Tuesday, 25 February 2014

Billy’s Seventeenth Law, Axiom Two: Belonging is powerful!

We all live in a yellow submarine.
John Lennon and Paul McCartney

I am an Old Goat.  That is not just a comment on my age or personality, but a group of regulars at the Dubh Linn Gate Irish Pub in Whistler BC.  My wife and I love the Dubh Linn.  Great food, amazing staff, a great apr├Ęs band, and of course beer!  But it is so much more.  We belong at the Dubh Linn Gate.  Once you belong somewhere, it is difficult to go elsewhere. We are advocates for 'our' pub.  We recommend it to our friends.  I recommend it when I am talking to my fellow skiers when on the lift.  The staff and management know us...they took the time to get to know our names.  They make us feel welcome.  They ensure that we belong. 
Belonging is a fundamental human need.  We are a naturally social animal.  Our ancestors realized that the only way for this small, hairless ape to survive was to form groups.  We needed to associate in order to survive.  The pair bond between men and women is the starting point to survival of the species.  Love is the most primal of belonging needs if only from an evolutionary perspective.
Our first associative experience is the family.  The human child is defenceless, and needs care and nurture for years to become independent.  The extended family becomes the clan…the clans form tribes and so on until we get such units as cities, provinces, states, countries, Kingdoms and empires.  The need for belonging is deep in the human psyche.
We can see evidence of the belonging need throughout society.  The Olympic Winter Games just wrapped up in Sochi, Russia.  My wife and I got up at 4:00am to watch Canada play Sweden in the Gold Medal Hockey final.  Alexandre Bilodeau raced to gold in the Men’s Moguls event.  While watching his performance, I noticed my heart rate racing as he raced the course.  Nationalism, for better or for worse, is a powerful binding mechanism. 
This is true of sports, religion, families and even schools.  James Twitchell, in his book Lead us into Temptation: The Triumph of American Materialism states:
Because increasingly, store-bought objects are what hold us together as a society, doing the work of "birth, patina, pews, coats of arms, house, and social rank"—previously done by religion and bloodline. We immediately understand the connotations of status and identity exemplified by the Nike swoosh, the Polo pony, the Guess? label, the DKNY logo.
He links the Shopping Mall as a substitute for Church and logos for religious icons.  Twitchell exaggerates to make his point, but his point is important.   We want to belong.  Businesses want ‘friends’ clients and advocates to help their businesses thrive.  
As you create your message…tell your story…make a compelling presentation, can you show the customer how they will increase their need to belong?  Can you help your customer to join you…to become a part of your ‘tribe’?  When telling your story, are you demonstrating that important belonging need? 
Terms such as love, community, national and together conjure familiar feelings reaching into the depths of our emotional needs.  Even the language we choose, in presentations and ad copy.  ‘It’ (third person) is cold.  ‘I’ (first person) puts the emphasis on the speaker not the listener.  We or Us (second person plural) brings everybody into the conversation.  Consider the following phrases:
  • Bill Erichson develops strategic plans for small businesses.
  • I develop strategic plans for small businesses.
  • We work together and develop a plan specifically designed for your business.
The ‘ownership’ language of the last sentence encourages that sense of association meeting that important emotional need.  This is in a business to business context.  Businesses to consumer situations are more emotional, and therefore building on the associative need is even more important.  This cannot be manufactured or contrived, but must come from your desire to help and to ensure your customer 'belongs' to your tribe!
Next time, we look at our place within the tribe and examine the importance of status!



Tuesday, 18 February 2014

Billy's Seventeenth Law: Axiom One - The Need for Security

In previous blog entries, I have indicated that there are four emotional needs that help to drive decisions.  This week examines the first need, the need for security.  Of all of our most fundamental human instincts, the need to survive and replicate the species is the dominant.  If we are in an insecure situation, we react in a manner known as the ‘fight of flight’ response.   Our adrenal glands kick in, and our heart rate and blood pressure increases.  In fact, that tickling in your stomach you experience on a rollercoaster is the body taking blood away from less important organs and channeling them to the heart, lungs arms and legs.  We avoid danger or react to danger instinctively. 
For the most part, people do not live their lives in imminent danger.  Our security need, however; still affects our behaviour, including buying behaviour.  We desire physical security, emotional security, and financial security.  Appealing to the security need is an important part of developing a balanced promotional message.  The ‘trust message’ is a powerful way in which to tap into the security need.  (A great advertising campaign proudly trumpeted that, “Nobody ever got fired for buying a Xerox.)
Closely related to the security need is risk.  Helping customers avoid risk has the added benefit of reducing price as a sole decision making factor.  Customers often make low risk, low reward choices.  For example, given a choice between receiving $5.00 guaranteed, and having a 50% chance of receiving $15.00, most people took the guarantee despite the fact that the second decision has the higher mathematical expectancy.  This example is adapted from the book Priceless: The Myth of Fair Value (and how to Take Advantage of It) by William Poundstone.
One of the most powerful promotional messages is the threats to security.  Financial ads often worry people about their retirement future and security firms show the vulnerability of not having the latest alarm system.  The contra-emotion to security is insecurity, risk or threat.  These bring forth powerful and even irrational buying behaviours.  This form of advertising brings forth the problem very clearly, leaving the customer to draw the conclusion that the solution.
Business groups do not solely use this advertising.  In health, we are encouraged not to smoke due to the health implications.  A Canadian study reported a 17.2% incidence of lung cancer among male smokers as compared to a 1.3% risk to non-smoking males.  This kind of promotion (promoting smoking secession) drives right to the security need, as does the recent series of ads from preventable.ca, discouraging risky behaviours such as Jay Walking, Distracted driving, and medication safety.  They are appealing to the same emotional needs.
When developing a promotional campaign, whether for a website, brochure or a sales presentation, see if there are ways you can show your customer how they increase their level of safety and security as a result of using your product or purchasing from your company.  Assure your customer that they are making the right decision for the specific needs you have identified.  This core human need goes directly to the heart of the decision making process.

Tuesday, 11 February 2014

Billy's Seventeenth Law: Never underestimate the power of emotions!

That’s the power of Love.

Heuy Lewis
Emotions are powerful things.  Emotions have an amazing impact on decision making…often overriding the rational in favour of the irrational.  Over the next few weeks, I want to examine the influence of emotions on customer buying.  I have begun to read more books and articles on the topic of the brain, and specifically on the ways in which decisions are influenced by the rational and the emotional centres of the brain. Books such as Blink, by Malcolm Gladwell or Buy-ology and Brandwashed, by Martian Lindstrom help explain how we think and how we decide.
I was teaching a marketing course in Penticton BC, and attempting to illustrate the point of ‘customer stickiness’; the notion that the more habitual the buying the more sticky the customer is to the supplier.  This is not a matter of loyalty, but rather a matter of deeply ingrained habits.  (An interesting example of this is in the United Kingdom, where people are more likely to change a spouse than a bank account.  Given the banking situation in the UK, this is certainly not due to any great love shown towards the individual banks.)
As a part of this exercise, I asked everyone in the room and tell us which local grocery story they frequented.  Grocery shopping is very habitual, and I could then move from the difficulty of getting customers to change grocery stores to the challenge of getting customers to change to my students’ potential businesses.   
As we went around the room, one of the participants mentioned that she shopped at Safeway.  Another participant, not a Safeway fan, berated the original respondent for her supermarket choice.  The original participant immediately began to defend her choice of Safeway in incredibly emotional terms.
The whole thing was bizarre.  These two rational adults were getting into an emotional argument about grocery shopping.  They were emotional in their responses to each other.  I didn’t know so much emotion could come from grocery stores. 
According to consulting firm APCO, consumers respond to companies along eight dimensions: Understanding, Approachability, Relevance, Admiration, Curiosity, Identification, Empowerment, and Pride. The company then surveyed customers to determine the most loved companies in the world.  The number one company for 2013, by this measure, is Disney.  By the way, the most hated company last year, according was McDonalds…partially for their treatment and low pay for their employees. 
As we move forward, I will focus on four foundational emotions, where they come from in and why they are important.  Finally, I want to display a model showing you how you can best sell to both the left (rational) and right (emotional) brain, creating a complete promotional message for your customers.
This week’s quote, from my favourite business writer, Tom Peters:
All businesses success rests on something labelled a sale, which at least momentarily weds company and customer.

Wednesday, 5 February 2014

Billy's Sixteenth Law: The inverse relationship between responsibility and control.

When you start your business, you have total responsibility and total control.  As your business grows, you have more responsibility, but less control.

Think of the early days of most businesses.  They start small.  Think of Hewlett & Packard, Wozinac & Jobs, or Gates & Allen.  In your business, you probably did a great deal of the real work and had your eyes on everything happening in your firm.  As your business grows, more people are doing more tasks of which you are unaware.  This is creates increasing dissonance, especially since most entrepreneurs are control freaks. 

Two factors drive business growth. Sometimes businesses increase capacity.  This simply means that they can do more of what they have always done. Sometimes, they increase their capabilities.  This means that they can provide additional products or services to their customers.  Either way, the owner must step back and allow other people to do work that he or she used to do.

Think of a store.  The owner is usually the store manager, merchandiser and head buyer.  If, however, she opens additional outlets, she must hire for many of these operational functions.  She counts on each store manager to ensure that the stores look good and the customers are well treated.

Think of a professional services firm.  Suppose an electrical engineer wants to add civil engineering to the portfolio.  This means hiring an engineer with a different competency of skills.  The owner must trust the new engineer to perform his or her function in a professional and timely manner.

Some people start businesses because they are good at something.  Being good at something is not the same as being able to manage a business.  Many businesses that work at a smaller size fail when the owner attempts to grow the business.  Sometimes, it is the fact that their business, or business model, is not scalable.  It works well as a small operation, but the things that made the company special or unique are lost when the business grows.  Some businesses are not scalable do to the inadequacies of the founder.  The skills set important for start-up are not the same for growth.  This skill gap becomes evident as a company grows from one person, to five people, to twenty people to fifty people.

Unfortunately even while the owner loses control over the businesses operations, he or she is still the owner and therefore responsible for the results, or lack of results, of the business.  This is frustrating for business founders who have a clear, yet unarticulated vision for what their company is and what it stands for.

Planning for growth is important, however when growing a business be aware that as your business grows, your business environment changes.  Those people who joined you when the company was, "Just like a family", blanche at the idea of the working in a more formal environment.  As a company grows, the change from familial to structured is inevitable. This inevitability means that the unintended consequence of business growth is staff turnover. 

Starting a business is hard.  Growing a business, especially when you grow it rapidly is harder.  Make a conscious decision to grow, plan for growth, and do so with the full understanding that your future firm will be larger and different.