Marketing Expert's Corner
This article written in 2009
A sad truth of language is that euphemisms and doublespeak really work. Like when the San Francisco board of realtors named the foggiest part of the city the "Sunset district." Or when Wall Street had to sell investments that jumped around in value, they called them "financial securities" to make us all feel better. Just look at the solidity of the columns in the image to the right! (Aren't they hollow?)
When it came time for Wall Street to puree a bunch of doubtful debt in a blender and make derivative instruments (that every business school student knew were quite risky), the process was called "securitizing." Look back exactly 80 years and you'll find the same stuff coming from the same part of New York. With about the same results.
Then along came the ultimate Wall Street insider, selling investments that were (by his own confession) bogus, a con job. Even jaded New Yorkers trusted this guy, and he took some of them for literally all they were worth.
Even though, as Seth Godin wrote, we live in a low-trust world, this last year has certainly pushed us down a couple of notches. Given the economic turmoil, you have to assume that your customers will be acting increasingly cautious. They will need more evidence, more reassurance, and more reasons to feel secure about you and your products. Prospects and customers alike will be wondering how may of their vendors will go under, and what kind of transitions they will be forced to make. While they will press for discounts and extended payment terms, customers will be much more concerned about vendor viability and longevity.
I expect that this time around customers will be even more worried than they were in 2002-3, because of the depth of the corporate carnage last fall. The credit crunch makes everyone feel at risk. So the headline marketing issue must be to project your company's solidity and security. If your firm is number one in your product category, this won't be a big issue -- but for everyone else, effort is required.
How to project solidity and security? Well, not through
advertising. And not by talking about your stock price (which is totally out of your control and may not be happy news). Solidity and security have to be baked in to all your customer communications: web site, phone "on hold" messaging, face-to-face, etc. The things that will reassure customers:
- Number of new customers
- Percentage of renewals or repeat business
- Press or analyst accolades
- Revenue growth
- Profitability and low cash-burn rate
- Available cash and size of debt
Profitability and cash burn are surprisingly important: the customer will not care very much about the rest of your marketing message if they don't believe you have the wherewithal to survive.
Once the survival question is answered (at an emotional level), several other areas will be important to your customers feeling secure. Let's look at a few of them:
Security = Risk Reversal
The idea of risk reversal is that you, the vendor, take on some of the risk of customer satisfaction. The first order of business is making sure the sale happens in the first place, so the classic risk-reversal technique is a free trial of your product or service. Or a money-back guarantee (30 days is the classic). Make it really easy: get rid of the long contracts that get in the way of a trial and conversion to a purchase. Don't try to hit the prospect up for a $5K purchase order before you start the proof-of-concept. Instead, tell them that they'll pay for that initial setup only if they make a product purchase. Invest in a "do-it-yourself" POC guide or other items that lower your cost of doing a pilot, as well as the customer's.
Security = Shared Rewards
The idea here is, "I get paid only if you make money." This is a tough one, because it can mean a delay in your payment stream. But if you have a long-term business relationship, this is a great way of insulating the customer from risk while getting some of the upside when the results are positive. Milder forms of this can be in the form of revenue sharing, inventory cost sharing, and other ways to bind yourself more closely to your customer. The payoff comes in the dividends of repeat business.
Security = Easier Terms
You don't have to be a CFO to know that credit can be very hard to come by, even for large corporations. Of course, constrained credit hits vendors just as much as customers, but your finance guys need to run the numbers. What's the cost of financing vs lowering the purchase price? Wouldn't you be better off getting a customer and 20% of their money right now -- even if they went out of business before they paid the next installment -- than selling the product outright for 80% off? What's the impact of leasing the product to the customer, rather than selling it? Or using a recurring model rather than a perpetual license? Offering the customer alternatives may in itself win the deal, even if they don't take you up on any of the new ways of purchasing.
Security = Better Customer Experience
If you offer the customer more options in how to buy, making it easier to do exchanges, upgrades, downgrades, adjustments, and refunds, you'll be lowering the perceived risk of a purchase. While being more flexible in customer service and support is not without its costs, customers really notice -- and will divert their purchases towards you. Offer Outrageously Great (and profitable) service plans, extended warranties, system diagnostics / administration and whatever else you can think of to extend the life of the assets the customer has bought from you. Make sure that your customer support, marketing, and sales messaging are coherent and create the impression that your company is focused on creating happy, relaxed, long-term customers. Think Southwest Airlines on this one.
Security = Predictability
Nothing rattles customer confidence more than unanticipated change. Even if your product or service lineup is being improved, discontinuing an offering means that the customer has to think. Wouldn't you just prefer that they mindlessly order? Then minimize change. If you absolutely can't keep things the same, make transition paths really easy, and telegraph them well in advance.
What You Don't Need to Worry About For Now
Curiously, when there's deep insecurity in a marketplace, product excellence per se doesn't matter very much. Trust in the vendor is the determining factor in purchases. While this is anathema to high tech, there's no real point in having a ground-breaking product when everyone is trying to avoid buying and is instead concerned with extending the life of existing investments. So offer the customer upgrades to what they already have, dramatically better support, or best-practices consulting to get them better business results. This doesn't mean hiring new people, it means using your talents and credibility as a vendor in new ways.
Even though the customer ought to be investing in their own competitive advantage, at times like these they tend to shun innovation. They'll buy garbage if they believe it will keep them more secure. So now is not the time to roll out an aggressive road map of fabulous new capabilities. Save that for when someone is in the mood to listen.
The trick with security is that everyone thinks of his/her own security first. Guess what: you make more money if you think of your customers' risks and rewards first. How are you going to lower their perceived risk that they might get fired? What are you going to do to make them look good? Why are they going to believe they'll make more money because of what you offer?
Vendors have a need to sell, but the customer does not have a need to buy. Customers have a need to solve problems, which isn't the same thing at all. Vendors need to figure out at an emotional level what the customers do need, and give it to them in the most streamlined, easy to understand way possible.
Thinking of it from the customer's perspective: rule one of marketing.
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