viernes, 29 de febrero de 2008

Permission, Advertising and Free

I finished reading the book Permission Marketing by Seth Godin. I’m a fan of his blog so I got his book for 5 bucks used off of

Traditional advertising is the science of creating and placing media that interrupts the consumer and then gets him or her to take some action. The problem is that the amount of advertising begging for your attention has increased. As the clutter has increased, advertisers have responded by increasing the clutter. Permission Marketing is based on the premise that the expense of interrupting potential customers can be leveraged into multiple interactions. The internet threatens the traditional form of interruptive advertising because there are millions of pages instead of just a few TV channels. This is a very big haystack and advertisers don’t have that many needles.

Although, advertisers wish the internet was like a TV, where they could control what people see. This strategy is based on an old-media worldview in which we are all masses that can be bought and sold. Microsoft - like too many advertisers and media companies - thinks we think of the internet as just another TV. It believes it can own content and technology when, in truth, we own it now. It shows in their work to thwart the threat of DVRs. In a New York Times article, the ABC network is establishing an on-demand video service that would allow viewers to watch ABC shows like “Lost” and “Desperate Housewives” any time they choose. The catch: It uses a new technology that disables the viewers’ ability to fast-forward through commercials. Also a Wall Street Journal article talks about how advertisers are trying to make their ads stick even when they are being fast forwarded. Obviously Godin’s observation is true, the mass market is dying. The vast splintering of media means that a marketer cant reach a significant percentage of the population with any single communication.

There are two metrics in advertising: reach and frequency. Reach is how many people see it and frequency is how many times it is seen. No single ad, no matter how well produced, is never enough to sell you product. You need frequency to earn trust and you need trust to sell. With larger reach, the percentage of ideal customers that are interested in your product will be very small. A lot of money is wasted on people who are not in the market for your product. Permission Marketing makes frequency work. It encourages the commitment and frequency that made mass marketing work years ago. But it replaces continuing interruption with ongoing interaction.

Godin’s idea is to first interrupt the customer but then engage them in a bargain where the customer opts-in. They opt-in by signing up for your newsletter, registering at your site or adding you to their rss feed. They opt-in because of some kind of bait or offer that you give for free. Chris Anderson wrote an article about free in which he says that today it's digital technologies have become too cheap to meter. The traditional free sample is the promotional candy bar handout or the diapers mailed to a new mother. Since these samples have real costs, the manufacturer gives away only a tiny quantity — hoping to hook consumers and stimulate demand for many more. But for digital products, this ratio of free to paid is reversed. A typical online site follows the 1 Percent Rule — 1 percent of users support all the rest. In the “freemium” model, that means for every user who pays for the premium version of the site, 99 others get the basic free version. The reason this works is that the cost of serving the 99 percent is close enough to zero to call it nothing. In another post by Godin, he gives reasons why someone would pay for something when it can be free.

Then after the customer has opted-in and the exchange of data with the customer has taken place, you then teach and eventually leverage the permission you’ve obtained with them. By continuing the dialog, you can teach the customer until a stranger becomes a friend and then a friend becomes a customer. If you offer something that is genuinely of interest of the customer than they will look foreword to your messages. Inviting people to opt-in to become their friend and then a customer won't reach everyone. In fact, it will reach almost no one. But that's fine if the few people you do reach are the people who are looking for you.

martes, 12 de febrero de 2008

Discovering the Soul of Service

I finished reading Discovering the Soul of Service by Leonard L. Berry and thought it was a great book. I’ve always wanted to start my own business or go after other business pursuits for the sake of making money. I learned that seeking for money is not the best goal for enduring business strength. Core values, focusing on customer needs, focusing on value, investing in employees and generosity all are much higher and nobler pursuits that will inevitably lead to success and ultimately satisfaction.
A successful service company first starts with never-changing core strategies. Some of which are excellence, innovation, joy, respect, teamwork, integrity, and social profit. “These values reflect what the leader holds worthy, what the organization assigns worth. They are the ideals, principles, and philosophy at the center of the enterprise. They are protected and revered. They reveal the company's heart and soul. They energize the covenant.” These values of excellence do not permit organizations to rest. Excellence keeps you awake, striving to improve and searching for ways to enhance competitiveness.
Next, the company should focus on serving a specific need rather than on marketing a specific product for that need. I feel that always focusing on the customer rather than the marketplace or competition is paramount. Identifying a need rather than a product allows the company to create an enduring path to follow. Successful companies are aware of what the competition is doing but they resist copying what they are doing. Instead, they focus on what the customer wants.
Service itself is so important in creating value to its customers to be able to compete. Value and price are not the same thing. Price is part of value but not its equivalent. Value is the total experience; price is price. Its value that customers want. The lack of physical differentiation among competing services encourages managers to overuse price as a marketing tool. When the products themselves can give customers non-price reasons for favoring one brand over another, services managers are limited to nonphysical means of differentiation. Managers frequently use price cutting to differentiate, which may lead to cost cutting and weaken execution. Preparing for intensified competition requires strengthening execution not weakening it. Many managers prefer price cutting because it can be implemented quickly and may be deemed more salient to customers. Without differentiation in quality, without superior total experience to offer customers, a company has few, if any, non pricing options when key competitors cut their prices.
The ability of adding this value to the service that a company provides comes down to the quality of its employees. A company must invest in their employee’s success by using strict hiring measures to find those employees whose values mach those of the company. Companies also instigate ownership attitudes in their employees. Helping the employee feel like they are part of something bigger, part of the team, and in the loop is essential. The more people know about the organization the more they will care. If there is anything a company can do to enhance communication with their employees they should do it. Those who truly invest themselves in the business expect to participate in the success and the company earns the employees trust in doing so. It isn’t hard work is not what defeats people on the job. What defeats people is work without personal growth, without teammates, without kindness, without meaning. The goal of making money in itself is not heartening.
All this investment with employees pays off in the end. A company that can’t maintain this trust with its employees can’t hope to maintain it from their customers. Employee turnover causes less money to be invested in employees which causes less satisfaction from the customers which continues to add to the problem of not having enough money to invest in employees. "The best-run companies find ways to leverage the flexibility intrinsic to the services they market. They accomplish this with strong values and thin policy manuals; with well-selected, prepared, and empowered service providers; and with systems that facilitate flexible execution. Flexible systems support excellent execution through service customization and adjustable capacity" The degree that strong values can guide employee’s behavior, companies can function with fewer rules. I like the idea of being guided by two categories of rules: those that can’t be broken under any circumstances, and those that can be bent or broken depending on the circumstances.
Generosity is the secret weapon for success. Working for a generous company gives the employees pride which in turn, builds pride in themselves. “Humane values power great service companies; generosity continually reinforces and enriches these humane values. When the product is a performance, winning the hearts of the performers helps companies win the hearts of their customers.” Selfish companies cannot serve. Making money is not enough. It is more important to positively influence the broader community.
Wealth creation is too small a pursuit. If fails to fully unleash the human spirit in organizations, or fully tap into the natural generosity of the human heart. By generously sharing with society they talents, their leadership, and their money, excellent companies make a bigger more meaningful difference in the quality of life; win the hearts of their employees, customers, and other stakeholders, and become even more excellent companies.
I want to eventually become a real estate investor. Instead of going about it to become financially independent, although that is an attractive outcome, I want to go about it with the attitude of helping someone in need of a good place to live be able to live in a quality, affordable home. As an advertisement salesman I want to help businesses succeed. As a small business owner I want to serve those with the talents that I have.