Category: Sales And Marketing

As young children, we are often educated about the difference between wants and needs. Needs are basic things like food, clothing, and shelter that are required. Wants, on the other hand, are things that people desire but are optional, like toys, jewelry, etc. It is not uncommon for parents to diminish the importance of wants as compared to needs.

As some people grow up, they may become engineers and scientists. The training is very problem-solving oriented. Given a problem, how do we solve it? If there is a need, how do we fulfill it? I don’t recall much engineering training on understanding wants.

As one’s career changes, there can be troubles with carrying such lessons over to environments involving entrepreneurship, consulting, and other environments where purchases are emotional. In many of these environments as a supplier, one can easily get caught in a rational trap of trying to selling to needs as opposed to wants. That is, it is easy to say if I meet all of the customer prospect’s requirements and needs in a proposal, then surely the customer will buy from me. The problem is that one’s solution may be totally logical, but it may miss a critical aspect of the customer prospect’s deep desires.

Some examples of selling to needs versus wants:

• structured process and framework for analyzing company acquisition versus recommendations and approval from top-tier consulting firm
• comprehensive integration software versus contractual guarantee that integration will work
• financial model that proves a business will work versus a complete business plan that has buy-in from the executive team, Board, and shareholders
• 8-hour day care versus day care a family trusts and feels safe with
• good husband versus sexy hunk
• extremely innovative software from a startup versus pretty innovative software from a startup where source code is secured in escrow if startup goes bankrupt

Some of the examples I offer above are clearly in grey areas, but my point is that one contantly needs to be aware of the purchaser and whether old brain (desire) or new brain (reason) is the more active one at work at any given time.

Daniel Harrison has put together some of his thoughts on organizational behavior here, and it is a great reminder to me that this subject cuts through many aspects of professional and personal life. Daniel’s listing brought me over to Dr. Andrew McAfee’s (a Harvard Business School professor) post here, which starts off citing some reasons (by Dr. John Gourville) why consumers should not be thought of as  "… highly rational evaluators of the old vs. the new products, lining up pros and cons of each in mental tables and then selecting the winner …". The post goes to mention three explanations (each of which either stem from or highly relate to prospect theory):

• We make relative evaluations, not absolute ones.  When I’m at a poker table deciding whether to call a bet, I don’t think of what my total net worth will be if I win the hand vs. if I lose it.  Instead, I think in relative terms —  whether I’ll be ‘up’ or ‘down.’

• Our reference point is the status quo.  My poker table comparisons are made with respect to where I am at that point in time.  "If I win this hand I’ll be up $40; if I lose it I’ll be down $10 compared to my current bankroll."  It’s only at the end of the night that my horizon broadens enough to see if I’m up or down for the whole game.

• We are loss averse.  A $50 loss looms larger than a $50 gain.  Loss aversion is virtually universal across people and contexts, and is not much affected by how much wealth one already has.  Ample research has demonstrated that people find that a prospective loss of $x is about two to three times as painful as a prospective gain of $x is pleasurable. 

What is interesting to reflect on is that it is not always very easy for marketing organizations to explore the points above in a quantitative way. Figuring out where people’s reference points are (e.g., on a market segment basis) often requires primary research that may be expensive (e.g., millions of dollars). Hence, organizations may (primarily or initially) resort to secondary research methods that may tend to be biased toward assuming that consumers are rational evaluators.

Some ways to bootstrap the marketing research process may be to use focus groups, interview distributors (e.g., of competitors), and/or conduct mystery shopping efforts. What bootstrap methods have others used and found to be effective? How does it complement secondary research?

I don’t know if folks saw the article, "In Heeding Health Warnings, Memory Can Be Tricky" in the NY Times (use BugMeNot if want to bypass compulsory registration), but there is some interesting organizational behavior-like research alluded to there as done by Dr. Ian Skurnik in the marketing department at the University of Toronto. Here’s a passage from the article:

"You notice that your grandmother has been taking useless medical
treatments, and you’re worried," he said. "You tell her, ‘You know,
Granny, shark cartilage doesn’t help your arthritis.’ You tell her three times to make sure she understands, and she seems to."

He
continued, "But a few days later you talk to her again and find the
warnings have had precisely the opposite effect of what you intended."
This common problem arises, Dr. Skurnik said, because in laying down a
memory trace, the human brain seems to encode the memory of the claim
separately from its context – who said it, when and other particulars,
including the important fact that the claim is not true.

While the article is about heath topics, the implications are actually more general. The basic gist (without capturing all of the necessary pre-conditions with rigor) is along the lines of this:

When you tell someone not to believe a myth, in the short-run that works to help him/her remember. In the long-run, the opposite effect can [likely] occur. The person ends up thinking the myth is true.

I find this to be an important thing to be aware of because I touch on both marketing and management consulting. Marketing tends to involve trying to be catchy, stand out, gain top of mind awareness, etc. True consulting is oriented towards having empathy and about helping a client in the long-run. When debunking myths, is seems as though there can be competing effects if one is not focused on both near-term and long-term effects (and the pre-conditions as to when things can backfire).

So is there a problem with debunking myths? Yes … if a person does not remember the context of the situation. Read more of the article to get some tips on how to get people to remember the right thing.

Motivated a little by my prior post on using blogging to imbue culture, I have a post over at my 21Publish blog to try to imbue some culture (in the public eye) on people performing inside sales and marketing functions at 21Publish. As I’ve mentioned before, the sales process and the role of cold calling (if any) depends on what type of product or service is being sold. There is also a lot of detail on optimizing sales operations which I do not go into on this post. Yet some may be able to imagine how things need to be segmented out so that skillsets of employees are used properly and so that customer prospects are engaged the way they want to be engaged.

Update (9/30/05) – Here’s a snip of a blog post I did about a year ago that sheds some light on different sales processes as related to the type of product being sold. I believe sales operations is something that every entrepreneur and general manager should better understand …

Where things can go awry is in the implementation of marketing and sales operations, and I’ll only address two activities for brevity: cold calling and networking. A popular saying is that networking is the most effective way to generate sales. While I think this is true, I think that such thinking ignores some underlying core concepts. Better understanding the core concepts is helpful because a spectrum of marketing and sales techniques may be used in an organization.

On one end of the spectrum, cold calling operations are generally better for those types of offerings that are more commoditized, common, and well-defined. Cold calling operations are also better for those cases where the customer’s problems are not that confidential. Thus, as you can imagine, since customer prospects can be contacted at any moment by telemarketers (aside from do not call regulations), if the prospect has a common and well-defined problem, there is very little risk to having an unknown, telemarketer give the sales pitch to them.

On the other end of the spectrum, problems of an infrequent nature and with a confidential slant to them (e.g., merger integration, company turnaround, new business launch) – these types of problems are better matched to sales and marketing processes involving networks. Use of networks and trusted people are the people that get invited to the party. Since problems faced by customer prospects are more confidential and infrequent, networks serve as feelers into the marketplace for suppliers.

So this is just another way of thinking about sales and marketing. At which end of the spectrum do your products and services sit? Do you have multiple products that require different operations? Does a blend apply? What should the balance be?

"Don’t Become An 80s Rock Drummer" … These were the words of hall of fame drummer Dave Weckl (one of my favorite drummers) at his drum clinic in Texas last night.

There’s a lot of talk about specialization these days. Pick a niche and master it. Become the best in the world. There’s a lot of truth in this because people can’t master everything. Plus the professional market is very competitive these days. If you are not a master of something, there is increased risk of someone always beating you out.

Now for those who don’t know, Dave Weckl is one of the world-renowned fusion drummers. He plays jazz, rock, funk, latin, world music, etc. His comment about not becoming an 80s rock drummer was not at all a downplay on rock music. It was actually professional advice. There are many 80s rock drummers today that are unemployed. In essence when the rock music trend died, those who only played rock drumming got specialized out of existence. If you want to stay employed, Dave’s recommendation was that you need to be able to play all types of drumming styles.

In other areas, consider tennis. The old days used to consist of specialist players like John McEnroe that could serve and volley or Bjorn Borg that could play the baseline. Today, specialist players are nearly extinct, and all the pros are all-court players (i.e., can play serve and volley or the baseline). Or consider golf. Tiger Woods used to be just a long game player. He’s improved his short game tremendously. Guys like Phil Mickelson can play both the long game and a phenomenal short game.

So it seems that a case can be made for not specializing and becoming more of a generalist. Having diversity can be a strength too.

But before I go down that path too much, if one investigates Dave Weckl’s music in depth, he has a very signature style to his play, and his drum setup has a crafted sound. If one thinks about other commodity markets (such as haircut places), there can be some differentiation achieved by having different ambiance, etc. Supercuts differs from a high-end salon, say like Mario Tricosi’s. The essence of the difference is a difference in style.

Changing gears a bit, another noteworthy case to mention is crossover innovation and success. People like Tom Parks in the signal processing area took and over-an-under ladder theorem in mathematics and applied it to create equiripple digital filters used worldwide. People like Ronald Reagan and Bill Clinton became recognized for their communication abilities, one or both of them leveraging from the acting sector (depending on how you count things). People like the founders of Skype came from the P2P world and have changed how people look at the telcom space and the internet.

Now I’ve cut a few corners here on market structure and when specialist versus generalist strategies may be more effective in some markets versus others (sometimes it also comes down to how one defines a "market"), but I think there’s also a duality of truths. People both are and are not a bunch of pluggable parts in an organization.

Update: Dave Weckl also had another good saying. "How do you define young versus old? When does one become old? The answer: When one has to start paying bills. That’s when you become old. Experiment (in drumming) as a youth and when you don’t have to pay for things.

Anita Campbell has a very interesting post on pay per call advertising. I have never heard of this type of product before, but it definitely seems like something worthwhile to explore for small businesses (and businesses in general for that matter). This kind of product seems like it would help to eliminate click-through abuse as well as set the bar a little higher on screening customer prospects in certain biz models.

My wife (Suzanne Shu) is quoted pretty extensively in an article in the Seattle Times by Drew DeSilver. The article is entitled, "Gas Pump Angst: Why Rising Price Riles Us Up". Nice job, Drew and Suzanne.

Update (8/15/05): I guess folks were pretty impressed with this article. I just learned that my wife has a TV spot on NBC this afternoon at 4:00pm.

Update (8/15/05): NBC link is here. Actually this aired on the 6:00pm news at the top of the hour.

Update (8/16/05): Two airings for my wife on the 5:00pm and 6:00pm news. Link is here for the next 21 days. Looks like you cannot view it in Firefox (only Internet Explorer).

Update (8/17/05): Another article with the Dallas Morning News stemming from the article here. Also, Bloomberg NY radio station did a live interview this morning. Don’t know if the audio is available online, but I may find out.

Update (9/2/05): Denver post article.