“He who rejects change is the architect of decay. The only human institution which rejects progress is the cemetery.”
~Harold Wilson
 

In 1972, a 42 year old man by the name of Maurice was attending a dinner party in Manhattan when he struck up a conversation with another man whose family owned movie theaters.  Maurice, always the curious type, asked the man how the family business was doing.  The man answered rather bluntly: “TV is ruining us.  People just don’t go to the movies the way they used to.”  He said the theater was lucky to have 120 people attending a movie that held 1,200 seats. 

Perhaps this man was merely resigned to the inevitable: that industries come, and industries go, and that larger forces such as new technologies, more competition, lower cost alternatives and changing demographic forces conspire to reduce demand for a the products and services of many industries, and ultimately decimate established businesses over time.

Maurice, on the other hand, was surprised to hear this man’s claims.  It was Manhattan, after all, a dense borough of 1.5 million people.  And so he set out to undertake his own form of guerilla-style market research.  After all, he was always the curious type.

• He visited several movies and counted the house.  It was generally small;
• He observed who was attending movies.  It was mainly younger people in their 20’s and 30’s;
• He began creating storytelling scenarios about these moviegoers to try to understand what motivated them.  He concluded that there would always be a small group of avid moviegoers;
• He then asked if there was a small group of avid moviegoers, what was keeping them away from any given movie?  This was his “a-ha” moment.  He reasoned that thousands of people were attending movies on any given night, but they don’t attend a specific theater because they prefer to see a different movie being shown that night.

If movies are the product a movie theater sells, then another way to frame this problem is that the product assortment is too narrow to attract a broader set of customers.

In his book, Secrets From an Inventor’s Notebook, Maurice Kanbar writes:

Instead of concentrating on increasing the number of customers for one film, why not increase the number of offerings?  Without requiring any more ticket takers, concession-stand workers or projectionists, you could easily multiply your profit.  And instead of complaining about your shrinking audience, you’d be giving that audience more viewing choices and a novel atmosphere.

After some testing of the idea, one of the first multiplex movie theaters was born as Quad Cinema.  Quad Cinema was profitable since opening in October, 1972 and is still operating today.

By framing the problem not in terms of external changes, but rather  in terms of what opportunities the movie theater operator was missing to serve more customers, he found a solution to broaden its appeal, attract more customers and build a growth business in what at the time was a dying industry.

With little or more than an opening question based on an underlying disbelief that the status quo made sense, a deep level of curiosity and the skills of observation and storytelling, Kanbar was able to apply an outside perspective to a single movie theater and reinvent an existing industry.

Have you ever asked for an outside perspective to help transform your business?
 

“In a world of ever-accelerating change, innovation is the only insurance against irrelevance.”
~Skarzynski & Gibson in Innovation to the Core

Thinking is about imagining possibilities, of asking why and why not, of generating options for how to market your business.
Doing is about selecting options already identified and launching them the best you can.

Thinking is hard.  By thinking I don’t mean staring into a cup of coffee, or calling a meeting once a year to hold a brainstorming session.  I mean a committed process that systematically generates hundreds, if not thousands of ideas inspired by employees from all areas of the business, from suppliers, from investors, from partners, from customers, from fans, from different industries and even from competitors.  It’s colliding ideas that on the surface are not related, and in doing so, creating aha! moments, or an adrenaline rush associated with epiphany or serendipity.  It’s a journey that could include challenging orthodoxies, identifying discontinuities, figuring out how to apply organizational strengths in new areas and identifying deep consumer insights and unmet needs.
Doing is relatively easy.  There’s no shortage of ineffective marketing that each of us are exposed to every day.

Thinking helps you solve problems that nobody else thinks to solve that lead to breakthroughs and game-changing opportunities.  It’s the future.  It’s innovation. It’s growth and it’s success.
Doing helps you solve problems everybody has and helps you support current customers and employees.  It’s the here and now.  It’s generating cash flow and paying salaries.  It’s business as usual.

Both thinking and doing are necessary.

But do you have the right balance?

Are you sure?

“Beliefs and values that have held sway for thousands of years will be questioned as never before.”
~Carol P. Christ
 

Diageo is a global liquor and spirits giant.

An orthodoxy is a widely held belief about what drives success for a company or for an industry.  For instance, you (or your management) may believe that:

• to grow your business means that you have to do so at the expense of your competition (grow market share);
• to maximize sales, you need to own the major holidays, events, or usage occasions;
• men are the purchase decision makers for your products at retail.

An orthodoxy is just a fancy term for prevailing wisdom, and it’s usually rooted in past experience.   After all, leaders of businesses, be them marketing leaders or not, usually gain their positions of influence through delivering past results.

But what would happen if you turned the words “past experience” into a negative?  Perhaps you’d call it a dogma.  Then what you would have is a “established belief or doctrine…[that] is authoritative and not to be disputed, doubted, or diverged from, by the practitioner or believers.”

What then happens when some heretic within the company (our outside the company) suggests that you challenge the beliefs you and the industry hold so sacredly, or better yet, gains information that refutes them?  What happens when you gain information that suggests that the world is changing, or has changed right before your eyes?

What happens is that you unlock a new world of opportunity and you get to innovate!

Diageo is a $14 billion global company that owns and markets many of the #1 alcohol brands within various segments.  It’s brand lineup is staggeringly impressive:  Smirnoff is the #1 vodka in the world, Johnnie Walker is the #1 whisky, Jose Cuervo the #1 tequilla, Bailey’s the #1 liqueur,  and Guinness the #1 stout.  

Diageo Expects Sales Growth After Focusing on Shoppers

Rather than resting on its laurels as the undisputed industry leader, 3 years ago, Diageo embarked on a mission to better understand who buys these products, why they buy them, and just as importantly, what stops them from buying them.  It created a shopper marketing team that set out to deepen its understanding of consumer shopping behavior.

Generating new consumer insights is not the only way to challenge your orthodoxies, but it’s a foundational marketing practice that often will.

So what did Diageo learn that were assuredly “aha” moments within the company?

• Women are the primary shoppers for spirits and liquors, not men, as had been assumed;
• People buy spirits and liquor for special occasions, but they define special occasions much more broadly and frequently than holiday and birthday celebrations, as had been assumed.  Informal, spontaneous group events such as dinners, porch parties, or backyard grilling were just as likely to drive purchase occasions;
• Many people are intimidated to buy spirits and liquors because they don’t have a go-to repertoire of cocktail recipes.  They don’t know what complimentary products they would need to be able to serve a cocktail to a friend or guest;
• Beyond the consumer insights, Diageo also learned to better understand its retailer’s needs in selling and marketing its products, that they were willing to partner to sell the category, rather than to assume its dominant position allowed it to assert is clout.

These new insights then led to a wide variety of programs that were tested with its retail partners and validated in market.  They include:

• Supplementing big holiday events where spirits and liquor are traditionally purchased with more year-round marketing;
• Development of programs to educated and take away the intimidation factor, such as “Simply Cocktails” which is a display and merchandising area where consumers are given options in how much complexity they are willing to use in order to create a cocktail;
• Diageo has increased the tools available to retailers to help them succeed in this category.  For instance, they provide food pairing and cocktail suggestion ideas that many consumers seek before they begin a shopping trip and when they visit the retailers’ website.   Additionally, retailers have the option of customizing the displays or using their own nomenclature, and selecting merchandising modules that fit their store size.

So what have been the results?

• Diageo says that it’s seeing double digit growth in its brand sales;
• It also says that it’s growing overall category sales, which its retail partners no doubt care about more;
• Presumably, as reflected in more sales, consumers are realizing the benefits of these programs, and ultimately, when you make your consumers happy, they reward you with sales.

Marketing has been changing rapidly as consumers gain greater control of the messages they are willing to listen to, in their ability find the information that’s important to them, and then to spread ideas and information through social media and word of mouth. 

Are you learning from your target customers how you can connect with them in more valuable ways, and in doing so, being open to challenging your own orthodoxies? 

 

“Strategy is doing the right things. Tactics is doing things right.” ~various attributions, including Peter Drucker and paraphrased from Sun Tzu I recently posted a series of slides from prominent social media thought-leaders as to why social media is not a retail marketing strategy. The point was not to diminish the potential value of social media or inbound marketing, for there are considerable benefits to be realized. Rather, my point was to assert that the use of social media and inbound marketing tactics can benefit tremendously by being used to support general marketing strategies and online content strategies. Starting your marketing efforts with well thought out strategies will help you manage limited resources, help you understand what’s driving success and failure, and accelerate success by unlocking the creativity that exists within your organization.

Goals, strategies and tactics

Before you can speak intelligently about the differences between strategies and tactics, you first need to start with the purpose of having strategies and tactics.  The biggest reason is to help you achieve a goal. A goal is a specific result that your business needs to achieve in order to sustain itself, usually through revenue growth or expense reduction, but also sometimes in terms of market share or cash flow.  A goal is more often than not a financial measure, should be your measure of what success looks like, and it should be S.M.A.R.T.  (Specific, Measurable, Actionable, Realistic, Time-bound).  Often, multiple goals are established to reflect the various ways a business can succeed. For example, let’s say you operate a chain of grocery stores.  The following could be goals for you to achieve:

• Grow meat department sales by 20% by Fiscal Year End 2011;
• Increase average purchase value from $75.00 to $85.00 by Fiscal Year End 2011;
• Increase the purchase frequency of shoppers from every 10 days to every 8 days by Fiscal Year End 2011.

I’ve previously written about how you can frame your thinking around ways to grow revenue. Strategies are statements of how you will achieve your goals. They are high level ideas, usually long term in nature, that set the direction and scope of a business to achieve its goals. In military language, “divide and conquer” is a strategy that is likely to be in place over the course of a military campaign. “Paratroopers secure the airport” is a tactic that is likely to happen once as part of the way a force divides and conquers. Great marketing strategies are focused on delivering benefits or in meeting the needs of its customers, and are often based upon information, research, trends, and insights generated through the analysis of markets, customers, non-customers and competitors. How are you going to get your target customer to spend money with you?  What benefits are you going to deliver to them? Just saying that you will use social media or inbound marketing isn't going to be a sufficient reason for you to persuade and succeed. Philip Kotler from Kellogg Business School has recently said that the role of marketing is to C.C.D.V.T.P (Create, communicate and deliver value to a target market at a profit).   Creating value for a target market requires you to understand what the target market values, so in essence, a strategy is a connection between your goals and delivering a value, or a value proposition, to a customer.  A value proposition is defined as “a powerful emotion evoking statement that validates a customer’s unmet need and instills confidence that this unmet need till be totally satisfied (by you and your company).” I always advocate that businesses craft strategy statements using following the formula as it connects a goal to a value delivered to a target: Returning to our grocery chain example, the following could be strategies to achieve one of the previously stated goals:

• Grow meat department sales by creating smaller package sizes to meet the weekly cooking needs of single (unmarried) shoppers [who frequently eat at restaurants]; or
• Grow meat department sales by creating a line of ready-to-cook entrees to address the time constraints of busy moms; or
• Grow meat department sales by offering butchering classes to educate “foodie” customers on unusually found cuts of meat;

Presumably these strategies would have evolved from a deep understanding of various buyer personas, but the point is that now you have some overarching themes around which to build your marketing tactics and this is where your marketing creativity can begin to flourish, where you can start dedicating resources to developing online content around these strategies and themes, and gain the benefits of social media such as establishing authority, credibility and trust. So then what are tactics? Simply stated, a tactic is an action you take to execute a strategy. Examples are TV advertising, newspaper advertising, retail promotions, a website page, a banner ad campaign, a sampling program, etc.  Without the context of a strategy, in and of themselves they lack meaning as to how they will benefit your business. Getting back to our grocery store example, some tactical ways you could support the strategy to grow meat department sales by creating smaller package sizes to meet the weekly cooking needs of single (unmarried) shoppers could be:

• Advertise in weekly advertising circular;
• Put up shelf talkers or signs in the meat department;
• Run a retail promotion;
• Publish a single serve recipe book;
• Sponsor a speed dating event;
• Run a co-promotion with a brand of wine;
• Create an email newsletter;
• Create online content around the shopping and lifestyle needs of the single customer;

I want to highlight this last idea because I believe it brings me full circle to the point about social media not being a strategy, but it does highlight how social media or inbound marketing could be used to deliver a compelling series of messages to a strategically identified customer segment around a well-researched need. Without the context around who you are talking to, what needs, wants, dreams and desires they have, and how you can address those needs, wants, dreams and desires, social media will be underutilized by you and your business and the limited resources you dedicate to it will likely fail to help you achieve the business goals that will sustain you. As Ann Handley and C.C. Chapman say in their book “Content Rules:

That’s precisely the point of creating killer content – to convert browsers into buyers and customers into regulars or (better yet) rabid fans, ambassadors, and advocates. You do that by deepening your relationship with them, over time, by repeatedly and consistently creating content that they care about and want to share freely with their friends or colleagues, and by encouraging them to engage with you and to sign up for things you publish, (like an email newsletter or a webinar) or to download a whitepaper or ebook.

In order to use social media and inbound marketing to accomplish this, you need to start with customer-centric strategies.

"A commodity is some good for which there is demand, but which is supplied without qualitative differentiation across a market." ~Wikipedia "The brain is a commodity used to fertilize ideas." ~Elbert Hubbard Powerful marketing can come when a business creates alignment of a shared vision between owners, employees and customers .  It can also come from product differentiation. I believe that even if you sell a commodity product, there are ideas you can develop to bring differentiation to them. Let's face it.  Most small businesses sell me-too products, products that are in essence undifferentiated.  But it doesn't have to stay that way.  With a lot of thought, maybe even a lot of work, I'm a firm believer that any business can innovate to transform a commodity product or service into a differentiated product. The following businesses are in essence selling commodities.  But look at what they've done to create differentiation in their products.  Either they are solving a problem that the product itself creates (ex- water bottles are made from petroleum and their disposal adds toxicity to landfills), they've extended the service to provide additional benefits (free pick-up and drop off), or they've wrapped a values based story around the product (100% sustainable urban warehouse farm). BTTR Ventures – This startup in Berkeley California has created a unique, closed loop production model that converts one of the largest waste streams in America – the tons of coffee ground waste generated daily – into a valuable, nutritious product: gourmet, specialty mushrooms that it sells to Whole Foods, at Farmers Markets and online. By creating a 100% sustainable urban warehouse farm, it has a built in values based story that will get noticed. NOTE:  BTTR is a finalist for the BBC World Challenge as a small business that has shown enterprise and innovation at a grass roots level.  You can vote for them here. Wild Boar Farms – Heirloom tomatoes are already different from the garden-variety tomatoes found at most grocery stores.  Yet that's not good enough for Brad Gates at Wild Boar Farms.  Brad grows some of the most outrageous tomatoes available on the planet by constantly creating new varieties using heirloom genetics and mutations.  He focuses on bi-color and striped varieties with extreme flavor and fascinating looks and gives them Bay-Area centric names such as the Berkeley Tie-Dye, Pink Berkeley Tie-Dye, and the Michael Pollan. Plant It Water – The first time I ever drank bottled water was on a trip to Indonesia where travelers have health concerns about drinking from the local water supply.  Today, portable water is a big convenience to people on the go.  As this category has grown, however, so has the landfill waste stream of petroleum based plastic bottles.  Plant It addresses the problem by using packaging that is sustainably manufactured, recyclable, and that uses 60% natural resources such as plant fibers.  Plant It also supports environmental organizations and is currently planting a tree for every carton sold. Keatley Detail – Keatley is a business that cleans, polishes and waxes automobiles.  Like most service businesses, it's reputation rests on doing a great job and living off word of mouth referrals.  But Keatley goes the extra mile by making it easy to do business with them.  It offers customers free pick-up and delivery.  It allows for online scheduling.  It has a business center with wi-fi where customers can work while the car is being cleaned.  And it offers free beverages in the business center.  In essence, it has taken away any possible reason that an interested prospect might have for not using Keatley.  And that's a powerful statement to be able to make. Rock & Roll Dentist -  I previously wrote about this example of another service business.

How are you bringing differentiation to your products or services?

“Dream lofty dreams, and as you dream, so shall you become. Your Vision is the promise of what you shall one day be. Your Ideal is the prophecy of what you shall at last unveil.” ~ James Allen "Chase the vision, not the money…if you are actually chasing the vision and not the money, the money will follow because your customers and employees will be able to sense your passion, and they will want to help you succeed." ~Tony Hsieh, founder, Zappos "Milton Friedman said the only reason a corporation exists is to maximize the return of the shareholder. Forget that. Do this instead: Put the employee first, and that employee will take better care of the customer than anyone else." ~Kip Tindell, founder, the Container Store "I think that marketing is the art of telling a story to a consumer that they want to hear that lets them persuade themselves that they want to buy something." ~Seth Godin

1. Clarify your vision
2. Hire people who share your vision
3. Identify customers who share your vision
4. Tell stories about how you're jointly (company + employee + customer) pursuing your shared vision

"Effective leadership is not about making speeches or being liked; leadership is defined by results not attributes." ~Peter Drucker Implementing a powerful marketing campaign is easy.  Developing one is not. The hardest, and most crucial part, of a powerful marketing campaign is in identifying what you can say that helps you connect to customers and prospects, that resonates so strongly with them and that is worth commenting about.  Being worth commenting about is the definition of "remarkable."  Thinking is hard.  Thinking about what matters to your customers is harder.  Connecting your customers to your product with a powerful idea in a way that is remarkable is even harder.   But it has to be done. What's the powerful idea behind your marketing? Too often a new business owner develops a product, starts a business, then hires a "communications" manager to find ways to market the product. If the communications manager is good, she or he will embark on a process to define or clarify the product's Unique Selling Proposition, or points-of-difference.  This process should almost always include finding ways to talk to customers and prospects to understand what it is about the product they like and what benefits its ultimately delivering.  Understanding what is different, persuasive and authentic/believable about a product is crucial in determining what to say in your marketing messages and ultimately in developing powerful marketing. If the marketing manager is awesome, she or he will identify bigger or more persuasive benefits that the product could be delivering, and then champion a process of innovation within the company to improve the product or launch new products that deliver these benefits.  I believe this is one of the primary reasons the marketing profession sometimes gets a reputation among its cross functional peers as being disruptive.  Innovation and progress, depending upon how you look at it, can be subjective. But let me be clear here that innovation should only matter relative to the benefits you are delivering to your customers.  Without customers, a business does not exist. If the communications manager is not so good, they are left with the often unenviable challenge of creating messages based on benefits that are already being delivered in the market, or worse, me-too features that do not connect the customer succinctly to benefits.  This is the aged old "lipstick-on-a-pig" conundrum.  They develop messaging that is flat and unispired.  They don't really connect with customers.  And in the worst of all cases, they spend money just to demonstrate marketing activity to justify their jobs, or to allay stakeholders who are waiting for the marketing to come along and save them.

How are you innovating your business to uncover the next powerful marketing idea?

"The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself." ~Peter Drucker Yelp is hiring a Director of Local Business Marketing and challenges this person to use outbound marketing tactics such as direct mail, Search Engine Marketing and enhanced tools for its sales force in order to accomplish its goal of acquiring thousands of new SMB customers. Rather than hire a marketer who puts lipstick on a pig and tries to implement marketing tactics to sell a service that many businesses are frustrated with, I think that yelp's big opportunity is to innovate its services in a way that provides far more value to SMBs and business owners than it currently does. The "secret sauce" that founder Jeremy Stoppleman discovered while building yelp was that he could make the site popular and sticky by attracting and nurturing a core group of fanatic reviewers (called the yelp elite squad) and by building community among all reviewers.  “Yelp is about the reviewing experience,” Mr. Stoppelman has said. “It is like a blog with a little bit of structure.” And for those businesses that have been awarded a strong review by an influential yelper, they've often witnessed tremendous customer growth. The reputation of yelp among many small, local businesses, however, has not always been positive. This reputation has been based upon ongoing stories and accusations by business owners of aggressive sales tactics), a relative high cost as compared to AdWords and selective display of reviews which yelp has directly and repeatedly denied. I personally think that yelp in its current state can be a tremendous resource for business owners.  Being able to capture consumer feedback and insights without having to spend money for focus groups or other research studies should allow owners to identify ways to improve its operations in order to make its customers happier. But the simple fact of the matter is that "Stoppelman [has] said that the site deliberately tilts its rules to support the reviewers. 'We put the community first, the consumer second and businesses third.'  Under the current business model, businesses are the primary source of revenue and yelp should work to improve its product and services so that business owners find even more value than it currently does. So how can yelp expand its paying advertising base of SMBs in the face of poor product reputation?  In my opinion, sales people armed with better sound bites, more colorful collateral and a special offer to florists in the month of November are not the way to significantly accelerate the acquistion of new SMB clients.  SEM?  I'd be highly surprised if a business owner visits Google to search "San Francisco advertising options." Beyond the basic advice of better educating business owners to how it can use yelp in its current state to receive and use consumer feedback, what I believe yelp needs to do is to innovate its offering to develop and launch information & services beyond customer reviews and ratings that help local business owners better manager their business.  The following ideas are what I believe yelp should put into development. Provide business owners with information & tools that helps them operate more effectively – This could take several different forms:

1. Capture additional information in the review system to identify how a reviewer learned of business.  Every business owner wants to know which of its advertising vehicles was responsible for generating awareness and trial.  What if yelp could show a business that a yelp review, rather than a google search was responsible for increasing traffic?
2. Offer reports (for a fee) that summarize a businesses reviews into actionable categories.  I’ve recently spent hours cutting and pasting the reviews of a client so that I could identify where opportunities to improve customer satisfaction exist.  I’ve had to manually categorize feedback in terms of pricing, product quality, product assortment, customer service, and overall business concept in order to draw conclusions on what part of the businesses operations deserve more in-depth review.  yelp could do this for me and I’d probably pay for it;
3. Offer reports that make comparisons of various metrics across competitors, against defined industry segment, etc.  This could help an owner determine whether it’s doing well or poorly versus competition;
4. Conduct research studies that help business owners use yelp tools.  This could be a study that shows the greatest impact on sales of displaying a Yelpers Love Us sticker, or the increaseed redemption rate of a direct mail piece that features a yelp review;
5. Develop a B2B review section where owners can share reviews of vendors and suppliers so that they can make informed choices;
6. Create widgets of a customer's reviews that can be placed on customer websites.  At some point in time, businesses are going to realize that having negative reviews of its products and services can often lead to increase sales;

Celebrate small businesses – At some point in time yelp needs to change the perception that it's holding business owners at gun point and instead embrace them as valuable, paying customers.

1. Host business owner seminars to educate owners, to solicit feedback and to identify new ways that yelp can help them grow their businesses;
2. Develop a yelp video channel to feature successful businesses (or even businesses that the elite squad loves).  Business owners crave seeing success stories of other small business owners;
3. Create a blog about businesses who are seeing success using yelp.

What other ways can you think of for yelp to increase its value among SMBs?