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 après 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!

 

 

 

 

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.

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.

 

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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.

Billy’s Fifteenth Law: Always look bigger than you really are.

Perception is reality!

This, again, is a borrowed law.  I have taken this from my business partner George Slade, who is much better at this kind of thing than am I.  Many of the most successful business owners I know are bold; often exaggerating their skills and abilities in order to gain that important sale.  (I won’t go as far as to say lying but…)  George always made sure that our small technology firm looked like a big technology firm.  George began consulting for a large, international firm, but realized that the teams they put onto a project were no larger and no more competent than our small business.

The logic is simple, if KPMG is going to use a five person team for the project, and George can assemble a five person team for the same project, then George is as good as KPMG.  This is not to knock KPMG, or any other large firm, but to present things in a way that assures the customer that they were getting the same value and more personalized service than with the large business behemoth. 

George presents himself well.  He has well produced business cards, letterheads, website and the other accoutrements necessary in his business. His presentations and proposals are first rate.  He goes to the additional expense of printing on heavy bond paper.  He once told me, “It doesn't matter how good you are if you don’t get the job.” 

There is an important marketing lesson behind this law.  There are four primary buying emotions.  They are:

•  Control
• Security
• Belonging 
• Status

People gravitate towards ‘large’ because it seems a safe decision, thus meeting the customers’ security need.  If the customer needs this kind of assurance, then George provides it.  He not only had a clear idea of exactly what he could do for the customer, he had a clear understanding of the decision making processes of his clientele.

George and I were in a meeting with a client and she asked me a question about modeling her financial plan or some other arcane business process.  I thought for a minute, and then responded that we could do that for her. After the meeting, our discussion went like this:

George:  You were figuring out exactly how to develop that model right in that meeting weren't you?

Bill:         I didn't want to provide her with an answer until I knew the solution. 

George:  That’s the difference between you and me.  I would have simply told her in no uncertain terms that we could do it.  I have enough confidence that between you, me and Scott (another associate) we can solve most problems and if we can’t, we can find someone who can.

George knew that we could do it…I needed to have a good idea of how to do it before taking action.  His bold approach got more business than my cautious approach even though the customer gets the same result. It is that kind of confidence in yourself, and in the team around you that lets you be bigger than you may really be. 

So I leave the quote of the week to my friend George:

Say yes first, and figure out how you’re going to do it later. With the vast resources available to today’s entrepreneur, there are very few problems you cannot solve.

Great advice!

Billy’s Fourteenth Law: Know Thy Customer

“If I had asked people what they wanted, they would have said faster horses.”

Henry Ford

Good businesses understand what customers' want and how customers' want to buy. Great businesses know what customers will want and provide it exactly when they want it.  This requires a combination of insight, foresight, empathy and trend spotting.  It involves knowing not only what customer’s buy, but anticipating what they need and how you can best provide it to them.  In short, it means truly knowing your customer!

It is not unusual for business owners to understand their customers from a consumption point of view.  For example, a clothing retailer understands customers' clothing needs or a bookkeeper understands her clients from a financial perspective.  This level of customer knowledge is just the beginning to truly understanding your customer.

In the book The Discipline of Market Leaders, Michael Treacy and Fred Wiersema define three value disciplines in large corporations.  They are operational excellence, product leadership and customer intimacy.  They argue that although you practise each discipline, one emerges as the dominant discipline in the most successful corporations.  They emphasize the nature and importance of this discipline this way.

Companies and organizations whose discipline is customer intimacy really know their customers; not simply from a customer perspective but from a personal perspective. Good B to B firms understand their client's industries and business challenges.  Don’t make the mistake of simply understanding your customers’ needs…understand your customer.

One author and researcher who really ‘gets it’ is Paco Underhill.  He has several books, including Why We Buy: The Science of Shopping, however; the book that best illustrates this point is What Women Want: The Global Market Turns Female Friendly.  Time and again, Underhill provides examples of how firms understanding of women led to understanding a need and subsequently creating a business opportunity.

To desire to understand you must truly love your customers.  I am lucky.  I work with entrepreneurs and business owners.  I understand business and I understand business owners.  I hope this comes from truly caring about both the enterprise and the entrepreneur.  I was working as part of an entrepreneurial training team in the nineties.  The project coordinator told me that I cared more about the participants business plans than they did.  He was probably right!

When it comes to customer intimacy, you really have to care about the whole customer and not simply their commercial needs.  This value must permeate throughout your firm and be evident in everything you do.  Caring leads to understanding and the understanding in turn leads to opportunity. 

Again…your comments are welcome.

Billy’s Thirteenth Law: Sometimes thinking is more important than doing!

Thinking is the hardest work there is, which is probably the reason why so few engage in it.

Henry Ford

Think for a moment about the ways in which you spend your working day.  We spend time on routine tasks, managing people, addressing the needs of your clients and, to be honest, wasted on things like writing blogs.  The reality is that we often react to situations, or we follow tried and true methods.  We know from psychology that in times of stress, we revert to habit.

The problem with these behaviours is they are the same… and the same actions lead to the same results.  Ben Franklin said, "The definition of insanity is doing the same thing over and over and expecting different results."  In today’s world, with rapidly changing market conditions, we need new approaches.

Our tendency is to ‘do something’.  In our society, especially in the commercial world, we value action.  We love terms such as ‘go getter’ and ‘self-starter’.  Rarely, if ever, have I heard the word, ‘thinker’ considered a superlative in a business context.  We consider thinking a more academic pursuit…not worthy of the real world.  As executives, we need to take time to think!

When was the last time you thought about your own business?   Take some time to think…even to dream about what you do, how you accomplish it and even for whom you are doing it.  Think of how your situation has changed in the past few years, and how it continues to change.  Engage in some extreme thinking.  I first discovered this term in a book by Faith Popcorn.  She suggests looking for a trend, and take it to the extreme.  For example, if there is a trend towards vegetarianism, ask the question, “What would my business look like if everybody was a vegetarian?” If you are in the restaurant business…then this could have profound consequences.   Then bring it back to reality and ask yourself, what I should do given this trend. 

Thinking is tough.  The best way to begin is to continually ask two questions…they are the two golden questions of entrepreneurship and they are:

Why?

What if?

So here is this week’s challenge.  Ask yourself either a Why or what if question as it pertains to your business.  Remember, take time to think!