Why the accepted notion of ‘Brand Loyalty’ is rubbish

Why the accepted notion of ‘Brand Loyalty’ is rubbish

Mar 6, 2017 | Branding, Customers, Marketing

Brand loyalty, and one step further, finding those few  users of the brand who will use no other, and demand their networks do the same, is the holy grail of most marketing. It comes up in almost every marketing brief ever written.

However, there is almost always a flaw in the logic I see used.

Heavy and exclusive use of a brand is interpreted as brand loyalty, and occasional users are disregarded except as a possible opportunity to increase usage, if they are even picked up in the data. Consumers usually have a small pool of acceptable brands, and expect to be satisfied by the product they buy, whatever the usage, or they do not return. The brand is just one of the the filtering mechanisms of varying strength they use to make the choice easier.

While loyalty and heavy usage may be in a very few cases generated by the brand, it may also be that the heavy usage is just habit, availability, convenience, the shape of the package, or many other factors other than a behaviour changing loyalty to the brand.

Heavy usage and brand loyalty do not always have a cause and effect relationship. There is certainly a strong correlation, not necessarily causation.

My father would only use one brand of mustard powder, a blindingly hot concoction he used sparingly on an occasional sandwich. The stuff was only purchased once every blue moon, as he was the only one in the household who would go near it. Far from heavy use, but very loyal.

Conversely, if you look in my sisters fridge, there is only ever one brand of natural yogurt, and she consumes a kilo or more a week, in a number of ways. However, the choice is driven not by  the brand, although it is entirely satisfactory, but by the fact that the small supermarket she stops at every couple of days on the way home because  of the easy parking and friendly environment, to buy her milk, and a few other staples, only carries that one brand. Convenience drives the purchase, not loyalty.

Anyway, the nonsense that gets touted around by snake-oil sellers about consumers wanting to have a relationship with their brand is just so much crap it makes me sick. Brand loyalty is a rare thing, and is always, always given as a part of a whole package of value that is delivered consistently by the product to the consumer.

Consumers want a lot of things from  their favoured brands, but only a very few with some sort of emotional incapacity see a brand as a substitute for a human relationship, so lets stop talking about it as if it were.

My thanks again to Tom Fishburne.https://marketoonist.com/ When I went looking for a visual for this post, this cartoon says it perfectly.

 

Does ‘Know, Like, & Trust’ still hold?

Does ‘Know, Like, & Trust’ still hold?

Feb 27, 2017 | Leadership, Marketing, Sales

The only way businesses survive is to generate revenue in excess of their costs, consistently.

Common sense.

One of the oldest adages in revenue generation is that people do business with those they know like and trust.

It was correct, and to an extent it still is, but with a huge, game-changing wrinkle.

Most of us by now have done some sort of transaction electronically.

You have most likely moved to that transaction without ever meeting the person on the other side, so you certainly do not know them, and have no idea if you would like them, but you trust them to complete their side of the transaction.

One out of three now seems to be good enough?

Not really when you think about it.

In most cases there has been some interaction that you as the purchaser have undertaken that the seller knows nothing about.

You have looked at their website for technical specifications, prices, service promises, you may have downloaded some of the free stuff from their site, often to a junk email address so you do not get bothered with the following auto-marketing.  Depending on the product you may also have checked out the various product forums, and review sites, and you have compared all this to the competitive offerings.

The summary of all this is that when you get to the point of initiating a transaction, you have come to value and trust those you do not know, sufficiently to decide to do business with them.

Value and trust. Key words.

Trust is mutual and earned by performance over time, value is delivered.

The challenge now in revenue generation is therefore to reach out to those who do not know you, but who may have some problem you can solve, some irritation you can remove, and demonstrate your value to the point where they trust you sufficiently to do business with you.

A complete turnaround from the days where you did business with people you got to know like and trust while walking the golf course.

Case study: The pros and cons of PR in a B2B market.

Case study: The pros and cons of PR in a B2B market.

Feb 15, 2017 | Branding, Customers, Marketing, Strategy

PR can be a remarkably effective tool in the marketing arsenal, but most of it is just wasted, simply because it is not delivering any message of value to anyone who cares.

What can you expect when you have a combination of PR agencies who get paid by the word, various supposedly credentialed dills with a barrow to push who like to see their names in print, and politicians who will respond to the smallest of pressure groups who make a big noise?

The latest target of the word churners is sugar, specifically sugar in soft drinks,  but more broadly, sugar in everything.

Tax it and the problem will go away.

Nonsense.

While it is true that in economics 101 I learned that when you increase the price of anything, you sell less of it, this is a logical outcome based on an assumption of rational behaviour.

If I have learnt anything about consumer behaviour in the 45 years I have been in the marketing game, it is that it is rarely just rational, and unlikely to be altered by well meaning press releases, full of adjectives and promises of better days, written by those with a dog in the fight.

I was recently asked by a former client who supplies high value but very low usage ingredients that have the  potential to replace some of the functionality of sugar in food products for an opinion on a couple of different PR approaches they were considering in response to the discussion about a sugar tax.

Following is the reasoning I offered on PR as a marketing tool in this situation, sanitised for more general consumption.

  • There is a political problem, we are all too fat, therefore there is pressure on governments to regulate. Some of this regulation is warranted, such as the disclosure of the calorific value of products, in this case soft drinks, some is just nonsense.
  • We all (should by now) know that soft drinks are full of sugar, and drinking them to excess makes you fat, as well as having other health impacts. Therefore ensuring that label regulations are clear and understandable to laymen is a good thing, resisted by the beverage companies, as they do not want to scare the horses.
  • We cannot expect (in my view) governments to regulate for our behaviour, to be the gate keepers on our fridges. However, the tendency seems to be to seek to regulate to protect people from themselves. This is the guts of the move to have a tax on sugar, but underneath, there is a revenue measure for government that they will not talk about, but remains.

For a business to successfully leverage the public discussion for their commercial purposes requires some sort of strategy, and what I often see is a strategic vacuum, into which a PR release is sent. Some thoughts on the value of PR in these circumstances to a business that has some sort of vested interest in product formulation in the beverage market :

  • The target market for information is the marketing and technical people in beverage manufacturers, and they require different messages entirely. If it was me, I would have a plan with a few simple elements, and execute on the plan.
  • Create a list of the beverage manufacturers in each market, along with the relevant information about their ownership, location of factories, brands, strategies, etc, all you can reasonably glean from the combination of public documents and what your sales force knows. This is part of what marketing departments in businesses  with these sorts of interests should be doing.
  • As part of the above, ensure there was a list of the personnel in each business, their role in an organisation chart, and more importantly their role in the marketing, procurement, and product formulation decision making.
  • Develop ‘content’ with credibility to support all sides of the debate, and make all the data available, not just the bits that may support your commercial objectives. Research by the likes of Tate and Lyal, and CSR will be viewed with suspicion, irrespective of the science of it, because they have a vested interest, unless they discuss all the data and both sides of the debate.
  • Use the lists developed above to target selectively the people you need to speak to with the commercially agnostic data (content) you have developed. Do this digitally to create MQL’s (marketing qualified Leads) which are then passed to Sales and Technical services to follow up in person to make your formulation and commercial arguments.
  • Pick a small number of real target companies and devote resources specifically to the task of selling to them.  I would pick the challenger brands in each market, the ones you can sell to without the regional head office being involved, those who do not  have the big marketing budgets and brands, so they have less to risk. Once you convert a small number, and they have success in the market, the rest will follow.

This is pretty basic marketing 101.

Recognise that your target market is specific, and sales intensive, not marketing intensive. You are not selling toothpaste to a consumer with a low transaction value and regular small transactions, where marketing is vital. You are selling high value ingredient to customers where there is a high degree of specification, complication, and a long term relationship at stake. The challenge is different. Wasting time and effort, as well as money on consumer PR is useless in this context except as a strategy for keeping the wallies who do not understand the basics of the sales and marketing of their businesses quiet.

 

To cut through the digital clutter:  Tell stories.

To cut through the digital clutter:  Tell stories.

Feb 13, 2017 | Branding, Marketing

Stories are personal, they resonate, you see the real people behind the business, not some nameless corporation, the people who do the work, and are accountable for  the decisions and outcomes.

Facts never change anything, but stories can.

Martin Luther King did not recite a list of the facts surrounding the deprivations and discrimination of the American negro in his 1963 speech, he told us of his dreams, and changed the world.

Facts are boring, stores are listened to, part of our DNA, we listen to stories and relate to them into old age.

 As a kid Dad read to us from what became known as ‘The weekend book’. A book he had been given as a kid, of the Greek legends. I saw that book again for the first time in probably 40 years last weekend. My sister had it carefully stored, as it is now falling apart from almost 100 years of love and use. She has kept the family tradition alive by reading the stories to my niece, who is as familiar and engaged with them as I was at her age. As I turned the pages, every page, story and picture was as familiar as if 55 years had not passed and I was 10 again, listening to my dad reading them.

Stories allow you to differentiate in an emotive and highly engaging way. Your story is yours, not your competitions, yours. They can be used to give potential customers a reason to go nowhere else, they give you a personality that cannot be erased with a cheaper price, or a hyperbolic sales pitch.

Tell stories

I am currently working with a medium sized printer, a 60 year old business founded by the current MD’s father in the mid 50’s. In a recent move of premises, sitting in the corner was the original little printing press that he had used to start the business,  about to be sent to the tip. Aloud, I wondered at the stories it could tell if it could talk. That press now holds pride of place in the foyer of the new premises.

We trust those we know, and we get to know people by hearing, understanding and relating to their stories. Facts simply do not  build trust, they bring enlightenment, and understanding, but not trust.

Tell your stories, you may be surprised at who is interested.

How do you price for services.

How do you price for services.

Feb 9, 2017 | Customers, Marketing

A common question from all those in consulting, and one I ask myself regularly, as it becomes really easy to under-price in order to get the job.

From time to time in the past I have done jobs for various bodies that I believe in, pro bono. I always thought it was my way of making a contribution, and that the effort was understood and appreciated.

Not so. In most people’s minds, things are worth what they pay, so a free consulting is worth exactly nothing, particularly if the recommendations are challenging and uncomfortable to implement. It is then very easy to just walk away as there is no skin in the game.

So, how do you go about setting your price?

Determine your hourly rate. Generally you can get a handle on the amounts that are the ‘going rate’ in the market, not just for your service, but for the range of services a business may need. For example, book-keeping is around $60/hour, a virtual CFO will be around $160/hour and a partner in a large accounting firm $400 plus. If you are selling accounting services, at least that gives you a context. More qualitative services like marketing have a similar range from the kid who can run your Facebook account for you, (not the copywriting, that should cost way more than a base rate) to the virtual  marketing manager with all  the skills of implementation at $160, to the widely experienced guru who will be $400 plus. Most shudder when that number is quoted, but why would a highly qualified accountant who looks in the rear vision mirror most of the time be worth more than a highly qualified marketing and strategic thinker who is looking forward, to the things that will sustain the success of your business?

Estimate the hours of a project. This always involves breaking a project down into its component parts, and making a judgement about the time each will take. The complication is always ensuring that the goal posts do not move. Agreeing the exact scope of the work up front is essential, and always hard, but scope creep adds enormously to the risks you face, and is present in almost every project I have ever done.

Provide the quote. Pretty obviously a multiplication of the rate by the hours, in most cases, perhaps plus a bit for scope creep and complications you did not anticipate. These are some of the considerations that play into the quote process:

  • A fixed price will always be appreciated by the client, as it removes risk, so long as there are also guarantees of performance in place. A fixed price also enables budgeting, which is usually very welcome.
  • Will the job lead to ongoing work? Often a key question in providing a quote, particularly for small firm like mine where a lot of time is spent prospecting. A flow of work that generates reliable revenue is enormously valuable as a means to keep the beast fed.
  • Who will be doing the work? Often the system is that the really important and highly compensated partner or rain maker sales person does the selling and negotiation, then hands the job over to the gophers, whose time gets charged at the high rate. Clients are not stupid, they understand this process, and have differing attitudes to it, usually depending on the confidence the gophers create in the first meeting. In my case, I do all the work, bits where some specialist advice is needed, I provide some referrals, and my clients make the choice. I do not clip the ticket for the referral, unless I am involved in the project management, and then the added cost is absolutely transparent.

Actively manage and communicate the project progress. Managing expectations is a key success necessity, and to do this communication is essential. Usually about the time you are tired of the communication is about the time that it is sinking in. Mutually agreed KPI’s are important, they act as milestones, but often the qualitative understanding of progress being made is as, or more important than, the pre agreed KPI’s.

Tracking your time is a key activity, you need to know how you are going compared to your expectations, and while this is not for the clients sake, it is vital for yours and the long term profitability of your business. There are many tools around to track time, pick one that suits you, even if it is a simple note in a diary.

Know who your ideal client is. Maybe not the name, but the characteristics they display, the market they are in, the problems they face to which you have a unique set of solutions and relevant experience. Having this piece of thinking done will enable polite removal of tyre kickers and those who are not really ideally suited to benefit from the experience and knowledge you have.

‘Embrace’ your pricing. This may be the hardest part of the equation for most. Charge what you are really worth, name the number with confidence. Usually for services that is hard, and is based on the outcomes, not the cost. An expensive consultant that gets results is far better value than a cheap one that does not. At some point, the question of what success means to your potential clients business comes into play, as does the ability to pay.

It is inevitable  that you will not get every job, and that you will need to keep a straight face as potential clients over-act a response your prices. You will also have to believe in yourself to the point where you can look people in the eye as you deliver the price and they over-react, and you need to be a good negotiator. Most people respond positively to a high price delivered with clarity and certainty about the outcomes that will be delivered. The first person, who has to be convinced that you are worth the price, is you. The second one is easier.

Guarantee an outcome. This takes a level of confidence that is pretty rare to be able to build as there are simply so many variables at play. However, if you are sure that by employing your services you can guarantee an outcome, you can charge almost anything you like up to that outcome, and most will see it as money well spent. Few will walk away from swapping 10 cents for  20. There is a lot of services marketing that involves an implied outcome, justifying a high price, but the explicit guarantee of success is not something I see much.

Leave it to them. This is a risky strategy, but one I use a bit on short term projects such as a workshop, where the investment of time is understood, there is a clear problem to be addressed that is right in your ‘hitting zone’, but they do not really know you. Giving them a ‘list price’ with the undertaking that you will leave it to them to assess the value of the time to them, and tell you the invoice amount. It removes risk from them, and underscores your own confidence in your ability to deliver value.

Your best marketing tool. We all know that satisfied, even delighted clients are the best advertising you can have. Referral business is the best business, and the easiest to get, as happy clients refer you to their networks as someone who really delivers value. When that value is delivered at a high price, so much the better.

As a final thought. Increasingly in a complicated world, we value simplicity in all things, and the response to your prices will be enhanced by simplicity.

Cartoon credit: Scott Adams and his alter ego Dilbert.

Net rule No.1: Own your own space.

Net rule No.1: Own your own space.

Jan 30, 2017 | Marketing, Social Media

Two recent events have put starkly into the spotlight the need to control your own space on the internet. When you use the space of another, you are just one of a huge number of a mass of irrelevant renters, and the landlord is able, indeed likely, to screw you at some point, as you have absolutely no power in the relationship.

First, Hewlett Packard. In September last year a change to the chips in some printers delivered via the net stopped those printers using anything other than the high priced HP ink working. In other words buy our printer, and we will control which ink you use, and we will actively prevent you making the choice for an alternative, and forget to tell you.  This post by Cory Doctorow, one of the most creative thinkers about things digital on the Boing Boing site  gives the details. A disgusting use of the power that H-P has taken by stealth, that would have the founders turning in their graves.

Second, LinkedIn last weekend. LinkedIn has developed as a remarkable tool offering the opportunity to connect widely, in exchange for just your personal details and commercial history, which they used to flog advertising. While we accepted the exchange, most dislike the ads that chase us around, latching onto the cookies sites we visit sneak onto our drives. Then Microsoft paid $US26 Billion for them and we knew, if we thought about it, that it would just get worse. Late last year LinkedIn told us they were going to ‘retire’ a couple of the really useful tools on the free version at the end of February. Disappointing, but not unexpected. The changes came in last weekend, a bit before the anointed date, and to call them wholesale is an understatement.

Having spent a bit of time last week poking around in the bits of LinkedIn left open to those on the free version, the changes have not just been a few tools removed, and a new look, it has been a wholesale gutting of the functionality. Unless you pay the piper, and the piper is being pretty greedy, the functionality we have become used to LinkedIn delivering, which is what made it so successful, has largely gone.

This will leave many with the choice of pay up or don’t bother any more.

It also highlights again the absolute necessity of building your on line presence on a platform you own.

Like many, I have made coaching my clients on the functionality of LinkedIn a part of my offering. In my case it is a small but important part of the value I have delivered to my SME clients. Many others by contrast have built a business  around flogging strategically superficial advice about how to leverage LinkedIn to generate leads and sales. I guess the side benefit is that those superficial methods are now into the  digital waste-bin, and we will need to get back to the nitty gritty of developing strategies and tactics that rely on our own capabilities and domain knowledge to work, rather than renting influence from digital landlords.