What the world's greatest managers do differently

Marcus Buckingham and Curt Coffman
Publisher: New York : Simon & Schuster
ISBN: 0684852861

This is a synopsis only.  RESULTS.com recommends you buy the original book.

How do you measure and grow your human capital?

Financial statements do a poor job of measuring the true value of a company.  A great deal of your company value is tied up in your human capital – the hearts and minds of your people. 

The Gallup Q 12

Extensive research by Gallup has discovered 12 statements that are be the most powerful predictors of employee engagement.

The teams with highest engagement scores had:

• increased sales growth
• increased productivity
• increased customer satisfaction
• fewer accidents
• lower staff turnover
• less staff absenteeism

Each question is rated on a scale of 1 - 5

(1= strongly disagree, 2 = disagree, 3 = neutral / no opinion, 4 = agree, 5 = strongly agree)

1. I know what is expected of me at work.
2. I have the materials and equipment I need to do my work right.
3. At work, I have the opportunity to do what I do best every day.
4. In the last seven days, I have received recognition or praise for doing good work.
5. My supervisor, or someone at work, seems to care about me as a person.
6. There is someone at work who encourages my development.
7. At work, my opinions seem to count.
8. The mission/purpose of the company makes me feel my job is important.
9. My co-workers are committed to doing quality work.
10. I have a best friend at work.
11. In the last six months, someone at work has talked to me about my progress.
12. In the last year, I have had opportunities at work to learn and grow.

Research shows, it is the employee’s immediate manager who is the critical player in building an engaged, productive workplace – not pay, benefits, conditions, or even charismatic leadership

The best thing the business leader can do create a great company is to hold each line manager accountable for what their employees say to each of these 12 statements. 

The Difference between Leaders and Managers

The difference between managers and leaders is more profound than most people think

A leader is not a more advanced form of manager. Both roles are vitally important – they require 2 very different strengths. 

Great leaders look outward:

Key role = rally people to a better future

Great managers look inward:

Key role = find out what each individual’s strengths are and capitalise on them

The 4 Core Management Activities:

1. Select for Talent

Selecting for talent is the manager’s first and most important responsibility

Understand the 3 categories of talents / strengths:

1. Striving = the “why” of a person (what motivates them)
2. Thinking = the “how” of a person (how they make decisions)
3. Relating = the “who” of a person (how they relate to people)

• Study / interview your current top performers in each position - how they strive, think and relate
• For each role Identify at least 1 critical talent from each of the 3 talent categories
• Use this as the basis for recruiting and interviewing for each role
• Do not compromise on these talents – no matter how persuasive the candidate’s resume or personality  
• Talent trumps experience, intelligence & determination
• Ask questions that elicit past examples of specific behaviours
• Clues to talents / strengths = SIGN
  • S – Success – you are good at it
  • I – Instincts – you have the urge to do it
  • G – Growth – you love learning about it
  • N – Needs – it meets your needs - you feel a sense of fulfillment 
• Use profiling tools to provide objective measurement

2. Define the Right Outcomes

• Standardise the “ends” rather than the “means”
• Enforce only those steps that correlate with prescribed standards of performance
• The customer is the ultimate judge of what is a valuable outcome – ask them!
• Realise that employees will not do things exactly the way you would do them.
• Let employees leverage their own unique styles to meet measurable outcomes
• Select for talent / strengths in the 1st place and you will need fewer rules
• Create measures for all outcomes
• Hold people accountable for achieving measurable outcomes

3. Focus on Strengths

• Cultivate each individual’s strengths and manage around their weaknesses
• Manage around weaknesses by providing a support system, a complementary partnership, or change their role to match their strengths
• Don’t try to fix their weaknesses
• Everyone is different – and their strengths / talents are resistant to change
• Help them become more of who they already are
• Confront poor performance immediately
• Check - Is it a talent issue or a training issue?
• Check - Is the manager pushing the right buttons?
• Terminate the staff member early if you have made a hiring error

4. Find the Right Fit

• Help each person find roles that enable them to do more and more of what they are naturally wired to do
• Encourage world class performance in each role
• Promoting people can lead them to failure. Traditional career paths are traps
• Management / Leadership require specific core strengths
• Instead, create “heroes in every role” – i.e. alternative career paths
• Make every role, when performed excellently – a profession with associated prestige, pay and perks
• Create levels of achievement (ala lawyers – junior associate – associate – senior associate – junior partner – partner – senior partner)
• Broadband (overlapping) pay rates – i.e. senior salespeople earn more than junior sales managers
• Make specialization and excellence in a role more attractive in terms of pay, perks and prestige than seeking promotion 
• Celebrate individual successes

Customer Research – What customers really want:

The 4 Step Hierarchy to increase Customer Satisfaction

1. Accuracy 
   Did I get what I expected?
    
2. Availability
   Are you there when I need you?
    
3. Partnership
   Are you on my side?
    
4. Advice
   Can you help me to learn?

4 Keys for Effective Performance Appraisals

1. Simple   
2. Frequent
   • One on one manager meetings with direct reports
   • Minimum of 1 hour performance appraisal per employee per quarter 
   
    
3. Future focused
   • What “could be”, rather than focus on past mistakes 
    
    
4. Self Measurement  

• Staff track their own performance and learnings = self discovery
• Get them to prepare answers to the following questions prior to the meetingWhat results have you achieved? 
  • What have you learned?
  • What relationships have you built?
  • What do you think you are good at?  Why?
  • What parts of your current role do you enjoy?  Why?
  • What parts of your current role are you struggling with?  Why?
  • How can we manage around this?
  • What would be the perfect role for you?
  • What would you be doing?
  • Why would you like it so much?
  • What will be your main focus for the next 3 months?
  • What do you want to learn?
  • What relationships do you want to build? 
• During the appraisal, honestly tell them what you think about each of their answers to each question and add your comments to each of their answers.

Interviewing for Strengths:

• What made you want to apply for this role?
• What do you think you are good at?  Why?
• What parts of your current / previous role(s) do you enjoy?  Why?
• What parts of your current / previous role(s) do you struggle with?  Why?
• What would be the perfect role for you?
• What would you be doing?
• Why would you like it so much?
• How often do you like to meet with your manager to discuss progress?
• Do you tell people how you are feeling, or do they have to ask?
• What is the best praise you ever received?  What made it so good?
• Who was the best manager you’ve had & what made this relationship work well?
• Have you had any really productive work partnerships?
• What made these relationships work well for you?
• What are your future personal development goals?
• What skills would you like to learn
• What challenges would you like to experience?
• Is there anything else you want to talk about that might help us work well together?

Robert B. Cialdini
Publisher: Glenview, Ill: Scott, Foresman
ISBN: 0673189422


This is a synopsis only. RESULTS.com recommends you buy the original book.


Short Cuts – The Power of Perception

• In today’s busy, information overload society people take mental “short cuts” to save themselves from thinking or doing their own research

• E.g. - people perceive that higher price = higher quality.

• Many times the same goods (ones where people have nothing objective to compare their value to) can be dramatically increased in price and suddenly they will achieve dramatic increase in sales.

• (Chivas Regal Scotch Whiskey struggled as a brand until they raised the price far above its competitors – then sales skyrocketed)

• A discount coupon even if it offers no real savings triggers the same number of people using it – than a coupon that offers significant savings

• People believe that if an expert says so, it must be true and don’t pay attention to the details in question

Instant Influence

• The speed of change and the volume and complexity of information means that we are increasingly unable to process all the relevant information necessary to make sound decisions

• We tend to make decisions based on a small subset of information which we extrapolate to represent the total

• Marketers and governments know this - hence they know that we will unconsciously react to the Laws of Influence and not even realise what is happening or why we are doing what we are doing

• Learn the laws of influence – and be more aware of what is really going on around you in your interactions with people, advertising and the media.

• Ask yourself – What is happening here? What are their motivations? How are they trying to influence me? What are my choices? What do I really want?

“Because”

• The word “because” triggers an unconscious compliance response

• When we ask someone to do something they we will be likely to comply if we provide a reason – any reason

• The reason itself is inconsequential in eliciting the response

• E.g. “Can I please go first, because I am in a hurry” is just as likely to get people to stand aside as having some more plausible long-winded reason

The Law of Reciprocity

• The rule says that we should try to repay in kind what another person gives us

• Human civilisation evolved by people giving goods and services (without fear of loss) so in return they could expect to be repaid with other goods and services.

• A feeling of future obligation to repay was trained into us by socialization.

• People in general do not like to feel indebted to others and will want to return the favour as soon as possible

• There is a universal dislike in all cultures for people who take and do not give in return

• The Hare Krishna organisation’s incredible economic growth is fueled by reciprocity – they give a free “gift” (a book or even a flower) and refuse to take it back. Then they ask for a contribution to their cause

• There is a strong cultural pressure to reciprocate a gift – even an unwanted one (ie Xmas cards)

• After accepting a free “gift” customers are more willing to purchase goods / services they would have otherwise declined

• Successful politicians provide favours to other politicians and store them for when they need to call on a favor in return. The recipients of their favours feel obligated to vote for their legislation later

• Medical researchers funded by drug companies feel obliged to favourably recommend the company’s drugs

• Samplers in supermarkets invoke this rule immediately when you taste the food, and there is a subconscious compulsion to repay them by buying the product

• Free trial periods have the same effect. People feel obligated to pay for and keep the products once they have used them

• Free consultations and seminars use this principle also

• Fundraising dinners have learned it is better to wait until you have had the meal before they ask for donations

• A woman who allows a man to buy her drinks is immediately judged by him as being more sexually available to him

• Another way to invoke reciprocity is to combine the Law of Contrast. Ask someone to do a favour for you (the reverse of doing a favour and expecting one in return). Ask for a big favour that is unlikely to be agreed to. When they decline, then make a concession by asking for a smaller favour (the favour you actually wanted all along) and you influence the other party to reciprocate by making a mutual concession (ie they will likely comply with your request). Unions do this in their wage demands. Children ask for $10, get a refusal, then ask for $5 (which is what you really wanted), and the parents will likely comply

• Another version of this is where the door to door salesperson does not get the sale, but the prospect is then willing to provide them the names of their friends as customer referrals as a concession.

The Law of Commitment and Consistency

• Once we make a choice or take a stand, we encounter internal and external pressure to behave consistently with that commitment

• We justify our decisions in our minds and continue to behave according to our earlier decisions

• In most circumstances it is commendable to say “my word is my bond”, but the drawback is that it binds us to old ways of behaving that may not be relevant anymore

• We use this law as a shortcut to not have to think through issues every time

• Salespeople invoke this law by saying to prospects, “If I could get you the model you want and the price was right, would you be prepared to buy today?”

• The strategy is to “start small and build”. Get a small commitment, then people will feel the need to be consistent with their earlier decision when you ask for a bigger commitment later

• The law of consistency is sometimes called the “foot in the door technique”. Get them to say yes to you demonstrating your product to them, and you are more likely to make the sale

• Charities know people who have already donated once, are likely to say yes in the future

• Therefore be careful about agreeing to what seem to be trivial requests. It can make you feel compelled to comply with larger requests that are only remotely connected with the original request

• During the Korean War the Chinese would isolate an American POW and over several hours of (friendly) interrogation get him to admit that the USA was not perfect. From there they would build on his commitment and get them to write & sign a small statement about how capitalism had its faults in return for some cigarettes etc. When the POW returned to the barracks he would hear his essay being read aloud over the prison camp speakers, and his comrades would label him a traitor. He would defend his actions, but from that point on would be forever shunned by his fellows, and eventually become a willing collaborator with the enemy, willing to spy on his comrades

• Beware of signing petitions – it will subconsciously influence your behaviour in the future to be consistent with your earlier position on this subject

• People use this law to label people and then control them. Once you accept someone’s label for who or what you are, you feel obligated to behave according to this label. I.e. “Do you consider yourself to be a generous person? Great then you’ll be willing to help me out with ….etc”

• Give people a reputation to uphold, and you can wield great influence

• Getting customers to fill out the sales contract, prevents them from backing out from paying later

• Writing down goals, increases your commitment to taking action toward their attainment – telling others about your goals heightens the commitment

• Competitions like “Tell us why you like our product in less that 100 words and you’ll win a prize” are powerful influence tools. Once you have entered you will always feel compelled to choose the product

• Groups like Weight Watchers and Alcoholics Anonymous are successful because they get people to publicly announce their intentions – and thus they are more likely to follow through

• The more effort that goes into a making commitment, the greater the ability to influence the person who made it (eg inviting someone to come to your office for a free consultation etc)

• When advertising, you are best to not show prices. Even getting prospects to phone up is a commitment that you can use to your advantage

• The more active, public and effortful you can get people to make the commitment, and the more they make it of their own free will (no coercion) the greater the influence on their behaviour

• Car dealers are notorious for “low balling”. They sell you a “cheap car”, then once you have made a commitment to buy (or even visit the showroom!) you realise that you have to pay extra if you want a stereo, air conditioning etc. (The law of Contrast also comes into play. After you have spent $20,000, an extra $200 doesn’t seem so much)

The Law of Social Proof

• We determine what is correct by finding out what other people think is correct

• We view a behavior as being correct to the degree we see others performing it (especially those we identify with as being similar to us in appearance or background)

• The greater the number who believe in an idea, the more we think they must be correct – that perhaps they know something we don’t

• Canned laughter during sitcoms increases the humorous responses of the audience and their rating of the humor of the TV show – even when they know the laughter is not real

• Bartenders / buskers put some of their own money (gold coins / notes) in their collecting jars giving the impression that everyone is tipping generously & influencing others to do likewise

• Evangelical preachers / magicians / comedians sow their audience with ringers to act in a prescribed manner and thereby influence the rest of the audience to do likewise

• Nightclubs deliberately create queues so that people think it must be popular

• Advertising uses social proof to influence us when it claims “fastest growing” “most popular” “trendiest” “number one” etc

• Advertisers also try to use people who look just like the intended target user for the product – so people who identify with the actors in appearance and background will be influenced to view the product favourably

• Suicides / murders / accidents tend to invoke copycat occurrences – the more publicity they get, the more similar occurrences happen soon afterwards

• When newspapers publicise a young person’s suicide, youth suicide increases – including youth vehicular suicide.

• 4 people looking skyward will get 80% of all passersby to do likewise

• Children shown violent programs will afterwards act in a more harmful way to each other

• In any situation where we are unsure of ourselves we look to others for guidance – hence the common occurrence where an accident victim lying on the footpath in need of help is ignored by passersby

• In an emergency situation social proof can often be completely wrong. Many people have died in fires as a result of the group not reacting to fire alarms.

• The Jonestown cult suicides – the 910 members were isolated from society and took their lead from the group leaders to willingly drink cool aid laced with poison

• Farmers know that if you can get the herd leader animal moving in a certain direction, the rest of the herd will follow

The Law of Friends (Liking) & the Law of Association

• We tend to say yes to the requests of people we know and like

• Network Marketing (MLM) / Tupperware etc use this law to successfully sell product

• Even a mention of a friend’s name can influence a buying decision – hence the power of salespeople getting referrals “Your friend Mr. X suggested I call you as he thought you might be interested in this product”. Turning salespeople away in this case is more difficult – it’s almost like rejecting the friend

• We are genetically programmed to “like” attractive people – and as such we tend to comply with their requests.

• Therefore if we wish to influence people – the more we can enhance our attractiveness the more effective we will be

• The “halo effect” – we automatically believe that good looking people have the traits of talent, kindness, honesty and intelligence. This unconscious reaction makes us assume “good looking = good”

• Good looking people are more likely to get your vote, get hired and get favourably treated by the justice system

• Advertisers frequently feature good looking people promoting their products

• A fashion model / celebrity lends their perceived positive traits to the product they are promoting (the Law of Association) – thus we like it more

• We also tend to like people who are similar to us in appearance, dress, behaviour, political allegiance etc.

• Even little things, like if their name is similar to ours in direct marketing letters we tend to be more likely to respond favorably

• Good salespeople know how to find common interests with their clients and appear more likeable (as well as mirror client’s posture / vocal patterns etc)

• They also “take our side” and “do battle with the boss” to get a good deal for us

• Good cop / bad cop. The suspect sees the good cop as being on his side and is more likely to confess to him (the law of Contrast also applies here)

• Most people are suckers for flattery – we tend to believe praise and increasingly like those who provide it

• Conversely there is an unconscious tendency to dislike the person bringing us unpleasant information “shoot the messenger”.

• Therefore association with good things makes us more likeable, association with bad things makes us less likeable

• “We will be known by the company we keep”

• Sports fans see the team they are supporting as representing “them”. If the team wins “they” feel superior by association

• People desire to live in prestigious neighbourhoods, attend the best schools, eat at the best restaurants, associate with the “in crowd” – to invoke the law of association

• The desire to bask in the reflected glory of others (the Law of Association) taken to the extreme does suggest low self esteem and external motivation however (groupies / rabid sports fans / stage mothers)

• Having team goals in a company leads to greater cooperation and liking for each other – than individual competition

The Law of Authority

• We unconsciously obey symbols of authority without question

• We are trained as children that obedience to authority is “right” and disobedience is “wrong”

• People have an extreme willingness to go to almost any lengths to obey the command of authority (hence the Nazis convincing the German’s to persecute the Jews etc)

• Nurses obey Doctor’s prescriptions – without thinking or questioning

• Advertisers use people posing as Doctors or Scientists to promote their product – the white coat uniform adds to the influencing effect

• Uniforms, titles, qualifications and other symbols of authority (ie the well tailored business suit and highly polished shoes) have the same unquestioning influence effect

• Physical size also conveys authority (as it does in the animal kingdom) – hence high heels, shoulder pads, and the fact that tall people are more likely than short people to rise to positions of leadership

• Fine clothes, jewelry, cars and possessions convey authority.

• Authority is easily faked - ask yourself, “Is this person really an expert or is it just superficial appearance? What is the evidence of their authority? How truthful can we expect them to be in the circumstances?”

• Clever influencers will argue against their own interests to assure us of their sincerity – this helps “prove” their honesty to us. Invariably of course the drawbacks will be outweighed by the advantages. “We’re more expensive – but we’re worth it” “Listerine – the taste you hate twice a day”

• Clever waiters will say – “The dish you chose is not as good tonight at usual. Might I suggest instead…..” (This invokes several laws – liking / trust / reciprocity / authority)

• Letters of recommendation obtain the most favourable results when one minor negative comment about the candidate is included – rather than wholly positive comments only

The Law of Scarcity

• Opportunities seem more valuable to us when they are less available

• Rarity increases the value of an item (jewels / art / stamps)

• People are more motivated by the fear of losing something than they are of gaining something

• A ringing phone is more compelling than the conversation we are having – what are we missing if we do not take the call?

• Marketing that implies what we will lose if we don’t act - is more compelling to purchasers than outlining what we will gain

• “We have only one left in stock / Offer expires this Friday / Hurry while stocks last / for a limited time / Buy now, or pay full price when the next shipment arrives / I am booked out – but if I move things around I may be able to fit you in on Friday” etc

• Whenever our free choice is limited, or we are prevented from accessing something - we react by wanting it more (censorship / prohibition)

• This tendency starts at age 2 (“The terrible twos”) – where we start to resist being told what we can and can’t have, and rebel against constraints on our freedom. Children constantly test the limits of their freedoms (a wise parent provides consistent boundaries). The teenage years are another especially rebellious time – although we tend to react against restrictions to our freedoms all our lives

• Adult tools of influence like persuasion and preference are more effective tools with teenagers than prohibitions and controls

• Taking something away that was previously given intensifies desire for its return

• Mikhail Gorbachev gave the Russian people increased freedoms (the policies of glasnost and perestroika). The KGB staged a coup placing Gorbachev under arrest and pledged to reinstate the old suppressive order. The people revolted at the prospect of losing their newfound freedom and took to the streets to secure Gorbachev’s release.

• The lesson applies to families also – the parent who grants privileges and freedoms, and enforces rules erratically invites rebellion from the children when they try to reinstate the rules

• Censorship makes people want the information even more. In fact they become even more sympathetic to the information even though they have yet to see it!

• For fringe groups the clever influencing tactic is to get your views officially censored, then publicise the censorship

• Judges ruling evidence as inadmissible is the same as censorship – the jurors unconsciously place more weight on this evidence

• Information does not have to be censored for us to value it more; it need only be scarce

• We want things more when we are in competition for it “While stocks last!” “I have another person interested in making an offer” (also “feeding frenzies” at January department store sales / buyers getting emotional & competitive and over paying at auctions)

• When a new admirer appears on the scene, relationship partners become especially possessive

• Auctioneers fabricate dummy bidders to invoke scarcity

• Our typical unconscious reaction to scarcity & competition hinders our ability to think rationally as to an item’s real worth and we tend to overpay

• If you are a seller – give all your prospective buyers the same appointment time to view your product to invoke scarcity and competition amongst them

Doug Hall,
Publisher: Emmis Books
ISBN: 1578601797

This is a synopsis only. RESULTS.com recommends you buy the original book.

Business success is not random. There are reproducible scientific lessons that can help you win more, lose less, and make more money with your products, services, sales and advertising efforts

75% of new businesses fail within 5 years. 75% of new product / service launches fail - and are discontinued within 2 years. A 25% chance of success is terrible odds. Most business owners will have a greater probability of success if they went to the casino and gambled their investment

Working harder won’t do it. You need to think smarter.

Those who excel in marketing, at a reproducible level (anyone can get lucky once), are students of the marketing craft and understand the strategies that have higher probability of success. They are professionals who study the literature.

Research for this book comes from the analysis of more than 6000 client groups, and more than 1,200,000 customers. The findings apply to both products and service

Canadian philosopher Marshall McLuhan once said, “The medium is the message”. Research has proved this to be wrong. It is the message that motivates the customers, not the medium. It is what you say, not where you say it that matters most. The message is king.

It is important to note, that no amount of communications enhancement will help where the products or services are not competitive.

Who, Why, What, How.

Target market = “Who” your ideal customers are

Dramatic and Meaningful Point of Difference = “Why” your target customers should care

Overt Benefit = “What” you are offering to your target market customer

Real Reason to Believe = “How” you are going to make good on your promise

Target Market

Target market = “Who” your ideal customers are

The rule = “Delight the few to attract the many”

• Your target market are the customers you seek to delight and excite the most with your offer

• Your target market are your most profitable customers with the most potential for growth

• When you have a clear target market

  • Your product and service design has more clarity and focus

  • Your customer communications are much more effective

• Note – while the target market is the centre of your business “bulls eye” it does not necessarily mean they will make up most of your sales volume

• Whenever you focus on a specific target market you immediately enhance customer perception of you as being an expert – and experts can expect to get paid more and earn higher margins

3 Laws of Marketing Physics

1. Dramatic and Meaningful Point of Difference

2. Blunt Overt Benefit

3. Real Reason to Believe

Notes about the 3 Laws of Marketing Physics:

Spending more money is rarely the answer to more growth.

It’s the quality of your idea that matters. No amount of communications enhancement will help where your products or services are not competitive.

Successful selling requires 2 simple tasks:

1. Making the effort to contact potential target market customers

2. Delivering an effective message

The research in this book will help you to deliver an effective message.

You still need to get out there and make the effort!

Dramatic and Meaningful Point of Difference

“Why should I care?”

Dramatic and Meaningful Point of Difference = “Why” your target customers should care

Increases your chances of marketplace success 353%

• Your mission is to create a monopoly – by being so dramatically different to your competitors

• If you’re not meaningfully unique, you’d better be cheap

• Without uniqueness you are a commodity and will only achieve commodity profit margins

• For uniqueness to be effective it must be dramatic and meaningful

  • It must be relevant to the target market, yet unexpected

    • (unexpected = novel, unusual, original, unique, new, different, revolutionary)

  • It must “call out” to your customers

  • It must make a real difference to your customers

  • The only difference that matters to customers is the experience they receive

• Dramatic & Meaningful Difference gets you noticed, remembered, and acted on by customers

• Make sure you can explain it simply to someone who is not knowledgeable in the field

• Can a 12 year old understand what makes you unique?

• Take whatever you think makes you different and multiply it by 10. Be boldly unique

• Dramatic and Meaningful Difference is the greatest weapon a small business has in competing with large companies.

  • As a company gets larger, its courage tends to get smaller

  • Larger companies tend to play it safe rather than trying to be unique

• Dramatically different ideas are usually hard to execute – they challenge you operationally

  • Is it a sustainable, defendable difference?

  • Can you execute effectively?

  • Is there a barrier to competitors copying you?

  • Dramatic differences cause you operational chaos and stretch you to deliver, and can invoke initial resistance from staff

• To be dramatically different is hard work – but worth it (353% more worth it!)

• You must continually develop your Dramatic Difference – if you are successful you will eventually have “me too” competitors

• What starts as a monopoly soon becomes a commodity

• Data shows that 80% of all copycat products fail – (but their entry into the category has the effect of lowering category margins)

• Always focus some of your resources on creating the “next big idea” for your uniqueness

• Being “new” and “having news” is the #1 driver of advertising success

Common mistakes with Dramatic and Meaningful Point of Difference:

• Delusion – refusing to face the fact that your company is not truly dramatically different

• Your uniqueness is too easy for competitors to copy and implement

• Exaggerating a difference based on minor distinctions that require “insider knowledge” but are irrelevant, or not easily understood

• SOS = “Same Old Stuff” - Having a “me too” product or service and hoping that a better marketing message will produce a miracle

  • Your Dramatic and Meaningful Difference must be built into your product or service

  • You uniqueness must come from within

• Shallow gimmicks

• Solving yesterday’s problems

How to craft a Dramatic and Meaningful Difference:

Be a Pioneer

• Having a future focus is 10 x more predictive of success

• Lead your marketplace – don’t copy

• Do not ask customers what they want. Innovation does not come from customers

• Customers don’t know what they don’t know. No customer asked for an iPod.

• Anticipate the future needs of customers. Vision takes courage.

• Pioneer companies enjoy a 4 x sustained advantage – they can command ongoing premium pricing over clones

• Create the news – be the first to offer a “….”

• Create new market categories – position yourself as leader

• Claim a dramatic point of difference

• Pursue change even when you don’t have to

• Learn more about your customers and your industry every week

• Make learning a daily activity

• Be open to new information – new facts

• Be prepared to change your mind with new information

“An excessive customer focus prevents firms from creating new markets and finding new customers for the products of the future. They unwittingly bypass opportunities.” (Harvard Business Review)

“A customer can seldom say today what new product or service would be desirable in 3 years from now, or a decade from now. New products and services are generated, not by asking the customer, but by knowledge, imagination, risk, trial and error on the part of the producer, backed by enough capital to develop the product or service and to stay in business during the lean months of introduction” (W Edwards Deming)

Pursuing dramatically different ideas takes courage

It takes courage to lead customers into the future

Blunt Overt Benefit

“What’s in it for me?”

Blunt Overt Benefit = “What” you are offering to your target market customer

Having 1 blunt overt benefit will nearly triple your chances of marketing success

• Customers stay with the status quo until they see an overtly appealing alternative

• Be blunt. The more obvious it is what you do - the increased chances of success

• Focusing on benefits instead of features is critical for marketing success

  • Features = facts, figures, technology, details about your product / service

  • Benefits = what’s in it for the customer? What do they receive, enjoy or experience?

• Engineers, scientists, and technology driven companies are prone to making the mistake of focusing on features – and communicating their love of the technology

  • For every feature ask from the customer’s perspective – “So what?”

• Benefits must be specifically related to your target market customer

• Tell customers exactly what you will do for them in a direct, easy to understand manner

  • Is it specific about what’s in it for the target customer?

  • Is it clear and obvious?

  • Does it excite and compel?

  • Is it unique vs. the competition?

  • Does it work visually as well as when said out loud?

  • Is it easy for customers to spread via word of mouth?

  • Does it travel well? E.g. the game of Chinese whispers – does the message stay the same as it is passed on from person to person?

• Research shows you need to be blunt and overt in order for your target customer to “get it”

• It’s not boasting when you can really deliver

• The clearer you are about what you do, the more customer word of mouth referrals you get

• Being clever and obscure does not create customer curiosity, they simply reject you

• Can a 12 year old tell what your company does by looking at your business card? By looking at your branding? Your tagline? Your advertisements?

• It’s OK for a customer to say “NO” because your Overt Benefit does not apply to them (i.e. they are not your target market customer)

• It is inexcusable for a target market customer to say “NO” because they do not understand your Overt Benefit

• Sometimes people fear that they might insult the intelligence of their customers if they are too blunt & overt

  • Don’t worry you can’t. You will attract the right customers for the right reasons

  • Being blunt and overt ensures the enquiries you get from your marketing will be pre-qualified and already interested in exactly what you are offering

• The more you focus on doing 1 thing great, the greater your chances for success as a brand

• Analysis of over 4000 concepts shows that if you offer more than 1 or 2 benefits - you lower your chances of marketing success.

• The strongest brands and strongest companies offer 1 focused benefit

• There are many cars, but few “real brands” that are associated with 1 benefit

  • BMW – driving

  • Volvo – safety

  • Toyota – reliability

  • Mercedes – engineering

  • Ferrari - speed

• Contrast this with brands that try to be all things to all people

  • Ford = ?

  • Chrysler = ?

• When customers hear your brand name, what 1 benefit do you want to come to their mind?

  • Ask your customers what 1 thing comes to mind when they hear your brand name?

  • Ask your staff what 1 thing do we offer our customers?

  • Are they all saying the same thing? If not – you have work to do

• People fear that by focusing on 1 thing, they will limit their customer base. They think that by promising everything they will broaden their business potential. However, the data shows the more you dilute your focus – the more you limit credibility and customer appeal.

• When you proclaim and then deliver excellence in 1 specific area, it gives credibility to your entire business. Rather than limit your customer base, you can actually grow as perception of your excellence and focus. Customers assume that if you do 1 thing great, you must have excellence in other areas too.

• The most difficult, yet important decision is to decide what you are not going to be.

• You may feel like you are giving something up, but saying NO to promoting other offerings gives you a greater chance of success. Saying NO enhances your employees’ effectiveness

• Your 1 Blunt Overt Benefit is actually your brand / company mission – it focuses your employees on what really matters

• Your Blunt Overt Benefit is what your brand stands for, what your company stands for

• Your Blunt Overt Benefit can be either rational or emotional – the data shows there is no difference in their effectiveness. The key is to do 1 thing great and focus.

• When a customer buys your product or service they are buying the “end result” they can visualize in their mind

  • What is the defining moment of success for your product or service?

  • How could you show the end result visually?

How to find your Blunt Overt Benefit:

• What is the reason you got into business in the first place?

• What problem did you set out to solve?

• What are you most proud of / excited about regarding what your company offers?

• What would your most loyal customers boast most about what your company offers?

• Complete this statement: We are the best / first / only company to offer….

Common mistakes:

• Providing a solution (or inventing something) to solve a non-existent problem

  • This is the #1 mistake. The customers must have tension for change

• Selling the absence of a problem - instead of a positive benefit

  • Instead of saying “no preservatives” it is better to sell your health benefits

  • Selling “we don’t have a negative” requires customers to know that all other products have that negative. When you ask customers to do more work - you get fewer sales

• Assuming customer knowledge

  • Make sure a 12 year old level of comprehension can understand your benefit

• Selling “low prices”

  • The only time you can “own” this benefit on a sustainable basis is if you are large enough to have economies of scale or are vertically integrated to the extent that you have a sustainably lower cost of production (e.g. Wal-Mart, Dell, Southwest Airlines)

  • Do not market “low prices” unless you truly have lower costs than your competitors

• Being too humble

  • Being overt can feel like boasting - some people are scared to blow their own horn.

  • It is not boasting when you are telling the truth and you can do what you say

  • Beware of comments from close friends and focus groups – who tend to try to water down your offer – because they are familiar with your offer and will say “You don’t need to say that, we know that”. The real world is not familiar with your offer. Your business has mere seconds to get a customer’s attention. Be blunt and overt.

• Doing what everyone else is doing

  • Your overt benefit needs to be unique. If you “play safe” and offer the same things as your competitors you will have no impact.

Real Reason to Believe

“Why should I believe you?”

Real Reason to Believe = “How” you are going to make good on your promise

You are 2 x more likely to succeed if you combine your Blunt Overt Benefit with a Real Reason for them to believe you

• Customers will not commit to purchase until they perceive a Real Reason to Believe that you will deliver on your Blunt Overt Benefit

• You need to provide evidence that you will do as you promise

• Your Blunt Overt Benefit is “what” you are offering. Your Real Reason to Believe is “how” you are going to make good on your promise.

• To succeed in marketing you need the “what” and the “how”

• Customer evaluation of your Real Reason to Believe happens in a split second

• Overt Benefit generates the interest; the Real Reason to Believe is what closes the sale.

• “Real” = you must tell the real truth. Authenticity is the #1 most important personal value

• Customer trust in marketing messages and product and service claims is at an all time low – after having been duped by companies’ and politicians’ hype for far too long

• Real Reason to Believe is built or diminished by small actions e.g.

  • Clean uniforms and clean sign-written trucks increase your credibility

  • Staff answering the phone professionally and courteously increase your credibility

  • Dirty food trays on a airplane make you question the airline’s engine maintenance, and decrease your credibility

• Credibility is like a bank balance. Today you start with a negative credibility balance and need to build trust. 93% of customers do not believe advertising anymore.

• When customers trust you they:

  • Are more willing to make the purchase.

  • Will drive further to do business with you

  • Will be more loyal

  • Will pay more, and be less tempted to shop elsewhere for a cheaper price

• Successful TV infomercials that stay on the air for a long time provide some of the most effective examples of Real Reason to Believe. They provide:

  • Visual demonstrations

  • Customer testimonials – aimed at converting skeptics

  • Common sense explanations of how the product works

  • Verification of the expertise and pedigree of the inventor of the product

• Bricks and mortar stores have an advantage of more credibility than infomercial companies or internet companies because people can see and try products for themselves and know they can come back and present any problems to real people

• Internet companies need to provide as many Real Reasons to Believe as they can

Real Reasons to Believe strategies:

• “Kitchen logic”

  • Use common sense language to explain in a direct and straightforward manner why you can deliver your Blunt Overt Benefit e.g.

    • We make the most durable jeans – because we use triple-thick denim

• “Personal experience”

  • Demonstrations are more effective than testimonials

  • Let customers see, feel and experience your brand

  • Sampling

    • Sensory feedback – see, smell, feel, taste, touch, experience

  • Demonstration

    • Includes “before & after” photos

    • Images of a product being used in extreme circumstances (so customers can imagine how well it performs in their ordinary personal circumstances)

• “Pedigree”

  • Detail the heritage of your brand

  • “Development pedigree”

    • Describe the design, creation, recipe, or process behind your brand

    • (Remember these types of Real reasons to believe are not your overt benefit – they are simply reasons to believe you can deliver your overt benefit)

  • “Marketing pedigree”

    • Use market data to communicate credibility e.g.

      • “The #1 selling XYZ in …”

      • “Winner of the ABC award 2 years in a row…”

  • “Trademark pedigree”

    • Use a trademarked brand name that is already trusted to endorse your new brand – e.g. line extensions

    • The danger is when companies use line extensions to stretch their original trusted brand into another category that is beyond what it currently stands for

• “Testimonials”

  • Either from customers or experts (get their signed permission)

  • Celebrity endorsements (For celebrities to add credibility, the fit needs to be right and they need to be perceived to have some expertise in the area)

• “Guarantee”

  • The power of your guarantee is directly linked to the level of risk your company is perceived by the customer to be taking

  • Keep fine print to a minimum – you must maximize customer confidence, not reduce your legal risk

  • Be bold & confident in order to give your customers peace of mind

Common mistakes with Real Reason to Believe:

• Not big enough reasons

• Not enough reasons. When in doubt, add more

• Irrelevant reasons

  • Needs to be synergy between your Blunt Overt Benefit and Real Reason to Believe.

• Are your marketing communications saying the same message in all your media channels?

• Are your staff all saying the same messages about your company (on the phone / at trade shows etc)? When the messages are different you lose credibility with customers

• “Me too” reasons – following the rest of your industry (“they all say that”). The more a strategy is used in a category the less credible it becomes e.g.

  • All scotch whiskeys talk about their pedigree

  • All mail order companies offer a money back guarantee

  • (You need to come up with a unique strategy to break the cycle of cynicism)

• Destroying your own credibility

  • Usually done by lawyers inserting fine print to limit company liability

The 3 Laws of Capitalist Creativity

1. Explore Stimuli

2. Leverage Diversity

3. Face Fears

• Brainstorming is not effective or efficient = the “suck” method of creativity

• Brainstorming is 50 years old. Data shows brainstorming does not work well in business

• Create a multi-sensory stimulating environment = 2 x more creative ideas developed

• Leverage diversity – surround yourself with people who think differently to you (different cultures, ages, backgrounds, thinking styles etc)

• Let people write their own ideas / solutions individually first

• Then people present their written ideas to the group

• Don’t worry about practicality of ideas in the initial stages

• Generate many ideas

• Suspend judgment

• Drive out fear – encourage dissension and debate

• Left brain people are just as important as right brain people in the creative process– leverage both styles

• Right brain = energy to lead change

• Left brain = doers = turn dreams into reality = bring discipline to the creative process

• Experiment on small scale. Fail fast – fail cheap

• “It is not the strongest that survive, nor the most intelligent, but the ones most responsive to change” (Charles Darwin)

• Take risks – the players who hit the most home runs have the most strike outs

• Courage comes from believing you are making a difference

by Al Ries and Jack Trout
Publisher: New York : McGraw-Hill
ISBN: 007052730X

This is a synopsis only. RESULTS.com recommends you buy the original book.

Marketing Warfare

War is often used as a metaphor for business, but most authors are unaware of military strategy and what really works. The study of warfare is a study of how to win, and how not to lose.

The principles of military strategy have been refined & perfected over 1000’s of years. Marketing as a discipline is less than 100 years old.

It’s not about aggressiveness and fighting. The best approach is seldom a direct head on attack. (i.e. it is a mistake to market the benefits of your product X vs the competitor’s Y)

Instead, ask yourself, what is most likely position to take that will undermine the competitor’s position?

Apple is good example – it stopped going head to head with Microsoft, and outflanked it by launching iPod.

Aim to be the first to offer a something in a new category

The Principle of Force

Superior numbers wins most of the time (biggest sales team, biggest marketing budget)

Quantity overcomes quality most of the time (Microsoft / Coke etc dominate over better quality products).

You don’t win with better people, product, service – you win with better strategy

You must accept customer perceptions as their reality, and focus your marketing accordingly. The customer defines who is the leader in each category.

You can’t change customers’ perceptions once they have been formed with your “so-called truth” about who has the best quality product.

You don’t win with a better product, you win with better perception (positioning)

The Superiority of Defense

It is hard to take customers (territory) off a company that already occupies it

People fight harder to resist losing something they already think they have

You need to gain your own high ground (perception of leadership).

It’s easy to stay on top of the hill, hard to dislodge someone off it

Avoid entrenched competitors

Market research – don’t ask people what they want, ask how they perceive you and your competitors

Don’t try to control everything (line extensions). Spread yourself too thin and you are liable to attack on a narrow front from a focused competitor

The 4 key strategies

Out of 100 companies

1 = Market leader playing defense
2 = Offence – competitors being opposite of the leader
3 = Flanking
4 = Guerilla

1. Defense

Only the dominant market leader should play defense

The best strategy for dominant leaders is to attack yourself. Create new products that make your old ones obsolete – (Gillette introduces new razor blades every couple of years etc)

Strong competitive moves should be blocked (Shick releases Quatro = Gillette counters with 5 blade razor). Bock them as they land on the beaches – don’t let them get a toe hold on your territory

By retaliating quickly a large company can protect its territory from more innovative, nimble companies

Block them asap with covering products, and bring economies of scale pricing to bear in terms of pricing. Aim to contain their growth with a blocking product, and go back to focus on creating a new innovation to make your old product obsolete

2. Offence

Go on the offence if you are a strong #2 or #3 brand

Be the opposite of the leader and focus your attack at that point

Find a weakness in the leader’s strength (a strength that they can’t change the market perception of easily).

Attack on as narrow a front as possible. (Don’t do line extensions)

Keep your forces concentrated. Bring the greatest number of your team into action at a focal point

Ask what word do you want to own in the customer’s mind? (one that is the opposite of the leader)

3. Flanking

Go around the competitors. Make a move into an uncontested area.

Create a new category – be the first to occupy this ground. The element of surprise is important

The pursuit is as critical as the attack – you need to pour it on once you get a foothold – to gain the leadership perception before a large competitor launches a “me too” defensive product

Reinforce success, abandon losers quickly. Don’t spend resources throwing good money after bad

Don’t try to be all things to all people. Keep your forces concentrated

High priced, exclusive products can outflank incumbent giants in a way they can’t counter easily (e.g. Absolut Vodka launched at 50% higher price than leading brand Smirnoff).

Use different packaging, distribution, price, design – compared to incumbent products

Don’t ask customers what they want – you need to be innovative and creative, and then generate as much PR as possible (keep it secret – use the element of surprise so incumbents are caught unable to respond - then pour it on)

When creating a new category, don’t look at advertising Return On Investment. In the crucial early times, you should be asking, “How much do we need to spend to ensure victory (ownership of this new category)?”

4. Guerrilla Warfare

Most companies in the world should play guerilla warfare

Find a segment small enough to defend. Pick a segment small enough that you can become the category leader.

Become a big fish in a small pond (focus geographically / by industry / by price point – e.g. Rolls Royce)

Go narrow and deep rather than broad and shallow. You have limited forces. Focus.

Never act like the leader (never introduce line extensions etc)

Don’t be greedy – position yourself as far away from the leaders as you can

You are not trying to take customers from someone else (as per a flanking strategy) – you are in a market all your own (Rolls Royce does not try to line extend down market to compete with Mercedes etc)

Be contrary. Defy conventional wisdom. Do the opposite of what MBA’s recommend.

Have lean and mean operations. Limited support staff. Make quick decisions.

Jump in, jump out. Be prepared to run away to fight another day

Form alliances – band together for self preservation (Century 21 / Quality Inn)

Strategy follows tactics.

Tactics first – then strategy.

Most companies decide their strategy then look for tactics to make the strategy work

Better to find a tactic that works, then build it into a strategy

Strategy should evolve out of the mud of the market place – what works in the field, not out of some ivory tower

Be like the battlefield general - not the conference room CEO

Seth Godin
Publisher: Portfolio
ISBN: 159184021X  

This is a synopsis only. RESULTS.com recommends you buy the original book.

The old rule of marketing:

“Create safe, ordinary products – then sell them with advertising”

The new rule of marketing:

“Create remarkable products that your target market will seek out and talk about”

The old ways of marketing are dead. Playing safe is now risky. Stop advertising and start innovating. Be a purple cow. A purple cow is remarkable – it gets noticed. It gets talked about

Customers are harder to reach these days because they ignore advertising

“Interruption marketing” – i.e. mass media advertising is dying (TV / print / radio ads).

Just because you can market to someone, doesn’t mean they want to hear from you. To cut through you need to be relevant

Flashing banner ads on Yahoo don’t work, yet targeted contextual ads on Google do

Satisfied customers are unlikely to advocate your product (“The plane landed safely”).

You need to be truly remarkable – you need to offer them something that is worth talking about (“The cabin crew were smiling and telling jokes and really made us feel special”)

Being better than the rest is not good enough. Very good is not even worth mentioning - you need to be remarkably different – you need to be a purple cow

If you are worth talking about – you will get talked about!

You must design a product / service that is remarkable enough to attract the early adopters, yet simple enough for them to easily spread the word to others. Make it easy for them to share your story with their friends.

A big mistake many companies make is to keep changing their marketing message (marketers feel they need to justify their position). This makes it harder for your early adopters to spread the word.

Be consistent!
 
Your marketing slogan / tagline needs to be:

• True

• Consistent

• Worth passing on

How do you create an idea that spreads? Don’t try to make a product for everybody, because that is a product for nobody.

Focus on your most profitable market segment, the one with the most growth potential, the one that is most influential. Don’t cater for the masses. Cater to your ideal customer

Define your target market first, then design a product / service that is remarkable to them

Understand your target market’s needs and provide the solution in a remarkable way

Get their permission to communicate with them directly to keep in touch with their needs, and offer them more remarkable products & services that are relevant to them (“Permission Marketing”)

Most people are scared of standing out from the crowd, of being criticised - and thus create bland inoffensive products – this is a recipe for mediocrity.

The greatest achievements are usually the ones that get criticised the most. Push the boundaries.

Be extreme and don’t water down your offering to appeal to the masses. If you are not annoying some people you are not operating close enough to the edge. The edge is where the money is.

Explore the limits – be the fastest, loudest, hottest, coldest, slowest, hardest, oldest, newest, friendliest, most hated, most efficient, biggest, smallest etc. Whatever everyone else is doing – do the opposite – and do it in a remarkable way

Make it safe for your staff to take risks and fail. Fail fast, fail cheap.

Measure everything, figure out what’s not working and stop it, figure out what works and do more of it.

Starbucks was remarkable a few years ago. Now they are boring, but that first burst of purple cow innovation allowed them to become one of the largest brands in the world.

Once you have created a purple cow you now have 2 simultaneous challenges:

1. Milk the cow for all it’s worth while it remains remarkable

2. Invent a new purple cow to replace the first one

Instead of spending more money on advertising, spend more money on designing your product or service to be remarkable

Don’t use focus groups to pick your winners. Not everyone has to like your product. Compromise is the kiss of death.

Focus groups hated the Southpark cartoons (too vulgar), the Hummer (too big). But what made these products successful is that they:

• targeted a specific niche market

• they were remarkable

• the people in that target market thought they were worth talking about to their friends

Where do remarkable products come from? Usually from passionate people who are making a remarkable product for people like themselves. Howard Schultz – Starbucks CEO loves coffee.

The Burton snowboard, the IPOD, the Lear Jet all come from people who live for what they do. Remarkable products & services come from people who deeply care!

Selling Your business for a Premium
Tom McKaskill

This is a synopsis only. RESULTS.com recommends you buy the original book.

Pro-Active Trade Sale Strategy

• A business should always be ready to sell.

• To maximize the sale price of a business you need to plan an exit strategy well in advance in order to maximize value.

• Selling on an earnings-based formula to an interested buyer or via a broker is not an ideal way to maximise the sale price.

• If you take the time to prepare your business for sale your Return on Investment (ROI) will be very significant in terms of the premium price you will get
  You will be prepared for any eventuality outside your control i.e.

  • Ill health

  • You want to retire and staff are unable to buy you out

• You are in a powerful negotiating position if you are able to position your company in front of potential buyers as either eliminating a potential threat or creating an opportunity for them (or preferably both)
  Solicit multiple buyers.

• Put time pressure on potential buyers to extract maximum value.

• Use professional advisors as intermediaries in negotiations

The best strategy for the seller of a business is appeal to multiple buyer needs: 

• Reduce a threat to the buyer

• Create an opportunity for a buyer by providing them access to new markets, customers, processes, technology, or revenue streams

• Offer the buyer leverage / scalability – i.e. if you can increase their sales well beyond their existing capabilities they will pay a premium price to purchase you

Pro-active Trade Sale Process

• Few companies take the time to develop a strategic plan for selling their business

• Most just sell their business because they have to, or the owner has no successor, or they have just ‘had enough’

• The result is:

  • Little understanding of risks for potential buyers and how to mitigate them

  • Documentation for due diligence by potential buyers is not available

  • NNo relationships developed via networking with potential buyers

  • The timing of the sale may not be ideal in terms of getting the best price

  • The structure and systems may not be developed to maximize value

  • Key staff may be lost due to uncertainly

  • After sale scenarios not planned for

Ideally a company should be always prepared for sale

• Networks should be cultivated and people made aware of the capabilities and potential of your business

• When it comes to selling the business you do not plead to be acquired - instead you position the strategic nature of such an acquisition and put it up for bid among several

• possible buyers

• Preparing your business for sale enables you to move quickly when the time is right or an unexpected opportunity appears

• Let your industry network know when the buying process has commenced so you can attract additional bids.

Present buyers with a scalable / leverage-able opportunity that helps them to do one or more of the following:

• Increase revenue

• Reduce costs

• Achieve economies of scale by combining their business with yours and rationalizing the 2 operations

• Get access to your better technology, marketing, sales process

• Increase their customer penetration or purchase frequency

• Enhance their existing product sales

• Sell new products to their existing customers

• Add more products to their portfolio

• Use their existing distribution channel to sell your products through

• Re-brand your product / service as their own

• Increase their customer numbers by buying your customer database

• Expand their distribution channel

• Acquire customers at a lower acquisition cost than through traditional marketing

• Break into a new market category

• Acquire synergies with their existing business

• Acquire capabilities that they lack themselves

• Counter a competitor threat

• Get out of a declining industry / category 

Identify potential buyers:

Who makes money when – I make money?

• Vertical integration - suppliers / distributors who may buy you

Who does not make money when I make money?

• Competitors may want your products, customers, contracts with suppliers, customers, technology, R & D capability

• Competitors may want to eliminate you as a threat

Who can make more money than I can from my products?

• A buyer with a larger customer base or better distribution channel, or access to finance for growth / expansion / export etc

Who has a problem I can fix?

• A buyer may quickly need your capabilities, products, processes, technology, distribution, customers, people, expertise

Who has a threat I can eliminate?

• A buyer who is faced with losing their supplier / distribution arrangements

• A buyer faced with new competition

Who sells to the same customers I do?

• A buyer wishing to diversify / cross sell

Who uses the same technology I do?

• Ease of acquisition and merger

Who needs my customer database?

• A buyer who wants to break into new markets and understands their customer acquisition costs – and realizes it is cheaper to buy your customers than to attract them through marketing

“Put yourself in a potential Buyers shoes”

• Where will the merged business be located?

• Are there any duplicated assets that will be surplus to requirements?

• How will these be disposed?

• Staff duplications / redundancies?

• What will happen to employee share options?

• Can existing health insurance, superannuation, holidays and reward systems be transferred to a new owner?

• What will happen to existing customers, suppliers, distributors, and their contracts?

• What partnership / alliances need to be terminated or protected?

• What potential litigation will need to be resolved?

Ideal conditions for sale

• Time on your side

• More than one potential buyer

• They have urgent problems / threats

 Limitations to obtaining a premium sale price for your business:

• Your firm’s knowledge is inside the heads of your key people and not documented into a process

• Your business is dependent on a small number of critical individuals and their relationships

• Your processes are not standardized to enable new people to quickly get up to speed

You need to remove or reduce these risks to the buyer:

• Non-standard customer / supplier contacts

• Harsh lease conditions

• Unprotected IP

• Overly generous reward schemes

• Poor quality equipment

• Poor process and systems documentation

• Poor sales process and conversion rates

Ensure major stakeholders’ agendas are aligned well in advance

• Get all your stakeholders working in the best interests of a positive sale outcome

• The more issues you deal with in advance the easier the negotiations will be

• Will they veto any sale proposition?

• What are their minimum conditions in order to agree to a sale?

• What level of involvement would they want in any negotiations?

• Lock in key employees if they are required to smooth the transition or they represent a competency a buyer may wish to acquire

• AAlternatively create retirement or redundancy package that empolyees agree with

• Key stakeholders need to accept that new owners will want to make changes that you may not necessary agree with

  • Changes in structure / personnel

  • New conditions of employment

  • Changes in products / distribution / location

  • Sale of parts of the business

Do your own due diligence on your firm before the buyer does/p>

• Can your business run successfully without buyer intervention?

• Aim to reduce potential risks for purchasers by showing that you fully comply with all regulations and your business is well managed

• Monthly financial and Key Performance Indicator reporting system in place

• Updated / comprehensive business plan

• They may want to make changes but if they know the business can run effectively and efficiently without any intervention they may leave it like that for a period of time while they concentrate on maximizing synergies

• Alternatively a good business plan may provide the evidence they need of the growth potential of the business

• Formal forecast budgets are prepared and performance is actively monitored versus budget and deviations understood and proactively managed

• Standard contracts, good relationships and goodwill exist with suppliers and distributors and customers

• Formal systems exist for complaints and disputes resolution

• Good employee management, appraisal and reward systems are in place

• Good credit rating and bank relationships and good credit rating with suppliers

• Contracts are able to be assigned to purchaser without needing the permission of the other parties

• IP is protected and able to be sold

• Industry standard employment conditions - salary and benefits

• Share option schemes compliant with stock exchange regulations

Your due diligence file should contain

• Supplier and customer contracts

• Licenses, patents, trademarks

• Leases, hire purchase agreements

• Employment contracts, health insurance, superannuation, bonus schemes

• Complaints process, dismissal process

• Performance management system

• Quality control systems

• Inventory management system

• Financial reporting system

• Reference checks from customers / suppliers and key professional advisors

• Back ground on key staff

• Property / asset valuations

• Full position descriptions

• Full description of business systems and processes

• Bank and loan details

• Shareholder agreements and options

Al Ries, Laura Ries
Publisher: New York : HarperBusiness.
ISBN: 0060007737

This is a synopsis only. RESULTS.com recommends you buy the original book.

1. The Law of Expansion

“The power of a brand is inversely proportional to its scope”

• When you put your brand name on everything it loses its power

• Customers want brands that are narrow in scope and are distinguishable by a single word, the shorter the better.

• A brand should also “own” a word in the mind of the customer

  • e.g. – Mercedes (prestige), BMW (driving), Volvo (safety)

• Line extensions bring short term sales growth but sacrifice the power of the brand long term

• You need to contract the brand not expand it

• e.g. – Is a Ford a truck or a car? No one is sure

• Line extension mistakes = Mercedes making small cars (where is the prestige?), BMW station wagons (driving?), Volvo sports convertibles (safety?)

2. The Law of Contraction

“A brand becomes stronger when you narrow its focus”

• In order to dominate a category you must contract your focus.

• Do not try to be all things to all people

• Only try to be a generalist if you are competing on being the lowest price provider (e.g. Wal-mart)

• E.g. – Starbucks should focus on coffee, Subway should focus on submarine sandwiches, Dunkin donuts should focus on donuts

3. The Law of Publicity

“The birth of a brand is achieved with publicity, not advertising”

• Most marketers and advertising agencies confuse brand building with brand maintenance

• While hefty advertising will maintain mature brands like McDonalds and Coke, advertising won’t get a new brand off the ground

• Publicity is generated by being the first brand in a new category

• Promote and announce a new category, not a new product

• What others say about your brand is more powerful than what you say about it yourself, that’s why publicity is more powerful than advertising

• Branding strategies should be developed first from a publicity point of view

4. The Law of Advertising

“Once born, a brand needs advertising to stay healthy”

• Sooner or later the category leader has to shift the branding strategy from publicity to advertising

• Advertising doesn’t buy you anything, it just keeps you from losing market share to your competitors

• First think publicity, then advertising

• What to advertise? Your category leadership of course!

• Don’t make the mistake of advertising quality – every company makes “better product” claims – these have little effect on customers

• What customers respond to is the company that claims to be the category leader – the customer then forms the perception the leading product must be better (even if it is not necessarily the case)

5. The Law of the Word

“A brand should strive to own a word in the mind of the consumer”

• If you want to build a brand, you must focus your branding efforts on owning a word in the customers mind. A word that nobody else owns

  • e.g. – Volvo = safety, BMW = driving, Kleenex = tissue

• It is a mistake to try to expand the customer base by using the brand name to get into other market categories

  • e.g. – Mercedes moving into cheap cars

• If you are not the first product into a category (e.g. pens) create a new category by narrowing your focus (e.g.-Mont blanc = expensive pens)

• Or create a new brand to compete in the category e.g. Toyota creating the Lexus brand to compete in the luxury car category

• Don’t ask what % of an existing market your brand can achieve, ask how large a market your brand can create by narrowing its focus and owning a word in the customer’s mind

6. The Law of Credentials

“The crucial ingredient in the success of any brand is its claim of authenticity”

• Customers tend to disbelieve product claims (“That’s what they all say”)

• Category leadership is the best way to establish the credentials of a brand

• If you don’t have the leading brand, your best strategy is to create a new category in which you can claim leadership

• Never assume people know which brand is the leader (tell them you are!)

• People naturally gravitate to what they perceive is the leading brand

7. The Law of Quality

“Quality is important, but brands are not built on quality alone”

• Does a Rolex keep better time than a Timex? Are you sure?

• Does a Mercedes have fewer mechanical problems than a Nissan? Are you sure?

• In taste tests Pepsi always beats Coke, but Coke dominates the cola category

• There is no correlation between comparative tests of quality and market success

• Quality (or rather the perception of quality) resides in the mind of the consumer and they are swayed by many psychological factors

• If you narrow your focus you become a specialist in the consumer’s mind and you are perceived to be of higher quality in that category

• If you charge a high price, you create the perception of quality – people obtain psychic satisfaction from purchasing and displaying expensive brands

• Generalists can only compete on price

8. The Law of The Category

“A leading brand should promote the category, not the brand”

• The most productive, useful aspect of branding is not increasing market share, but creating a new category you can own.

• Create the perception that the brand is “the first”, “the leader”, “the pioneer”, “the original”

• Then promote the new category - not the brand

• Customers do not really care about brands, they care about new categories

• e.g. – they do not care about Domino’s Pizzas (brand), they care about the 30 minute pizza delivery (the category)

To build a brand:

• Narrow your focus to claim a new category

• Make your brand name stand for the category (the generic effect)

• Expand the category by promoting the benefits of the category – not the brand

• A new category gives you a PR platform

• Promoting the category will pull your brand up along with it

• Even when competitors appear, continue to promote the category, to increase the size of the pie rather than your slice of the pie

• Competition will help stimulate consumer interest in the category – welcome them

• Leading brands should promote the category – not the brand (and promote their leadership in that category)

9. The Law of The Name

“In the long run a brand is nothing more than a name”

• The difference between brands is not in the products, it is in the consumer perception of the brand names

• Make your name stand for 1 word / 1 product in the customers mind

• Don’t make a number of different products under the same name

• Hyundai makes everything except profits (likewise most Japanese companies)

• Xerox = copiers, Xerox tried to use their brand to sell computers - naturally they failed to sell

10. The Law of Line Extensions

“The easiest way to destroy a brand is to put its name on everything”

• Line extensions provide short term sales boost, but long term brand damage

• Line extensions are often just copying a category leader product – you will never win this battle

• Launch a new brand name if you want to compete in a new category

11. The Law of Fellowship

“In order to build a category, a brand should welcome other competitor brands”

• The best thing that happened to Coke was the introduction of Pepsi as it grew the cola category by increasing the noise level and raising consumer awareness

• Welcome competition as they will bring new customers into the category

12. The Law of The Generic

“One of the fastest routes to failure is giving a brand a generic name”

• The best brand names are always unique pronouns and not in common use prior to the brand becoming dominant

• The biggest mistake when picking brand names is to do it visually (usually done by ad agencies with names set inside a logo mounted on a board)

• The printed word is secondary to the sound in generates in the reader’s mind

• The mind doesn’t deal in letters or words, it deals in sounds

• Make your brand name unique. Make a new word up if you have to!

13. The Law of The Company

“Brands are brands. Companies are companies. There is a difference”

• Brand names should always take precedence over company names (for large companies making many products)

• Consumers buy brands, they don’t buy companies

• What is the name of the brand? What is the name of the thing inside the packaging? Both names had better be the same or you are in trouble!

Alternatively for a start-up company with a single narrow-focus product, the best branding strategy is to use the company name as the brand name

14. The Law of the Sub Brands

“What branding builds, sub-branding can destroy”

• Can a brand be marketed as more than 1 model? Sure, as long as those models don’t detract from the essence of the brand, that single word or concept that the customer associates with the brand

• If it doesn’t – create a new brand name for new products

15. The Law of Siblings

“There is a time and place to launch a 2nd brand”

• Make each sibling a unique individual brand with its own identities

• The strength of a brand lies in having a separate, unique identity, not being associated in the mind with a different category

• I.e. Toyota created Lexus to compete in the luxury car market, likewise Black & Decker created DeWalt for high end tools

• Maintain a separation between brands! Avoid overlap. Use different pricing.

• Create different, not similar names

• Only launch a new brand when you are creating a new category

• Do not launch a new brand just to compete in a category with an existing competitor

16. The Law of Shape

“A brand’s logotype should be designed to fit the eyes. Both eyes”

• Since your eyes are mounted side by side, the ideal logo should be 1 unit high and 2 and a quarter units wide (in this proportion)

• It should be clearly legible

• The visual symbol is over-rated. The meaning lies in the word or words the brand forms in the consumer’s mind, not in the visual symbol

• You can spend a lot of money to make a symbol stand for your brand (e.g. Nike swoosh) but you have to keep spending that money to re-educate each new generation.

• You can spend millions to get people to associate your brand with a symbol but what is the advantage of doing so?

• The power of the brand lies in the meaning of the word in the consumer’s mind. For most brands a symbol has little or nothing to do with creating this message in the mind

17. The Law of Color

“A brand should use a color that is the opposite of its major competitor”

• Leaders have 1st choice of color

• New competitors should choose the opposite color to differentiate

18. The Law of Borders

“There are no barriers to global branding. A brand should know no borders”

To grow your brand:

• Keep your narrow focus

• Be the first in a category

• Go Global

• Use brand names that work in English

19. The Law of Consistency

“Success in measured in decades – not years”

• A brand cannot get into a consumer’s mind unless it stands for something

• Markets may change but brands shouldn’t

• If you follow a fad you will destroy a brand

• E.g. Tanqueray was the leading high-end gin. Vodka became the new fad. Tanqueray created Tanqueray Vodka to compete in this category. They will not dominate the vodka category and will undermine their brand because in the consumer’s mind they stand for “high quality gin”. Now they have confused the market. They should have launched a new brand or stayed put and waited for the fad to pass

• Brand building is boring work. What works best is consistency over time

• Impatient marketing managers feel they have to expand their brands (to stop getting bored or justify their existence). This is a mistake

• You should limit your brand

• Your brand has to stand for something both simple and limited in the mind

• Limitation combined with consistency is what builds a brand

20. The Law of Change

“Brands can be changed infrequently and very carefully”

• When you try to tell your customer that your brand is different than it used to be they will reject your message

• Brand changing occurs in the mind of the consumer. If you want to change your brand keep your eye on the consumer’s mind

• You can strategically cheapen the brand if your strategy is to become a price leader

• It is impossible to do the reverse (upgrade your brand to a luxury item) (Volkswagen are try to unsuccessfully sell luxury cars – it won’t work because Volkswagen = fun beetle cars)

• Only if you have no brand awareness can you realistically change your brand

21. The Law of Mortality

“No brand will live forever. Euthanasia is often the best solution”

• There is a time to build and a time to harvest and divest

• E.g. Kodak = photographic film. They have no digital connotations – other companies already dominate the digital category - the writing is on the wall for the brand

22. The Law of Singularity

“The most important aspect of a brand is its single-mindedness”

• A brand is a pronoun that can be used in place of a common word

• A brand is a single idea or concept that you own inside the mind of the consumer

• It’s as simple at that!

Internet Branding

1. The Law of Either / Or

• You fracture your brand when you try to make it an internet brand as well as a physical brand

• No brand can be all things to all people

• Big physical brands have limited online value

• If the internet is going to be your business, create a totally new strategy and a new brand name

• If the internet is going to be a medium to communicate information about your existing physical business, that is fine but don’t expect it to dominate the category where competitors treat the internet as their sole business

• E.g. Borders dominates physical bookstores. Amazon dominates internet bookstores. Borders’ website will not be able to dominate the internet bookstore category because consumer’s associate the Borders brand with a physical bookstore

• It is better to give your internet business a different name

2. The Law of Interactivity

• Interactivity will make the internet the greatest of all media

• Interactivity will define what will succeed on the internet and what will fail

• Advertising will never work on the internet because people will turn it off or use ad blocking software

• Interactivity is the ability for the customer:

  • to type in information and have responses tailored to their information

  • to receive recommendations based on their original purchase / query

  • to contribute comments to your site

  • to receive all pricing / payment options

  • to input information and receive a diagnosis / recommendation

3. The Law of The Common Name

“The kiss of death for an internet brand is to use a common name”

• With a physical product you have packaging, premises, displays etc to aid the visibility of your brand

• With an internet business all you have is a domain name and it had better be a good one

• Common names have not worked as brand names (Pets.com, Sports.com, Hifi.com, Toys.com, Mortgage.com, Cars.com etc)

• Companies have paid millions of dollars for such domain names that have turned out to be useless

• All the big internet businesses use unique names (Google, Yahoo, Amazon, AOL, Ebay etc)

• One of the reasons for the dotcom disaster was the lemming-like use of common-name websites

4. The Law of The Proper Name

• Your domain name is your most valuable asset

• A proper name is superior to a common or generic name

• Even in the physical world: McDonalds is a better brand name than Burger King, Hertz is better than National Car Rental, Kraft is better than General Foods

• The shorter the domain name and the easier to spell the better

• The name should be simple, using only a few letters in combinations that repeat themselves (e.g. Volvo, Coca Cola, Blockbuster, Dirt Devil, Weight Watchers)

• It works with movie stars too (Robert Redford, Sharon Stone, Charlie Chaplin, Marilyn Munroe, Greta Garbo, Mickey Mouse, Donald Duck)

• Always register alternative spellings of your domain name (including numbers as letters)

• Do not use numbers in your real brand name however

• Make sure your brand name is easy to say verbally (word of mouth is your best advertising)

5. The Law of Singularity

• In the real world 1 product dominates, with a strong 2nd competitor. 3rd place brand always struggles or is about to go out of business

• Retailers play the 2 leading brands off for their own leverage

• In the internet there are no middle men (retailers)

• In the internet there is no 2nd place

• Every category will be dominated by a single brand

• If you are not the leader, narrow your focus and create a new category

• Borders closed their online store on their website and now outsource to Amazon

• Which brand will be the winner in each category?

• It won’t necessarily be the first in the marketplace

• It will be the first brand to establish a dominant position in the consumer’s mind

6. The Law of Advertising

• The internet will be the first new medium that will not be dominated by advertising

• Click through rates on online ads are less than 0.3%

• You will need to advertise in the physical world to increase your brand’s visibility to get people to log on to your website

• Publicity is the key (especially when you create a new category)

• Advertise the category, your market leadership of the category, and your domain name

7. The Law of Globalism

• The internet allows you to be a truly global business

• You need a brand that will transcend borders

• Go for an English-only website. 80% of computer data is in English.

• Time is on your side. Every day 10,000 people learn to speak English (esp. India)

• The internet will homogenize cultures

8. The Law of Time

“You have to be fast, you have to be first, you have to be focused”

• You have to get into the mind first (not the market first).

• First mover advantage is a myth

• Beware being a small company first into a category and having a large company take your idea, and with greater resources win the “battle for the consumer’s mind” and create the perception that it was the pioneer

• Be quick or be dead

• Don’t wait until it is perfect before you launch.

• Get it up there and improve as you go

• Big companies can miss the boat through endless research and testing and be beaten by a nimble competitor who gets big fast!

9. The Law of Vanity

“The biggest mistake you can make is to believe you can do everything”

• Overconfidence leads to marketing disasters

• Remember it is not your perceptions, it is how the customer perceives your brand that matters

• As soon as one company is successful in one area, it tries to move into another – usually with little or no success

• The confusing thing is - line extensions seem to work in the short term, but almost never in the long term.

• If you try to be all things to all people, no one will know what you stand for

• Gain leadership of a category and people will perceive that you are the best

• If you want to diversify, launch a 2nd brand rather than create line extensions

Choose your customers, narrow your focus, dominate your market

Michael Treacy and Fred Wiersema
Publisher: Reading, Mass: Addison-Wesley Pub. Co
ISBN: 0201406489

This is a synopsis only.  RESULTS.com recommends you buy the original book.

1.  
2. Choose Your Customers
3. Narrow Your Focus
4. Dominate Your Market

No company can succeed today by trying to be all things to all people.  It must instead find the unique value that it alone can deliver to a chosen market.

There are 3 different types of 'value discipline' (generic strategy) that successful companies can adopt to command leadership in their markets.

The decision depends upon the sort of product or service that they provide, and upon the organizational culture that they maintain.

The 3 'value disciplines' (generic strategies) are summarized in the chart below:

Operational Excellence

• provide the lowest cost goods and services, while minimizing problems for the customer
• efficient management of people
• employees are trained in the most efficient and lowest cost way of doing things
• efficient transactions - for greater efficiency and speed
• processes between suppliers and the organization are often merged
• (for example, the quality control function, which historically has taken place once by the supplier to ensure a good product leaving their shop, and once at the buyer's end to ensure a good product coming in, is merged into one quality control inspection, undertaken under the auspices of both the supplier and the customer - this reduces cycle time considerably, allowing just-in-time supply and at lower overall cost as well)
• measurement systems - to ensure rigorous quality and cost control
• monitor and measure all processes
• continually searching for ways to reduce cost, and improve service and quality
• manage customer expectations - under the principle that 'variety kills efficiency'
• provide only one or a limited number of product or service options, and manage customer expectations accordingly

Product Leadership

• Provide the best possible product / service in terms of the features and benefits offered to the customer.
• innovation - small ad hoc working groups
• an 'experimentation is good' mind-set
• compensation systems reward success
• constant product innovation is encouraged
• a risk-oriented management style
• product leadership companies are innovators
• recognize that there are risks (as well as rewards) inherent in new ventures
• current success & future prospects lie in its talented design people and those who support them
• need to educate and lead the market regarding the use and benefits of new product

Customer Intimacy

• Select one or a few high-value customer niches, and understand their needs in detail.
• This requires anticipating the target customer's needs as well as (if not better than) they themselves do, and sometimes sharing risks with them when the development of new products or services is required:
• full range of services available to serve customers upon demand
• may involve running a 'hollow company' - where a variety of goods or services are available quickly through contract arrangements, rather than the supplier business having everything in stock all the time
• philosophy and business processes practices that encourage deep customer insight and breakthrough thinking about how to materially improve the client's business are essential

Because of the focus of management time and resources that is required, a firm can realistically choose only 1 of these 3 value disciplines in which to specialize.

Most companies in fact, fail to specialize in any of the three, and thus they realize only mediocre or average levels of achievement in each area. These companies will not be market leaders.

In today's business environment of increased competition and the need more than ever before for competitive differentiation, their complacency will not lead to increased market share, sales or profits.

The authors state, "...when we look at these complacent firms, we find companies that don't excel, but are merely mediocre on the three disciplines.  Sure, as the ante has risen in their markets, they've improved their cost structure and become more aware of their customers. They've added new products and line extensions over the years.  They've kept up with rising parity levels to stay in the game.  They've maintained threshold levels of performance in each dimension of value.  hat they haven't done is create a breakthrough on any one dimension to reach new heights of performance.  They have not traveled past operational competence to reach operational excellence, past customer responsiveness to achieve customer intimacy, or beyond product differentiation to establish product leadership.  To these managers we say that if you decide to play an average game, to dabble in all areas, don't expect to become a market leader."

Phase 1 - Understanding the status quo in your business

• What dimensions of value do our core customers care about?
• What is their primary or dominant decision criterion?
• Which competitor provides the best value in each of 3 value dimensions?
• How do we measure up against our competitors on each dimension of value?

Phase 2 - Identify the realistic options for your company

• What are the benchmark standards of value performance that meet customer expectations?
• How do other firms achieve these standards?
• For value discipline leaders, what will be their standards of performance three years from now?

Phase 3 - Detailed designs and hard choices

• What should our new operating model look like?
• What will be our core processes, management systems, structure?
• How will we produce superior value in 1 of the 3 value disciplines?
• How will we retain industry parity in the other value dimensions?
• What is the business case - including costs, benefits and risks - in pursuing this option?
• What are the critical success factors that can make or break this solution?
• How will we transition to this new operating model over a two- to three-year period?
   

The Hero and the Outlaw: Building Extraordinary Brands Through the Power of Archetypes

- Margaret Mark; Carol Pearson; Carol S. Pearson