October 6, 2008

Ford Finally Gets It… Really!

It's a rare day when I find a U.S. Automaker doing something in their marketing that's right… really right.  According to CNN, Ford is introducing a new feature geared towards parents of teenage drivers. It's a special computer chip encoded key that limits the maximum speed of the car and nags the driver to death if his or her seat belt is not on.

Finally, somebody is listening to parents!

Amazing they got it right… and equally amazing it took this long.

So what's unique about this marketing move? Three things:

1) It targets a very specific, well define, target customer - parents with teenage drivers

2) It solves a problem for that audience that they really care about– keeping teenagers safe from their own, sometimes not so good, judgment.

3) It's unique

From a marketing standpoint, this is a very good combination. It's a formula that any company in any industry can replicate.  Target a specific customer segment, Solve their problem, and do so in a unique way.

This formula / checklist is something that I personally look for when looking at candidates for our Bookmercial publishing service — after all it's pretty much impossible to create an excellent Bookmercial if there is nothing unique about the author, the company, or its products.

It's also a part of my mental checklist of what makes marketing good when I serve as a guest expert for television and radio broadcasts (Victor Cheng in the News).

I encourage you to follow Ford's example (OMG can't believe I just said that… but hey, I gotta give credit where credit is due) and: 1) target a specific customer segment, 2) solve their problem, and 3) do so in a unique way.

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Filed under Case Studies by Victor Cheng

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September 30, 2008

The Wall Street Bailout: A Credibility Crisis of Epic Proportions

Yesterday's defeat of the "bailout" package isn't just a financial crisis, it's a credibility crisis of epic proportions.

Economists unanimously agree that doing nothing will be a disaster (e.g., serious recession). While the current "bailout" proposal is not perfect, it will make a significant difference.

(As a side note: While I'm known primarily for my expertise in marketing, I have a degree in Economics from Stanford and one of my professor's worked for the Federal Reserve as Greenspan's right hand guy)

The rescue package was supported but top democrats, top republicans, the treasury, the fed, and the President… in other words the entire political establishment was behind this one.

What did Americans say to that?

In no uncertain terms, they said….

WE DON'T TRUST YOU

Bush has a 28% approval rating. Congress has a 18% approval rating. Ouch!

The problem is this financial rescue package is VERY complicated. Unfortunately, very complicated problems often require similarly complicated solutions.

Now if credibility and trust were high, the average American would be much more likely to say… okay, I don't understand this Wall Street thing entirely, nor do I understand this package, but you (Congress, the President) guys understand this stuff, we trust you, so if you say it's important, let's do it.

(Yeah right…)

But, look what happens when credibility is totally shot. Trust isn't there. Americans aren't going to just "take their word for it" and demand an explanation… but to explain the problem and the corresponding solution can't be done in a 15 second sound bite.

Having done a number of television interviews on Fox, I was quite surprised at how little time you get on air. As a guest expert on marketing, most of comments lasted about 1 - 2 minutes… maybe 3 minutes tops.

In preparation for my first live national TV appearance, I found myself spending 2 hours figuring out my opinion on a particular issue and then 4 hours figuring out how to say it in 4 sentences.

I found it surprisingly difficult to do. I would jot down some notes, say it out loud while timing myself, and found myself taking 4 minutes… instead of 2. Clearly not acceptable.

Keep in mind these were for relatively speaking "minor problems" (e.g., some Fortune 500 company making some interesting marketing related decision)… and not rescuing the U.S. economy.

So what's the right approach?

A DETAILED EXPLANATION + A CREDIBLE SPOKESPERSON

To "sell" a complicated idea (or product or service for that matter), the right combination is 1) credibility, and 2) a detailed (yes easy to understand) explanation.

The perception of the "bailout" is that it's a "bailout"–a way of taking the hard earned dollars of the average Amercian to "bailout" a bunch of rich people on Wall Street.

The average Amercian does not understand WHY the Wall Street chaos affects them on Main Street… and HOW they two are related. They don't understand this because nobody has been able to clearly explain it to them. Whose fault is it when the "customer" (in this case voters) don't buy?  Well, it's always the marketers fault… in this case our political leaders.

Requirement #1: A Clear, Yet Detailed, Message

When I explain the Wall Street situation, I explain it like this. The US economy consists of a bunch of dominoes. When the first domino is tipped over, it impacts the 2nd, 3rd, and so on.

In good times, this is beneficial. A few years ago, when housing prices were rising, everyone benefited — there were more loans, more credit, and more consumer spending. The economy grew.

But, this same domino effect is true in tougher times too. When the first domino falls, in this case the collapse of real estate prices, it knocks down the 2nd, 3rd and 4th dominoes.

When housing prices collapsed, it wiped out the collateral that supported mortgages. This wiped out many retail banks. Of course the retail banks themselves borrow money from "wholesale" banks that you find on Wall Street… so they got wiped out too.

These wholesale banks bought insurance from companies like AIG to protect themselves from these problems… so the insurance companies are getting hit too.

So you can see how these dominoes fall one after another - like clockwork. The next domino in line to fall is YOU - the average American on Main Street.

Here's why.

When the Wall Street banks are on the verge of being wiped out, it's impossible to lend money they DO NOT HAVE to the Main Street banks that you do business with every day. If your local bank does not lend money to you, to your employer, to your employer's customers, this is a serious problem.

Imagine a world with no mortgages, no credit cards, no student loans, no business loans, no inventory loans, no car loans… what would happen to your job?

Would your employer's customers do not have access to credit, are they going to buy from your employer?

If customers do not spend, employers can't pay employees and therefore can't provide jobs.

This is how the US Economy works… the "domino effect". Now, the problem is YOU are the next domino. This rescue package is about ensuring the availability of loans to YOU, YOUR employer, and YOUR employer's customers.

I think this is a much clearer and relevant explanation of the rescue package than what I'm hearing on the news today. The average American does not care about something as abstract as "stabilizing the financial markets".  What the heck does that mean to me?  (It's a "theoretical" problem… that most Americans do not feel comfortable spending $700 billion "real" dollars to solve.)

But a clear message must show relevance to the audience… must explain to them what this means to them in their situation.

But a clear, relevant message is not enough.

Requirement #2: A Credible Spokesperson

To be fair to President Bush, he did get on national television and attempted to explain how the Wall Street crisis impacts the average American. While I think his explanation could have been a lot clearer, he had a different problem. His credibility is TOTALLY SHOT.

With a 28% approval rating and a "sky is falling" (e.g., non-existent Weapons of Mass Destruction will be used to harm Americans) reputation, very few people believe him. So it did not matter WHAT Bush said, because without credibility nobody pays attention.

This is why to sell any complex idea — rescue package, product, or service– you MUST combined CREDIBILITY and a DETAILED EXPLANATION.  Without credibility, nobody believes you. For something complicated, a 10 second explanation does not cut it.  CREDIBILITY and DETAILS are critical.

Unfortunately for Washington, they are sorely lacking both.

On a side note, all of the ideas I've mentioned above is the subject of my book Bookmercial Marketing: Why Books Replace Brochures in the Credibility Age.

My on-going fascination with credibility and long-format communication methods is what prompted me to invent the Bookmercial. It's a marketing tool that 1) gives the author immense credibility, and 2) provides a "long format" communication format to complicated ideas.

It's not the appropriate tool to use in every case, but if credibility and details matter in communicating effectively with your audience, then it's quite often a very powerful tool to use.

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Filed under Marketing Credibility by Victor Cheng

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September 27, 2008

Every Mistake is a Deja Vu Mistake… Just Ask Warren Buffet

It's my firm belief that every mistake you will ever make has already been made by someone else previously. Hence, every mistake is in the grand scheme of things a deja vu mistake.

The trick of course is to find the person who has already made the mistake you're on the verge of making… learning from his/her misfortune so that you may prevent a disaster yourself.

The Wall Street Crisis

Let me use the recent Wall Street crisis as an example. During the several television and radio interviews I gave on the crisis I mentioned that this crisis is not a new one. In fact a crisis very similar to this happens ever 10 - 15 years. The banks generally lend more money than is wise (and in the process borrow more money themselves than they should), "stuff happens" that wasn't anticipated, there was no margin of error given how aggressively these banks were managed, and the banks hit a major crisis.

Suddenly, the get financial conservatism religion, stop doing stupid things, and do things right. Of course this big problem amongst all banks is they have a really short term memory. After many years go by, and the last crisis has been forgotten, they get greedy and overly aggressive all over again. Historically this happens every 10 - 15 years or so.

But in banking at least, history has repeated itself quite consistently.

Here's a very interesting commentary from someone who should know… It's a "must read" even if you're not really into finance, wall street or banking.  There is a very important lesson at the end of this post that's not to be missed.

Remarks by Warren Buffet

The banking business is no favorite of ours. When assets are twenty times equity - a common ratio in this industry - mistakes that involve only a small portion of assets can destroy a major portion of equity. And mistakes have been the rule rather than the exception at many major banks. Most have resulted from a managerial failing that we described last year when discussing the "institutional imperative:" the tendency of executives to mindlessly imitate the behavior of their peers, no matter how foolish it may be to do so. In their lending, many bankers played follow-the-leader with lemming-like zeal; now they are experiencing a lemming-like fate.

…Month by month the foolish loan decisions of once well-regarded banks were put on public display. As one huge loss after another was unveiled - often on the heels of managerial assurances that all was well - investors understandably concluded that no bank's numbers were to be trusted.

…risk is systemic - the possibility of a business contraction or financial panic so severe that it would endanger almost every highly-leveraged institution, no matter how intelligently run.

My Comments on Warren Buffet's Remarks

I think Buffet's remarks hit the nail on the head. Translated, he says banks generally take on way too much risk and the slightest hiccup can cause a major financial disaster.

What I found most amazing about these remarks is the Warren Buffet made them in the year 1990. They were made in the Berkshire Hathaway 1990 Shareholder Letter in response to the crisis in banking in 1990.

Like I said, every mistake you're about to make has already been made by someone else previously. The trick is to find that person and learn from them BEFORE you make the same mistake.

Incidentally, the first two chapters of my book Bookmercial Marketing was based on the major marketing mistakes I made earlier in my career. To be fair to myself, everybody was making the same mistakes at that time.  So I admit, I was one of those lemmings that Buffet was talking about.  But I figured out what we were all doing wrong at the time (and most people continue to do wrong), and show my readers how to avoid these major, yet quite common, marketing mistakes.

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September 26, 2008

And The Winner Is… JP Morgan

In the midst of the credit crisis, JP Morgan Chase has been quietly rolling up major assets in investmet banking and retail banking. They bought Bear Sterns with government financing. They just bought Washington Mutual and will overnight have a massive retail branch network in the West–something they've been trying to do for decades.

So what's the marketing lesson in all of this?

There are two:

1) You can't market crap… just ask the CEO of Washington Mutual. I was a customer (until I pulled all my money out about a week ago… so yes, I was part of the run on the bank) and I thought it was ironic that upon logging into my online banking account, there was a letter from the CEO saying my money was safe.

Like that message was believable. Apparently, I wasn't alone. In the past 10 days or so, WAMU customers withdrew approximately $16 billion in deposts.  Geez, talk about a run on the bank.

So if your product "stinks" (and in this case I'm referring to WAMU's balance sheet), no amount of marketing is going to help. Forget the marketing. Fix the freakin product.

2) In a tough economy, there are ALWAYS opportunities… Just ask the CEO of JP Morgan Chase.  When the dust settles (and it does settle), JP Morgan Chase will have roughly doubled its Investment Banking business in terms of revenues, size, reach, distribution… and have done the same in retail banking.  In other words, when things settle down, JP Morgan Chase will have twice as good a "product" as they did before the current credit crisis.

It's a whole lot easier to market a great product that a lousy one. 

 

So my lesson for today, is this: Marketing is not just about communicating to your market about the virtues of your product (like the Washington Mutual CEO's attempt to tell customer their money was secure). It's just as much about making the factual reality of your products better.

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Filed under Case Studies by Victor Cheng

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September 25, 2008

How NOT to Market a $700 Billion Bailout Package

Price Tag: $700 Billion

What You Get: Unclear

This is not a great way to market a $700 billion bailout package. Wall Street is in turmoil. Much of Paulson's bailout proposal has merit based on what I learned about Economics at Stanford University.

BUT, how the proposal was communicated to the average person on the street was terrible.

Here are several tips for how this bailout could have been marketed differently:

1) CHOOSE YOUR WORDS CAREFULLY. Don't call it a bailout. Bailout implies the average person is paying for someone else's mistake. That's not a benefit to most people regardless of the price.  Something like a "Credit Availability Program" (made that up off the top of my head) would be much better…which leads me to my next point.

2) EXPLAIN THE BENEFIT. You have to explain to your audience what they get for their money. As it relates to the "Credit Availability Program", something like this would make sense:

"We're going to invest up to $700 billion to make sure credit continues to be available to American consumers and businesses.

Without the availability of credit in our economy, many parts of our economy would grind to a halt. Without car loans, the US auto industry would shrink in half overnight. If your employer's customers can no longer use credit cards, fewer will buy–leading to layoffs."

3) CREDIBILITY. In President Bush's prime time address, he explained what the bailout would mean to the average person. He warned of the major negative impact it would have on the economy if the bailout package did not pass. BUT, the problem is even though he is right (this time), few people believed him. He had already blown his credibility on the whole Weapons of Mass Destruction argument for the Iraq war.

The fact that he's actually right this time, is almost irrelevant.  Let's face it economics is a pretty abstract topic. There's nothing to see, hear, or touch–it's just an idea. When you're in the business of selling an economic program, all you're really doing is selling an idea.

When it comes to selling an idea, the "sale" starts with selling yourself–first.  Then if your audience believes in you, they will consider what you have to offer with an open mind.

Incidentally, this is why I originally developed the Bookmercial as a way to give myself (and now clients) a serious credibility boost in sales and marketing activities. I've found my own Bookmercial to be a very effective tool in establishing credibility with the media and with prospective clients.

In the case example above, even if you did the first two steps: 1) Choose your words carefully, and 2) Explain the benefit, without credibility your effectiveness gets blunted.

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Filed under Marketing Credibility, Marketing Fundamentals by Victor Cheng

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September 18, 2008

Marketing During a Crisis

A few days ago, chaos reigned on Wall Street. When Lehman's CEO made his earnings call announcement, I was in the satellite studio for the Fox Business Network standing by for a segment on how banks should market themselves in a crisis. My segment got pushed back by a few minutes while Fox broadcast the Lehman call live.

Little did I know at the time that that conference call would mark the beginning of what has been a extremely chaotic few days on Wall Street. If you ever find yourself in a crisis, the following segment on Fox Business, where I appeared as a guest expert, covers this topic.

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This is So Cool…

I saw the coolest thing on the NY Times site today. It's a desk that's meant to be used while standing that has a treadmill underneath. The idea is you let the treadmill run all day at the leisurely pace of 1.5 miles per hour. By my estimate of when I used to live in New York, that's about about half the speed of a New Yorker walking to work.

This apparently burns about 150 calories an hour, so over seven hours at your desk that's close to burning 1,000 calories a day. The average person would lose two pounds a week by doing this.  It's a pretty unique product (which incidentally is a big secret to word of mouth marketing… offer something very unique.)

Take a look at the photo yourself.  Here's the article:

I Put in 5 Miles at the Office

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Filed under Positioning by Victor Cheng

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August 15, 2008

The World's Greatest Niche Market

I read the most hilarious marketing case study article in the New York Times the other day. It's from an article titled Music Retailer Thrives Serving Captive Audience. In an age of audio downloads and all kinds of techncial innovation in the music industry, the article describes how a music retailer has built a thriving music business selling audio cassettes–yes, audio cassettes.

For those who have difficulty remembering what that is, it's how music was stored before iTunes, mp3 files, and audio CDs. Yes, before all of that there was the lowly audio cassette.

So who in the world would buy such a thing?

In two words: prison inmates

Yes, for the 2.3 million inmates incarcerated in our country's prisons, they can only buy music on audio cassettes. They  areforbidden from having electronic devices, so sorry no iTunes. They aren't allowed to use audio CDs because those can be turned in an edged weapon. So if you love music and you're doing time, you don't any other choice. You can only buy audio cassettes.

And apparently, there's only one company in the world that will sell it to you. You gotta love a monopoly and you gotta love a business person who finds a target customer, figures out their problem, and then solves it. It's the oldest, simplest, and continues to be the single best formula for creating a profitable business.

The reason I talk about target market selection so much is because it's the one marketing decision that impacts all of your other sales and marketing activities. If you pick a target customer that barely has a problem, has multiple choices of vendors, and perceives no difference between what you have to offer versus your competitors, life's going to be pretty darn hard in the sales and marketing department.

Target customer selection and picking the right problem to solve for that customer is quite fundamental to the process. Most of our Bookmercial clients have usually figured this out years before we ever meet with them. Yet in the process of creating a Bookmercial for our clients, we often look at the company with a fresh set of eyes–seeing what their customers see.

This gives us a unique perspective. The kinds of clients we routinely turn down are ones where there's nothing unique about the company. They don't target a unique niche. They don't offer a unique product or service to their market. In short, there's nothing different about them whatsoever.

It's darn near impossible to create an effective Bookmercial in  these cases (effective defined as something that will measurably increase sales and profits). This is also why the topic is somewhat top-of-mind for me these days. A business that's unique in some way, shape, or form is much easier to market than one that's not.

When you're unique, you'll find your marketing costs go down and your response and closing rates go up. Uniqueness is an enormous marketing and financial advantage.

While picking a niche market is not the only way to be unique (The others are solving a unique problem ignored by others, or solving a common problem in a unique way), it's vital that something in the business is unique.  Once you have that, the next step is to communicate this uniqueness to your target audience aggressively, frequently, and consistently.

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Filed under Positioning by Victor Cheng

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July 31, 2008

Solving the "Toothache" Marketing Problem

Seth Godin recently blogged about solving the marketing problem that dentists have with trying to market toothache repair services. From a marketing standpoint, this is a very tough audience to target due to the timing problem.

Nobody can identify which people are about to have a toothache, which makes it tough to reach them. Incidentally, this problem occurs in many businesses, including plumbers, surgeons, lawyers, network security consultants, CPAs that specialize in IRS audits, and any other business that deals with solving the unexpected problem.

Here are a few of the extremely clever examples that I've seen.

The first was a 6" x 10" wide bright yellow postcard that was also a sticker. It's "What to do in case of a water heater emergency" sticker.

I've included a black and white version below:

It's really a very clever piece of marketing. At first I thought that it was a consumer advisory label from my local utility company. It looked exactly like something they would send me. I had to do a doubletake until I realized (after I put it on, incidentally) that it was actually an advertisement, placed in precisely the location I'd be looking at if or when I had a problem.

This ad drives their competitors insane. I know this because I did have a water heater leak, called the company I've used for years first, and the sales guy saw the sticker and was visibly flustered–I guess he sees his competitor's ad a lot.

The underlying principle of this strategy is to tie your marketing for an "emergency" type problem into some type of leading indicator. In this case, the need to replace a water heater is precipitated most often by a water heater leak.

Another example I encountered was about a very marketing savvy personal injury attorney. In his city, he bought rights to magnetic signs on all the doors of all the tow trucks in town. Why? He realized that most people who get into a serious car accident end up calling a tow truck before they ever consider calling an attorney.

As you're sitting on the curb waiting for your car to be towed feeling that pain in your neck, you're staring right at his ad.

It's brilliant!

Of course, not every business lends itself to this kind of specific tactic. But here is a tactic that can easily work in every business that follows the same idea. The approach I'm talking about is using automated marketing follow-up.

Get your prospect to request something free from you, a Bookmercial, a white paper, audio, video, or webinar replay. As part of the offer, include the ability to receive a free printed newsletter, email-based tips newsletter, fax broadcast alert service, or other type of ongoing useful communication vehicle.

Then use the ongoing follow-up piece to continually stay in front of your prospects. It's important that this ongoing communication has real value in it–otherwise it'll get ignored.

The idea behind this approach is to "catch" the prospect right around the time he or she has a problem that pops up that your company's products or services can solve.

So if your company sells network security consulting services, you could have a newsletter on how to prevent intrusion attempts on your network. This is a great excuse to stay in touch with your prospects while demonstrating the value of expertise. If they get hacked one day, and receive your regular and trusted communication the next, you've "caught them" at exactly the right time… making it that much more likely to get the sale.

Follow-up at all times is critical. The top performing sales pros will do this by phone. The best business-to-business marketers do this through media. I recommend doing both whenever possible. Follow-up is a proven way to solve the marketing timing or "toothache" marketing problem.

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Filed under Lead Generation by Victor Cheng

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How to Market Pole Dancing… Yes, Pole Dancing

A recent New York Times Article, From the Erotic Domain, an Aerobic Trend in China, talks about a interesting marketing case study that's actually relevant to all of us. It has to do with an entrepreneur who decided to offer pole dancing classes to Chinese women as a form of exercise.

Like a modern day equivalent of the Jazzercise craze in the 1980's here in the United States, some marketer cleverly repackaged pole dancing as a great way to get a workout. Apparently, and I have definitely not tried this, it takes quite a lot of strength to hold up your body weight on a pole (serious!).

It turns out that the Chinese do not have any stigma attached to pole dancing. In the United States, we associate it with the seedier side of society. But in China, it's just, well… a pole (like the kind you'd attach to a stop sign)

So what exactly does pole dancing give its Chinese students? Well, they get a good workout, get an interesting "war story" to tell, and get to pretty much irritate all the conservative people in their lives (e.g, parents).

For renegade women, what's not to love?

In all seriousness, there are two important marketing lessons here.

1) In marketing any widget, it's not about the widget. It's about what the widget does for a customer that matters. In this case, the pole is largely irrelevant. However, being perceived as a renegade is very relevant.

This is in a twisted sort of way along the same lines of "Nobody ever got fired for buying IBM." IBM doesn't sell hardware, software and consulting services. Instead, IBM sells the feeling of reassurance.

The pole dancing school does not rent you access to a really stable poll. They provide you with an incredible feeling of being unique, different and trendy.

The question to ask yourself is what feeling are you selling to your clients? As the ridiculously successful "Nobody got fired for buying IBM" campaign (from decades ago, no less) demonstrates, even when you're selling business-to-business, you're still selling feelings to the decision makers in those businesses.

2) The second big lesson is around targeting. Target market selection is one of the most overlooked, haphazard decisions made in many companies. It's vital that this targeting decision by made quite deliberately. And in today's uncertain economy, it's important to revisit that decision and make adjustments from time to time.

In a strange way, when a client of ours commissions a Bookmercial, the issues of feelings and targeting come up quite early in the process (though never in the context of pole dancing!) After all, why do our clients find our Bookmercial books so helpful early in the sales process?

It builds instant credibility and feelings of trust much more quickly than a cold call or a brochure ever could. Next to having your own television show, publishing a book is the  best way to build trust with prospects quickly.

Is this really any different than what IBM or the pole dancing school in China sells?  At the end of the day, we're all in the selling of "feelings" business. The only question is whether or not you realize it.

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Filed under Blog, Marketing Fundamentals by Victor Cheng

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