Don’t be a ‘best-kept secret’

BY RICH SCHMITT
Management specialist

A couple weeks ago I visited my son Joe at college. We were headed for dinner at one of the national chain restaurants that encircle the campus and discussing how very few people, in our industry and in the world, understand gross margin calculation. He was telling me that one of his accounting professors (PhD) had stated, “Gross margins in the 200% range are possible in high-end retail.” Joe’s grandfather had taught him to understand the calculation of GM when young Joe was about 12 years old, so he knew that his prof had made the common mistake of mixing gross margins and markup. So it is easy to see how your people might be flubbing pricing calculations, and hurting your profits, while you read this column.

(For a reminder reprint of gross margin calculations and our GM test, e-mail me at rich@go-spi.com.)

About halfway to our destination, Joe suddenly remembered a great local place that he thought I would like. I was delighted since I am a fan of hole-in-the-wall places that are unique to the areas I visit. (I also like the national chains but they are about the same across the country.) So as we drove up to the place, I was intrigued by the sign, “Bob’s Place, the best-kept secret in town.” (Not the real name.) When we got to the door, there was, sadly, another sign, “CLOSED.” The owner of the ill-fated restaurant had an expensive sign created to document his marketing problem. Maybe he hoped that it was a clever way to improve the situation but, apparently, it was not enough.

A couple of thoughts to take away from the experience:

• While some businesses want to be well-kept secrets (especially those of the criminal persuasion), most businesses want to be anything but a secret. Even better, leading companies want to be the “First in Mind” primary supplier to their targeted customers. (For a reprint on what it takes to be the primary supplier e-mail me, rich@go-spi.com.)

• Whenever you find that your business, your locations, your website or what you are selling is a secret, treat it as an emergency. The restaurant owner obviously was not able to overcome his “best kept secret” situation and is now history. Sadly, he might have had the very best secret restaurant in the city.

So my three suggestions for this month are:

1. Marketing
2. Marketing
3. Marketing.

I do want to sound like a broken record on the marketing front, so here are some thoughts to persuade, encourage, prod and cajole you into some serious marketing activities:

• “The fish are no longer jumping into the boat” – That’s how one of my clients described the huge difference between the boom-time environment and the current economy. The boom times spoiled many of us. We only needed to get the boat into the lake to attract fish/business. We didn’t need to bait the hook, to cast the line or even take our fishing pole with us. Very little real marketing was required so, with the other pressing activities, most marketing activities fell by the wayside.

• Marketing is never done – The best wholesalers have a continuous program filled with periodic, seasonal and promotional marketing activities aimed, very specifically, at bringing in business.

• Marketing is spread across the calendar — This addresses any seasonality and applies continuous marketing pressure to your customers.

• Even the best marketing has a very short half-life — The amount of information that people retain from intensive training erodes very rapidly over time. Advertising, promotions and marketing programs are often even more short-lived in the customer’s memory. Many human beings — and thus many of your customers — are like the woman in the movie 50 First Dates who, due to a brain injury, awakens every day with no memory of the previous day. Each day is like a total reboot of their memory with only a little information being retained from the previous day.

Repeat your message

Many of your customers don’t remember your marketing message from yesterday. In most cases, it is not their fault — your marketing is just that unremarkable. It is not interesting, not fun, not informative, not relevant and thus not worth remembering.

• Why is much of this industry’s marketing unremarkable? Often because the 10 minutes that was spent in planning and creating the marketing campaign didn’t result in brilliance. Good marketing programs take thought and effort. Some wholesalers act like marketing to contractors is casting “pearls before swine” and arrogantly feel that it is not worth their time to create interesting marketing programs for the trade.
I disagree. Take the time to figure out what your customers care about and then creatively and in an interesting way, communicate with them.

• Very few wholesalers do enough real marketing. Just to be clear, handing out hats and hosting a customer appreciation dinner do not constitute a real marketing program.

• Repetition, repetition, repetition. Your messages should, ideally, be said in different, creative, interesting ways. People often need to hear the same message many, some say eight, times before they tune in.

• Pick multiple targets and different ways to hit each target. Contractors often have several people who make purchasing decisions: the owner, a buyer, the owner’s spouse, the office staff and the guys in the trucks.

The message and the way to sell each purchaser is different since their concerns differ and their emotional needs differ. Where the owner’s major concern is finding cost effective suppliers, the guys in the trucks may be more focused on your morning coffee and doughnuts. Further, the people in each of these groups may have unique motivators so it is critical to have variety in your marketing programs. BTW, did you know that most people need to hear your message a bunch of times before it registers and even more times before they act upon it.

• Work to be one of the top-two horses in each race. There is an old joke of two hikers who happen upon a bear while walking down a remote mountain trail. One takes off his backpack then stoops down to adjust his shoes. The other hiker looks puzzled and tells the first hiker that it is fruitless to adjust his shoes since ?there is no way he can outrun a bear. The first hiker looks up, smiles and tells his partner, “You’re right but I don’t need to outrun the bear, I just need to outrun you!”

A two-horse race

This gets me to a concept that marketing gurus Al Ries & Jack Trout described in their book The 22 Immutable Laws of Marketing: “Law # 8, The Law of Duality – In the long run, every market becomes a two-horse race.” While in many markets the number of competitors has increased over time, each customer usually buys from just a couple wholesalers. As human beings, we are able to compare two suppliers but adding a third makes the process much more complicated. So part of your marketing effort must be to determine:

a. Who you compete with by customer
b. How you stack up to the other horse in the race
c. Whether you are in the top two by customer. (This will vary from customer to customer.)
d. If you are in the top two, who is the other company…and what it will take to outrun that company with this contractor.
e. If you are not in the top two, what you must do to earn a top-two spot on each customer’s dance card.

• Differentiation. Part of beating the other horse in the race is being able to describe how you are different than the other wholesaler and, even more important, why the customer should care about the difference. I often see marketing efforts that tout, “We are the largest wholesaler in the area.” I think this is like saying, “We are the tallest wholesaler in the area.”

From the customer’s viewpoint, why does being “tallest” matter to me. Why should I care? What is in it for me? And you are going to need to remind them, several times how you can help them.

• Urgent. You want the customer to act within a reasonable timeframe. Contractors can be first-class procrastinators. When we sold a video series to contractors, we would get calls to order the video program literally years after we had run a promotion. “Yeah, I’ve had this order form sitting on my desk and I was wondering if you still have it on special?” I would want to ask them if an archeologist had uncovered our order form but two things kept me from it:

1) I didn’t want to be rude
2) I may have some two-year old letters on my desk.

They probably won’t react to even your most urgent messages until they have seen them several times.

• Call to action. The only reason that you have marketing activities is to get customers to buy more than they would have if there were no marketing activities. Some companies do “name recognition” or “warm and fuzzy/touchy-feely” kinds of image marketing activities aimed at getting customers to love their company. They believe that it will eventually result in added sales.

Frankly, I remain unconvinced that this approach works when selling to contractors in our industry. I like programs that work on a more primal cause-and-effect approach. So as a part of the marketing plan, you should understand what you want the customer to do after they see your marketing program:

a. Create urgency through a short timeframe to take advantage of the offer or by limiting the quantity available through this offer. (When you set these limits and timeframes it is critical that you never allow your people to honor the offer after it has expired. Setting this precedent properly will save you time and, in the long run, save many hours of time arguing with your customers and, even more so, with your team.)
b. Call us now to get the special price
c. Stop at one of our 10 convenient locations to see the daily specials
d. Visit our website for our web-only specials

• Show them the money. Focus on communicating what’s in it for the customer, in the most basic terms possible:

a. Always state the customer benefits in a way that the customer relates to. When all is said and done, many owners’ interest is like the phrase from the movie Jerry McGuire — “Show me the money.” But never assume that the message can be subtle; thus, requiring the customer to connect the dots to find the money.

Marketing to contractors is not a treasure hunt where only one lucky individual finds the pot of gold. Marketing to the trade should be crafted so that even the least interested plumber can see the treasure and get some gold. If money is the reward, you need to say, as clearly as possible, how much is involved and what the customer has to do to get it.

b. Of course, there are other motivators for customers. Some will appreciate your trip program where they get to take their significant other to exotic locales. In this case, the message may need to be sent to that significant other so she is encouraging the customer to buy from you and only you. Why be subtle when you can send the message, “Tell the hubby that come January, you want to be in Cancun drinking cold cervezas, por favor.”

• Simple and cost-effective above all. Good marketing does not need to be expensive nor fancy. In fact, I have heard more negative comments from contractors about “flashy, expensive marketing” since they feel that they are the ones who pay higher prices to support the glitzy marketing. (I think it’s funny that retail companies can spend outrageous amounts of money selling us beer, burgers, clothes and cars yet, very few of us ask, “I wonder how much cheaper that burger would be it they didn’t spend so much on marketing.” But in our industry, flashy can be a turnoff to the customers that we want to attract.) Say it in small words, use pictures and remind them often.

• Pilot before you publish to the masses. Before you print a million fliers or mail a billion postcards send some to a target group and see whether they fly. I have never been disappointed when I have piloted a marketing piece with customers. Even when the feedback is greatly negative, it was better to have missed the target with 20 customers than with 2,000 customers.

• Forecast, measure and adjust. As part of the planning process, at least guess at the results that you should expect, measure (as best you can) the results and adjust what you are doing based upon the feedback. Measuring the results is tough but it matters. Even if you just call a sample group of contractors and ask them if they saw it and how it struck them, you will be better off than continuing to shoot in the dark.

• Just Do It. Make a new mid-year’s resolution to spend some thoughtful time doing real marketing to your target customers.

In the end, the challenge is to spend the time to create interesting, ongoing marketing programs. For the best results, focus on throwing intellect at the project instead of money. At the very least, spending time communicating with your customers will remind them that you are still in business, that you care about them and that you do a really good job for them.