Irresistible Direct Mail

Who says direct mail has to be boring? Who says direct mail has to produce 1 or 2% response at best? Who says direct mail is a medium of the past? I’ll tell you who – those who are doing the same old, same old direct mail. We’ve all heard Ben Franklin’s quote on the definition of insanity: to do the same thing over and over again, yet expect a different result. Let’s face it, if you are doing the same kind of mailings that you did 3, 5 or even 10 years ago you can expect not just the same response but a significantly lower response. What can you do to make direct mail interesting? Direct mail is often viewed as a type of “push” marketing. Yet if it is performed creatively, direct mail can become a powerful “pull” marketing strategy. We can use direct mail to create “attraction” rather than as a means of “chasing” business. All this can be done without in your face, pushy tactics if we are willing to take a step back and focus on the customer’s challenges rather than become embroiled in our solution. Direct mail is no different than any other marketing medium. If we can focus our communication efforts on not just what the customer wants but rather why they want it, we can align ourselves to the customer and thereby attract them to our solution.
Take the direct mall piece shown below. When it arrived on my doorstep, I had no idea what it was but the 8 x 10 inch envelope with the eye staring at me and the headline: “Ready for a SHOCK? Then open this” did have me wondering. I usually trash this kind of stuff but something about this had me curious. I guess the headlines were right up my alley:
“Jack Welch was wrong. Dead WRONG.” “Next recession in 2011. BE READY.”
“America’s 3rd great MIGRATION has started: $1 trillion dollar opportunity.”
That got me to open the envelope. When I did, I found this was an offer for Peter Drucker Institutes new on-line E report, “TRENDS.” Also in the package was a CD and several inserts. One was a letter customized to me (host at CBS Radio). Also enclosed was a very well done interactive CD, a brochure discussing the problems I face as a radio show host finding accurate time information about business trends, a response card (pre-filled out!), and a discount coupon.

We talk a lot about the rules of attraction and how valuable they are in direct marketing. This mailer included several. Let me list them so that you can build them into your own campaign:

  1. Become a big fish in a smaller pond. It was aimed at business journalists and included information only valuable to them.
  2. The problem is more important than the solution. It focused on numerous problems that we will be facing in the coming decade. Many of the same things I talk about on my radio show and in my weekly articles.
  3. Give information away without selling. It included a FREE subscription for 1 month and the CD which was crammed with 20 excellent articles.
  4. Reverse people;s risk in changing. It had a discount coupon for $100 off.
  5. Don’t be a better option, become the ONLY solution. I don’t know of any organization offering this type of information.
  6. No one has time to read so let design and color speak. As you can see it included compelling graphics, a tasteful layout and colorful design.
  7. Traditional advertising is a HOPE business. This was not your typical mailer. I suspect it cost 2 or 3 times more in production costs than a typical mailer, but was sent to far fewer people, all of whom have a higher interest level in this kind of information.
  8. Learn the discipline of testing. It had a pre-numbered savings code so they could track the response to determine which offer was most successful. I assume they tested numerous solutions.

This is a great example of a powerful, well-conceived marketing device. One particularly good thing about the piece was that it carried much of the message on the envelope itself, motivating me to open it.

Think about ways that you can implement these strategies in your own direct marketing program. If you get stuck, give me a call or send an email and I will do my best to help. Also check out our new program, “Attract More Business” at www.attractmorebusiness.com for a step-by-sep approach on how to do this. The program includes dozens of examples, a 150 page manual and 9 CDs that you can listen to in your car, making it a practical learning tool.

Have a great week! I hope that this “Business Update” has been helpful in assisting you to improve the performance of your organization. For more information on how the Small Business Advisory Network assists companies in improving their performance, please feel free to contact us at 310-320-8190 or emailmark@markdeo.com 

Mark Deo Print this article.

Giant Brand, Guerilla Tactics


Recognize that movie poster? It won critical acclaim from the design world for the Oscar winner “Walk the Line” last year. Designed by artist Shepard Fairey, it never would have happened were it not for the wrestler Andre the Giant. 

You’ve probably seen Shepard Fairey’s “art”. If you’re under 35, you’re likely very familiar with it, and if over, you’ve probably seen and ignored it all. Shepard Fairey began a remarkable branding campaign in 1989 in Rhode Island as a joke. As a student at the Rhode Island School of Design, he created a silhouette of the famed wrestler Andre the Giant to show a friend how silhouettes could be made of virtually any photo. As a joke, he decided to place the image on a sticker, with the text “7’4″, 520 LB., Andre the Giant has a Posse”. Intended to mock underground skateboarding culture, these stickers were placed all over Providence, Rhode Island- on the back of street signs, streetlights, traffic signals, buildings, etc.

Getting lots of feedback from friends in the skating community, Shepard took out an ad in a skateboarding magazine featuring the image and a P.O. Box, with a note urging people to send a Self Addressed Stamped Envelope for more information. He would send back a few stickers, a template to use for printing more, and a note urging the recipient to spread the message. 

I can recall personally seeing these stickers in Pittsburgh, PA in 1992, as well as in Los Angeles in the early 90s. Shepard Fairey then transitioned into a more stylized image, and created other silhouette styled images that were incorporated into posters that mock government propaganda with the word “Obey” featured prominently. 

The end result? His work has been seen in numerous films (including Batman Forever, 8 MM, and others), is now designing CD covers, movie posters, and t-shirts, and has built a visual brand among persons who were young adults from the late 80s until now.

What is most interesting is that Shepard Fairey created a brand without a product! When he started, he had nothing to sell. He’s created a legion of fans who spread his message for him, and that has led to mainstream success. Whether you like or dislike his tactics (many view it as simple vandalism), the result cannot be denied- mainstream commercial success.

What can you do that will generate interest among your target audience? How can you encourage persons in your network to spread your message for you? What can you do to brand your company, products, or self to spread your message?

I’ll get this started for the SBA Network. Please take this article (or any of ours) and share it with a friend. 5’9″, 170 pounds. Mark Deo has a posse.

SBA Network Sales Technology Specialist Matt Walker wrote this article. To reach him, send him a note at mwalker@sbanetwork.org.Have a great week!-Mark Deo

Direct Marketing

Why is it that some people make BIG money with direct mail and others lose their shirts?

Is it the packaging, the postage, the copy content, the design or layout, the offer, the promise, the guarantee, the response device, the cost, the list, the database management or the timing?It is all of these things and sometimes none of these things. Big help so far, huh?Overview 
Like all types of marketing, your efforts are only as good as the weakest link. Remember there is no guaranteed formula for success with anything. Every situation demands a different approach. You wouldn’t go about selling computers through the mail the same way you would toothpicks. Nor would you sell suntan lotion in Alaska the same way you sell parkas in Hawaii. The most important thing about a direct marketing program is to put yourself in the customer’s shoes.You may be saying to yourself, “Thanks Deo (that’s me),I already know that.” But you would be amazed at how many times I have seen “wishful thinking” replace logic in such situations. We must be willing to remove ourselves from the process when planning a marketing campaign, and truly take on the role of the prospect. This is why the perspective from an unbiased professional can be so valuable.With this in mind let us begin to look at some of the variables that contribute to success or failure of a direct marketing program.Packaging 
The direct mail packaging typically consists of an envelope. Although some direct mail packages utilize boxes, bags, tubes, and an assortment of odd packages, these may be great for getting attention but they are costly. In the proper circumstances, however they can be very effective. I can show you some very unique direct mail packages that have generated 5 to 10% response. Remember that the front of the envelope or package is your first opportunity to get the prospects attention. It is also an opportunity to target your prospect.For example making a statement such as “FREE Seminar Information Enclosed” or if you are mailing to buyers of fishing equipment, making a statement on the envelope such as, “Great Deals on Fishing Gear and Tackle,” would be appropriate. It is statistically proven by the Direct Marketing Association that personalized envelopes generates 20 to 30% better response than non-personalized envelopes. This also helps with tracking response and cleaning the list.Content 
The direct marketing package should be prepared in such a way so as to engage the customer. By this we mean that it first demands attention, gets them interested and then gets them involved. It should include some type of compelling imagery (photo or illustration), as well as a powerful headline. The best headlines are no more than five to six words. The best words to use are simple, easy to understand preferably one, two or three syllable words. Write your copy or headline so that it could be understood by your average 10-year-old.The content of the direct marketing package should clearly describe the product or service. It should also outline the benefits the prospect will receive once purchasing the product or service. Since people buy emotionally rather than logically, the best copy powerfully shows how the prospects life would change as a result of having the product or service. It satisfies the question of; WHY the prospect should own the product or subscribe to the service. Evidence is critical here.Testimonies, endorsements, examples of success are all great ways to build credibility in the direct mail device. Many direct marketing experts claim that a long letter and more material included in the package produces a higher response. Certainly this costs more, both in postage as well as development. It seems that many people believe that more is better. However I have seen very successful direct marketing packages that include merely a one-page letter, one page product benefit sheet, and a response device addressing the critical information. If you follow the above checklist, you should do well, even if you don’t mail a ton of material.Response Device 
The response device is a form that makes it simple for the customer purchased product or service. A good response device should include the space for information such as name, shipping and billing address, phone number, email, fax number, quantity purchased, unit cost and total cost. It should also include payment options. A good response device can be completed in less than 3 minutes and provides ALL the information necessary to ship the product or provide the service. It should also include a carrier (as it is known in the direct mail world). This is a return envelope so the customer can send in payment. It should be pre-addressed and postage pre-paid. I also suggest including a fax #, email address, and toll free number for order placement.Product or Service Being Offered 
Products or services priced at more than $100 each typically are more difficult to sell via direct mail. They require a more sophisticated approach. This means building greater credibility, incorporating testimonies or endorsements, showing several photos of the product, and including compelling evidence that the product is worth the price.Direct Mail and Telemarketing 
In many of these cases I recommend that my clients utilize a mail-call-mail type of direct marketing program. This mail-call-mail program involves placing a telephone call (See Telemarketing White Paper) following the initial mailing. This call should be placed seven to ten days following the mail drop, assuming that the mail is sent third class or Bulk mail.Bulk mail typically requires three to five days to reach its destination however in some cases it can take as long as seven days. The telephone call following the mail piece allows the customer to be reminded of the offer. It also allows the customer the opportunity of getting their questions answered, and motivates them by communicating the benefits in an interactive way. This telephone call can add as much as 50 to 250% to the response.Typical response rates for direct mail alone range from 0.5% to 2.5%. Response rates for direct mail WITH telemarketing typically range from 7% to 30%. The final mail piece allows the telemarketing salesperson to follow-up with the customer in writing. This, in itself builds credibility and permits the customer to receive any additional information that might culminate in the sale. This also helps to strengthen the accuracy of the database. And, in a mail-call-mail program it is critical to maintain an accurate database of prospects (See Database Management White Paper). This can be done with one of several inexpensive, off the shelf, contact management programs such as ACT!, Goldmine, Microsoft Outlook, or others.The Purchasing Process 
I’m constantly amazed at how many people have attempted a direct marketing program without doing the slightest bit of research. How are your competitors selling your product or service? Is it typically purchased at a retail location? Does the customer typically negotiate price? How many stores do customers typically visit before purchasing the product or service? Answers to these questions are absolutely crucial in determining whether you’re going to make money or lose money on your direct marketing program.Results 
Evaluation of your direct marketing program should not be based on the number of sales or even the percentage response. It should be based on your return on investment. Return on investment is simply calculated by taking the total cost of the project (which should include cost of design, layout, printing the mail piece, postage, letter shop, any costs incurred by the mail house, telemarketing costs, even your time) and dividing this by the total profit generated as a result of the direct marketing efforts.For example, if the total cost for direct marketing program is $5000 and profit is $1000, your return on investment would be 20% (1000 divided by 5000). Often times it will take two or three mail drops or telemarketing campaigns in order to generate profit from a particular list or geographic market segment. Typically the first drop and the first telemarketing campaign will generate zero return on investment, perhaps even a slight loss. The second and third attempts however should generate 25 to 50% return on investment. Successful long-term direct marketing programs can typically produce upwards of 200 to 300% return on investment. This often requires testing several solutions (See Testing White paper).Controlling Cost 
The best way to the control cost of a direct mail program is to figure out what all of your costs will be and how many products you need to sell in order to achieve a specified return on investment. We call this the R.O.I. Pro-forma. This evaluative tool should be used PRIOR to the mailing to help determine how much to mail, how much to test, and how much to spend on the package and postage. By setting this budget you can predict the profit or loss at every point on the response curve. (We have many examples of these ROI Pro-formas that we can share with our members).There are many other tricks of the trade in controlling costs with regards to direct marketing. For example, ever wonder if the mail house dropped ALL of your mail? Be sure to request U.S. Postal Service Form 3602-R Postage Statement. This is the standard form used by mail houses when delivering mail to the post office.Another way to control costs is by getting the best deal on printing. Most customers have the mail house print their mailing material. It is best to contract with a printing company that is close to the mail house to print up your envelopes, carriers, letters, and brochures. They can then deliver them to the mail house, instead of having the mail house print this material. Since the printer specializes in printing they can provide the service at a lower cost than mail house. Your savings can be rather significant by doing it this way.

Cool Business Cards

What’s the most under-utilized of all marketing devices? Few people get this one…. Business Cards! 

Think about it. When someone is even remotely interested in your company, product or service, what is the first thing they ask for? That’s right, your business card. 

Often time, the impression a card makes on the receiver sets the stage for WHO the prospect believes you are. In fact, the prospect will many times categorize you based upon the type of business card you have. Are you a large company or small, conservative or liberal, arrow-straight or creative, high-priced or discount? It’s all on the face of the card! 

I thought I’d take a moment to share with our Business Update readers some of the things we covered at our “Attract More Business Workshop” last week. By the way, thanks to everyone who attended. We had a fabulous day working on improving our marketing skills. Everyone left with a specific action plan and I have heard from some of some participants who have already begun to reap the rewards of their new marketing initiatives. Congratulations to all. 

I have shown a few business cards below that follow the rules that we discussed in the seminar:
1. Become a bigger fish in a smaller pond – narrow your market by showing how you are more important to a smaller group of people
2. The problem is more important than the solution – customers are not interested in us they are more concerned about their problems
3. People don’t like to read so let design and color speak – Design the ad first using a single, compelling image
4. Don’t become a better solution become the only solution – Use powerful headline that expresses you exclusivity
This is a card developed by my associate Tom Vickers. Tom is an A and R man (that is, he is the Artist Relations person for music acts) In fact, Tom does work for ZZ Top, Brian Auger and other Classic Rock and Rollers. They remember him because his card is “literally” a beer coaster. And we all know that rockers MUST drink!

Max Parker, owner of the Dogs of Design is a designer and he has narrowed his market so that he specifically works with industrial and automotive product manufacturers. You will not forget his card nor mistake it when he hands it to you. You see, Max’s business card is made out of metal. It has all kinds of intricate embossments on it and it gets the point across that Max knows all about industrial fabrication.

There’s nothing more pedestrian than a real estate agent’s business card. They are all the same. Typically, they have a photo of the agent smiling showing off their pearly whites. BORING!! I love Rick Wilkinson’s card. It’s all about his best friend… Jake the Irish setter. If you know anything about the market today, you know that it’s not easy finding a home let alone finding a great home. Well I kind of like the idea of Jake sniffing them out for me.

Business cards are critical in connecting with and communicating to your prospects and customers. Often times we are completely unaware of how our business cards have served us even in silence. 

We can accomplish great feats of networking with the right message on a business card. Our card can make a strong impression or relegate us to obscurity in the mind of the receiver.

If you would like to increase the effectiveness of your marketing, I am happy to tell you that you don’t have to spend a fortune on advertising or hire some self-proclaimed guru. You can do it yourself. That’s what our Attract More Business workshops and programs are all about.

In fact, I will be doing another full day workshop I Long Beach, CA in September. If you are interested let me know by registering here or emailing me at mark@markdeo.com

In addition, my Attract More Business program is now available with 9 CDs and the 150 page color manual. Check it out here.

Choosing the Right Media

I’ll never forget when I was a fledgling Marketing Manager with Walker International, a top consulting firm. It was my first major presentation to the board of directors. 

“It’s a HOPE business,” our CEO bellowed in my direction. “You HOPE someone sees your ad, you HOPE they call you and then you HOPE they buy something.” Cocky New Jersey Italian that I was (or am, I should say), I was REALLY afraid to give my presentation at that point. Here I was preparing to wax eloquent on the virtues of why our company should start advertising. A 28 year old junior executive in a billion dollar conglomerate about to take on the CEO at changing one of his long-held principles – NO TRADITIONAL ADVERTISING! Tired of reading already? Click here- LISTEN TO THIS ARTICLE. Well I lost that battle but learned a far more valuable lesson. Traditional advertising is not a viable long term marketing strategy. 

We all need to employ some kind of media to get the word out about our company. Yet selecting the most effective media can be a daunting task for most entrepreneurs. Marketing budget dollars are limited and every penny counts. Today the number of media choices through which we can market our company, products or services is staggering. It is difficult to know with any certainty which media will produce the best results. 

The Targeted Media Conundrum
It follows that the most targeted media happens to be the lowest reach media and the lowest cost media. This presents an opportunity and a challenge. The fact that the cost is low gives us the opportunity to test various different messages for a very small investment. Yet since the reach is small, that is the actual number of readers, viewers, listeners or visitors is smaller than broad media it greatly lessens the number of opportunities to create enough impressions and ostensibly enough response to pay for the media. This is the biggest challenge with targeted media.

Targeted Media Solution
So how can we create a successful targeted media campaign? While the audience is, admittedly, far smaller, they participate (read, listen, view, visit, etc) with far greater interest and intensity. On top of that the cost per impression or cost per audience member is far smaller than broad media. 

Example
Suppose you’re promoting a chain of cool new coffee shops in the LA area. You place a small three and one half inch square ad in the LA Times (actually this would be a 7 column inch ad because it is 2 columns wide by 3 ½” deep). This costs about $2,400 to run ONE TIME on any given Sunday. The good news is that you will reach 750,000 people yet your ad will be sandwiched in between a car dealer, a bank, an electronics retailer and an auto mechanic. And that’s if you’re lucky. If you’re like most, they’ll put your most powerful competitor, Starbucks or Pete’s right next to you! Now how many of those 750,000 will even NOTICE your ad let alone read it? – maybe 1%? That’s 7500 people. How many will read it? Let me be kind and say 5% – we’re down to 375 people. Now how many will visit your stores? Let’s say you’ve perfected the art of creative ad development and your ad knocks them dead with another 5% response – you have generated 18 potential visitors at a cost of $133 each. Could you EVER sell $133 worth of coffee to each of them? I don’t think so. Think my response numbers are too low? Double them. Triple them! You’re still losing your shirt. 

Find the Media that Appeals to the Sneezers
Now instead, let’s say you discover by completing your target profile that your best customers are workers from the large office complexes within a few blocks of your stores. You place ads in each of their company newsletters, on their bulletin boards and on their company intranets. All this costs you less than $600 and exposes you to 10,000 people. What’s better you’re the ONLY coffee shop and your ads have top billing. Instead of running ads for one day they run for a month or longer. 

Now because you have no visual competition, more like 20% notice your ads for 2,000 people. Because you are very close to them, the ad is relevant and has credibility and more like 30% read it for 600 people. Finally 10% take action for 60 visitors at a cost of $10 each. Starting to make sense? 

The best part though is that every visitor has a high intent to tell 2 or 3 other people about you. In all likelihood they will bring their associates. In fact they have an even higher capacity to become loyalists and make your shop their first stop before going to the office. The trick is reaching enough people at a low unit cost with a memorable, relevant and compelling message that motivates them to take action.

How to Increase Media Effectiveness

  • Find the media that most closely addresses your target audience.
  • Become the most dominant advertiser in the media.
  • Eliminate any visual or auditory competition.
  • Make a long term commitment to the media.
  • Aim to reach the sneezers.
  • Appeal to the loyalists.
  • Back into your targeted cost per customer.

Attributes of highly targeted media

  • Creates greater influence
  • Communicates with more sneezers
  • Allows you a bigger share of voice
  • Costs less than broad media
  • Lends itself to a message that educates and inspires

Just as with preparing our marketing message, the traditional approach; “using a media that sells as many people as possible on WHY we are the best choice,” simply doesn’t work. Instead we must look for media that exclusively and credibly addresses the most selective audience possible. In fact, contrary to popular belief, the smaller the audience, the better. By using highly targeted media we are able to reach the most influential prospects and to do so in a way that is valuable credible and memorable.

Cable TV Advertising

Cable and satellite TV is switching to the new digital technology. With the merger of Time Warner and AOL and the completion of new digital subscriber lines nationwide, television will never be the same.

Because of the added bandwidth, consumers will be able to interact with their TV’s like never before. Within a year, cable TV systems in major cities will be offering more than 100 channels. In two years cable systems will jump to 500 channels! What will this mean for small and home-based businesses wanting to advertise on TV? They’ll be able to do it. Advertise as much as they want, at unheard of low prices.

When asked who would be on TV next year, one media expert replied, “Everybody!” Watch for small bedroom TV studios to start popping up everywhere. People will be producing TV shows and commercials with some of the small, cheap cameras and editors now available. One man asked me if there would be a place for Multi-Level-Marketing in cable TV’s future. You bet. I would imagine that major network marketing groups will have their own channels, complete with commercials, information, and seminars for their down line folks.

Do you have a specialty that would make a good cable show? Keep your ears to the ground for cable TV changes happening in your community. TV will no longer be only for the big boys with deep pockets, but for all of us to use, profit from, and enjoy.

Some of our suggestions when it comes to television advertising:

Target your market. Make sure that you know who your viewers will be. That means researching demographics, psychographics, and viewing habits.

Hire a professional broadcast production group rather than settle for what the local cable provider deems ACCEPTABLE.

Make sure that you clearly explain the product or service that you are providing in the first 10 seconds and follow-up with applications, testimonies and a call to action.

Tell your viewer how they can buy your product or service.
Offer a guarantee

Maintain a 24 hour incoming hotline so hat people can order your product or service or at least schedule a free consultation with you if you are a professional.

If you’re interested in find out more about cable TV opportunities, contact us for examples of infomercials, and 30 second and 60 second TV commercials that have already achieved results for clients nationally.

Build Your Reputation

One of the most important assets a company has is its reputation. A firm with an above average reputation can achieve and sustain an above average return on assets…

A good reputation pays off in a number of ways. It can:

Add to the psychological value of products and services in terms of customer trust – when it is difficult to quantify the quality of a service, consumers rate the company with a good reputation higher than those with a poor reputation.
Increase employee job satisfaction – good company reputations have the knock-on effect of increasing the degree of employee job satisfaction.
Provide access to better quality employees when recruiting – after all, most people would rather work for a respected company than one with a shoddy reputation.
Support new product introductions by reducing the risk perceived in the eyes of customers.
Act as a powerful signal to your competitors. For example, companies gain a reputation by how they react to the actions of competitors.
Provide access to the best professional service providers – to boost their own reputations, the best retailers seek to stock the products of the best manufacturers.
Allow a second chance following a crisis. For example, thanks to its reputation, the market share of Arnott’s Biscuits bounced back despite the product tampering crisis earlier this year.

Poor reputations on the other hand can be dangerous to business health:
Many bosses claim that bank managers don’t like their company and overestimate its commercial risk. A lackluster reputation is often the cause.
Journalists tend to scrutinize companies with a poor reputation and remind readers of a history the company may prefer was forgotten even when a story is upbeat.
Customers are more anxious and price sensitive about products and services from less well-respected companies; poor (external) reputations tend to breed poor employee morale and so lead to the possibility of industrial dispute.
So there are good reasons, both operational and financial, for managers to enhance the reputations people hold of their companies.

Building blocks of image

What do we want to stand for? The answer to this question lies in three issues. The first involves analyzing what the product offers to customers and then communicating why it is unique and what it can deliver.

For example, the Swatch watch company hangs its image on providing “fashion that ticks”, the Department Education is in the business of providing “education for life” (life skills and skills for the rest of your life) and computer giant Apple focuses on making personal computers which allow people to enhance their skills, captured in the famous slogan “the power to be your best”.

Being able to clearly and succinctly distill the essence of your offer to customers is important. However, it is equally important to state exactly what it is you offer to employees – the second issue. Employees, like customers, listen to WII-FM radio – “what’s in it for me?”. Your organization’s formal policies (performance appraisal scheme, pay levels, work practices), organizational culture (informal practices, fun and work rituals) and expectations (rewards for past behavior, vision statement) combine to form the package you offer to employees.

The third part of the question of company image involves ethical contribution. US editor Daniel Gross believes “the ethical heart of business is service to others”. A good example of this is US-based chain Wal-Mart discount department stores. Wal-Mart founder Sam Walton offers low paid rural Americans more choice and quality for less cost than ever before. Do customers want this? Yes. Are employees proud to provide this service? Yes. Does the community value it? Yes. Can competitors easily match it? No.

Generally, the companies with the best reputations offer the best value (benefits minus the cost) to their internal and external stakeholders – it’s that simple.

What drives corporate reputation?

There are two sets of factors which combine to create the reputation an organizations projects. But only one set is under the direct control of managers and can be considered as levers to engineer change. The other acts either as a constraint on or opportunity for achievement. The controllable factors are: vision; organizational culture; strategy; formal policies; products and services; employees; and advertising and promotion.

The uncontrollable factors are: competitors’ actions and reputations; country and industry images; and media attitudes towards your industry and organization.

Many companies have a weak foundation from which to build a good corporate reputation because there is a poor match between their vision, strategy, organizational culture and formal policies. Human resource people sum up this problem in the saying “people do what is inspected, in preference to what is expected”. For example, if your appraisal scheme for employee performance rewards cost-cutting and your vision statement applauds customer service, employees will always give cost-cutting preference, regardless of how important customer service is to a good image. And in such cases a policy rethink is inevitable.

A company’s product and its promotion are also key drivers of corporate reputation. Both customers and employees are equally interested in the value of what is offered. This is especially true for advertising, where employees are increasingly being labeled as advertising’s “second audience”.

If we focus on customers, then at least four factors drive the perception of a company’s reputation: the perceived value of the offering; customer perceptions of employees (for example, are they customer focused); what other people and the media say about the company; and whether the company is part of a respected industry, a factor which includes the reputations of its competitors. Research suggests the most important of these factors is the perceived value of your products and services.

Stamp out stupid practices

Nearly every company has some practices which needlessly upset customers and employees. Some classics include: using lawyers to talk to valued customers. For example, the application forms for both Qantas and Ansett’s frequent-flyer schemes contain some heavy-handed terms and conditions. These leave the impression that the airlines don’t trust their most valuable customers;
for the last few holiday periods, petrol companies have raised the price of a liter of petrol by up to five cents. And during any week the pump price may vary by over five cents per liter. This doesn’t instill customer confidence in the petrol companies’ pricing policies.

In the scramble to attract customers and employees, some companies offer newcomers a better deal than that received by existing, loyal employees and customers, with the obvious effect on morale. The point is that stakeholders quickly loose confidence in a company they think is either wasteful, greedy or stupid, or which they think discriminates among similar types of people, has power over them or simply doesn’t trust them. The only way to identify these detrimental practices is to periodically sound the opinion of each group of important stakeholders.

Communicating stance with internal and external stakeholders

A critical element of a corporate reputation is positioning the company to stand for something important, deliverable and unique. Most companies fail the unique part. When this happens, both customers and employees tend to focus on price. If a company’s offer is not significantly different from others, then why shouldn’t customers buy the cheapest and employees be more concerned about wages?

The advertising slogans companies use and sometimes their name are often used to communicate their positioning:

3M – “innovation”

Ford – “a better idea”

Sharp – “sharp minds, sharp products”

Charmin – “squeezably soft”

And some slogans work as well with employees as customers. For example, while Nike’s “just do it” campaign urges customers to buy the product and not be a couch potato, it promotes employees to be proactive.

Branding

“One of the most important assets any organization has is its reputation.”

What does your company stand for? What do people think of when they think of your business, product or service? What do they think of when they think of you? When people think of Apple Computers, they: “Think Different.” When they see Charmin, they think: “Squeezably Soft.” BMW is, “The Ultimate Driving Machine.” Pepsi is the “New Generation” and so on.

Entrepreneurs and small business owners can also differentiate themselves with this kind of branding strategy. In fact it is even MORE important for smaller organizations to set themselves apart. Particularly if they are competing with the BIG GUYS! Remember, your customer’s perceptions of WHO you are is all the matters to them. Who you really are is quite meaningless!

Often times your reputation is wrapped up in what advertising guru, Bill Bernbach called the “unique selling proposition.” What sets you apart from the crowd? What do you do that no one else does? For me it’s “Providing answers for your small business.”

How can I back that up?
We hold Small Biz seminars and classes in marketing for entrepreneurs and business owners.
Every Monday night I teach the Dales Carnegie Sales Advantage Class in Long Beach.
Marketingquestions.com (our web site) has over 300 pages of articles for the entrepreneur and small business owner.
I do a weekly radio show that focuses on educating small business owners.
We offer a free small business success manual that provides answers to small business challenges.
We email our “Small Biz Update” to over 1000 subscribers every month.
We provide answers to our clients and members in the form of coaching and consulting sessions
We consistently communicate our unique claim and branding message in every promotional message employed. It is in our web site, in our brochure, on our business cards and even in the conversations we have with people. I don’t know anyone that offers the same combination of services that wrap around providing “answers for small business owners.”

Now remember, this is not a Mark Deo commercial. The purpose of my yammering on about how spiffy I am (NOT!) is merely to demonstrate how YOU can develop your own branding message and unique selling proposition.

THINK….. How are you different? What is unique about your company, product or service? What do you do to support that uniqueness? How can you consistently communicate that branding strategy?

If you’re interested in learning more about reputation, branding and the unique selling proposition go to the web site at www.sbanetwork.org.

Welcome to Paradise: Now Go Home

Imagine you are in a beautiful sun-drenched corner of the globe, thousands of miles from the rush of your home in Los Angeles. You’re blood pressure has dropped, your respiration is lower and you are downright RELAXED. This is paradise. You are spending your last few hours on a deserted beach enjoying the sun and tropical breezes. But your wonderful getaway is coming to an end. You head back with plenty of time to finish packing and vacate the room WELL before the check-out time.

What do find when you get there? Housekeeping getting ready for a new guest, and to your horror, all of your bags and EVERYTHING in your room… GONE!

Did someone steal them? Are they with the porter? Did your credit card bounce? None of the above. Actually the hotel decided to pack your bags, remove them from your room and send them to a place you AREN’T going. Hey it’s an honest mistake! Try to be understanding. It happens. What’s worse however is that you are standing with just a wet bathing suit in a foreign country, with your family’s passports, flight confirmations, all of your clothes, money, checks, credit cards even your toothbrush in your bags. And who knows where they are. Add to this, the fact that your flight leaves in a little more than two hours. What do you do?

No problem. You’re staying in a world class, six star resort. It is a member of the prestigious, “Leading Hotels of the World.” One call and they will spring into action recovering your bags and deliver them to your room like magic. After all that’s how your stay has been up until now: the entire staff was friendly anticipating your needs, every amenity at your fingertips, sumptuous meals, perfectly planned excursions, lush tropical environment, wonderful entertainment, fabulous pool and beach activities. But things are about to change.

You ask the staff at the front desk where the bags are stored. No idea. Who retrieved them from your room? No idea. How do we find out? Have a seat, we’re working on it. After 20 minutes of waiting, they still want you to sit and now you’re fit to be tied! Time was running out. You speak to several of the staff who tell you that it‘s normal course for the luggage to be packed and removed from rooms in order to get them ready for the next guest. Please don’t be offended. What?!

Obviously as you can guess by now, this circumstance happened to me. What was most distressing was not that they packed and removed our bags from the room but the way everyone acted like it was no big deal. It seemed like the staff was more upset than the managers. Yet no one was willing to take responsibility for being overly aggressive about clearing rooms for new guests. I expected this from the employees but not management. All the General Manager told me was that he would find out who did this and heads would roll. Yet I do not blame the porters, housekeepers, and supervisor who made the decision. I blame management! And I told him so. Of course he didn’t like this very much.

I suppose he was too embarrassed to confess that this was an occasional result of clearing rooms too fast. Yet if you think about this from a management standpoint it does make sense. It costs lots of money to keep an army of housekeepers ready to clean a room at a moments notice. Let’s face it, this is cost control issue. We all have them. But isn’t this cost control gone awry?

We are living in competitive times; every industry is facing price erosion and increased employee turnover. Customers just aren’t as loyal as they once were. When we place pressure on our staff to control costs, increase sales or create more output regardless of the consequences, this is the result we create.

I later found out that management, over the last few weeks has been harping on the staff to clear guest rooms faster. This particular resort, and believe me it is a remarkably beautiful and exquisite place, has recently been purchased and is under new management. Management that is clearly being compensated and evaluated based upon occupancy percentages.

What’s most ironic about this story is that as one of the most exclusive resorts in the world they have escaped the barriers that plague the competition: price erosion, lack of loyalty and escalating employee turnover yet they are still acting like a commodity-driven business! By changing their business model in favor of a commodity-based or volume concentric philosophy, they are investing more in advertising, turning over more guests yet running headlong into a the classical problems loyalty, turnover and eventual erosion. It’s like running from the oasis into the desert to find more water!

In the end, everything turned-out alright. Our bags were found at the airport on the mainland. They were sent by helicopter back to us on our private little island (which must have cost the hotel a pretty penny. I’d bet a lot more than they would pay to an extra housekeeper for the day.) Apologies were made and accepted and we made our flight on time (just barely).

The lesson here is that as managers we sometimes can push our people very hard to accomplish specific goals. This is certainly acceptable but not without consequences. Employees tend to want to please their managers and they might take license or go a bit overboard with unfortunate results.

Organizations that have installed a culture of empowerment among their staff tend to have far better results. Rather than blindly driving hard to meet that sales goal, or profitability percentile, or production number we should encourage, support and inspire team members to think for themselves. Operating with this kind of trust creates an environment where profitability can coexist with higher performance and superior customer service. It is the difference between leadership and merely management.

No Soup For You

Remember the classic Seinfeld episode with the “Soup Nazi”? He ran a soup shop that sold amazing soups, and if you didn’t order exactly the way he wanted, he would simply say, “No soup for you,” and you were banned from his shop. That’s not exactly the type of personalized service we usually recommend.

We write often about personalizing your business. It’s right in the Rules of Attraction, “Who you are is more important than what you do.” With today’s fast-paced business landscape, a personal connection is critical in appealing to potential customers. You can often dramatically increase your profitability byadding a personal touch. Customers and clients gladly pay more for personalized service, even if you’re in a commodity business…most of the time.

We recently participated in the C-Suite Briefing with Morrie Shechtman of Fifth Wave Leadership. The event was videotaped, and we put together a DVD with the presentations of Mark Deo and Morrie Shechtman. In looking for a duplication company to make copies of this DVD, I found that most had tiered pricing models, plenty of options, and value added services that were included. Most companies I’d need to call and discuss all these options just to get a quote on my project. I’m savvy enough with media duplication to where I not only didn’t need these features, I didn’t want them. Personal service in this instance was more of a hassle for me than a convenience.

Enter Kunaki.com. This site offers media duplication, though not the way most companies do. You have two options- CDs or DVDs. That’s it. There’s no selection of pages on inserts, no slim line vs. standard cases, no custom cover design. There’s also no customer service, and no phone number you can call. They even state on their website, “Kunaki does not wish to be viewed as a company. Kunaki prefers to be viewed as a machine.” Even their pricing model reflects this- you pay a flat fee per disc that is the same regardless of the number of discs you order. You can order just one disc, a few, or even hundreds and pay the same price.

In this case, de-personalizing the business is exactly what appealed to me. I downloaded their software, designed my case and disc label to their specifications, and placed my order. It took LESS time for me to do this than to deal with a designer, or even review the choices that other companies have to offer. I found the Soup Nazi of DVD duplication. If I didn’t want to order the way they liked, well, no DVDs for me.

I plan on using Kunaki for any client projects that requires media duplication. In fact, according to their website I believe we’re already business partners. “Prospective business partners can use Kunaki as they would use any machine. If your planned activities makes sense to you, Kunaki suggests you simply do it. Kunaki is not actively interested in your plans and activities.”

Like everything in life, there are no rules that work 100% of the time. If you’re dealing with a customer base that ONLY looks at price, and isn’t concerned about lots of choice in your products, de-personalizing your business can help you get an advantage over your competitors, while dramatically cutting costs.

This Business Update was written by SBA Network Business Advisor Matt Walker- for more information, please contact him at mwalker@sbanetwork.org. If you’re interested in seeing the C-Suite Briefing and weren’t able to attend, send Matt an e-mail for details on how to get a DVD of the event.