This morning I read a wonderful article about branding by Al Ries of Trout and Ries from the classic advertising book Positioning: The Battle for Your Mind fame. Ries modernizes his concept and chimes in with the old “make your customers fall in love with you” routine. He compares brand loyalty to being in love with your spouse, or being politically correct, your significant other. In the comparison we may readily admit there are better products available to fulfill a need, but most people are remarkable about maintaining the stance of “love the one you’re with.”

Marketers never seem to fully appreciate the intangible territory of brand loyalty, whereas ad people spend a great deal of their time in that realm. Marketers seem only interested in the here and now. It’s the old “what have done for me today” mentality. I would hate to be married to a marketer, because I would be afraid that if I had an off day, I’’ be replaced by a newer, more efficient model. Fortunately for me, my wife is more like an ad person; she appreciates me for the glow of my past performance as well as the considerable intangible value of the totality of my achieved tasks over the years.

Come to think of it, many of us would hate to be held to the marketing standards to which we hold our products. Ries makes the point in his article that being “in love with” is not the same as “loving.” Something that you just “love,” you can still let go. Being “in love” with something prevents you from considering that eventuality. To let it go, you must first fall out of love with it.

In masterful style, Ries completes his article by tying his observation back into what we all know and appreciate Al Ries for — positioning. He makes the point that people don’t stick with Coca Cola because they love it. They are In Love with Coca Cola, because it is The Real Thing, The Original, The First and The Only in the minds of branded customers.

Branding’s current reputation is an indescribable lack of accountability that at one time was associated with advertising. Today, the word “advertising” is used in more general terms, and the discipline of “branding” has fallen into disrepute among those “in the know.” But brand loyalty is the difference between Coca Cola and Cheryl’s Cola. It is the difference between Kleenex and Regal 2-Ply Facial Quality Tissues. Branding is the investment that increases today’s return on sales, as well as the value of what has not even been sold yet.

In a rough economy, I would much rather be dependent upon a branded product than one marketers strictly sold for margins. An old sales adage is, “When price is introduced before value is established, price becomes the controlling factor.” It could be said about branding that, “When features are stressed without the brand being built, the next additional feature wins the sale.” Remember, it is easy to beat a purely marketed product after it has been pitched — just add a feature or undercut the price by a dime. It is nearly impossible to outsell a product that people are in love with. Even when you alienate your customer base by coming out with “New Coke,” a well-branded product can recover from a grand marketing error and still survive.

In the previous newsletter I wrote about market share being available at half price or better during economic times of stress. Branding deserved to be a portion of that discussion. Great opportunities abound and are around all of us, even as you read this newsletter. They do not look the way we expect them to look. Great opportunities rarely do show up as expected — so many times we walk right by them. But a couple of years or just a few months from now, each of us will see or run across the result of something that someone with courage is doing today, and say, “I wish I would have done that.”

I wish I were smart enough to recognize all of those opportunities now (or even just one of them!) and were courageous enough to say “count me in too.” But extraordinary success is not meant for all of us; the purpose for many of us in life is to be part of the masses, or heaven forbid, to be the example of what not to do.

Ries finishes his article by asserting that the first established product of a type is usually the one people fall in love with. And until they give up that position voluntarily or by default, there is virtually nothing anyone can do to win over it. I agree with his assertion, but I would add the caveat that during difficult times like now, those companies that have enjoyed the luxury of customers being in love with them are pulling back on their branding dollars and allowing those loyal customers to fall out of love with them. When they do, don’t market to them, advertise to them. Build a brand of your own that they can love.

My colleagues cringe when I agree with many other business people that word-of-mouth advertising is the best form of advertising. My colleagues believe that I am agreeing with a strategy of avoiding paid media advertising in favor of word of mouth. You see, a belief in word-of-mouth advertising is one of the most common objections to purchasing paid media we receive when speaking to potential advertisers. Many potential advertisers fear being sold something they don’t want, and that fear causes many of them to tell advertising salespeople that they only rely on word-of-mouth advertising.

The irony of that statement comes to light when many of them say this while exhibiting at a trade show, a very expensive form of advertising where the advertiser transports his product, himself and other portions of his business to a centralized location where a select number of buyers gather to purchase product. In the 1980s, trade shows were one of the most expensive ways to market products. With today’s rising costs of travel, unionized labor on the show floors, products costs, etc., trade shows are not becoming any better bargains today.

Trade shows are the least cost-effective way to advertise products. Even the smallest exhibitor is going to spend at least $3,000 for an industry-event trade show. Considering that most exhibitors speak with no more than 150 potential customers at the show that equates to a $20,000 CPM (cost per thousand). Advertising rates for trade (business-to-business) magazines, industry trade journals, etc., run from $35 to $100 CPM. Why would anyone attend these shows with such high costs? The answer: buzz.

Word-of-mouth advertising occurs when one consumer tries a product and is impressed enough to share his positive experience with others. The more positive the experience, the less risk involved, and the more trusted the source of the endorsement, the better the results in word-of-mouth advertising in terms of generating more sales. Word of mouth is so effective, that for many years, advertisers have employed recognizable people and have paid them to endorse products. Advertisers have played upon the trust built by certain personalities to sell their products. All because they know that word-of-mouth advertising is so much more effective than any other form. When an advertiser cannot find our close personal friends, they hire a substitute personality, usually a celebrity that is easily recognizable and scores high in credibility with target audiences. It is not as good as hearing it from a friend or trusted advisor, but still, a spokesperson is one of the most effective advertising strategies.

True buzz comes from consumers, purveyors and industry experts who are impressed with a product and recommend that product to friends and others. Companies who attend trade shows hope that the few customers they encounter will leverage the large trade-show expense by buying their products and recommending those products to their colleagues. Too few companies understand the value of finding these passionate consumers. If they did, they would use mass-advertising techniques to locate advocates that exist for their products lines. These advocates account for a large volume of sales by recommending the products to friends, colleagues and total strangers, if the endorser’s job is to make recommendations. Most businesses attending trade shows find heavy users or influencers, and treat them as a single consumer. This expectation limits the experience for the customer and highly motivated person who might have become an advocate, but becomes simply a customer. And there are very few companies that can afford to spend the $3,000+ on the low number of potential customers available at a trade show.

The Anatomy of Buzz: How to Create Word-of-Mouth Marketing by Emanuel Rosen, a Currency book published by Doubleday, outlines the importance of word-of-mouth advertising. The mere recommendation of any product from a trusted source can often lead to outstanding success of a new product introduction. Editors from magazines in my former company are bombarded with requests to review and endorse products. Any company wishing such review should first read and understand Mr. Rosen’s book, for a product review is little good if you do not know what to do with it.

Like all other advertising, word of mouth will accelerate the failure of a poor product as quickly as it can lead to the success of an excellent product. Unfortunately, word of mouth is largely ineffective with the promotion of mediocre products, since many of them are not worthy of conversation. This is something that those folks I mentioned at the beginning of this column do not understand. Only very good products or very poor products respond well to word-of-mouth advertising. The more of a staple that the product is, the less opportunity exists for it to qualify for word-of-mouth endorsement. Can you imagine being at a gathering, say a picnic, and actively talking about a new brand of straight pin? Hardly. Even if you were talking to another sewing enthusiast, you are more likely to talk about the weather. However, if you were sufficiently impressed with a new fabric-cutting product, you might share that experience. After you did, someone else might approach, the subject might change or the conversation take a different direction. The point is that your mention is going to be balanced by your experience, and the importance of that product in your overall experiences. Advertisers want this conversation, but too few realize that mass advertising media is the common denominator that can stimulate such an exchange.

A few years ago the success of the book A Purpose-Driven Life and the movie The Passion of Christ were both driven by word-of-mouth advertising. Key consumers were located in both instances and were targeted for advertising messages. These consumers became advocates and were targeted for even more promotional efforts. As more and more effort was focused at this group, the more the group recommended the products to relatives, friends and eventually total strangers. In the case of the book, the passionate core bought several copies to give as gifts. In the case of the movie, the core advocates actually took friends and relatives to the movie.

If you are going to utilize word-of-mouth advertising, first begin with an exceptional product. A mediocre product will take too much effort, and a poor product will fail far too quickly. Next, make sure that the consumers you select to be your advocates have an extraordinary experience with your product. Take the time to make sure they have a “WOW” experience. The more memorable it is, the more it will be shared with others. Make sure you look at these few users as an investment. If possible, supply your advocates with a few product samples to share in the case of consumables, or discount coupons in the case of long-life products, so they have a head-start on becoming an evangelist for your brand. Keep your advocates on the inside. Inform them about new developments, awards, price breaks, sales, etc. In essence, continue to give them positive things to share about your product. Use mass advertising to continue to build this core of loyal consumers. Yes, pay to advertise. But understand your purpose is to build this core. Continue to grow your core to a critical mass. Build fanatical customer loyalty by returning loyalty to your customers in the form of product improvements, price reductions, or anything else you can do to increase the quality equation of your offering.

Like the evangelist in a traveling tent revival, find the followers of your product in each city and share with them the gospel of your products. Ask them to spread the word about your company and products as you continually reaffirm their importance by acknowledging them.

The Anatomy of Buzz suggests that advertising is the best way to stimulate buzz. Media advertising jump-starts the process and can accelerate product sales quickly. Advertising is not very effective in simulating buzz. Even endorsements by a credible company spokesperson, do not come close to the credibility of a recommendation of a nonpaid source known to the consumer. And yes, advertising can kill buzz. If consumers feel that advertisers are trying to pull a fast one by attempting to stimulate buzz, they will revolt by distrusting the product.

Using pre-existing social connections to increase awareness of your product, known as “viral marketing,” can be very effective. Yet almost every expert will tell you that viral marketing works as well or better with a branded (advertised) product than with an unknown, suggesting that viral marketing is not a substitute for advertising, but at best a personalized extension to a measured media campaign.

So the next time you are tempted to tell someone that you rely only on word-of-mouth advertising, beware—it may be me. If it is, I will engage you in a discussion about what consumers you are targeting as the most likely group to carry your word-of-mouth message. I will ask you to point out the product features so remarkable that they cause consumers to endorse your product to their friends. And finally, I’ll recommend to you that measured media advertising is the most effective manner to expand and stimulate further word-of-mouth advertising, thus expanding additional product sales with “Buzz.”

“There is a great deal of advertising that is much better than the product. When that happens, all that the good advertising will do is put you out of business faster.” — Jerry Della Famina

I visited my doctor this morning for a check-up. He proudly announced that my general health is as good as it has ever been and even at an age when some things should be declining, I am better in some areas than ever. Most people visit their doctor to get better from some malady or sickness. They make the visit because they want to feel better. And most often their question is “when will I feel better?”

I often hear a similar inquiry when I speak with advertisers. “When will my ads work?” Like a doctor’s visit to feel better, I often work with businesspeople who want their business to get better. At the very least they wish to know the money they spend with me is generating a result.

Doctors check several vital signs to see if there are symptoms of disease or sickness. Likewise, I try to find out about key aspects of the business to see if they are in balance and there is adequate activity to meet the levels required for the business to remain healthy.

Diagnosing the correct illness or injury takes a lot of training and knowledge about the human body. A physician spends years learning the interaction of different bodily systems of musculature, circulation, bones, nervous system and so on. Likewise, to understand what makes a business healthy, you need to be able to understand profit & loss statements, balance sheets, transaction trends, buying motives, product life cycles, the target market and a multitude of market factors.

Once a doctor finds out what is wrong with a patient, there are specific drugs and medical treatments that have been time tested to address the problems. Most drug companies have literature developed to let the patient know “when they will feel better.” Advertisers usually don’t get a mass produced solution for their problem. True, the number of possible things that could be wrong is less than the illnesses and diseases a doctor can face. But there are some basics in advertising that can help you estimate “when your ads will begin to work.”

First off is your dosage. Similar to a medical remedy you must take an adequate dosage. If your share of voice is too low, you advertising problem will not get better very quickly. Share of Voice is your share of all messages from yours and other businesses just like yours. If you sell food, there is likely to be a lot of competitors also selling food, so your share of voice is likely to be very small. You can shift this by purchasing more media. The more you dominate the mediums you use, the higher your share of voice. Beware too that a very small share of voice is not much better than no share of voice. The larger your share of voice the faster you will see results.

Since advertising results requires customers to buy your product or service, the life cycle of your product is also a factor. There are more people in the market for an oil change (generally once every three months) versus a new car (generally once every 48 months). With the same share of voice, you will sell 16 times (48 months vs. 3 months) oil changes than automobiles. In a market of 2,400 car owners where you have 100% share of voice, your potential is to sell 800 oil changes per month (2,400 oil changes/3 months) versus sell 50 cars per month (2,400 cars purchased/48 months).

The life cycle example above assumes 2,400 car owners. That may not be the population. As a matter of fact it probably is not. Similarly, prospects for a refrigerator would be defined mostly by home ownership (with a few apartment landlords and a couple of small businesses added to the number) but most definitely a number smaller than the population.

So the market size is a factor of the population. The target market percentage times population divided by the product life cycle in months will determine the number of potential customers that will statistically purchase this month. That number times your share of voice will determine your potential sales results.

Additional factors are: the credible urgency of your message; the competitive environment; the broader economy; and even the weather. Yes, don’t discount the weather. Good weather and bad weather both can have an adverse effect on your sales. Most often a change in the weather means a 24 hour slow down of sales. After the consuming public becomes accustomed to the change, regular buying habits return. The factors affecting when your ad will begin working are quantifiable. There are just a lot of factors. Your share of voice, how much you dominate your selected media, and your product/service life cycle, are the two biggest factors in getting results. But understand all of the other things that can impact the result of your marketing efforts.

Remember that a business that needs advertising help is less apt to get better than a patient who does not follow a doctor’s advice. The human body has a great capacity for healing itself in many different ways. Very few businesses can solve their problems by doing nothing.

The first retailer opened his Straw Store on the corner of Wheat Avenue and Hay Boulevard. Since he wanted his business to flourish he set aside a portion of his budget for advertising. He searched high and low for the best advertising deals he could find. He wanted to extend his budget as far as possible so he would always have money to spend on advertising. Surely enough he found every bargain he could in advertising. If he could not find something cheaply to buy he would hold off on advertising until the price came down. When he used the cheap advertising he purchased, he told the media salesperson to “just put something together,” not paying a lot of attention what his advertising message said. As time passed, he became more and more dissatisfied with his results and finally decided that he could not but advertising cheap enough to make it work. Because his sales were down he eventually closed his store and went to work for the second retailer.

The second retailer located his business on Elm Street. Elm Street Lumber sold a wide selection of sticks at unbelievable prices. This retailer was much wiser about the media he purchased. He paid a fair price and even a premium when needed to reach the highest volume stick buyers. He knew his customer well and bought advertising media that reached his customer at the exact point when they were contemplating a purchase. Retailer number 2 was determined to get the sale so he undercut every other company’s price. As a matter of fact, his advertised prices were so low that nobody would buy unless he was having a sale. As time progressed, retailer number 2 discovered that the more he advertised and sold his product, the faster he was going out of business. He soon decided to close his store. He and retailer number 1 both went to work for the third retailer.

The Brick Store on Cobblestone Drive was built to last. Retailer number 3 decided early to promote quality and service in his advertising. He knew that most people would willing pay more for quality and they would become much more loyal if they consistently got good service. He understood that consumers realize that both quality and good service come with a cost. Unlike many he knew that if he delivered both, consumers would willing pay for it and support his higher margins. These margins made carried his advertising budget and insured his profit. He also knew that the addictive nature of quick sales increases by dropping prices would erode his margins. He knew that these unprofitable spikes in sales were not the type of commerce he wanted to build his business with. He also purchased his advertising media on a long term basis. He knew that media liked long term advertisers because they provided stability to the mediums revenue stream. Because they did, the most generous discounts were given for long term buys. This enabled retailer number 3 to advertise consistently and not be dependent upon the low margin revenue spikes other retailers became addicted to. Retailer number 3 grew his business consistently as he continued to advertise in good times and bad. Good times because he could afford to and in bad because he knew his advertising was buying the loyalty of his competitor’s customers. Both times because he wanted his business to grow in both good and bad times. Things were good and retailers number 1 and number 2 had safe and secure jobs because of retailer number 3’s wisdom. The three lived happily ever after.

“Heroes are ordinary men and women who dare to see and meet the call of possibility – Bigger than themselves. Breakthroughs are created by heroes, by men and women who will stand for the result while it is only a possibility, people willing to create a path to the result, while others are still squabbling about the “right path” and arguing about the “right answers” – people who will act now, to make possibility real today.” –Werner Erhard

Much is made today of our professional athletes. They are bigger than life, and you see them everywhere. It almost seems like you must be a celebrity before you can become a Hall of Fame athlete, rather than the other way around.

The whole phenomenon is interesting when viewed through the eyes of advertising. The art of advertising has become so advanced in sports that many amateurs become famous before they have played their first professional match. Sports agents can take the credit for this. Their fees are based upon a percentage of the contracts they negotiate for the athletes they represent. The bigger the claims made about their client, the larger will be the resulting contract, and hence, the bigger the agent’s fee.

It is interesting how agents spin the statistics of their clients in order to show them in the best light. It used to be if the athlete’s team won a lot of games, they undoubtedly were good at the position they played. Today, quarterbacks are measured on dozens of statistics including third-down conversions on the final drive of the games they’ve played. Or how many different receivers they have thrown to and completed passes, as if the receiver’s ability to catch passes is totally the quarterback’s responsibility.

There are multitudes of measurements in every sport designed to quantify an athlete’s talents, skills and predictable behavior. All of them are designed to figure out one thing—can he (she) win?

In spite of these statistics and measurements, more athletes fail to make the professional level than the number of those who succeed. Of those who become successful in the professional ranks, many are unknowns. They are unknown in terms of not having an outstanding amateur career. Why is that? How can someone who is not acknowledged as the best of the best become an elite professional athlete?

I believe it is the one thing nobody has found a way to measure: competitive spirit. There are some athletes, like Lance Armstrong, the cyclist, Doug Flutie, the diminutive quarterback, and other seemingly ordinary people who have been defined as winners, solely because of this trait. Their natural talent is not extraordinary. In some cases their skills and demonstrative talents are not even close to many of their colleagues. Yet they win because they refuse to be beaten. These people love to compete.

Often this intangible quality is called “heart,” a romantic term which attempts to define a single person’s determination to win. This characteristic has become romanticized to the point that it is the most desirable trait sought in professional athletes. It is based on a love of competition and on the ability and desire to use all of the skills and talents at one’s disposal to win the game he or she is engaged in playing.

We all need to compete. We need to compete in our businesses. We need to compete in our jobs. Competition defines the result of our efforts. Without strong competition, we fail to give our all. It cheats us of giving our best, and it cheats our customers by providing them with a little less than the best product or service.

In our capitalist society, competition drives our economy. Without competition, there is no urge to improve. This is no urgency to even win. Without competition, apathy toward our product or service leads to dissatisfied customers and a less vigorous marketplace.

There are few things more gratifying than becoming successful in an area where aggressive competition exists. Competition validates your effort. It gives you a benchmark to measure your own talent and skill. When all other rewards fail, competition fulfills us.

If you are like me, you have a relative in your family that you look up to. As a younger man, it was my uncle. I idolized him, and I always wanted to please him. I asked him to play games with me. Those times when he challenged me and beat me, I worked hard, was out of breath and was taxed by my effort, but I knew I gave it my all. I felt good and measured my advancement by the severity of the beating I took.

But there were also times when my uncle tried to be kind to me by letting me win. He lowered the level of competition. Even though I won, I was not satisfied. Neither of us enjoyed it, and winning did nothing to help me improve my skills or hone my talents, much less my confidence.

This uncle is no longer with us, and I miss being challenged by him. As I grew older, he would challenge me intellectually. He defeated me as long as he could. We eventually became equals, and I often was able to defeat him in many areas. But our relationship, by and large, was based in getting the best out of the other, and we enjoyed every minute of it.

School children today are not being challenged the way I was. Political correctness has made many afraid to stimulate competition. Instead, teachers are finding ways to avoid measurements of comparison, so they don’t hurt children’s feelings. Or they measure so many areas that each individual wins based upon criteria so narrow to that person that no competition exists. That’s too bad. We are training a generation to become dull and unengaged. They are failing to learn the lessons of competition. But an even more terrible loss is that these children do not understand that disappointment and elation are on the same continuum. Without experiencing one, you cannot fully appreciate the other. By keeping them from failing, we steal from them of the full pleasure of winning.

Dolly Parton once said, “If you want to enjoy the rainbow, you must tolerate the rain.” In avoiding competition, we are raising a group of children who may be doomed to only experience the middle of their emotional range. We are training them to avoid attempting to become a winner because of a fear of losing. We may very well be deprogramming the next Lance Armstrong, erasing in our children the intangible “heart” that we all admire so much in our sports heroes and heroines.

Competition in our businesses is important. It is an integral ingredient in our capitalist model. It drives us to perform. It stimulates advancement and innovation. Competition creates in each of us a confidence and willingness to pick ourselves up and start all over. The feeling of winning is so addictive that, like a mother who is willing to go through the pain of childbirth for the experience having another baby, we are willing lose many times over in our attempt to feel that exhilaration of winning.

There are not enough of us in the business world who are acknowledged for having “heart.” Many of us win only because we desire to win, not because we are the best-prepared or the best-educated. We just really detest losing.

The next time your competitor beats you. Don’t get mad, get to work. Thank your competitor for driving innovation in your business category. Thanks to your competitor, you are as good as you are today. Thanks to your competitor, tomorrow you will be better. And thanks to your competitor, you can get genuine satisfaction and enjoyment from what you do.

Basics:
• There are only two ways to increase profits: Lower costs or increase sales revenues.
• There are only two ways to increase sales revenues: 1) Sell more customers, or; 2) Sell customers more.
• Track your gross sales, number of transactions and average transaction on a daily basis.
• Advertising impacts number of transactions (selling more customers) and average transaction (selling customers more)effective copy increases closing ratio (transactions divided by number reached).
Tips:
1. Know who you are attempting to attract with your advertising message, i.e. existing customers to increase your average transaction, or new prospects to increase number of transactions. Your strategies should be different.
2. Measure advertising effectiveness, not by people saying where they saw or heard your ad, but by your transaction counts and average order. These are the only true measures of success. People will tell you what they think you want to hear.
3. Remember, today you are not competing with the other car dealers, the other restaurants, or the other hardware stores. You are competing for “share of mind and share of time.” People are so busy today that time is their most valuable commodity and convenience is their prime buying motivator. Find ways to make doing business with you easy, time saving and hassle-free. If you do increases in sales will result.
4. Go big or stay home. Don’t advertise everywhere. Most businesses can’t afford to effectively do so. Pick a few mediums and dominate them as much as possible. (In America – everyone equates the biggest with the best – be the biggest where you can be). Remember it is more effective to reach fifty people ten times than it is to reach five hundred people one time and in media the costs are roughly the same.
5. Target your customer and be willing to pay for the specificity. If you are selling men’s hair pieces, it is better to talk to 20 bald men than talking to 200 men or 300 people (men & women).
6. One ad – one item. Don’t fall into the trap of trying to say too much with each ad. Again, people are rushed today. It is better to sell a single concept over and over and over. It will entrench your brand in the mind of the consumer.
7. Spend more time and thought on ad copy than anything else. What matters most is “what you say and how you say it.” Where you advertise and how much you pay for it is less important if your message is right. Low advertising rates cannot overcome poor ad copy or make-up for an inferior product.
8. View advertising as an investment. Expect a return on every dollar you spend. If you don’t get a return, don’t quit. Tweak your copy, your strategy and advertising direction until it works, but don’t stop. After you achieve the formula that works for you, increase your budget gradually. And keep increasing it as long as your sales increase with your expenditures. If you know that a $10 expenditure generates a $30 return and increasing to a $100 expenditure still generates the same percentage increase, a $300 return, why would you ever spend just $10?
9. Repetition is what makes advertising work, repetition is what makes advertising work, and repetition is what makes advertising work. Say your sales message over and over again. By the time you are climbing the walls and sick of your own advertising message, 5% of your target market is just learning who you are and what you do. The person who writes the copy is the worst judge of when the frequency is adequate.
10. Word of mouth IS the best advertising. But radio, television, billboard, magazine, newspaper, and phone book advertising all help to start and accelerate word of mouth advertising. Used correctly (and many don’t use them correctly), media will have your customers talking about your business. Use these mediums to fuel the fire and your advertising will almost always work. Frequency mediums will grow your business faster than mediums that work best with larger sizes.

“A man who stops advertising to save money is like a man who stops a clock to save time.” — Henry Ford

When I first started selling advertising, I wanted to be the best ad salesperson I could be. I discovered that just about everyone who bought advertising had some questions. Since these questions addressed advertising accountability, most of my colleagues avoided answering them, not because they didn’t want to, but because they failed to spend the time necessary to understand how advertising actually works, as well as to make their medium work, so they didn’t know how to answer the questions.

In order to set myself apart from ordinary ad salespeople, I studied advertising and developed strategies that led me to be confident that I could provide solid answers. In spite of the fact that I was one of the very few willing to accept responsibility for this accountability, many advertisers still found it difficult to meet my conditions for being accountable for their results.

What every advertiser wants to know, whether they express it in these words or not, is:
• How much will my business grow using what you are proposing?
• How much will this growth cost me?
• How long will it take to achieve this growth?
• How will I know that your program caused this growth?

These are hard questions that speak directly to advertising accountability. Most advertisers will not accept direct accountability for their own efforts when they control the total advertising budget, so you can see how confrontational the questions might be to someone selling media.

Being able to take responsibility for a business’s growth begins with a complete understanding of how and where they have advertised in the past, as well as their customer metrics.

Here’s a real life example: The Example Company has sales of $5,325,000 per year with an advertising budget of $213,000. This is 4% of sales. The company had 11,501 transactions last year with an average transaction of $463.00. from 2,175 different customers. Their average customer had 5.29 transactions and spent $2,448.28.

Knowing these metrics makes it relatively easy to forecast growth. The first step is to establish a budget to maintain existing business. If it took $213,000 to generate $5,325,000 in sales last year, why would it take any less to do it this year?

Next, estimate/establish a viable growth percentage, such as 5%, or $266,000, as an objective. Knowing the client’s average order is $463.00 means we would have to generate about 575 new average orders. At 5.29 orders per customer, it also means they would need 108.7 new customers, IF these customers all started in the first month or so. Assuming they can add new customers equally through out the year, they need to reach 108.7 new customers at the end of six months (an annualized new customer rate of 217.4) to achieve an average growth rate of 575 new average transactions per year. Last year, the company spent $213,000, or $97.93 per customer, to serve a customer base of 2,175. They will need to spend an additional $21,290.00 ($97.93 times 217.4) targeted at non-customers whose profile matches our existing customers.

It is interesting to note that many would target growth of just 108.7 new customers for the year. Since these new customers come on board at a rate of 9.06 new customers per month, their accumulated customer base at mid-year would be 54.34 new customers, which would generate only half the sales needed to reach the sales goal. At this rate, the number of customers needed to generate the targeted sales revenues would be reached only in the last month. This is the main reason advertising investment needed for growth should always be double the dollars spent to maintain existing customers.

Too many companies fail to realize the cost of growth. Even then, they fail to realize how expensive it can be to re-establish a growth model after just a few months of cutting back. Unfortunately, most companies develop structures too small for the growth they want, rather than structuring adequately to achieve it. Not only do they fail to use the correct mathematical formulas, but they also fail to have contingency plans in case other factors impact their strategies.

Understanding these metrics makes answering the first three questions easier. Answering the last question is generally a matter of tracking results on at least a monthly – if not weekly – basis. Again, this comes back to identifying who are existing customers and knowing when you get new customers. Additionally, a continual check on average transaction value is needed in order to know that promotional discounts are not eroding new ground gained by cutting margins.

If you find an advertising person willing to work with you in terms of your transactions, average order and customer count, you have found someone who can honestly help your business grow. You will need to share detailed sales metrics and strategy so they can help your business grow.

Another way to grow your business consists of increasing your average transaction. This can be achieved by advertising additional uses for your products to your existing customers, adding compatible product lines for existing customers, and/or developing and selling products that are consumed at a faster rate than your current products. Any combination can increase your average transaction.

Back to the four questions, if you are lucky enough to find someone who will accept accountability for one of these questions, you are way ahead of the game. If you find someone willing to accept accountability for more than one, make sure you develop a solid, long-term relationship with that person.

I spent many years learning how to answer these four questions. These days, I seldom go through the exercise and share the answers with others. I find that too few people are willing to earn success from advertising as we know it should happen. Too many expect results beyond what their efforts or investments actually merit.

As a friend of mine put it, “Instant gratification is no longer fast enough.” This is an attitude that keeps advertising a mystery. The failure to accept the correlation of what you put in to what you get out is why so few people understand advertising. Everyone expects to receive more than reality is ready to deliver. And advertising is more often blamed than the erroneous expectations of misinformed people.

Many years ago, I owned a merchandising support company, Impulse Broadcast Systems (IBS). We provided in-store music systems integrated with audio commercials that were synchronized to individual store merchandising sets. Our company was one of the first to use satellite technology and digitized audio from computer hard drives. It was pretty high tech stuff for 1991.

IBS is where I learned a lot about mass merchandising, especially the grocery industry. As I grew up in central Indiana, like everyone else I visited the local grocery store with my family. In the 60s, most grocery stores had a large meat freezer in the back of the store. There were generally one or more large store rooms surrounding the consumer shopping area of the store.

In the early part of the decade the grocery industry was the classic “push” sales model. The manufacturer’s salesman would visit the grocery store and sell cake mix. The salesman might sell a railroad train carload of a name-brand cake mix to the store owner, offering to give a discount and carry the financing of the order for immediate delivery. The grocer would thus fill the store shelves and much of the storage area around the store. The grocer in nearly every case was not aware of how long it would take to sell a carload of cake mix.

In the early 60s, the employees stocking shelves knew more about the grocery store’s inventory than the owner or manager. But that was about to change.

About the same time, a student working on his doctoral thesis at the University of Chicago was perfecting a system of cataloging using a series of lines and corresponding numbers. This student was addressing the problem of a creating common system of product identification.

In Dayton, Ohio the relatively small National Cash Register Company was experimenting with broader uses of new technology being developed by NASA in hopes of creating new products to lead the company forward in the next decade. Their work with lasers was beginning to make progress.

And computer systems, which in 1960 filled rooms, were becoming smaller and cheaper. The prospect of smaller companies owning a computer was in the foreseeable future.

These seemingly-unrelated situations collided in the mid 60s, when the Marsh grocery chain in Yorktown, Indiana was facing a possible strike by employees. Employees like Jack Williams who stocked shelves for the grocer. Jack and his colleagues knew how much sold and how much to re-order when the time came. The specter of these employees unionizing upset the owners because they realized that those very employees carried effective the company’s inventory management system in their heads. Management knew they were in a weak negotiating position.

Driven by Marsh, NCR pushed laser scanning technology in conjunction with the development of the uniform product code system to track product sales at the point of purchase in grocery stores and created UPC scanning systems. The payoff was not the avoidance of hiring skilled unionized cash register operators, as many surmised, but the development of immediately useful sales data and management information systems. MIS allowed the grocer to know just how many boxes of cake mix he sold every hour of every day.

As a result, the grocer now could tell the cake mix salesman that he didn’t want to buy and store a railroad car load of cake mixes. He was only going to buy 23 boxes of chocolate cake mix to be delivered Monday morning at 9, then another 17 boxes to be delivered Tuesday morning at 9. This knowledge led to “just-in-time” inventory systems and forced an elaborate “pull” sales technology to be employed by manufacturers.

Grocers no longer wanted excess stock and hence had no reason to have large storage areas surrounding their stores. The back room and storage areas were converted to the bakery, a larger produce section, a delicatessen, a floral shop, and other departments selling highly perishable products that could now be profitable with an accurate product sales forecast. Small grocery stores now became supermarkets with multiple departments on the periphery of the main stocking area. Packaged goods manufacturers were, for the first time, in step with consumer purchasing. Store owners no longer would buy big orders because they received a discount or credit. The only way for manufacturers to sell more was to stimulate consumers to buy more, creating a sales velocity “pull” for their product through the distribution chain.

Many companies fell by the wayside as retailing evolved. These companies failed to see the opportunity to increase sales by advertising directly to the consumer. After all, they reasoned, it was the grocer’s responsibility to advertise to his own customer. These companies reasoned that they were just a supplier. But they failed to realize that grocers were now buying product according to how fast the consumer purchased the product. Inventory mix was now dictated by consumer purchasing, which was impacted by consumer advertising. These retail stores were now being managed as real estate operations generating dollars per square inch, and how many times the inventory turned per square inch: the faster the turnover, the higher the profits. Discounts in price could no longer compete with the profitability of fast product turnover and consumer “pull.”

Advertising split into branding and product promotion. The age of the discount coupon began. Consumer promotion, i.e., ways to motivate the consumer to buy, became the manufacturer’s way to sell more product. Finding additional uses for products and advertising those new uses fueled incremental sales for established items.

Supermarkets were now just a conduit between the producer and the consumer. MIS systems could tell the grocer not only how much of each product would sell, but which days it would sell. Expensive computer modeling programs tracked such things as the impact of a 10% discount, temporary price reductions (TPRs), weekly ad placements, off-shelf displays, items stocked in the aisles and on endcaps, and the funds spent by manufacturers to tell consumers where to find their products. Each function, and every combination of functions, affects product sales levels. The results are constantly changing, influenced by weather, the seasons, and geography.

Before computerization, grocers selected a product mix and sold to loyal customers. Manufacturers now compete to buy distribution, provide just-in-time delivery, and secure prime eye-level shelf space in aisles and on endcaps. They purchase newspaper promotions to ensure their products get added impact. They negotiate TPRs, provide proven consumer promotion and assume the risk of not having their product restocked if it doesn’t achieve sales velocity or adequate turnover. All because Jack Williams, the stock boy at Marsh grocery store knew his job better than his manager and he wanted a raise.

Grocery retailing is highly competitive and much more sophisticated than most realize. But it provides lessons for those in other industries. With strong sales information from MIS software, retailers will only carry products with high product turnover or velocity. This information will in essence turn retailers into companies leasing real estate by the square inch. Velocity or product turnover will be measured by dollars per square inch per day. Retailers will not carry products that do not sell quickly. And eventually they will only carry products with bona fide consumer promotion (advertising) behind them that ensures consumers know where and why they need to buy the product. Even demand-products, i.e., the selection of products that nearly everyone buys on each grocery trip (eggs, orange juice, coffee, bread, milk, lettuce, and bananas) will need consumer promotion in order to consistently secure shelf space with progressive retailers.

“Life isn’t about waiting for the storm to pass. It’s about learning to dance in the rain.” — Anonymous

Over the years, I have been introduced to many different ways to focus advertising messages. One of my first and most effective lessons was to learn about psychographics. A combination of geographic, demographic and lifestyle data, psychographic studies collate different personality styles into five separate and distinct buying groups. The members of each group have similar characteristics which lend themselves to five different psychological advertising approaches. These models have held true over several decades and can be very helpful in creating copy points and approaches to marketing products.

Understanding psychographics early in my career helped me tremendously in crafting advertising messages for my clients. Like other lessons I learned from positioning, guerilla marketing and neurolinguistics, psychographics gave me new ways to effectively communicate with potential customers.

My first wife, a former president of the National Speakers Association was in high demand on the speaking circuit espousing effective communication between men and women by understanding the subtle but key personality differences in the sexes. In 1992, John Gray published his first Mars and Venus book on relationships, Men are from Mars and Women and from Venus. Creating marketing messages based upon gender instantly gained popularity.

Gender-based marketing of non-gender-based products gained greater popularity as the influence of females on purchasing patterns became more widely recognized. Most marketers now know that anyone, male or female, rarely makes a purchasing decision in a vacuum. Most often, the major influence is carried by the female

Many of my advertising years were spent in broadcast industry. From 1976 through 1995, the top demographic category routinely picked for nationally advertised products was women 25-54 years old. Packaged goods manufacturers have been aware for many years of the influence carried by the woman of the household.

In 2003, Mary Lou Quinlan published the book, Just Ask A Woman – Cracking the Code of What Women Want and How They Buy. This book is a great primer for anyone who markets products to a broad base of customers. If you are marketing your product to more than a remote group of tribesmen in a tropical jungle, you can bet that a female is going to have influence on the buying decision. In fact, if your product promotion does not target a female audience, you may want to consider making some changes in the way you do business.

Today, women buy or influence the purchase of 85 percent or more of what is sold, as reported by www.ewowfacts.com. That is a large market to own. As a matter of fact, I cannot imagine anyone not wanting to sell to this market. In recent years larger companies have revised and revamped their approach to customers with the understanding that if you sell to women, the rest of the market will follow.

In a previous issue of this column, competition was discussed in terms of identifying the real competition for our products. Mary Lou Quinlan points out that today’s woman is pulled in so many directions that she is continually stressed out. She feels the needs to “have it all,” and be the super mom and super wife that we see on TV. This stress to excel outside the home and the need to be all for their families has created an entirely new consumer. Do you think there is not stress among woman? Fifty-five percent of mothers with children younger than twelve months have jobs in addition to being a mother. Not only is stress and lack of time a constant companion but there is no end in sight for the woman who wishes to “have it all.” You must contend with this new reality if you plan to sell you product to this market.

The craft industry experienced a soft market a few years ago as relief efforts from Hurricane Katrina and escalating gasoline prices squeezed family budgets during the second and third quarters of the year. The woman of the house, the primary customer, sacrificed purchases she usually made for herself to compensate for the squeeze on the family budget. Household budgets mostly adjusted by year’s end, but a noticeable slow-down occurred. Even today’s most sophisticated advertisers could pay more attention to the business benefits of helping mothers take care of their families.

Marketers who have not updated their thinking show today’s woman as rushed, harried and out of control. This is not the image that you potential consumer wishes to have of herself. She has had her negative experiences with marketers and now has revised who she trusts and how she evaluates products and services. She has her own network of advisors and often turns to this network when looking for advice or approval for a purchasing decision. Understanding her network and this decision-making process will lead to not only selling her but also the network she advises. Shunning her can lead to being shunned by her entire network.

Today’s woman is a complex and unique consumer. Today, she controls 60% of the country’s wealth. She already influences 85% of consumer purchases. Understanding what makes her tick, why she is evolving, and how to speak to her real and emotional needs may well be the key to success for your business. Relying on practices of the past could easily spell doom and gloom for marketers who think it worked before, it will work again.

From John Gray’s Mars and Venus series to Mary Lou Quinlan’s Just Ask A Woman, seek expert advice on the subject. If you are a woman, you may be too close to the reality to see it clearly. If you are a man, you need a perspective outside of your personal experience. You want to know not only who buys your product, but all of the inbred, cultural and societal influences that mold her today.

“Making the simple complicated is commonplace; making the complicated simple, awesomely simple, that’s creativity.” — Charles Mingus

Weekly sales numbers have reflected the grade card of my job performance for as long as I can remember. Week in and week out over the past 30 years, it has all come down to the numbers. Was I a nice guy? Did I do the right thing? Were the interests of my customers in the forefront of my mind? All of these things were secondary to the numbers. For the first few years in sales, I did everything I could do to avoid that weekly reality. I finally gave up and just surrendered to the results that the world used to judge my performance.

I gave in when I realized that my income at the time was above many of my friends who did not have sales jobs. I worked commercial hours, basically 8 to 5 weekdays, when the majority of commercial businesses were open. My life was not bad by standards of personal income, work week and various other measures. That is when I came to grips with methodically managing myself. You see, I have this thing for wasted effort. My mother and my wife both choose to believe I am a little lazy. I, on the other hand, believe I have a healthy obsession for effectiveness, choosing only to put in effort that will yield a result—and preferably one that is positive. I don’t really like playing games that don’t matter, and I never play any games unless I intend to win. I have no use whatsoever for teammates that can be satisfied with moral victories. When it comes to work, I am much more serious. For I say, if it is worth doing, it is worth winning and annihilating your competition in the process.

Measuring my own performance began when I first started selling advertising. It seemed ad sales and I were made for each other. I did very well immediately. My first day, I earned more in commissions than I had made in the previous six months, proving to me I had a natural penchant for advertising. This early success, coupled with my desire to be the best, led me to develop measurements of my skills which I applied to every sales call I made. It didn’t take more than six or eight weeks of feedback and adjustments before I was generating incredible sales results in terms of closing ratio and sales dollars. My confidence soared, and I literally felt I could outsell anyone.

For many years I consistently applied principles of measuring the effectiveness of my selling skills. When I got too confident from my results and got slipshod in measuring and managing my activities, my sales would slip, too. This not-so-kind reminder focused my need to revert to the one thing that led to my success: measuring the activities that led to my sales and minimizing those activities that did not lead to sales. It was about that time that someone gave me the slogan “you cannot manage what you do not measure.” Since I had several years of outstanding growth in personal income, that slogan rang true.

As a manager, I learned how to differentiate personalities from performance. I developed a limited number of metrics that allows me to manage salespeople effectively. After many years of experience, I know I can rely upon them without question. My metrics have been tested by some of the best as well as some of the worst salespeople. The consistent results over the years from the metrics have led to the same conclusions and actions for adjusting sales performance.

For the last 27 years of managing salespeople and weekly sales figures, I can say I have prepared over 1,400 weekly sales reports. Week in and week out, I prepare these reports. Whether I am working in the office at my desk, traveling on business in a hotel room or on vacation with my family, Friday mornings find me assembling a sales report and determining what the numbers mean and how I can impact them the next week to achieve a higher level or increased quality. Ask me what Friday means to me, and I can assure you that no Friday is complete until I see the numbers, spend some time analyzing them and decide what, if anything can or needs to be done. You see, I also learned that management is the application of adjustments to the current state of activity. Too much adjustment can do damage, as well as too little adjustment. In many cases stability of direction is better than reacting to the bumps in the road we encounter every day.

Leadership, management and driving a car all require that you stay on the road if you are to reach your goal in the most effective manner. The more you keep your attention in the distance, the smoother your course will be. Making adjustments by looking right in front of you will cause your trip to be erratic and take more time to complete. Leaders keep the vision of the destination in everyone’s mind, and managers measure the daily progress toward the destination. Both acknowledge movement to create an awareness of progress and an environment of winning. The leader points to the accomplishment of the end result, and the manager celebrates the next step in the journey.

As an advertiser, you must lead to, and manage the achievement of, the goals of your business. As a leader, you must have the vision of where you wish to go, the ability to enroll those around you in getting there and be able to provide the inspiration for each of those involved in the journey. As the manager, you must measure each day’s progress toward the goal, break down the contribution required from every employee, and maintain the resources necessary to keep everyone on course.

Far too often we let what we want, influence us into forgetting the realities that rule us and divert our attention to doing it our own way. At times we become intoxicated with our own results and believe they are ours alone, when in reality they a borne of surrendering to measuring our progress and building on only those things that work. Performance is not us personally. Performance is the result of following what works and not following what does not work. The ability to get past ourselves and surrender to the equation of what works is not personal. But knowing the human condition, it is at times, heroic. However it is never personal.

Measuring sales metrics as I do each Friday is not extraordinary. Doing it every week for 1,400+ Fridays might be out of the ordinary. But you cannot manage what you do not measure. Find the metrics that move your business toward your goals. Record them each week. If they are low, find ways to increase them to the level you want. If they are just right or better than just right, find ways to sustain them by building structures that insure they can be continued. Find your current state of activity through measurement and apply adjustments as necessary. Monitor the shifts in results you measure and continue to adjust accordingly as you continue your trip toward your predetermined success.