Is money the root of all evil?

Some of you know I’ve recently gotten engaged, so I’m cleaning out the basement to make room for our merged household.  In going through some files from 40 years ago, I found the following.  I don’t remember who it should be attributed to, but I hope you’ll find it as thought-provoking as I did then, and do now.

“So you think that money is the root of all evil?  Have you ever asked what is the root of money?  Money is a tool of exchange, which can’t exist unless there are goods produced and people able to produce them.  Money is the material shape of the principle that people who wish to deal with one another must deal by trade, and give value for value.  Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force.  Money is made possible only by the people who produce.  Is this what you consider evil?

When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others.  It is not the moochers or the looters who give value to money.  Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow.  Those pieces of paper are a token of honor—your claim upon the energy of the people who produce.  Your wallet is your statement of hope that somewhere in the world around you there are people who will not default on that moral principle which is the root of money.  Is this what you consider evil?

Have you ever looked for the root of production?  Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes.  Try to grow a seed of wheat without the knowledge left to you by people who had to discover it for the first time.  Try to obtain your food by means of nothing but physical motions—and you’ll learn that the mind is the root of all the goods produced and of all the wealth that has ever existed on earth.

But you say that money is made by the strong at the expense of the weak?  What strength do you mean?  It is not the strength of guns or muscles.  Wealth is the product of people’s capacity to think.  Then is money made by the person who invents a motor at the expense of those who did not invent it?  Is money made by the intelligent at the expense of the fools?  By the able at the expense of the incompetent?  By the ambitious at the expense of the lazy?  Money is made—before it can be looted or mooched—made by the effort of every honest person, each to the extent of their ability.  Honest people know they can’t consume more than they have produced.

To trade by means of money is the code of the people of good will.  Money rests on the axiom that every person is the owner of his or her mind and effort.  Money allows no power to prescribe the value of your effort except the voluntary choice of the person who is willing to trade you for their effort in return.  Money permits you to obtain for your goods and your labor that which they are worth to the people who buy them, but no more.  Money permits no deals except those to mutual benefit by the unforced judgment of the traders.  Money demands of you the recognition that people must work for their own benefit, not for their own injury; for their gain, not for their loss—the recognition that they are not beasts of burden, born to carry the weight of your misery—that you must offer them values, not wounds—that the common bond among people is not the exchange of suffering, but the exchange of goods!

Money demands that you sell not your weaknesses to others’ stupidity, but your talent  to their reason; it demands that you buy not the shoddiest that they offer, but the best that your money can find.  And when people live by trade—with reason, not force, as their final arbiter—it is the best product that wins, the best performance, the people of best judgment and highest ability—and the degree of a person’s productiveness is the degree of their reward.  This is the code of existence whose tool and symbol is money.  Is this what you consider evil?”

Think about it.  And if you find value in good marketing advice—give YOUR CMO

You’ll like this column. I guarantee it*

When a consumer is considering whether to “buy” a product or service, they are facing a risk that it won’t live up to their expectations.  That risk can be reduced by a guarantee.    For the business owner, that reduction in perceived consumer risk means an increased propensity to buy, which translates to additional sales.  For that reason, guarantees should be considered a marketing tool rather than a cost of doing business.

To determine how important a guarantee will be to your business, you need to put yourself in your potential customers’ shoes.  What fears do they have?  Different products and services generate different fears.  For a food item, someone might worry about taste, or shelf life.  For tires, someone might worry about safety, or longevity.  For a haircut, someone might worry about social embarrassment.   Until you know what people are worried about, you don’t know what to guarantee.  Don’t guess.  Talk to your customers and make sure you’re addressing their real fears, or your guarantee may miss the mark.

Fears are a function of expectations.  People have an expectation, and they fear that a product or service won’t live up to that expectation.  So once you’ve identified the fear, you need to identify a common expectation.  That expectation may be set by the customer (“I’m not buying a car whose engine won’t last 50,000 miles.”) or by the business (“You’ll get 40 loads of wash from this box of detergent”)  Either way, you’ll want to be sure that you and the customer quantify the expectation that is being guaranteed and the circumstances that will trigger the guarantee.

Next you should decide what form the guarantee will take.  The most common forms are either

--a partial or full replacement or do-over, or

--a partial or full refund

Companies tend to prefer replacement, because it is less expensive for the company and because it keeps the consumer captive.  Consumers tend to prefer refunds, because if the product or service fails, they lose faith in the company, and would rather take their business to someone else.   The company needs to weigh the greater power of a refund against the lower cost of replacement.  The competitive environment will have a lot to do with this—the company can decide whether to match competitive guarantees, live with a less effective guarantee, or use a better guarantee to gain a competitive advantage.

Within this general framework, there are six specific factors a company should consider:

--What is the customer spending?  If consumers are spending a small amount (think “candy bars”), a guarantee can be relatively unimportant.  There isn’t a great deal of risk in a $1.00 purchase.  For someone spending $50,000,000 on a new computer system, however, there is a huge risk, and a guarantee will be absolutely necessary.  The most interesting area is one where both the product and the risk are subjective, like a haircut and the social embarrassment which a bad one can generate.

-- What is your failure rate—how often will  you have to “pay out”?  Your quality control determines both the degree of need for a guarantee and the strength of that guarantee.

--How well known is your product?  A well-established product with a good reputation has much less need for guarantees, because people don’t perceive the degree of risk they might fear from a product with no track record.

--How long do you guarantee your product for?  Guarantees may range from the first 10 days of use to the lifetime of the product. 

--What amount of liability is the company ready to assume?  Most companies re-insure their guarantees against catastrophic failures (ie. a huge auto recall or poisonous pharmaceuticals).

--Not everyone will take advantage of a guarantee, even if it is justified.  Most people with a tire that has a guaranteed life of 60,000 miles are unlikely to demand compensation if it wears out at 59,500 miles.  And for small amounts of money, the effort of obtaining the redress promised by the guarantee is often not worth the effort.

*Guarantee made for illustrative purposes only.  I mean, you didn’t really think I was going to guarantee a column, did you?  Besides—you liked it, you know you did!

Evolution needn’t be Life or Death

In the natural world, species evolve generation by generation.  That’s a little slow to be practical for your marketing programs. Not to mention the part about winners living and losers dying. 

Your marketing can evolve to become more successful, but it isn’t wise to trust to chance (remember the living/dying thing?).  The alternative is experimentation. TEST TUBES  [OK, there’s another alternative, which is to just put 100% of your resources into “trying something new ” but then you’re back to that living/dying thing again.]

“If it ain’t broke, don’t fix it” may work in some areas, but not marketing.  The marketer’s motto should be “If you don’t constantly improve your successful marketing efforts, everyone else will copy you and pretty soon your share of market will shrink away to nothing.”  It’s not catchy, but it’s true.

You experiment by pilot testing changes to your marketing.  If your experiment produces a better result, you implement it, and if it doesn’t, you discard it and try something else.  It’s a sort of “evolution to order.”

You’re probably not disagreeing with anything I’ve said, but I’m betting that you can’t remember the last custom-designed experiment you tried.  USED CAR SALESMAN Don’t count marketing solutions you bought or rented from someone else—if they’ll sell to you, they’ll sell to anyone, and phhhht-there goes the competitive advantage you’re seeking.

You need to be constantly trying out new landing pages for your search engine marketing, or alternative designs for your website, or new radio commercials, or different brochure designs, or holographic business cards, or new giveaways, or new sales promotions, or…all of the above. 

Not enough time or resources?  Then don’t do it all—but do something!  DINOSAUR Because if you don’t, you’ll be joining the dinosaurs and passenger pigeons on the evolutionary scrap heap.

Need some help in managing your experimentation?   Your CMO will be happy to help you evolve!

Don’t get boxed in!

If you’re doing the same thing as your competitors, you’re going to get the same results, which means you’re a commodity.  Not good.  So you need to be thinking outside the box.   “Ok,” you say, “so how do I do that?”

Good question.  Years ago, when I was working with new product inventor Doug Hall, he did a study, which he subsequently recapped in his book Jump Start Your Brain.  Doug sat people down in an empty room with a pencil and a pad of paper, and asked them to write down vacation ideas.   Then he sat different people down in a room filled with Globes, Sunday newspaper supplements, travel magazines, atlases, etc. and asked them to write down vacation ideas.  Of course, the people in the stimulus-rich room outperformed the people in the bare room by orders of magnitude.  So we know that outside stimuli can help foster more ideas.

There’s a second part to this, though. The further out of the box you want to get, the more unrelated your stimuli should be from the subject you’re focusing on.  If you’re trying to develop a new kind of broom, you are unlikely to get very far outside the box by using mops, rakes, and dustpans as stimuli.   Surrounding yourself with circus posters, children’s toys, furniture catalogs, and a selection of food packaging for stimuli (there’s nothing magic about this mix—any similarly eclectic collection of items would do) is likely to generate more far out ideas.

It’s like there’s a rubber band connecting the idea you’re trying to develop and your stimuli.  The further you stretch it, the more unusual (and potentially profitable) the connections you’ll come up with.  It takes work to stretch the rubber band further than anyone else.  But that work that will yield results.

Some of the ideas you’ll come up with will be silly.  But you only need one good one to make the work pay off.  And that good idea is more likely to show up outside the box.

Marketing Resource Management

Marketing Resource Management (MRM) represents low-hanging fruit for most

companies.  MRM is concerned with economically providing collateral materials such as flyers, brochures, cooperative advertising, and promotional items for sales and marketing groups.  It’s not sexy, but it is a major opportunity, as you can see from the following personal example:  http://yourcmo.com/collateral-sales-materials-cost-control/

Everyone has seen examples of abuse such as the following: 

·        A group of sales people are manning a booth at the county fair.  At the end of the fair it is raining, and they don’t want to carry the heavy box of brochures back to the car, so they dump $155 worth of perfectly good materials into the nearest dumpster.

·        In the absence of what brokers consider “appropriate” materials, they create their own, diluting your brand equity.

·        Marketing is changing the logo on a product line, and instead of running out the current inventory (which was heavily overbought), they just print new pieces and scrap the old collateral, at a cost of $2,150.

While the main benefit of MRM is cost control, it also creates the ability to

1) offer customized/personalized materials

2) better track usage of materials so as to tie them to specific marketing initiatives and events, improving ROI calculations.

It is relatively painless to impose discipline on the ordering and use of collateral materials.  Often, just letting users know the cost of what they are ordering will impose a measure of economy.  This can be leveraged by creating a “just-in-time” ordering system (to permit customization and discourage stockpiling) and a “budget” to force users to prioritize the quantity and type of collateral material they order.

MRM can be handled internally or by a vendor, such as Marcom or (locally) DocuStar.  It can be instructive to talk to a vendor first, to learn more about potential MRM benefits and capabilities, before you decide whether or not to tackle the project internally.

Interested in exploring Marketing Resource Management?  Give me a call.  Been there.  Done that.

Is Social Media Marketing exempt?

 Must Social Media Marketing generate an ROI?  If it requires a negligible amount of resources, maybe not.  But I don’t think you’re going to find a social media marketing platform which can be effective without a substantial commitment.

There is a mental pathway you must follow to determine the ROI of a particular platform: 

1) What is your goal?  Decide what ultimate contribution you want your marketing to generate.  Awareness? Incremental sales?  Sales leads?  Increased customer dialogue? Building a mailing list? Increased customer satisfaction?  Stronger branding?

2)  What factors will demonstrably lead to your goal?  “Likes”?  “Friends”? Inquiries?  “Posts”? Orders?  You can’t measure ROI without quantification, and that means something that can be counted.  Creating a verifiable link between goals and factors is almost always the most difficult step, but can generally be achieved, although sometimes requiring more advanced techniques like pre-post comparisons or split panel testing. 

3) How many of each of the factors from #2 are you generating?  This is generally the most easily secured information in this process.

4)  How much is the marketing costing you?  There is a tendency to think of social media as being free, but there is always a significant investment in time, and sometimes in technology.  You need to be sure that you’re capturing all the dollars and hours that go into the marketing.

 At this point, it is a simple matter to calculate the ROI.  

Why bother? 

1) Because it will help you keep your  job if you can prove you are contributing to the company’s success.

2) Because company’s don’t cut budget for programs that can prove they’re making money.

3) Because knowing the ROI of your programs can help you dump losing programs and prioritize winning programs.

If you’re having trouble calculating the ROI of your social media marketing, give me a call.  Your CMO will be happy to help!