Marketing Notes

Marketing

Notes from “The 1-Page Marketing Plan” by Allan Dib.

The BEFORE phase

0. Introduction

The overall phases of the direct response marketing strategy are:

Phase	Status	Goal
Before	Prospect	Get them to know you
During	Lead	Get them to like you
After	Customer	Get them to trust you

Direct response marketing should be:

• Specific
• Trackable
• Include an offer
• Follow up

A marketing plan encompasses:

Stage	Example
Advertising	Sign for the circus
Promotion	Put the sign on an elephant and walk it into town
Publicity	Elephant tramples the mayor’s flowers and it makes the news
PR	You get the mayor to laugh it off
Sales	People come to the circus and spend money

Strategy changes with scale

• Don’t blindly copy large companies. “Branding” to “get your name out there” is expensive and ineffective.
• The one and only objective of marketing for a small company is “make a profit” For large companies it may be: appease shareholders, board, managers, existing clients, win advertising awards. Making a profit is a low priority for them.
• Strategy without tactics = paralysis by analysis
• Tactics without strategy = bright shiny object syndrome

Product quality is a customer retention tool, not a customer acquisition tool.

• People don’t know how good the product is until they’ve already bought it
• “If you build it, they will come” doesn’t work

The 80/20 rule (Pareto principle) states that 80% of the outputs come from 20% of the inputs. Applying the 80/20 rule to the 80/20 rule gives the 64/4 rule: 64% of the outputs come from 4% of the inputs. Identify this 4% and focus on it. Often this is marketing.

Spend money to make time, not vice versa. Money is a renewable resource, time is finite.

1. Selecting your target market

The niche should be as specific as possible - an inch wide and a mile deep.

• Too broad a target market is useless as the message gets diluted
• Mass marketing/branding can work for larger companies but not small. Large companies have enough firepower to fire arrows in all directions. Small companies need to fire in a specific direction.

Become a specialist in your field to make price irrelevant

• Become an educator and build trust
• You don’t want to be a commodity shopped on price. A customer won on price will be lost on price.

Use the PVP index to identify the ideal niche. Assign values to each possible segment for:

• Personal fulfillment
• Value to the marketplace
• Profitability

Questions for the target prospect:

• What keeps them up at night?
• What are they afraid of?
• What are they angry about? Who are they angry at?
• What trends affect them?
• What do they secretly desire most? What one thing do they crave above all else?
• How do they make decisions? Analytical, emotional, social proof
• What language/jargon do they use?
• What magazines do they read? What websites do they visit?
• What is a typical day like?
• What is the single most dominant emotion this market feels?

Create an avatar for each prospect. Put a name and photo against each market segment and describe a specific person in detail. Describe their life, job, activities, relationships. Answer each of the questions above from their POV.

2. Crafting your message

There are two key elements of the message:

1. Purpose of the ad
2. What it focuses on

Keep the message focused: 1 ad = 1 objective. “Marketing on purpose” rather than “marketing by accident”. There should be a clear call to action. You should know the exact action you want the prospect to take next.

The following two questions help refine the USP:

1. Why should they buy?
2. Why should they buy from me?

Key takeaways for USP:

• Why should they buy from you rather than competitor
• If you remove the company name and logo, would people still know it’s you?
• Quality and service are not USPs. The customer only finds these out after they buy from you. USPs should attract customers before they buy.
• Lowest price is not a USP. There’s always someone willing to go out of business quicker than you.

People rarely want what you’re selling, they want the result of what you’re selling. Sell the problem. People don’t know what they want until they’re presented with it. Purchasing is done with emotions and justified with logic after the fact. “If I had asked people what they wanted, they’d have said faster horses” - Henry Ford.

When you confuse them, you lose them.

• Explain the product and its benefit in one sentence.
• The biggest threat isn’t that someone buys from a competitor, it’s that they do nothing.
• Elevator pitch of the form: “You know ? What we do is ? In fact .”

Be remarkable

• Transform something ordinary into something that makes the customer smile.
• Unique is dangerous, you just need to be “different enough”.

Craft the offer

• If you don’t give a compelling reason to buy, customers will default to price, and you become a commodity.
• Don’t just offer a discount, think about which product will definitely solve their biggest problem.
• Add value rather than discounting, through bundles and customisation.
• Create “apples to oranges” comparisons to your competitors to get out of the commmodity game.
• Target pain points. Sell the problem, not a feature list. Customers in pain are price insensitive.

Create the offer:

• Value to customer
• Language and jargon they use
• Reason why this offer is here. People are skeptical if it is too good to be true.
• Value stacking. Add in high-margin bonuses.
• Upsells
• Outrageous guarantee
• Create scarcity. People react more to fear of loss than prospect of gain.

Writing copy:

• Be yourself and be authentic. “Professional” = boring.
• “The enemy in common”. People buy with emotions: fear, love, greed, guilt, pride.
• Copy should address the bad parts of the product, not just the good. Who is this not for?

Naming:

• Title=content
• Choose clarity over cleverness

3. Reaching prospects with advertising media

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half” - John Wanamaker

Measure ROI of ad campaign

• If it made more money that it lost, it was a success. The only metric that matters.
• Customer acquisition cost vs lifetime value of customer
• Other metrics like response rate are only useful to the extent that they help you calculate the above.
• Specific target market is key. The goal of the ad is to make they prospect say “Hey, that’s for me”.
• What gets measured gets managed. Conversely, what you don’t know will hurt you.

Lifetime value of customer = Frontend (initial purchase) + Backend (subsequent purchases)

• Ideally the frontend alone exceeds the customer acquisition cost to be sustainable. Then the cost of the ad is immediately recouped and the ad campaign can be reupped for another cycle.

Successful marketing has three components:

1. Market
2. Message
3. Media

Social media is a media not a strategy and it’s not free. It’s only free if your time is worthless.

Email is preferable to social media because you own the mailing list. The customer database which is a valuable asset in its own right.

• Email regularly - weekly at least
• Give value - 3 value-building emails for each offer email
• Snail mail complements email - less cluttered and less competitive because fewer people still use it.

Marketing budget

• The only time for a budget is during the testing phase when your finding what works (what delivers a positive ROI)
• Once you have a campaign that works, go all in. It makes money, it’s not an expense so don’t limit it.
• If you could buy £10 notes for £5 you’d buy as many as possible, you wouldn’t limit it with a budget. The same applies for a marketing campaign with a £5 cost of acquisition and £10 lifetime value of customer.

Avoid single points of failure

• One customer, supplier, ad medium, lead generation method.
• Paid media is reliable and allows ROI to be tracked and measured.

The DURING phase

4. Capturing leads

Treat marketing like farming not hunting. Avoid “random acts of marketing” that hunters do. Build a CRM system and infrastructure for new leads, follow-ups, conversions, etc.

The first goal is to generate leads - find people who are interested.

• Avoid trying to sell from the ad immediately
• Capture all who could be interested, not just those ready to buy immediately
• Build a customer database, then sell to them later

The market for your product might break down something like:

• 3% - ready to buy now
• 7% - open to buying
• 30% - interested but not right now
• 60% - not interested

By selling directly from the ad you limit yourself just to the 3%. Capture leads first and nurture them to appeal to the 40% who are interested.

Educate customers to offer value, then you become a trusted advisor rather than a pest salesman.

5. Nurturing leads

The process of taking people from being vaguely interested to desiring it. The nurturing process means they should be predisposed to buying from you before you ever try to sell to them.

Stay in contact.

• Most stop after 1 or 2 follow-ups. The most effective salespeople do 10+ follow-ups.
• The money is in the follow-up

Build trust and add value. Don’t pester to close.

• When the customer is ready to buy, you will be top of mind and they are predisposed to buy. It should be when they are ready to buy, not when you are ready to sell.
• Do not pressure prospects to close. Don’t be a pest, be a welcome guest.
• Contact regularly - “market until they buy or die”.
• Most contact should be value add, with occasional pitch/offer emails. 3:1 ratio of value add:pitch.

Shock and awe package.

• Physical parcel mailed to high probability prospects.
• “Lumpy” mail grabs attention - snail mail with something physical inside.
• Need numbers on conversion probabilities and lifetime value of customer for this approach to be viable. Good marketing can’t beat bad math.
• High value contents should:
  1. Provide value
  2. Position you as a trusted expert
  3. Move prospect further down the buying cycle.

Make lots of offers. A/B test with small segments. Take risks, write compelling copy and make outrageous guarantees.

Three major types of people:

Type	Role	Responsibility
Entrepreneur	“Make it up”	Vision
Specialist	“Make it real”	Implement
Manager	“Make it recur”	Daily BAU

Marketing calendar.

• What needs to be done and when
• Daily, weekly, monthly, quarterly, annually
• Event-triggers tasks, e.g. on signup, on complaint

Delegate.

• If someone else can do the job 80% as good as you, delegate it.
• Separate majors and minors. Focus on the majors, dump or delegate the minors.
• Don’t mistake movement for achievement.
• Days are expensive. You can get more money but not more time.

6. Sales conversion

Once you reach a certain level of expertise, the real profit is in how you market yourself. A concert violinist makes more money performing concerts than busking.

Trust is key in sales.

• Difficult for unknown businesses.
• People are wary because of dodgy sellers. Assume every dog bites.
• Educate -> Position as expert -> Trust
• Delay the sale to show:
  1. You are willing to give before you take
  2. You are an educator, so can be trusted
• Stop selling and start educating, consulting, advising.
• Entrepreneur is someone who solves people’s problems for profit.

Outrageous guarantees.

• Reverse the risk from the customer to you.
• Guarantee needs to be specific and address the prospect’s reservations directly. Not just a generic money-back guarantee.
• If you’re an ethical operator, you’re already implicitly providing a guarantee, just not marketing it. Use it!

Pricing.

• The marketing potential of price is often underutilised.
• Don’t just naively undercut the market leader or use cost-plus pricing.
• Small number of options/tiers
  • More choice means you are more likely to pique interest but less likely to keep interest.
  • Fear of a suboptimal choice; the paradox of choice.
  • Standard and premium tiers and a good rule of thumb.
• “Unlimited” option can often be profitable because customers overestimate how much they will use, so overpay for unlimited use.
• Ultra high ticket item
  • Makes other tiers seem more reasonably priced
  • 10% of customers would pay 10x more. 1% of customers would pay 100x more.

Other price considerations:

• Don’t discount, unless specifically using a loss-leader strategy.
• Try before you buy (the puppy dog close)
  • The sale feels less permanent so more palatable for the customer.
  • The onus is on the customer to return - shifts the power balance.
• Don’t segregate departments - everyone can warm up a prospect.
• Payment plans - people are less attached to future money than present money.

The AFTER phase

7. Delivering a world-class experience

The goal is to turn customers into a tribe of raving fans. Most companies stop marketing at the sell, but this is where the process begins. Most of the money is in the backend not the frontend.

Sell them what they want, give them what they need.

• These don’t always overlap
• If they buy a treadmill and don’t use it, they’ll blame you when they don’t lose weight. You need to make sure they use your product correctly after they buy it.
• Split the process up for them to make it less daunting.

Create a sense of theatre

• People don’t just want ot be serviced, they want to be entertained.
• Innovate on: pricing, financing, packaging, support, delivery etc, not just product. For example, “will it blend” YouTube videos to sell ordinary blenders.

Use technology to reduce friction. Treat tech like an employee. Why am I hiring it? What are its KPIs?

Become a voice of value to your tribe.

• Education-based marketing leads to trust and becoming an expert in the field.
• Tell your audience the effort that goes into the product. For example, shampoo bottle that says how many mint leaves went into it.

Create replicable systems

• Systems ensure you have a business, rather than you are the business
• Often overlooked because it is “back office” or “not urgent”
• Benefits: build valuable asset; leverage and scalability; consistency; lower labour costs
• Areas:
  1. Marketing (leads)
  2. Sales (follow-up)
  3. Fulfillment
  4. Admin
• Create an operations manual:
  1. Imagine the business is 10x the size
  2. Identify all roles
  3. Identify all tasks - what does each role do
  4. Checklist for each task

Exit strategy. Start with the end in mind. If the goal is to sell for $50 million, any decision can be framed as “will this help me get to $50 million?”. Who will buy the company? Why? Customer base, revenue or IP?

8. Increasing customer lifetime value

People are 21x more likely to buy from a company they’ve previously bought from. Increase revenue by selling more to existing customers.

1. Raise prices

• People are less price sensitive than you’d expect.
• Some may leave but these were the lowest-value customers - this may be polluted revenue you want to fire anyway. A customer won on price can be lost on price.
• Give a reason why prices increased. Explain the benefits they’ve received and future innovations.
• Grandfather existing customers on old price as a loyalty bonus.

2. Upselling

• “Contrast principle” - people are less price sensitive to add-ons. If they’ve already bought the suit then the shirt seems cheap.
• “Customers who bought X also bought Y” - people want to fit social norms.
• Sell more when the client is “hot and heavy” in the buying mood. Some people naively think you should overwhelm them with more selling.

3. Ascension

• Move customers up to a higher-priced tier.
• Product mix - standard, premium, ultra-high.

4. Frequency of purchases

• Reminders, subscriptions
• Reasons to come back; voucher for next purchase.

5. Reactivation

• Lure back lapsed customers with strong offer and call to action.
• Ask why they haven’t returned.
• Apologise and make corrections if necessary. Make the feel special if they do return.

Key numbers - what gets measured gets managed

1. Leads
2. Conversion rate
3. Average transaction value
4. Break even point

For subscription models measure:

1. Monthly recurring revenue
2. Churn rate
3. Customer lifetime value

Polluted revenue - dollars from toxic customers != dollars from raving fans. Types of customers:

1. Tribe
2. Churners - can’t afford you so drop you on price or intro offer ending
3. Vampires - suck up all your time, you can’t afford them
4. Snow leopard - big customer but not replicable

Net promoter score

• “How likely are you to recommend us to a friend?”
• Detractors 0-6; Passive 7-8; Promoters 9-10
• NPS=+100 if everyone is a promoter, -100 if everyone is a detractor

Fire problem customers

• “The customer is always right” is naive. It should be “the right customer is always right”.
• Genuine customer complaints are valuable and may help retain other customers who had the same issue but didn’t speak up.
• Low-value, price-sensitive customers complain the most. They take up your time and energy at the expense of your tribe.
• Firing detractors creates scarcity and frees your time to focus on the tribe. With limited supply, customers have to play and pay by your rules.

9. Orchestrating and stimulating referrals

Orchestrating referrals is an active task, not needy or desperate.

• Don’t just deliver a good product and hope for the best
• People refer because it makes them feel good, helpful or knowledgeable, not to do you a favour.
• Appeal to their ego, offer them something valuable, give them a reason to refer.

Ask (for a referral) and ye shall receive.

• “Law of 250” - most people know 250 people well enough to invite to a wedding or funeral. This is 250 potential referrals per customer.
• Set expectation of referrals beforehand - “We’re going to do a great job and we need your help… Most people refer 3 others.”

Be specific about who you ask and what kind of referral you want. Conquer the bystander effect.

Make referral profiles for each customer group in your database.

• Who do they know?
• How can you make them remember you?
• What will make them look good?
• How will they provide value to their referral target

Customer buying behaviour

• Who has your customers before you?
• Joint venture for referrals
• Sell/exchange leads, resell complementary products, affiliate referral partner

Brand = personality of the business. Think of the business as a person:

• Name
• Design (what they wear)
• Positioning (how they communicate)
• Brand promise (core values)
• Target market (who they associate with)
• Brand awareness (how well known / popular)

Best form of brand building is selling

• Branding is what you do after someone has bought from you.
• Brand equity - customers crossing the road to buy from you and walk past competitors.

Conclusion

Implementation is crucial

• Knowing and not doing is the same as not knowing.
• Common pitfalls:
  1. Paralysis by analysis - 80% out the door is better than 100% in the drawer; money loves speed.
  2. Fail to delegate
  3. “My business is different” - Spend your effort figuring out how to make it work rather than why it won’t work.

Time is not money

• Entrepreneurs get paid for the value they create, not the time or effort they put in.
• Making money is a side effect of creating value.

The value of a business is the eyeballs it has access to.

Questions to ponder:

• What business should I be in?
• What technologies will disrupt it?
• How can I take advantage of tech rather than fight it?