Familiarity Breeds Relationships

It’s an old folk saying. "Familiarity breeds contempt."

It’s a warning that we can learn too much about each other, and not like what we find.

But, what marketer wouldn’t go to excessive lengths to create more and more familiarity with his company? After all, the more a potential customer thinks about a company, the more likely she is to ultimately buy from that company, isn’t she?

Assuming a salient message, yes.

Evidence indicates that when no one has a obviously superior product, customers tend to buy from the company most familiar to them.

Market share tends to equal share of mind.

This kind of advertising is used by brand builders, and is known as top-of-mind-awareness. The strategy? Constantly remind people of what the company can do for them, then wait patiently for them to need what the company offers.

We call those customers relational. They’re most interested in doing business with companies they trust not to take advantage of them. Marketers hope to build brand recognition with relational customers because it eventually can lead to a long series of purchases from that customer. Brand building doesn't insist on a sale today, but rather builds awareness today for sales tomorrow.

Then there is the other school of marketing.

Direct marketers also build brands, as evidenced by successful companies like Land’s End, or Eddie Bauer. But though their customers can be every bit as loyal, direct marketers aren’t willing to wait for "someday" to acquire those customers. They aren't interested in the value of "getting their name out there." They want the cash register to ring, now.

Direct marketers study the numbers, and adjust tactics to gain minor fractions of advantage.

Direct marketers use call-to-action ads, and assume each time the ad is run, the phone must ring. If the phone doesn’t ring, the ad is a failure. Direct marketers know that every dollar they spend has got to return more than a dollar, and they measure to know exactly how much more.

To make that phone ring, direct marketers primarily target transactional shoppers – shoppers who are simply looking for a great deal today.

A direct marketer closely watches the costs of customer acquisition, so he can stop sending those relatively expensive mailings to people who don’t respond to his offer. The individuals on his “list” either react in the first, second, or fifth mailing (whatever his cost ceiling) or they’re dropped from the list and they don't hear from him again.

But mass media can’t offer that kind of selectivity.

You can’t change the physics of television broadcasting to prevent the people who didn't buy from being exposed to your ad again. You can’t block the view of the billboard only when non-purchasers drive by (and by the nature of the medium the cost of customer acquisition wouldn't change, anyway).

Which is why direct marketers don’t often use mass media. They consider those non-buyers to be "wasted circulation."

And that’s a shame, because mass media provides great opportunities to cost effectively reach those transactional buyers. Of course, the same mass media provide great opportunities to cost effectively reach relational buyers.

And eventually someone always asks, “Can’t we design an ad to appeal to both transactional and relational buyers?”

No. We can’t.

No ad can successfully appeal to two opposite purchase motives. The right thing to say to one is exactly the wrong thing to say to the other.

Which prompts today’s question.

On those rare occasions when a direct marketer uses mass media to attract transactional buyers, is it possible to achieve top-of-mind-awareness, too?

Humm.

Yes. Yes it is. A lot depends on how long those ads continue to run.

Here’s why.

Take an attorney. Call him, oh… call him “Hammering Henry.” Henry traditionally screams into the tube “I’ll fight hard to get you the money you deserve for your pain and suffering. Call me now.”

Henry buys massive amounts of gross rating points. Henry is also the only lawyer advertising on television in his market.

Over a period of time, when Henry’s ad is heavily repeated and no one else bothers to put any message on TV, who are accident victims likely to call? Which name is top-of-their-collective-minds?

It's Henry.

Henry isn’t screaming at the camera in order to build the Henry brand. He's simply doing his best to make the phone ring. He’s telling people who’ve had an accident to pick up the phone and call him NOW.

But, over the months and years that he continues to advertise, how many other names will the average driver remember?

By default Henry IS top-of-mind.

Sometimes there will be a medium that none of your competitors advertises in.

That medium could be the local television station. It could also be the local church bulletin. The medium could be a radio station or an outdoor sign company, then again, it could be a thirty second video running before the feature attraction at the local Cineplex.

Assuming a salient message, if a specific targeted audience is exposed to that ad over and over and over, and no competitors bother to respond, a strictly transactional ad could capture the attention of, and be remembered by, relational buyers as well.

Of course, as soon as competitors start advertising in the same medium, that natural advantage disappears. At that point, more than one solution comes to mind, all shoppers will respond to whichever ad which most closely addresses their needs.

But to a small advertiser with minimal competition, this strategy of being the only advertiser in a business category using a particular medium, could be worth considering.

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Four Stories - Two Outcomes - One Moral

It’s been said, perhaps too often, that nothing happens until someone sells something.

Then again, maybe it hasn’t been said enough.


Example #1 – The concert.

A not-for-profit agency decided to promote a concert as a fundraiser for their organization. They paid the deposit on a minor-league baseball stadium in which to hold the event.

They contacted a great number of family-friendly performing artists, asking them to perform gratis, to benefit the good works of the organization. Several artists indicated interest, but were unable to immediately commit, citing the need to clear their schedules.

The not-for-profit agency was advised to find sponsors for the event, in order to be able to pay for printing, advertising, security, and legitimate out-of-pocket expenses. They determined that they'd have an easier time acquiring sponsorship if they waited until the acts had all confirmed.

Things went along smoothly, until time to start paying miscellaneous expenses.

The not-for-profit group kicked into panic selling mode. Prospective sponsors, feeling the desperation, quite naturally distanced themselves. The family-friendly acts stared asking why no agreements were being put into final form.

The not-for-profit ran out of time, forfeited the deposit on the venue, as well as their credibility with the artists, the venue, and the community.


Example #2 – The study tool.

A husband and wife sold the business they’d built over the last decade for enough money to last the rest of their lives. They signed a non-compete agreement, which prevented them from creating a new business in the same industry.

They attempted to retire. They failed at it.

Feeling the need to do something, they looked for an opportunity in a new industry. The No Child Left Behind Act of 2001 had become the law of the land, and someone mentioned the need for additional study material. How much study material? Enough to provide tutoring for every class taught in all 13 years of public education.

They formed a company to produce self-tutoring study guides. They hired several school teachers to write the individual learning modules.

Our entrepreneurs determined that there would be less pirating of their soon-to-be copyrighted materials, if the study guides were only accessible on-line. They hired two software coders to make the materials interactive.

When they were finished composing, debugging, and making the product user friendly, everyone admitted that they'd created an incredible product. By their estimate, they sunk half a million dollars into this project.

Completely prepared, they started contacting school districts. None of those districts made appointments for demonstrations. Seems those school districts had already contracted to use another company’s product, even though it was still in the early stages of development and wouldn’t be available for another year.


Example #3 – The radio show.

A real estate broker, wanting to enhance his reputation in the community as a credible problem solver, contacted the local talk radio station to purchase an hour of time each week.

Then, as the host of a new call-in show, he sold ads within his program to a mortgage broker, a plumber, a landscaper, and a building contractor. By the time the first program aired, his broadcast had turned from an expense to a new profit center for his brokerage.


Example #4 – The headhunter.

While looking through the help wanted ads, an unemployed salesperson noticed a large number of positions available in a specific narrow field.

On a whim he phoned a few, represented himself as a headhunter who worked in that field, and asked about the range of compensation. He also asked about the employers’ willingness to pay a fee for his services. When enough of them agreed, he offered to send over an agreement.

Then he started phoning companies who employed workers in that field. When he got them on the phone, he told them he had employers lined up who were paying well for people with their particular skills. Did they know of anyone who would be interested in interviewing?

A quick trip to a quick printer 48 hours after reading the first want-ads, and our new headhunter had business cards, letterhead, confidentiality agreements, and contracts to act as agent. He also had several interviews set up for his professional clients to meet with his employer clients, and a company operating in the black within his first 30 days in business.


Finally, the moral.

Sell the concept first. Get commitment, then create the service.

Not only does this guarantee a market for the services you'll deliver, but it also allows you to get your new customer(s) involved in the development of those deliverables. (Which is another way to keep them committed to you, by the way).

There is nothing more important to the success of any new venture than the acquisition of customers.

Without a customer you don't have a business. You have a hobby.

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The Psychology of Pricing

The following stories are true. The author personally witnessed each as it unfolded. There is a commonality, which will become obvious.

1. A young man spends $400 on a new set of tires for his car, and then promptly totals the car. He pulls the new tires from the car and displays them in his front yard with a sign that says “New tires, $10 each.” No one even stops to look at them. After two days he changes the sign to read $5 each.”

2. A convenience store operator decides to get rid of two cases of cans of an off-brand fuel additive which haven’t sold at the recommended $1.67 per can. He puts the individual cans in a basket near check-out marked “Twenty-five cents each.” No one buys even a single can.

3. A music store has a collection of posters for guitarists and keyboard players which explain chord theory. They’re left over from last year’s inventory, and aren’t selling at the imprinted price of $5.95 each. Much like the convenience store owner, the music store owner displays the posters near check out. He prices them at fifty cents each. They don’t sell, and the owner is now considering dropping the price to twenty-five cents just to get them out of his inventory.

Interestingly, the solution is the same in each case.

That solution?

Raise the price.

The young man changes his sign to read “New tires, $50 each.”

The convenience store operator marks the cans “Cleans fuel injectors like nothing else. $4.95 per can.”

The music store tags the posters at $5.95, and adds a small sign to the effect that the poster is a valuable reference for any recording studio.

The results?

The tires sold. The fuel additive sold out. The posters sold out.

Consider it from the perspective of the potential buyer. There’s a psychology of pricing in which the old saying "You get what you pay for" is the lens through which the buyer views the world. Consciously or unconsciously, the vendor conveys the value of his product through its price. If the price is ridiculously low, the goods must be of low worth. But displaying them proudly, at a premium price, conveys value, too.

Everyone appreciates a bargain. No one wants to buy junk.

Would you have any interest in $5.00 tires?

Why would you even consider putting a twenty-five cent additive you’ve never heard of in your car’s fuel tank?

Would you even glance twice at a piece of “art” that costs only a quarter?

You don't want to sell junk, do you?

What’s in your inventory that you need to move? Can you price it aggressively, and move it to a high-profile location?

Drop a note and let us know how it turns out for you.

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Making News

Please note the following story.



The Queen invites Kate to Christmas at Sandringham

By KATIE NICHOLL, Mail on Sunday Last updated at 20:54pm on 25th November 2006

She has already been granted a rare private audience with the Queen, and now Prince William's girlfriend has been honoured with an invitation to Sandringham for the Royal Family's Christmas lunch.

It is the first time an unmarried partner has been invited to the festivities at the Norfolk estate, and it clearly indicates how close Kate Middleton has become to the Royal Family.

However, the 24-year-old has not yet accepted the prestigious invitation, as she struggles to find a compromise if she misses her own family's traditional Christmas get-together.

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We can speculate that somewhere a PR person typed a press release and sent it to the Daily Mail.

What’s the news angle? That someone outside the Royal Family has been invited to Christmas lunch.

Why is that news?

Bluntly? Because the press release says it is.

And the addition of the personal conflict – a young girl trying to decide whether to have spend the holiday with her own family, or the family of her boyfriend - only adds to the appearance of news. (And a photo couldn’t hurt).

There’s a great benefit to publicity. It’s reported by the news department, rather than the advertising department. To the reading (or listening, or viewing) audience news has much more credibility.

What have you done that may be newsworthy? Did you explain your industry to a class of 4th graders? Donated in every blood drive for the last 8 years? Discovered your great grandmother’s teddy bear in a trunk in the attic?

Have you considered releasing the story to the media?

Here’s another thing to consider: many smaller newspapers don’t have a large staff of reporters, and are begging for local news content. If you send the story already written in newspaper style (aka the inverted pyramid), there’s a good chance your story will be picked up as is. The chance improves with a good black and white photo.

Clip the story, run a few photocopies, and add them to your press kit.

Your company does have a publicity/press kit, doesn’t it? If so, a human interest story is a great addition. If not, it’s a great start.

Got a story? Will you make an effort to find or create one?

What’s holding you back?

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