It’s not about pricing, it’s about perceived value

I work for a company that sells a lifetime holiday product. We often get questioned about the value of our product. The sales process is getting harder and harder every year. It seems like the only tactic that works is to give a discount.

It gets me thinking. Does our product have poor value? How can we prove our product value? And most importantly, how do our potential customers create the perceived value of the product?

I don’t have the answers to the first two questions (yet). But, my assumption that could answer the third question is our potential customers compare our product value with the discounted holiday offers in the market. Online Travel Agents (OTAs) have done a great job in creating the perception that doing business with them offers a great value. And, it could be true but it’s not always the case.

People’s brain is lazy by nature. People always choose the easiest path to get something. If we want to prove our point, we have to come up with a way to show customers that their perception is not accurate.

In our case, the challenge is we need to find a way to overcome the time gap. Our product offers a lifetime holiday, while customer’s mind looks only at a short term horizon (many compare prices on OTA websites). Our sales and marketing strategy should start with this thought.

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It’s time to change

The plus side of the current virus crisis is that it allows companies to think if what they are doing is the best way to do business. Many are finding the way to reduce cost and find their ways to come back. Some companies didn’t do well before and now could hide their issues behind the virus pandemic.

Changing business model is a big deal and wouldn’t happen often. If you are a sales-driven organisation, it’s likely that you have been struggling for a while. You probably are in a discount game and in a cost cutting mode for a while. These 2 words are a clear signal that you have to change. And, there is no better time than using this crisis to change. This is because you are about to have another cost cutting exercise.

I am a firm believer that demand creation should be done with marketing. This is because the focus can be placed on solving customer’s problems and on building up brand for a longer term. Putting sales in front of the business model means the focus is ‘right now’. And, it doesn’t matter if a solution is right for customers or not.

It’s time for companies to put customers in front of their business model. And, the way to do it is to have an infinite mindset with marketing thoughts. As Steve Jobs once said – “Marketing is to create demand, sales to fulfil it”.

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Prepare yourself for the post-virus era

I am still on that though, the though about how to survive as a marketer after the crisis ends. I keep on talking about the future and I have been told in numerous occasions that we only focus on short-term. I don’t think that short-term thinking is encouraging. At the end of the day, lives will have to move on. As a leader, we need to give hope.

In a marketing area, due to social distancing, more and more people will live their lives online (even more than today). The skill sets that would be useful will be 1) new ways to communicate to customers using online channels and 2) creative content creation.

For the online channels, messaging technologies like Whatsapp, Line, and WeChat will rule the world. They will become a one-to-many channel and we may not need for example Facebook feeds anymore.

In terms of content creation, there are a lot of rubbish content out there, ads included. Content will be created for specific niche markets. Content for mass market will actually be dead, after have been in a zombie stage for a while.

Are you ready for the new world?

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Marketing opportunities during the lockdown periods

Who would think they could compete with Zoom in a video call/conference market? During the lockdown periods, online platforms that allow people to do activities, well online, are on the rise. Zoom’s stock price has increased more than 117% over the past 3 months.

Then, come along Houseparty. It is a FaceTime meets Zoom meets trivia–style app that got over 2 million downloads last week. It targets different segments from Zoom. It is less official with more entertaining features than Zoom.

When joining Houseparty, the app asks permission to connect with your contacts and social networks so it can add existing contacts to your friends list. Opening the app signals that you’re around and free to talk and displays a list of friends who are online and “live” parties you can join. There’s a dropdown tab for games, which include HeadsUp, trivia, and Quick Draw!

Every crisis has opportunities in it. The best approach to a crisis is to imagine how consumer behaviours would change after the crisis ends. They could be more health conscious. More companies might adopt a work-from-home permanently to reduce their office leasing expense. Those post opportunities to people who are creative with forward thinking.

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How David Cote went through recession

I keep on thinking what it would be like after the virus crisis ends. I (and you all) know the world won’t be the same. But, there are lots of uncertainties there.

I came across an interview of David Cote. He is a former Honeywell’s CEO. He took the company through the big recession during 2008-2009. I didn’t think to get much as I thought it would be a feel-good story from another ex-CEO. But, I was wrong. His view and his strategy are very, very interesting.

I am not going to get into the details of how he successfully took Honeywell through one of the major recessions of our generation. I want to only share one thing about his story. He had only one thought and one thought only – what would be the best plan when the recovery happen? His strategy then followed this only thought – how he looked after customers, employees, and suppliers. This was a positive thinking from a CEO that cascaded down to everyone in his company.

And, I love this statement:

The right approach is pledging to do all you can to minimize the impact on employees while we meet the goal that comes first, taking care of customers. Saying employees should come before customers ignores reality. If you want a future for employees and investors, take care of customers first. The next issue is, How do I allocate pain between investors and employees in a downturn?

David Cote

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Going niche

No product could serve everyone (well except water and electricity). Minimum viable audience (MVA) is the way of survival. It’s about time for hospitality companies to adopt a laser-cut niche product (and marketing) strategy.

American Express GBT (Global Business Travel) is a good example. They are a credit card company focusing solely on businesses. They just launched a service called “Rest Assured Solution”. It’s an online travel booking platform for business travellers. Their research shows that some of business travellers make bookings outside the company’s policy because they can find cheaper rates out there. As a result, GBT incorporates this rate guarantee feature in this service.

Who are your minimum viable audience?

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*Credit: I took the minimum viable audience from Seth Godin – my (book) marketing mentor.

Subscription model

Do you know Panera, a restaurant chain in the US? They recently offered a $8.99 coffee monthly subscription. Customers can take unlimited coffee under this offer.

They decided to offer this program after a few months of testing. They saw more than 200% increase in the frequency of visit, which is expected. The best part is there have been about 70% increase in food attachment. It’s like they use marketing money in this subscription offer to sell their core product which is food.

Can you add a subscription model to your product or part of your service? If you can and want to, I suggest you to build a strong financial model to justify it. A wrong calculation could cause a major issue.

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Marketing as service

I believe that everything is marketing. The era that has marketing department as an independent unit has ended a few years ago. Marketing should be at the top of the tower with customer service, customer experience, sales, even human resources underneath.

Let start by asking this question – why do we do marketing? We do marketing because we want to offer solutions to customer’s problems. We also do marketing to make a difference to someone’s life. The process is we tell customers that our product could be a solution to your problem. Customers buy the product and we want them to have the best experience. We then service them with the hope that they will stay and recommend our product/solution to their friends. When something goes wrong, they contact our customer care team. We solve their problems and delight them. They rave about us and their friends see it.

There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.

Sam Walton, founder of Walmart stores

Take social media as an example. It’s very hard to draw the line between social media marketing and social media service. Customers will bring up issue regardless of channels. You might post a new campaign on Facebook with an expectation for it to go viral to get more sales. But, your existing customers might see the post and share their frustration.

To be successful, marketing needs to be on the top of the tower. No offence.

Happy customers are your biggest advocates and can become your most successful sales team.

Lisa Masiello, Founder & President, TECHmarc Labs, Inc

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A decision to make

If you are working in the hospitality industry, you may have the same thoughts as we all do now. What should we do as a marketer under this virus situation. More and more countries have been shutting down. Consumers got panicked and pretty much stopped unnecessary consumption. Unfortunately, having a holiday fell into the unnecessary basket.

I noticed that the number of hotel and travel agent promotional emails dropped by more than half. I think everyone decided to hold off all marketing activities at least for the next few weeks.

I myself have been thinking what to do. It looks to me like we reach the point that none of promotions or marketing would work. Or would this be a great opportunity because the competition is close to non-exist?

Most of us never witness something like this in our life time. It sends a shock wave to both consumers and businesses. I believe no one has the right answer.

What would be the best strategy under this situation?

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How to sell without selling?

I talked about whether it is possible to sell without selling yesterday. I argued (and am confident) that it is possible. But, how can we make it real i.e. how to make it works financially?

One possible way is to create a business model that has a core product and viable number of auxiliary products.

As an example, if your core product is a holiday membership, you may have the following auxiliary products:

  • Holiday planning service – research, itinerary
  • Holiday activity service – earn commission from other providers
  • Personalised holiday assistance service

The idea is to create an ecosystem that your product becomes top of mind for customers.

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