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The New AIDA Part I: Transformative Value

LC — Mon, 10 Jan 2011 05:59:58 +0000

AIDA (Attention, Interest, Desire, and Action) is a self-explanatory sequential marketing process, and as valid today as it was in 1898 when first coined by E. St. Elmo Lewis who created the AIDA marketing funnel model for the life insurance sales industry.

The objective in selling any product from a pack of chewing gum to a mansion is to convince the prospect that your product or service is of greater value to her than the cash or available credit she now has. However, a distinct and sequential process of persuasion must be implemented prior to the customer agreeing to trade her cash for your offering.

Internet marketing guru Frank Kern recently released a pre-sales video in which he presented the “new” sales sequence, with the first step being “massive transformative value.” Marketing gurus are expert in recycling old concepst into new rhetoric, and Kern’s suggested criteria necessary for making a sale not only shadows AIDA; it improves upon it.

Without the prospect’s attention, a sale is not possible.It is no longer enough to get the prospect excited;Frank Kern says she must envision the possibility for transformative value, and for big ticket items, Kern invokes the necessity for massive transformative value.

Too often, retail merchants fail to show the transformative value of their products or service. Recently a shift toward commoditizing products and services by competing largely on price has cut margins in many industries by half. The appliance business is a good example; one large dealer recently reported than while in 2006 his margins averaged 34%, his 2010 margins were a paultry 14%. The problem starts from the “Attention” phase when we promote price first and fixate the prospect on price alone, resulting in the near exclusion of overall value and benefits of the offering.

There’s a saying that we can’t change the direction of the wind, but we can change the direction of our sails. Substitute “sales” for “sails” and one may envision alternate strategies to de-commoditize our products and services, even in the face of stingy consumer spending. One method is offering a stronger money-back or service guarantee than the competition. Another is batching products and services. This method combines several items as a package and typically includes some high margin offerings thrown in to compensate for the lower margins of the primary product.

Imagine a beauty salon offering a haircut for their standard price of $30, but a coupon for 50% off on a second visit but only during shoulder (light sales) hours. That’s net 25% off and it fills a chair that would likely go empty. The transformative value is the customer putting aside the initial cost, as the subsequent cost makes lightening her wallet today a little easier.

Groupon is a phenomenally successful marketing approach, wherein the services are usually cut by 50% in price, but paid for prior to use. The merchant usually gets a check before the customer is ever seen, and the customer’s transformative value is purchasing a product or service she likely has not before, and would not had the price not been so attractive. The services are often scheduled in shoulder periods and in at least 15% of the cases, are never utilized. The pricing gets the prospect’s attention; the quick cash and ability to manipulate the product delivery is the benefit to the seller. And of course, Groupon takes their cut too.

When evaluating the sales approach for any product or service, consider what approach, offer, or package will be perceived as transformative value, rather than focusing on margin-killing, price sensitive selling. In Part II we will discuss the new paradigm of “Interest.”

The Missing Ingredient in McDonald’s Big Mac

LC — Thu, 10 Jan 2008 18:00:00 +0000

I have a great deal of respect for McDonald’s, and a good bit of that is from my experience as an employee back in the $.15 burger days. They taught me how to work in production.

In grad school we studied their new product introduction cycle; it’s one of the most sparse in the industry. There was a three year void of new products between the existing line and the introduction of the Big Mac, way back when. McDonald’s doesn’t make many mistakes, and they still have the highest margins in the industry. And as we discussed in this recent article, they are still tops with us boomers.Yet, the “how many MBAs did it take to screw this up??” resurfaced yesterday when I bought my first Big Mac in several years, at the drive-thru.

Being a dedicated multi-tasker, as you probably are as well if you’re in this business, I often eat while I drive. I know, I know, that’s a no-no. As a matter of fact, Nation’s Restaurant News in May 2001 cited a study of “vehicular dining.”

According to recent studies conducted by the American Automobile Association and by the Public Health Department in San Francisco, drivers who ate and drank — coffee, milk shakes, colas, juice and other nonalcoholic beverages – behind the wheel were at least as dangerous as those who talked on cell phones.

However, at least 80% of us DO eat or drink while driving occasionally, and that fact is inarguable. A marketer, be them a one off strip mall retailer or a multi-national corporation, must meet the market and customer needs, and McDonald’s didn’t meet mine yesterday.

Driving up Interstate 5, yakking with some broker on the cellphone with the bluetooth, sipping my Coke, I opened one of the two Big Mac boxes (there’s a 2 for $4 deal going, how could I say no), I was horrified to discover the missing ingredient–NO PAPER WRAP! The cardboard box was the packaging and I knew what you see on the left was going to happen.

I ended up with half a head of shreaded lettuce, secret sauce, and burger juice running down my arm, onto my jeans, and the landing spot was the seat of my SUV. It was a damn mess and I blame the Ivy League schools for turning out too many knuckleheads obsessed with saving $0.002 per product delivery while marketing and product delivery get ignored.

I had the same question about the genius boys several years ago when I left KFC with a HALF a drink holder! Instead of the usual four-place cardboard holder, they gave me a half a holder for 2 drinks. How the hell does THAT work? Try balancing two sodas in traffic without a base to hold them. Did the packing managers miss their basic physics class?? Bet they saved a quarter cent though, and got a weekend in Dollyland as a bonus.

When the customer leaves your store, or your drive-thru, the customer experience continues until the product is consumed, stored, or discarded. An omission like this can cost any retailer a customer. Jamba Juice has “customer walks” several times a day, not only to insure the path to the store is free of trash and debris, but the trip out of the store when the customer first tastes the product is equally as pleasant.

What do you do to insure that a positive customer experience continues after you’ve got their money?

Blogging for Profitable Strip Mall Retailing

LC — Fri, 28 Dec 2007 18:34:34 +0000

While blogging is still in its infancy for most traditional businesses, there are certain sectors that can benefit greatly from maintaining a blog or interactive web presence. These sectors include professionals, consultants, and yes…..strip mall retailers and developers.

Too many small retailers default to the old expression, “what matters in store success is location, location, location.” I disagree, although if completely true that would be nirvana for our development company; we’d take no blame for poor store performance if others were doing well in the same center.

I’d amend the tired phrase to “location and operations.” All businesses should strive for some form of monopolistic competition which involves a great deal of non-price competition (based on subtle product differentiation, and blogging can be one of the most cost effective marketing tools available.

from Retail Wire (requires registration)

12/28/07
The Marketing Power of Blogs

By Tom Ryan

For many small businesses, blogging is proving to be a low-cost, high-return way to create public awareness.

Across businesses, blogging companies are still a small minority. According to a recent American Express survey, only 5 percent of businesses with fewer than 100 employees have blogs.

And blogging experts don’t recommend blogs for the majority of businesses. Among the challenges is that they require some writing skill and a large time commitment. “If you’re a clothing manufacturer or a restaurant, blogging is probably not as high on your list as making good food or good clothes,” Guy Kawasaki, managing partner of Garage Technology Ventures and a prolific blogger, told The New York Times.

But Aliza Sherman Risdahl, author of The Everything Blogging Book, told the Times the most obvious candidates are consultants. “They are experts in their fields and are in the business of telling people what to do,” she said.

For those in the professional sector, such as advisors or lawyers, blogs can not only help gain business and publicity but also serve as a networking tool and position the blogger as an expert in his or her field.

For other companies, it can be a challenge to find a legitimate reason for blogging unless the sector served has a steep learning curve (like wine), a lifestyle associated with a products or service (like camping gear or pet products) or a social mission (like the environment or a charitable cause). Even in those niches, companies need to figure out if they have enough to say.

“As a consultant, blogging clearly helps you get hired,” Ms. Risdahl said. “If you are selling a product, you have to be much more creative because people don’t want to read a commercial.”

Blogging’s a Low-Cost, High Return Marketing Tool – The New York Times