Category: marketing

Lipstick myths

Is the lipstick theory of recession spending really true?

Is the lipstick theory really true? I’ve been hearing a lot about it lately and I’m not so sure.

The “lipstick theory” is people will spend money on small, modest priced luxuries in a downturn to make up for not being able to afford big luxuries.

It’s been used to justify everything from increased fast food sales to Belgain chocolates to expensive beer to, well, lipstick.

I recently heard it used by a software developer as the rationale for investing in a software as a service product.

But is it true?

The Economist isn’t so sure and shows there’s little correlation between past recessions and lipstick sales.

My suspicion is if it was true in the twenties and thirties, it was more because better manufacturing and distribution techniques meant a better, cheaper product could get to the market.

Even if the lipstick theory is true, it’s dangerous to assume your product is the same.

For a start, some lipsticks will do better than others, partly because of marketing and partly because their price points are smarter.

Should your “lipstick” product be successful, it might not make much money for you anyway. In the last recession we saw McDonalds and other fast food chains introduce $1 and $2 meals, we’re seeing a similar trend at the moment with sub $500 computers.

These “recesssion busters” may keep your market share up, but they aren’t going to be particularly profitable. Indeed, for the computer manufacturers, the sub $500 laptops may well be cannibalising what’s left of their profitable product lines.

The reality is a lot of the products that are claiming the “lipstick theory” will save them are really doomed. The vast majority of shops selling expensive chocolate, lingerie, beer and other pricey but non essential products are simply marking time until the effects of the popped bubble reach them.

It’s best to base your business plans on sound evidence rather than blind hope in an idea that may or may not be true and may or may not apply to your products.

Ignoring your customers

The new Facebook design has picked up lots of critics with nearly 800,000 users giving it the thumbs down.

However Dare Obasanjo claims Facebook founder Mark Zuckerburg doesn’t care. Apparently Mark’s view is “the most disruptive companies don’t listen to their customers“.

That’s true – Steve jobs ignored the howls of protest when Apple dropped support for floppy disks and the Apple Desktop Bus which left millions of Mac users stranded with obsolete equipment.

Even more famously, Henry Ford told customers they could have any colour Model T they liked as long as it was black.

Both were right and the customers followed them, although not without some grumbling.

So you can succeed by knowing your customers needs better than they know them, but it’s a risky ask as Microsoft found with Windows Vista, Ford with the Edsel and Coca-Cola with New Coke.

Time will tell if Mark Zuckerburg’s right. It’s a high risk strategy though.

Managing your reputation

Keeping track of what your customers and others are saying is important for your business. Luckily there’s a free tool to let you keep track of your reputation on the Internet.

This article first appeared in Smartcompany on 17 February, 2009

Last week at a major telco’s product launch a respected tech journalist piped up that while their new gadget was nice, their network was rubbish and so the gadget wouldn’t work very well.

The telco’s reaction to this deserved comment was instructive on how large corporations deal with criticism.

Rather than take the comments on the chin, the telco’s spokespeople canned the journalist and waved around a report stating their network was the greatest thing since sliced bread, or at least since somebody thought of connecting two cans with a piece of string.

Personally I’d be tempted to point out to the esteemed and highly paid writers of the report that two cans of string are probably a touch more reliable than their client’s network in notoriously remote locations like North Sydney and Martin Place.

While telco managers usually get away with head in the sand behaviour, business owners in the real world can’t. Their reputation with customers matters.

In the current business climate, you can’t afford to be dismissing your customer’s concerns. When a customers complains, action needs to be taken and lessons learned from that complaint.

How business leaders deal with complaints is a real test of how good they are. Handled well, a complaining customer can be turned into a raving fan of your business and a complaint should be an opportunity to review how well you do your job.

You don’t need to be hosting press conferences with stroppy journalists to find out what people think of you. One Internet tool for managing your reputation is Google Alerts.

With this, you can set up an email summary of each time your target word or phrase has popped up on Google and have it delivered to your inbox.

I have all my business names listed with Google’s alert service so I can see when others have mentioned them on Internet forums, blogs or websites. It’s also very handy on keeping an eye out for anyone breaching your trademarks.

Incidentally, the journo was right, and that particular telco’s network problems have been widely discussed on the net and in the media. It beggars belief the managers and PR couldn’t have expected this sort of criticism if they’d been running these tools.

The web’s a pretty effective way of getting good and bad news out about a business. If you watch it closely, you can anticipate problems before they bite your bottom line.

Why your business should have its own domain

In our society where half the population seems to be on the road at any given time, having signage on your company vehicles is one of the most effective ways of publicising your business. 

Because I spend too much time sitting in traffic jams I get the opportunity to study a lot of this advertising. All too often I see terrific, well done designs let down by poor email or website addresses. 

No matter how much you spend on snappy slogans and flashy logos, an email address along the lines of fredtheplumber@biginternetprovider.com.au will spoil the effect. Addresses like these make it hard for passers-by to remember, and they smack of someone who can’t afford the less than $200 to set up a business internet domain. 

One of the great things about the internet is it allows smaller businesses to punch above their weight. With your own domain name, even the tiniest microbusiness is on the same basis as their multinational competitors, and they can do this for less than the cost of a cappuccino a week. 

Another big plus is your own business domain unties you from your internet provider. In Fred’s case, if he decides to change internet providers, he can’t have his address follow him. With his own domain, he can change internet providers every week without affecting his email and website addresses. 

Setting up your own business domain is a two-step process; first you register your domain with a registrar and then arrange for a hosting service to look after it for you. To simplify things most registrars, hosting companies, internet providers and web site developers can do it all for you. 

Whether you do it yourself or get someone to do it for you, it’s important to make sure someone at your business is designated as the administrative contact. This means you have ultimate control over the domain and you are the first to be told when fees are payable or domains are expiring.

There’s no reason in my mind why even the smallest business doesn’t have its own domain. Compared to the costs of a Yellow Pages listing, local newspaper ad or even car signage, a domain and the associated hosting costs are almost nothing.

Your business name is an important asset. If your organisation doesn’t have its own domain, regardless of its size, then you aren’t getting the most from that asset.

Every business is different

different

One of the things I’ve always believed is every business is unique.

Your character, your staff, your processes, your customers, your premises and every little thing your business does makes it totally different to every other business in the world.

That’s the beauty of business and it’s why any advice you recieve should be tempered by the knowledge that no-one knows your operation better than you.

This isn’t to say you shouldn’t listen to advice. You should because a fresh pair of eyes or ears can alert you to something you’ve missed.

This isn’t to say you shouldn’t experiment with new ways. Those businesses who don’t will probably not survive the next five years.

But what’s works for the guy up the road won’t necessarily work for you. His blog might be successful while yours may fail; she might be able to ditch the Yellow Pages while you cannot; they might be able to use social media while your contacts ignore it.

So understand your own businesses, its staff and the customers.

And most of all understand your own strengths and weaknesses.

email because you can

Seth Godin studies two email marketing campaigns. One that obtained his permission before sending emails and another that didn’t. Guess which one works.

This is a subject close to my heart. A loophole in the Australian Spam Act allows spamming if the sender has “inferred consent” which can be anything from giving your business card out at a network function to having an email address on your website.

When I wrote about this on Smartcompany last year I was criticised by one reader and yesterday I started receiving emails from an office fit out company.  This goes to show some marketers and business owners don’t get it.

People are swamped with email, they don’t want more unless it provides value. It’s highly unlikely an email they didn’t ask for will have any value at all.

So don’t spam your client base. They don’t like it and it will hurt your business.

Does your business need a blog?

It’s fashionable to tell business owners they need to embrace every aspect of the web. But do you really need a blog in your small business?

There’s no doubt a blog is worthwhile for many. It can give another perspective to the business and enhances their story. It can help smaller businesses cut through the noise to stand out in a crowded marketplace.

A good example is Mark Fletcher’s Newsagency Blog which has publicised Mark’s software company and his associated newsagencies while establishing him as a leader in the industry.

Not all businesses have Mark’s energy or some simply don’t have the time. For others, their markets don’t really care about blogs.

Also a blog is not an end in itself. A newsagent with an interesting blog is still going to fail if they don’t  deliver service to their customers and the same applies for PR agencies, marketers and management consultants.

If blog is going to distract you from your core business, then maybe it isn’t a good idea.

Every business is unique and what works for one enterprise is not necessarily right for another. A blog is a business tool, just like every other aspect of the Internet, and you need to choose the right tools for your business.

Integrity – Your most valuable asset

Whether you’re a blogger, a journalist, a business owner or just a plain ordinary joe in the street, one asset stands above all others – your integrity.

A Sydney advertising agency faking a story about a woman looking for the owner of a jacket is a good example of how forgetting this can backfire. 

For Naked Communications this is particularly ironic given the headline Naked tells the Naked Truth at the time of their corporate takeover last year.

An even greater lesson is the damage done to the fantastic “Best Job in the World” campaign with another lame stunt. It’s fairly safe to say overdoing things with a fake tattoo has destroyed much of this story’s goodwill which is a crying shame.

There’s a temptation to dress this up as a new media versus old media story, but it’s not. Ethics have always been ethics and truth has always been the truth.

Regardless of who you are and what your business is, integrity is everything.

Being proud of your business

Too many businesses have bland “about us” pages featuring stock photos and generic corporate phrases

Too many businesses have bland “about us” pages featuring stock photos and generic corporate phrases, here’s two examples;

We have many years of practical experience as sales managers, directors and business leaders.

Our staff have a great deal of experience, having placed hundreds of candidates in positions at many different hospitals and clinics

Both of these businesses have owners with fantastic experience, great staff and a terrific story to tell, yet from their web site you would never know this.

For all the reader knows, they are just another anonymous branch of a multinational which is a terrible waste for these great teams.

The web is one of the few ways a small business owner can tell their story without restrictions. So there’s no excuse to be shy about why you are so good at your job. Tell people who you are, why you are doing what you do and how good you are at doing it.

And ditch the stock photos. Chisel jawed models in Italian suits playing with laptops are fooling no-one. Put your own photo up and be be proud of who you are.

Potential customers visit your web site to find about you, they want to hear your story and why your businesses will delight them and meet their needs.

So use that “about us” page properly, tell your story and introduce yourself. Don’t be shy, you should be proud of who you are and what you do.

Survey Reveals Almost 50% Of Aussies Use Mobile Phone In Bathroom

Is the title of this Microsoft press release not the dumbest one so far this year?

The release itself is full of pointless and silly factoids which I’m not going to even bother repeating.

What will be interesting is which media outlets will pick this up and run it as “news”.

Respecting your network

This article originally appeared on SmartCompany on November 25, 2008

Australia’s Spam Act is just over five years old, and it’s had some success in keeping locally sourced junk email to reasonable limits along with catching the odd perpetrator.

The Australian Communications and Media Authority has plenty of Spam Act information for business owners on its website and the requirements can be summarised in three principles – get consent, identify yourself, and make it easy to unsubscribe.

Before you can send commercial emails to people, they need to ask for them. In itself, this requirement eliminates your emails being classified as spam given the definition of spam is unsolicited emails.

Identity is important, as the recipient needs to know who the email is from. All legitimate businesses should have no problem with this.

Finally, unsubscribing is simply good manners. For a business owner there is absolutely no point in irritating potential customers and partners who don’t want your messages.

The sticking point in all of this is defining consent. The loophole in the act defines “inferred consent” if you have an “existing business relationship”. The current interpretation of a business relationship is merely having the business card of the recipient.

Sadly this gives any dolt you’ve been foolish enough to give a business card to at a networking function permission to bombard you with invites to get-rich-quick seminars and share boat schemes.

I can’t tell you how irritating I find idiots sending me three pointless emails a week because I put my card in the door prize bowl or gave the courtesy of exchanging cards while talking.

Even worse are the dills who start sending SMS messages to your mobile phone. In fact I’m amazed that anyone thinks ultra intrusive text spam is an effective way to generate goodwill for a business.

A particular difficulty with spamming people in your network is that your paths will almost certainly to cross again, which can put all parties in a difficult position.

So don’t simply add everyone who gives you their business card to your mailing list. By all means send them a follow up email, phone call or postcard, and certainly offer to connect to them on social networking sites like LinkedIn and Facebook, but spare everyone the spam.

Understanding your responsibilities under the Spam Act will help you get more from your mailing lists. Adding some common sense and manners goes a long way too.

Should you drop the Yellow Pages?

yellow-pagesToday’s Australian reports Sensis’ Yellow Pages revenue is up 5% and White Pages over 11%. That’s an interesting result as it bucks the evidence that online advertising is hurting them.

At business events I’m finding many owners and managers are telling me they are dropping their Yellow Pages ads as they find they aren’t getting the returns they were hoping for and think online offers more return for their advertising dollar.

There’s a lot of people who agree with that idea and even Sensis’ e-business report showed 89% of consumers are using the net to research purchases.

So there is a pretty good argument for businesses to move their advertising online, but before doing so you need to look at what channels your market is using to find you.

For some businesses the Yellow Pages is still an important channel. For instance, the local plumber cannot afford to be without a Yellow listing.

But other businesses, say an online auction site, don’t need to worry about an expensive Yellow Pages display ad although a listing in the White Pages would probably help their credibility with some customers.

In the end, it depends upon your business and the customers you want to reach. If your business is a service business that generates work from emergency calls, such as the plumber, dentist, vet or a computer technician, then you will need some presence. 

Even if your business doesn’t cater to those markets, the online Sensis listings are still useful as this plugs your business into the directory enquiries, 1234 and web based services, although these may not be as useful as Google or Yahoo!.

Marketing’s all about telling your story to the right people. While many of those people are now surfing the web, it may suit your business to still spend something for those people who insist on using the Yellow Pages.