Sales & Marketing: dogs & cats?

Lunching with a client a few weeks back, I found myself listening to the challenges she (a marketing person) had working with her sales group.  She loves them and they her, because she’s always providing them with statistics and backup for sales challenges, and she never loses sight of my favorite question, “What are we selling here?”  But they always want more and they want it right now.  Offhand I tossed off a consoling explanation that made more sense the more I thought about it (not always the case with my off-the-cuff pronouncements).

“They’re sales, you’re marketing.  They’re dogs, you’re a cat.”

Before parsing this somewhat lighthearted comment, let me hasten to assure readers that I have owned both dogs and cats for many years.  So if it comes to one vs. other, I have no horse in that race, as it were.  But you don’t have to argue that one or the other is “better” to know that they’re different.  And so are sales people and marketing people.

Sales people are dogs:

  • They live in the now.  “Make the appointment!”  “Get the decision-maker!”  “Close the deal!”  This week’s sale is next week’s paycheck.  To marketing folks, that means they sometimes seem to have attention spans like the dogs in the movie “Up” (“squirrel!”).  But sales people with slow reactions lose business.
  • They’re always optimistic.  They have to be, to deal with the frequent rejections and discouragements that come with a sales job.  After all, a rep with a 20% close rate – pretty darn good – hears “no” four times as often as “yes.”  Like dogs, they’ll wag their tails at whatever opportunity comes up: taking a walk, chasing a ball, changing focus in mid-pitch if the prospect suddenly shows interest in some other product entirely.
  • Their bark is usually worse than their bite.  The very energy and focus that make good salespeople often make them seem a tad confrontational.  But five minutes later everyone is friends (particularly if they get their way).  Like dogs, the answer to “Are they playing or fighting?” is usually “Yes.”
  • They sometimes put their noses in inappropriate places…OK, let’s not go there.

Marketing people are cats.

  • They take the long view.  The food will come to them if they wait in the right place. The primary measure of success is to economize energy expended per kill. “Cost per revenue dollar” is the primary metric of success.
  • They make few sudden moves.  “Let’s think about this” is a good summary of what seems to dominate both species’ heads.  Short-term successes that hurt the brand or margins in the long run may not be successes after all.
  • They’re phlegmatic.  It’s often hard to tell a really happy marketing person from one that’s just waiting for you to go away so they can get back to work.
  • They like to play with their food before they kill it…OK, let’s not go there, either.

The thing is, they are different species.  And both species are necessary.  Most dogs are really terrible mousers, and few watchcats have ever foiled a burglary.  “Nothing happens till somebody sells something,” as Red Motley used to say, yet very few really long-lasting great products or companies have been built on sales alone.  And dogs and cats can live together in peace – it just takes some give and take on both sides. 

And good management – but that’s a story for another day and metaphor.

Mike Baum, Sophia Consulting LLC

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Kodak moment: Getting the one life-and-death strategic question right

People are drawing all sorts of lessons from Kodak’s Chapter 11 filing.  How does a dominant, “iconic” business slide downhill with such rapidity and finality – even though it invented the technology (digital photography) that remade its industry and caused the company’s ills?

One online commenter opined a week or so back: “They forgot they weren’t in the photography business, they were in the memory business.”  This was a riff, of course, on Theodore Levitt’s famous Harvard Business Review thesis that railroads declined because they forgot they were in the transportation business.  With all due respect to Prof. Levitt, this kind of thinking at a strategic level is likely to put a business on the wrong track, if you will – with a derailment due down the road.  In fact, perhaps the Kodak disaster resulted from taking this kind of theoretical marketing exercise too seriously.

Yes, the key marketing question is always: “What are we selling here?”  A clear vision of how products connect with customers’ desires, meet their needs, and differentiate from competition provides the esssential foundation for product strategy, promotion, pricing, etc.  But I don’t recall Kodak ever having much doubt about that.  Pace the above-cited online Levitt-channeler, Kodak knew very well that their photography business was really selling memories (or at least, the means to preserve them).  The famous “Kodak moment” line is just one of many ways, over the years, that Kodak’s consumer advertising focused on the events their products recorded, not the products themselves.  Kodak pretty much created the mass market for photography, so I’d have to say they answered the “what are we selling?” question well.

But marketing is not strategy – not all of it.  The key strategic question, dangerously similar to “What are we selling?” but fundamentally different, is “What business are we in?”  And especially in times of change, the wrong answer will kill you.  The right one – or one of the right ones, because there’s often more than one good answer – can save you even when your core business disappears.

To illustrate the difference, take the famous railroads/transportation example.  Imagine what would have happened if the railroad CEOs had said to each other: “Gentlemen, we are in the transportation business.  We’re facing competition from air transportation companies.  So we need to start airlines.”  That’s Ted Levitt’s thesis of what they should have done – a judgment framed, to be fair, back when railroads were financial trainwrecks and airlines soaring (sorry – this topic seems to lend itself to puns).

Railroad-spawned airlines almost certainly would have been colossal failures, and possibly damaged their core businesses even further through diversion of investment and attention.  Because railroads weren’t in any generic “transportation” business – they were in the railroad business.  All their expertise, infrastructure, history, and business relationships were designed for a very specialized kind of transportation: moving large quantities of (usually) low-value commodities along regular routes dependably and cheaply.  They knew nothing about air transport, which is almost the diametrical opposite: moving relatively small, discrete quantities of high-value commodities (airmail, people) along flexible routes very quickly from point A to point B, without any infrastructure to speak of in between.  The people who succeeded in the new-fangled airline business were specialists in that technology – many of them aviators and/or airplane builders like William Boeing (who started two of today’s major airlines before anti-trust made him spin them off).

The only market where rail and air overlapped was in inter-urban passenger transportation, which railroads never made money on even in their heyday.  Once they were able to get out of the passenger business (courtesy of Amtrak, which saddled a federal pseudo-business with that losing proposition), railroads got steadily more efficient focusing on the freight business they handle well.  New technologies such as bar-code reading to keep track of freight cars in transit, and intermodal services like trailer-train to interface more efficiently with trucks, made their business even better.  Today, railroads are hot investments for people like Warren Buffett – and not one of them owns an airline.

From that standpoint, what business was Kodak in?  The answer: they were in the film business.  That’s what they knew, that’s what they did superbly well.  George Eastman’s original patent – issued eight years before he sold his first camera – covered an emulsion-coating machine.  Kodak in the 1930s even acquired a gelatin company – a factory that boils beef bones down to their slimy essence – to insure supply of the critical ingredient for bonding layers of chemicals to a film substrate.   Kodak made all kinds of films, and they did it extremely well.

Certainly, part of Eastman’s genius was in realizing that the way to sell photographic film was to get lots more people taking pictures.  So Kodak made it easy to record “memories” with simple cameras like the Brownie and the Instamatic, which were so cheap they were sometimes given away with film.  Kodak’s cameras were never very good, but they didn’t need to be – they just needed to be simple enough for everyone to use, and generate resales of Kodak film – which was very good.

Kodak wasn’t in the “memory” business.  They weren’t even in the photography business (that was Rolleiflex, Leica, and Hasselblad, and later Canon, Pentax, and Olympus).  Kodak was in the film business.  Not necessarily restricted to “film” in the photographic sense.  They were in the thin precision coatings business.  Ironically, as the film photography market crumbled in the past few years, one of the valuable assets Kodak sold off to keep the lights burning was the old gelatin factory – which has continued to thrive and find new markets.

So what should Kodak have done when they invented digital photography and realized they’d just created the end of their legacy consumer business?  They should have said “OK, we’re in the high-quality film (coatings) business, so let’s start expanding all the different ways we can increase and sell that expertise.”  Maybe they should also have said “Let’s introduce this new digital thing too, and make money on it while the market lasts.”  But that would have been an entirely different, and relatively short-term, decision.

I’d been thinking along these lines for a couple months as the Kodak end-game sadly unrolled – then an article in the Wall Street Journal confirmed my hunch.  It details how Fujifilm avoided Kodak’s fate by doing essentially what I’ve just outlined.  In the ’60s and ’70s, Fuji was best known for lower-cost photographic film that chased the consumer photo business Kodak had built.  But they read the digital handwriting on the wall and acted on it.  They asked, “What business are we in?” and they answered “We’re in the film – that is, chemical coatings – business.”  Today, photographic film is 1% of Fujifilm’s revenues.  Mostly, they sell films for coating TVs and computer displays, cosmetics (another type of thin chemical films), and pharmaceuticals (branching off their chemical expertise).  It wasn’t easy – over the years they had to cut $3-4 billion in costs, including a lot of jobs – but they survived and they are growing and profitable.

What business are you in?  What business, really?  Sooner or later this is a question we all have to answer.  The marketing positioning answer can be misleading.  But there is no more important question to get right.

Mike Baum
Sophia Consulting LLC

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Lost in the yogurt

Shopping last week with my daughter (and grandchildren) in Chicago.  Looking for Greek-style yogurt amid untold linear feet of refrigerator case wallpapered with little colorful cups of regular yogurt.  Suddenly she pointed to the upper left-hand corner of the case.  “That’s the yogurt I want,” she said.

I looked, and it was like one of those trick lenses that blur everything except the center of the viewing field, to make the selection stand out.  About two linear feet of Siggi’s “Icelandic style skyr” strained non-fat yogurt.  White cardboard sleeve with just a few words of understated lettering and a single beautiful graphic of a fruit, a flower, or a milk can (the plain variety).  Against the competitor’s sea of color, this island of elegance stood out like Bach’s Prelude in C Major against a background of elevator music.

Their website looks pretty much the same.  Click to it – I defy you not to look up Siggi’s story while you’re there.

When everybody’s jumping up and down, the person who stands still gets the attention.  When everyone else is verbose, conciseness gets its point across best.  Isn’t that the idea in marketing?

Are you acting hyperactive to attract customers?  Maybe you should have a Siggi’s and try to calm down.

Mike Baum
Sophia Consulting LLC

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Wrong lesson from the gecko?

I’m sure Geico has a marketing research budget larger than the GNP of most small countries, so I hesitate to criticize – but what the heck, I’ll do it anyway.  I think their new TV commercials – e.g., “Does Geico save you 15% or more on your car insurance?  Is the Pope German?” – are clever, funny, and unlikely to help them sell their products.

The Geico gecko is clever, funny, and has sold loads of insurance (helping Geico climb from about 5% market share five years ago to nipping at second-place Progressive’s heels today).   I suspect that there was one outstanding, non-subtle reason.  “Gecko” sounds like “Geico.”

“Geico” by itself is an obscure acronym and hard for consumers to remember when it counts – namely, when the premium increase comes and they have the impulse to check rates.   But after the gecko ads it was a cinch.  Even if viewers didn’t know what that species of lizard was called before, they did after chuckling at him a few dozen times.  So their brains went: “Cheap insurance.  The gecko.  Geico.  Let’s give them a try.”  The new campaign, by contrast, shows the little piggy going wee-wee-wee etc. one night and a soap-opera predicament the next.  What’s to remember?

I see a parallel with an even more famous but less effective advertising animal, the Energizer Bunny.  He may not have been as funny as the gecko but everybody knows him.  And during his salad days, Energizer steadily lost share to Duracell, which ran ads that weren’t a bit funny but always included the product’s “copper top” closing with a powerful-sounding clang.   So folks went to the store thinking, “Boy, those alkaline batteries sure make that bunny keep moving,” saw the copper tops on some batteries and thought “Copper top.  Right,” and bought Duracell.  Maybe if Energizer had been called “Bunny Cells” or had put fuzzy tails on their packages their commercials would have been effective as well as memorable.

My point is not that ads shouldn’t be amusing.  I like a good laugh as well as the next guy and heaven knows television could use more really amusing moments.   But when ads produce chuckles instead of an impulse to buy, or at least a strong favorable association with the brand, they’re not doing what the marketing folks are paid to do – sell the product.

If I’m right, why is such a sharp marketer as Geico doing this?    Maybe their research shows the gecko’s appeal is waning and they just have to try other stuff to fill the gap.  Or maybe they just don’t track messages to sales.  It could be a classic case of “I know half my ad budget is wasted but I don’t know which half.”  Which we direct marketers, of course, never never never say…do we?

Mike Baum
Sophia Consulting LLC

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If it weren’t for those pesky customers…

During the recent unpleasantness, AKA the Great Recession, lots of retailers cut costs by cutting SKUs.  At some chains, the cost accountants had a field day dumping items with insufficient inventory turns to generate as much annual “rent” for their square inches on the shelf as some minimum standard handed down from HQ.  Now, as things are improving a trifle and consumers are start some cautious spending again, the SKU-slashing has started to bite retailers who cut too deeply.  Rip Van Consumer is saying “What happened to my favorite _____ that I used to buy here?” and flouncing off in a huff when s/he hears “Oh, we don’t sell enough of that to stock it anymore.”

I ran into that mentality at our local supermarket some months ago.  I drink a lot of grapefruit juice because I take a lot of pills and find them unpalatable with water but orange juice is too sweet for me.  I noticed it was getting harder and harder to find frozen GJ among the OJ and lots of other kinds of J housed in the block-long freezer case and asked a clerk about it.  “Yeah, the parent company won’t deliver anything to us anymore that doesn’t sell a certain minimum,” she said.  “After those last two cans sell there won’t be any more.  We do have bottled grapefruit juice, though.”  “But bottled juice is more expensive and takes up so much room I can’t stock up – I’d have to be buying a bottle every couple of days,” I objected.  “Sorry,” she said.  And I think she was, but that didn’t make any difference to the cost accountants.

So what does the Baum family do now?  Every couple weeks we make a shopping trip to a store a little farther away that prides itself on assortment.  They still carry frozen GJ and we buy a ton of it.  Along with whatever else we happen to need at the time…some of which our local store also carries but isn’t going to be selling as much of to us anymore because we won’t be coming in as often.

I’m not the only curmudgeon who says, “Fine, I’ll take my business elsewhere.” Mass Market Retailer reports a new Nielsen study cautioning about the negative impact of cutting items.  MMR says “Walgreens has backtracked on SKU-reduction moves that eliminated nearly 50% of SKUs that it classified as impulse or convenience items…It has returned several hundred eliminated products to the shelves of stores…” Wal-Mart and SuperValu are starting to discover the same thing.  An executive VP at the Bentonville Behemoth observed: “…eliminating a slow-moving $1 item can lose an entire shopping basket worth $60 to $80.” So they’re putting about 300 culled SKUs back on the shelves.

What’s the moral here?  Stock everything regardless of sales volume?  Of course not.  The moral is that customers are not cattle.  They don’t have to buy from your store or your website – in most businesses they have lots of alternatives.  So anything you can reasonably do to make life easy for them when they shop with you, you should do.  Even if they insist on returning things sometimes, or want to talk to you on the phone instead of emailing through your automated comment feature that reduces your support costs, or buying things you don’t sell as much of as you’d like.

When I was running a dot-com I winced every time some industry guru talked about “driving customers to the web.”  Usually they meant stop providing a phone number on the site, or make it harder to call in orders from the catalog, or something that reduced retailer expenses at the cost of customer inconvenience.  “You don’t drive customers,” I would snarl.  “You coax them.  You woo them.  You coddle them.  Because if you don’t, they drive themselves – away from you.”

It used to be a joke in business: “If it weren’t for those pesky customers we could get a lot more done around here.”  Smart merchants remember that it is a joke – not a rule of business.  Bless the customer and keep him or her…any way you can.

Mike Baum – Sophia Consulting LLC

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Is “so” the new “well?” Harley-Davidson in speech.

Lately it seems speakers, presenters, and interviewees start every talk, every answer to a question, with “So…”  “Are there any potential toxicity problems with this new treatment?”  “So…that will be addressed in the large-animal clinical trials, but at these concentration levels we’ve seen no sign of a problem so far.”

What purpose did “so” play in that sentence?  The same purpose as revving the engine on a Harley-Davidson before taking off from a stoplight.  No progress, just noise, though it did get everybody’s attention.

“So” isn’t the first common engine-rev to pollute the streets of discourse.  Years ago when people couldn’t think of what to say, they said “um” or “uh” (sometimes written “er” but I don’t think I’ve ever heard anyone actually say “er”).  When I was a teen-ager, right after the invention of indoor plumbing, “well” became common.  “What’s your opinion about legalizing marijuana?”  “Well…I think when pot is outlawed, only outlaws will have pot.”

“Well” ruled public dialog for many years.  Then in the ’80s or ’90s, “you know” or “y’know” appeared and started to infiltrate sentences.  “Y’know” initially appeared as an opening gambit like “well,” but soon started burrowing into the guts of sentences like a trichina worm, proving equally resistant to extirpation.  “Well” didn’t disappear but mutated; sometimes abbreviated to “W’l” in Harley-Davidson position, sometimes forming a genetic recombinant, as in “w’l y’know…”

I will leave the somewhat-related history of “like” to philologists with greater expertise and stronger stomachs.

So…what’s the, y’know, marketing point of all this?  The point is that as marketers we are communicators, and as communicators we must always be attentive to the effect produced on our audience.  Speakers using “so” mostly do it unconsciously, having absorbed trendy patterns of speech.  People start to expect “so” or “well,” and speakers use them in order to blend in.  But do we really want our messages to “blend in?”  Don’t we want them to stand out?  Don’t we want people to notice the substance of what we’re saying?  A cluttered background, visual or verbal, obscures the foreground, it does not emphasize it.

Politicians mostly want their pronouncements to glide by and keep them off the hook while making them look good – that’s why they love the verbal Harley-isms.  Communicators with a purpose – which is what marketing is all about – want to make their audience stop and say “Yes!” or “I understand!” or “I’ll do it.”  Which you accomplish by carefully considering the meaningful words you use and not muffling them with background noise.

Mike Baum – Sophia Consulting LLC

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Long copy sells – the web proves it

During the dot-com era, we often heard: “The web changes everything.”  Probably originated by investment bankers hyping internet IPOs, the phrase nonetheless took hold with marketing people who’ve come to think that 140 characters is just about the attention span of the American consumer.

Like much “conventional wisdom,” it just ain’t so.  Take a close look at a page on Amazon.com (or any other highly successful website).  There’s a ton of information on every book (or other product); on the author; comments from other customers; suggestions for books on related topics; etc.

It’s not all in one long column, of course: it’s carefully organized so graphics and short snippets of text let you click for details on what you’re interested in.  But organization is also key to the 3-4 page classic direct mail letter.  There, we use callouts, subheads, kickers, P.S., inserts.  On the web, we use hypertext.  But the principle is the same: give potential buyers the information they want and need to make a decision to buy.

Of course, you have to quickly grab attention.  Of course, you can’t overwhelm people up front.  But we direct marketers have always had only a limited time to make our pitch.  In direct mail, we depend on the envelope blurb or headline to catch the potential buyer before he reaches the wastebasket.  On the web, you keep key copy above the fold for the same reason.

But once an interested prospect starts to read – and you really don’t care about anybody else – give them everything they need to take the next step toward a sale.  Now, while you have their attention.  You may never get a second chance.

Mike Baum – Sophia Consulting LLC

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