from sales promotions to sales promoters
TRANSCRIPT
From
Sales Promotions To
Sales promoters Bucharest, September 2011
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Hi I’m Alain
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@FLB_Alainthys
www.futurelab.net
This will be a slightly different presentation
I’m going to advocate a new perspective on sales promotions
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From
Sales Promotions To
Sales promoters
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Stepping back a moment
But before we go there, let’s take a 10 minute detour
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Let us start with a few questions:
Why do the space shuttle engines have the diameter they have?
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Let us start with a few questions:
OK, that’s pragmatic, but why is the tunnel that width?
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Let us start with a few questions:
That makes sense, but who decided on the width of tracks?
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Let us start with a few questions:
Remarkable, but why choose this base for trams?
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Let us start with a few questions:
OK, but then why make the axes this wide?
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Let us start with a few questions:
So if the ruts lead to the cart, what caused the ruts?
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Let us start with a few questions:
Standardised imperial chariots? Where did Ceasar get that idea?
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Let us start with a few questions:
OK, but some Egyptian must have had an original idea!
2000 B.C.
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Let us start with a few questions:
And so we find the answer: it’s all because of a horse’s ass.
2x
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Orthodoxies drive our behaviour
We copy and build on what we know to work
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Orthodoxies drive our behaviour
In fact, it’s in our genes
... behaviour ...
... ways of working ...
... processes ....
... organisational structures ...
HUMANS
COPY
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Orthodoxies drive our behaviour
It is the secret to human success and achievement
Reading and print Industrial progress
Agriculture Apps
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Orthodoxies drive our behaviour
But they can create orthodoxies that close our mind
• We’ve always done it that way
• This is “best practice”
• That’s what everyone does
• Our world-view is right
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Orthodoxies can “lock in” behaviour
If they get too strong, they may be difficult to change
20.
Orthodoxies can “lock in” behaviour
School holidays
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Image: (cc) State Records NSW
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Wasn’t this a
conference about
marketing and
sales promotions?
Now wait a minute …
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Well, here is my point
Many marketing practices are driven by orthodoxy and lock-in
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Marketing is full of orthodoxies
Question: Where did the 30 second spot come from?
We will continue with this
programme after these
important messages.
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Orthodoxy alert
Pat Weaver & Leonard Lavin
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Lock-in Alert
We keep doing the 30 seconds, while the reasons disappeared
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Marketing is full of orthodoxies?
Where do banner adverts come from
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Lock-in alert
We keep doing them, while hardly anyone is watching
BANNER/AD BLINDNESS
78% of consumers consider in-stream advertising as
“intrusive”. Half of viewers stop watching an online
video once they encounter an in-stream ad.
Source: Burstmedia, January 2008
29% of consumers leave a website that appears to be
cluttered with advertising. 52% do not tolerate more
than 2 ads per page.
Source: Burstmedia, December 2008
Only 13% of UK consumers pay attention
to ads on social networking sites.
Source: Ebay Advertising, March 2009
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Sales Promotions
Why do we do many sales promotions?
Keep the
factory
running (at all cost)
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Sales Promotions
But today there is much more flexibility
Lean supply chains Outsourcing
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Sales Promotions
In which many sales promotions defeat their purpose
% of US sales
promotions which
are unprofitable
85%
UCLA, 2004
“the net impact of deeper
discount activity is almost
invariably to decrease ROI
even if cash returns are
increased”
Billetts, Warc Online, 2009
% of POP materials are never
used or used incorrectly.
Advertising Promotion and
Other Aspects of Integrated
Marketing Communications,
2008
40-50%
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Sales Promotions
While they may attract customers today, they don’t build loyalty
If they come to
you for price,
they will leave
you for price.
*note: the same applies to gifts, freebies, etc.
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Lock-in alert
And may even pose a reputation risk for your brand
Trade your
reputation for a short
term sales fix?
A 2011 study by John Byers and Georgia Zervas from Boston University and Michael Mitzenmacher
from Harvard University reviewing 56,000 yelp reviews of 2332 merchants offering 2496 Groupon deals
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My case
Start focusing at least 25% of your efforts on sales promoters
Keep doing “smart”
sales promotions, but
start shifting your
attention.
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My case
Sales promoters are so happy, they actively promote you
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The sales promoter
An illustration of the impact sales promoters can have
Video
http://youtu.be/b0OeM6UUAoI
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The sales promoter
An illustration of the impact sales promoters can have
“I’ll have what she’s having”
Sales promoters get others to buy your product
spend more
negotiate less
stay longer as customers
are more open to upselling
are easier to service
upgrade quicker
are ready to refer to others
increase staff morale
etc.
Customers that are so happy they
are likely to recommend a company
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The sales promoter
But there is more beyond advocacy
Detractors: Dislike Promoters: Delighted Passives: Satisfaction
0 1 2 3 4 5 6 7 8 9 10
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The sales promoter
How likely are you to recommend?
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The sales promoter
Case: an automotive brand
- € 1,500
€ 15,000
Detractor
Promoter
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The sales promoter
Case: UK FMCG
TOP 5 Most actively recommended
FMCG brands in the UK
Activia 76,9%
Kellogs Special K 76,0%
Innocent 74,2%
Lucozade 72,7%
Red Bull 72,2%
A 7% increase in NPS = 1% increase in FMCG Growth
“55% of FMCG consumers
had made at least one
recommendation”
120 Brands – 4000 consumers
Leading by recommendation, July 2010
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The sales promoter
Case: UK FMCG
Average revenue impact (own expenditure + recommendation)
Promoter: + $ 208
Detractor: + $136
Differential: +53%
Image: (cc) Joe Shlabotnik
Source: http://www.futurelab.net/blogs/marketing-strategy-innovation/2009/04/the_net_promoter_score_and_the.html
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The sales promoter
Case: Allianz Insurances
Indexed average gross
premium volume cancelled per
customer per year
- 100
- 271
Promoter Detractor
Promoter Detractor
Promoters defect less Promoters buy more Promoters drive business
100
83
Indexed average of newly
concluded gross premium
volume per customer per year
Indexed average new GPV
generated through
recommendation per customer
100
-200
Promoter
Detractor
Likelihood to Repurchase (B2B-markets) Share of Wallet (B2B-markets)
“delighted customers are 5x more likely to
(recommend) repurchase”
“at the point of delight, there is an exponential
increase in the share of wallet”
Source: http://www.ipsos-ideas.com/library/dl.cfm?pdf=IpsosLoyalty_WP_Delight.pdf
Being blunt about it … you’d make (a lot) more money
Also in B2B Markets
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The sales promoter
Case: Growth correlation
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The sales promoter
In summary
Creating and activating sales promoters
is one of the most profitable type of sales
promotion you can pursue.
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The sales promoter
How can you turn your customers into active sales promoters?
Let’s stay “in theme” with a case study
Say I seek sales promoters for my skills as a lover.
I just have to tell
you about Alain…
Mmmhhh … I’d like
some of that …
Direct Sales?
Hi, I’m a great lover.
Would you mind
telling your friends?
www.
greatlover .com
Tell them he’s a
great lover!!
Advertising?
2-for-1 Promo
Bring a friend & collect
double loyalty points to
get those wine glasses!
Recommend a friend & get
60 Minutes Extra
e-c
ou
po
n
This voucher cannot be combined
with other promotions.
Sales Promotion?
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Which would be the most effective method
To turn you into a sales promoter for my skills as lover.
The only thing that could work is to provide
An experience that sweeps you off your feet?
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Ask yourself
Are you a one night brand? Or do you want a relationship?
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Many brands are or have already moved there
More and more brands are taking the latter direction
Massive investment in customer facing staff with as goal to
create super-promoters
Global roll-out programme for creating (sales) promoters for
their business. (Case: Romania, acts of kindness)
Global change programme to focus the organisation on
creating (sales) promoters.
Orange Business Services - Zappos – KLM – Virgin - P&G - Carglass - …
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My recommendation
Start considering it too
Sales Promotions
Sales Promoters
• Shift 10-25% of your sales promotion budget
into “promoter creation”.
• Run the business case to calculate the value
of a sales promoter for your business to
justify this action.
• Launch initiatives aimed at your existing
customer base to WOW them into sales
promotership.
• Give people who are already sales promoters
tools and support mechanisms to convert
their friends and family.
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In other words
MAKE
MORE
MONEY
MAKE THE WORLD A MORE
CUSTOMER FRIENDLY PLACE
Thank you
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@FLB_Alainthys
www.amazon.com
If you want to be more
customer-centric, get in touch
via www.futurelab.net