etc. – have to have been briefed on the plan long before it’s executed. I’ve written before about how my organization’s web servers failed after 9/11 due to a lack of dust filters that forced the shutdown of the emergency power we were careful to have at our disposal. When the crisis had passed, we rewrote the disaster plan to account for yet another “just in case.”

Hurricanes happen. The question isn’t how to prevent hurricanes but how best to prepare and recover from any damage they cause when they do. I’m ready for this one. Are you?

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Filed under Helpful Hints, What's Going On

The Great Customer Gulf

Foodie Friday is here at last and with it comes some great information from Earnest Research. My data tells me that screeds about research don’t score particularly well with many of you but I think what the study I’m highlighting today is an excellent reminder of a basic business fact that pertains to the balance between keeping customers happy and attracting new customers. Read on!

What the study examined was the top 10% of various restaurants’ customers by the frequency of visit and how that compares with the average frequency. As reported by The Franchise Times, the gap can be enormous:

At McDonald’s, that top 10 percent customer went 86.5 times each year on average. That’s 309 percent more than the average customer, who went 21.1 times through the year.  Even the most frequent Starbucks customers don’t reach that. The top 10 percent of customers by frequency went 80.7 times—though they visited 374.5 percent more than the average customer who stopped in 17 times.

Earnest researchers checked in on a handful of brands for this data (see chart, right). In green are national QSR chains, orange is national fast-casual restaurants and blue represents chains that are regional but have a traditionally strong customer base. While the numbers jump around a lot, the highest frequency customers come between three and five times more than an average customer.

Your reaction to that may be a large “duh” since the Pareto Principle is probably burned into your head by now. What impressed me, however, was the size of the gap. If you factor in “average order value”, the amount of money spent by the top 10% is huge even though as it turns out they tend to spend a bit less per trip. In real terms, for example, the difference between a top customer at McDonald’s and an average one means a $708 annual value compared to the average customer’s $187.

Money spent to keep a customer happy is money well-spent. Money spent to get a customer to become a more frequent customer is even better. While there’s no question that we all have to keep adding new customers to our base, once they’re there, we need to shower them with love, great service, and incentives to grow their engagement with you. The data shows it’s true in the franchised restaurant business and I’m pretty sure it’s true of yours too.

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Mental Images, Mental Mistakes

Shut your eyes and picture the typical “All-American” family. Go ahead, I’ll wait. OK – have that picture in your mind? What does it show? Mom, Dad, and a couple of kids? My guess is that if you’re Caucasian so is your picture, and I’ll bet the typical family is also quite heterosexual.

Here’s the problem with your mental image. According to the 2010 U.S. Census, only one in four American families matches that description. That was almost a decade ago and I think we’re all aware of the changes that have been happening with respect to familial, and societal, composition.

If you’re in marketing, that mental picture has some fairly important implications. It might impact how you make creative for your campaigns, how you plan your media, and how those decisions provide relevance and meaning to consumers. For an example, the folks at HP brought together 13 Chicago families of different races, ethnicities, ages, genders and sexual orientations. They were split up and another group of people was asked to reassemble the families.

Guess how many people could put the families back together? Exactly none. In general, they tried to find groupings of the same race, different gender, and heterosexual. Oops. But this has implications even for those of you out there who aren’t in marketing. It speaks to the broader issue of preconceived notions and how we can’t just form opinions without adequate evidence. Some folks are seemingly determined never to let the facts get in the way of a good story, whether they’re reporting something to their boss or just ranting among their friends. It’s really a bad idea.

How often do a new employee or a business prospect walk into the room and you make a snap judgment before they’ve even uttered a word? We all do it, unfortunately. In fact, it’s sort of a “truism” that hiring decisions are made quickly. Well, according to a research study, some of the interviewers did make snap decisions about candidates. Roughly 5% of decisions were made within the first minute of the interview, and nearly 30% within five minutes. I think that has to do with the preconceived notions in the interviewers’ minds about who they saw in the job as well as who they saw in front of them.

Rip up those mental pictures as best you can. Do the research, seek the facts. and THEN form the pictures. Ready, fire, aim rarely works, don’t you think?

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Filed under Huh?, Reality checks, Thinking Aloud

Red Delicious

This Foodie Friday, let’s consider the Red Delicious apple. Until very recently, it has been the dominant apple in orchards all around this great nation of ours. According to the US Apple Association (as quoted in the NY Times), it has recently lost its dominant position to the Gala, and Granny Smiths are closing fast. You can probably hear Honeycrisps off in the distance too.

I know what you’re wondering: is this some sort of tangent brought on the by the start of football season (Go Blue!) and, therefore, the fall apple season? Not really, because there is a business lesson in the fall of the Red Delicious that can be used by any of us.

Have you ever eaten a Red Delicious apple? If you’re not sure, buy one the next time you’re at the market. They will be easy to spot. They’re very pretty – your prototypical apple. It’s a lovely deep red and their skins are generally unmarked. If you were trying to find an apple to use in an art class, the Red Delicious would top your list. So what’s the problem?

Bite into one. What do you get? Not much. They are bland and almost flavorless. That skin is so beautiful because it’s too thick to bruise. Oh sure – you get a blast of sweetness but there really isn’t much of a flavor there, especially when you compare it to pretty much any other apple. While people do eat with their eyes, at some point what they’re eating gets to their mouth and the food needs to deliver on the promise made by how it looks. That’s true of any product or service. Nice packaging, wonderful design, or a fancy sales brochure may attract a large consumer base but if what’s delivered doesn’t fulfill the promise made, it will be one and done. Either you’re solving the customer’s problem and providing superior value or you’re not, and it doesn’t matter how pretty you are.

Don’t be the Red Delicious of your business sector. It may be nice to be number one (and it’s probably pretty profitable for a while), but over time, it’s unsustainable if all you are is pretty. Substance matters, don’t you think?

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Filed under food, Reality checks, Thinking Aloud