The 65/35 Rule and Hoping-for-the-Best

A small chain of specialty restaurants has discovered that most of its new customers (65 percent of them) come from word of mouth. The rest are a result of the owner’s advertising campaign.

Question: To get more business, should the owner invest more in advertising to reach customers who have not yet heard of him or invest in promoting more word of mouth?

The best answer is to invest in word of mouth. The math is simple. Let’s say you expect to increase business in each sector by 10 percent. That means that you’ll get 6.5 new customers per 100 if you invest in the WOM sector and only 3.5 new customers if you invest in the hope-for-the-best mass advertising.

Surprisingly, hoping to find new markets, many owners opt for the hope-for-the-best tactic and throw money at the 35 percent. However, mass media advertising is really expensive. These owners invest with the odds stacked against them from the beginning.

On the other hand, reaching an established customer base is relatively cheap and the return potential nearly double the hope-for-the-best. And you can’t beat word of mouth.

How do you stimulate WOM? Let’s think: customer discounts; targeted sponsorships; giveaways; birthday specials; strategic partnerships; it’s endless. It’s called customer retention and it’s almost always cheaper than advertising for new customers.

Posted by Harry Chittenden

Chunks and Instinct

I recently saved a couple of articles on current thinking in psychology. While neither is on branding, they both demonstrate first how brands are constructed in the mind and secondly how the mind uses brands to make decisions.

Scientific American published an extensive article by Phillip E. Ross called “The Expert Mind.” The theme of the article is that experts, like chess masters, are mostly made, not born. They gain their expertise through “effortful” study. In other words they are highly motivated to learn a highly complex subject.

Ross surmises that the mind learns in “chunks.” Chunks are big identifiable collections of information that the mind can calculate in a single stroke rather than deal with each individual piece of information separately. He cites this example:

Take the sentence “Mary had a little lamb.” The number of information chunks in this sentence depends on one’s knowledge of the poem and the English language. For most native speakers of English, the sentence is part of a much larger chunk, the familiar poem. For someone who knows English but not the poem, the sentence is a single, self-contained chunk. For someone who has memorized the words but not their meaning, the sentence is five chunks, and it is 18 chunks for someone who knows the letters but not the words.

Isn’t one of our goals in branding to do what we can to organize for the customer the information about the brand into a usable, attractive chunk. Couldn’t you characterize “favorable impression in the customer’s mind” as a happy chunk?

When the customer is ready to make a decision about the brand, he takes the chunk from his memory and brings it to his conscience mind for analysis. Right? Well, probably not. Johnjoe McFadden in Guardian says that the conscience mind rarely gets involved with complicated decisions.

He tells of an experiment in which an experimenter named Libet asked subjects

…to perform a simple task, eg wiggle their little finger, at a time of their own choosing, and measured accompanying brain activity. Surprisingly, Libet could detect brain activity that predicted imminent finger wiggling nearly half a second before the subjects were aware they had decided to wiggle their finger!

We think that we make decisions when in fact the decision has already been made by our subconscious! The mind, faced with a decision, withdraws the chunks it needs, makes the decision and then shares it with the conscience mind.

Moreover, each time a customer has an encounter with the brand the chunk is modified to accommodate for the new experience.

Branding lesson: know what the brand’s chunk is and then work hard to make coherent, attractive contributions to your customer’s chunk, both in marketing and more important in serving his or her needs.

Social Media Press Releases: Not there yet

PR professionals have recently struggled to upgrade the press release to accomodate the social media revolution. Late last spring, Todd Defrin and Shift communications offered up a template to do just that. You can download the template here.

Now Edelman in conjuction with the Univesity of Alabama has produced its own version. I read about it on Steve Rubel’s Micropersuasion.

Both of these versions provide a ton of information. Praise be to them. But as a person who doesn’t like to read great gobs of copy on the Internet, I’m going to work to find a way to give the project the same scanability as a well-written press release used to give. Putting the “Ws” in the lead graph (who, what,…etc.) is still a great service to the reader, who can then choose to dig deeper or not.

Posted by Harry Chittenden

Long Term Marketing

I am a damn near reverent fan of Al Reis and his daughter, Laura. I’ve read two great books on branding by them, The Fall of Advertising and the Rise of PR and The 22 Immutable Laws of Branding and I’m looking forward to reading their latest book, The Origin of Brands. Their website, ries.com, is a must for anyone interested in branding.

In an article that I copied from The Atlanta Business Chronicle (ironically, about branding the city of Atlanta), Ries spoke about the long, steady nature of a good marketing program.

The purpose of the marketing program is to reinforce and remind prospects of what you already stand for in their minds. It’s like a religious service. What did you learn Sunday that you didn’t know before? Not much, but you still come away from the service with a renewed faith in your choice of religion.

Marketing programs should work the same way. They should exploit ideas that have already formed in your mind and make them resonate. Over time, this repetition becomes a powerful force for achieving our goals.

The key words here are “over time.” Most brands build with the passage of time, often lots of time. What you say about your product today might be pretty much the same thing you say two years from now. However, the impact two years from now will be far more powerful. Why? Because if you are reinforcing in your prospects “what you stand for in their minds,” each message builds on the last. At some point these you will have staked out important real estate in their minds. Then they are much more likely to do business with you.

Posted by Harry Chittenden