Tag Archives: marketing

On Lagniappe

I grew up in New Orleans, and there’s a word in use there that isn’t known anywhere else. Mark Twain said it was “a word worth travelling to New Orleans to get”. It’s a French word based on a Spanish phrase, the type of co-mingling of language only possible in such a place as New Orleans. So, what does it mean, and why is it so powerful?

Everyone in New Orleans will define lagniappe the same way, as “a little something extra”. The real meaning’s a bit more complicated than that. For example, the other day I ordered from Leona’s on GrubHub. Every time you order, no matter what you order, they add in at least one of these mini-cupcakes they make for free. First off, they are delicious. Secondly, there’s no message about it, and you didn’t have to pay anything for it. It’s just there for your enjoyment. That’s lagniappe, that little something given to you for free that you weren’t expecting but is such a treat to find. This type of practice is common in New Orleans, but you rarely see it elsewhere outside of the extremely common baker’s dozen or the fortune cookie in Chinese restaurants, which, because they’re so common, are expected and therefore no longer really lagniappe.

This type of practice creates such an overwhelmingly positive impact on the experience, I don’t understand why the practice in business seems to stay limited to small shops in New Orleans and bakeries. A small gesture can go a long way in creating a memorable experience with your customer, and whether you deliver food, make doughnuts, or do management consulting, there is always a way to give lagniappe. So, what little something extra are you providing your customers? How can you give lagniappe?

Black Friday Case Study: Bonobos Inconsistent Discounting

bonobos-sale

With Black Friday this year, I thought I’d see what I could pick up for myself online with the deep discounting going on. Shopping online was a breeze. I could do it at my own pace, search exactly for what I wanted, and not have to deal with any crowds. Why anyone is camping out in front of stores for this day I’ll never understand.

Unfortunately for brands, marketers seem to be getting just as irrational as the bargain shoppers they’re attempting to exploit. For this blog post, I’ll use Bonobos as an example. I made my first purchase on Bonobos.com over six months ago, after seeing an ad on Facebook.com offering $50 off my first purchase. Bonobos is known for making pants that fit the American male better than European designers. When I browsed the site, I noticed that even with $50 off, the pants were still too expensive for my liking. As a result, I purchased some shirts with my discount. Since then, I have been back to the site a few times to see if their prices have lowered, and they never have.

Bonobos has used an advertising device called retargeting aggressively since that point in time. What retargeting does is identify someone like me who has come to a website, but did not buy. Then, wherever else I go on the internet, Bonobos will attempt to show me ads. In this case, they show a discount of some sort to entice me to return. It is a good strategy, but it has never worked because the prices are still too high.

On Black Friday, browsing another site, I see a retargeting ad for Bonobos promising 20% off. It is more aggressive than what they offered previously, so I click on it. When I arrive at Bonobos, I see a message about their Black Friday deals, which are $15 off a $100 order, $40 of a $200 order, and $150 off a $500 order. To compare directly to the retargeting ad, these discounts are 15%, 20% and 30% respectively. I browse the selection, and it’s still too expensive for my tastes. I leave the site, and browse the web a little more. While on Twitter, I see someone I follow recommend Fab.com. Fab sells all sorts of design products at deep discounts for limited periods of time.

fab-bonobos-sale

Designers will let Fab sell their items at a discount to build awareness of their brand among their vast email list and to relieve themselves of unsold inventory. This makes sense, as the cost of production is a sunk cost, and any price you can receive for these goods is better than having them take up space in a warehouse. I had heard of this site before, and thought it might have some solid deals for Black Friday, so I sign up. As I scroll down the page, I notice a deal for Bonobos, which is 40% a select group of items. This brings their prices down to an affordable level for me. Fab had my size, so I purchased some pants.

These same items were available on Bonobos.com, but for about double the price. I wondered why Bonobos would be willing to let another site charge a lower price, in which case Fab collects all of the customer information, so Bonobos does not begin to develop a personal relationship with the customer. They’re likely also making drastically less from Fab than through a direct buy on their site.

I think, in this case, Bonobos was operating under an assumption that if they insert a third party between this lower price and their brand, it would not harm their ability to charge more in normal cases than if they advertised these prices on their own website. I also think they might have been trying to lure new customers from Fab. They are able to brand these prices as from Fab, and not from Bonobos.

I wonder if this is the right strategy or a sophisticated form of mental accounting. In this case, they were willing to offer a known customer like me less of a deal for going direct than through going through a third party where they have to pay Fab a part of the sale. Bonobos would have made more revenue by showing these prices directly on their website, and would also have been more likely to make the sale. They are lucky I saw this deal on Fab. They almost lost a sale on inventory which they are desperate to rid of.

Disregarding Fab entirely, I also did not understand why the retargeting ad and the Black Friday deals on Bonobos.com advertised such different promotions. One could make the argument they were testing which offers were more impactful. This type of test is much easier to do with A/B testing. Furthermore, if you are testing, you would want to complete that test well in advance of a big event like Black Friday so you know you are using the promotion which is most impactful. It appears Bonobos is advertising irrationally, using mental accounting to justify different offers in different advertising locations, even though, in many cases, they are reaching the same potential customer and just confusing them. There should be no reason they are willing to spend 40% to drive a sale on Fab, and anywhere from 15%-30% based in volume or 20% via retargeting for, in many cases, the same merchandise.

I feel guilty for beating up on Bonobos because they’re a good company, and their site went down for Cyber Monday, but hopefully they learn to present a consistent promotional strategy that aligns with their goals and their profit margins.

Counterselling

Working in marketing for a startup in the early days, I was always challenged with building awareness. There were mainly two ways to do that:

1) spend money on awareness advertising initiatives

2) create an environment for awareness

For the former, we identified a few affordable ways build awareness and spent money cost-effectively. For the latter, it was all about being out and about. Going to events, posting comments on blogs – anything that you get your name and your brand noticed, hopefully with a bit of a story behind it. A big thing is getting the rest of your employees to do the same.

Once you start to spend money on awareness advertising initiatives, it doesn’t matter how effective that initiative is; it will build awareness for one group guaranteed: salespeople. Particularly salespeople for other advertising companies. Most marketers probably consider this annoying because they are now inundated with cold calls and emails about a ton of marketing initiatives on which they don’t have money to spend. But this phenomenon presents a huge opportunity for the startup marketer. That opportunity is counterselling. It functions primarily the same way you would want to convert your target market: awareness leads to consideration which leads to trial.

So now you have a targeted group of potential customers emailing and calling you to find out more about your business. Who cares if they ulterior motives for that behavior? They’re still potential customers. So what I did is I responded to them. I thanked them for their emails. I set up phone calls. What did I do on those phone calls? First, I pretended I had money. Second, I told them the truth in that I had very little time. Lastly, and most importantly, I countersold.

Now, I want preface this by saying I am not a natural salesman and that I’m not saying all startup marketers need to become salespeople. The beauty of this group of potential customers is that their job is to listen to potential clients. And once you are on the phone with them, you are a potential client.

So what is counterselling and how does it work? Well, if a salesman is any good at their job, on that phone call their main job is to ask a lot of qualifying questions to make sure you can be a successful client for their company. These will vary by company, but mainly their intention is to make sure they aren’t selling forks to an ice cream shop kind of stuff. What these questions do though is give you a chance to tell the story of your company: how it was founded, the value proposition, a funny anecdote about how some people are using the service, and ideally, something that makes the company look bigger than it is.

Now, I know what you’re thinking. Sounds a lot like one-to-one marketing. I need a million users not to get fired. I don’t have time for this. Well, firstly, one customer is better than zero customers, and two, it’s isn’t one-to-one, and I’ll tell you why. The goal of your answers to their qualifying questions should be two-fold. First, you want to get the salesperson excited about trying your product him or herself. This is much easier to do than for normal users as it helps them qualify your product as a good potential sale or not, and they think it will impress you that they’ve used the product, making it more likely they can close.

Second, you want to sell the salesperson on the fact that you’re a serious potential deal. This is not hard as salespeople are notoriously optimistic, and because you pretended you have money, their biggest obstacle. What this second objective accomplishes makes sure of is that this salesperson at least tells one other person at their company about you i.e. their boss, and more likely, their entire sales team. The reason for the latter is because he wants to protect himself from one of his team members also calling on you and stealing his sale. So what you have after one call is basically a brand evangelist at that company.

Now, I don’t want to create the illusion that this always works, but it’s been pretty effective for me at enticing trial of the service. And if your product is good, trial can very easily lead to a repeat customer or a few repeat customers at that company. Also, I want to make sure you know that this is a good thing for the salesperson. They get to tell their story more often as well, and have a shot at convincing you they normally wouldn’t have gotten.

I also want to mention that the sales process does not stop there for this company. They are going to come back with two things (lots of dualities in this post I’m noticing):

1) a more serious meeting/proposal

2) some feedback on using your product.

It’s important to take both very seriously. If you dismiss the first, you will not have a repeat customer out of spite. If you dismiss the second, you’re just a bad marketer. I’ll assume you’re taking care of the latter, so let’s discuss the meeting/proposal in more detail below.

When a salesperson asks for a meeting or sends a proposal, it’s important to respond with something. First off, taking a meeting is not a bad idea if it’s genuinely a solution you may consider. You can learn about costs and implementation and add it to your marketing plan once you are ready for it and/or have the funds. But you may decide there is no value for you to taking the meeting. In this case, you have to handle things gracefully to keep them on your side. I generally like to blame things on the boss, saying that we re-prioritized some things and won’t be able to consider this for another six months. Something like that. Always thank them for their time and give compliments about their service.

All a salesperson wants is a fair shot at your business. So make sure they know they got one, and you can use counterselling to effectively build awareness, consideration, and trial within other companies.

Abbreviate Yourself

So now that we’re out the silly web 2.0 naming conventions that defined websites for a while (did you spell Zillow right the first time you tried to go there?), we can finally get back to to a sincere discussion on brand names. Now, I’m not going to talk about what’s a good one, how to name your product, etc. But I will talk about what happens after you create a brand. It gets changed. Shortened. Abbreviated.

Abbreviations are created for numbers of different reasons. You can become a stock which forces a maximum of a four letter way to describe you e.g. GOOG. You can merge with another company, and since egos are always involved and no one wants to give up their namesake on a company, you initial the words of the two companies together e.g. BBDO. It also could be a marketing reinvention or an offshoot e.g. Gatorade’s “G” campaign, conceived not longer after the debut of their “G2” product line. Brands’ customers can also develop shortened nicknames for products at any time e.g. the Volkswagen Bug.

The danger of abbreviations in branding is a gravitational pull towards the generic. The shorter your brand name the more likely it is there are five or six other companies with the same name. This not only affects awareness and word of mouth, but also search engines. Can Gatorade really optimize for “what is G?” when it’s typed into Google? (no, but now some bloggers have.) And what is the answer? Is it Gatorade? Or Groupon’s rewards program? If you become aware that abbreviations are bound to happen, you can steer this trend in a positive direction for your brand. When McDonald’s decided to target younger people with ads in the 90s, it had young actors refer to the brand as “Mickey D’s” in commercials, which is 1) easy to remember and 2) easily distinguishable from other brands, yet still shorter than their actual brand name. If you type in Mickey D’s into Google now, McDonald’s website shows up first.

Thinking about this when naming your company can save you a lot of marketing headaches down the road and potentially create some opportunities. If you’re thinking of starting a company (or, just for fun, if you already have one), take a potential/your current brand name. Now, pick a stock symbol for it. Pick a name for a sub-brand that is related to the brand name. Now pick a shortened version for it. Now find a way to abbreviate it. Now search all of those terms on Google. If you’re scared by what it returns, you might want to keep trying brand names until you aren’t.

The Michelob Effect

When I was a kid, I used to see quite a few ads for Michelob beer. They advertised on TV in the 80s quite a bit, so much so that in my head, I had placed the brand as the #4 beer, behind Budweiser, Miller, and Coors. It’s crazy how well ads work on you as a kid, but that’s a tangent. Anyways, after a certain amount of time, I stopped seeing ads for Michelob on TV, or anywhere for that matter. Ads for Bud, Miller, and Coors didn’t disappear, and ads for many other brands of beer started to appear, but I no longer saw any ads for Michelob. So, I assumed they went out of business.

Flash forward to the middle of this decade, and all of a sudden, I’m seeing TV ads for Michelob again. Lots of them, in fact. Hey, that company didn’t go out of business. Wait, it’s a not a separate company, but a wholly owned subsidiary of Anheuser-Busch? Well, I’ll be damned. What has their marketing department been doing for the last 15 years?

The point of this post is not my lack of knowledge in beer brands, or to hate on Michelob’s marketing department, but that Michelob, by heavily investing in an advertising medium for a long stretch of time, and then, at least in my eyes (I’m not sure that they actually did), pulling out of that medium for an even longer amount of time, created the illusion to me of them going out of business, when in fact they didn’t. By not advertising via television (at least that I watched) anymore, they still communicated an advertising message to me: that they didn’t exist anymore.

It’s important to remember that an advertising strategy is a long-term commitment to a communication channel with your customers, and that once you decide a certain advertising medium is something that works for your company and invest heavily in it, customers expect you to commit to that channel, basically forever. So, if you stop, you’re still communicating to your customer though the channel, but what you’re communicating is that you don’t want to talk to them anymore. This is as important with television ads as it is with a Twitter account or a website. If you’re putting that communication channel out there, you should be ready to cultivate and maintain it forever.