Industry Category StandardsStrategic Marketing Webinar5/2/13

Hello. Good morning. How is everybody dong today? This is Rich Harshaw. We’re here for our Strategic Marketing call for the month of May. We’re going to go a little bit old school here and cover a topic that I’m actually kind of surprised I’ve not covered this before in a Strategic Marketing call.

This concept goes way back to the early days of the company, back in the late 90s and into the early 2000s. In those days, we did an awful lot of training, as we still do. A lot of that training was with our consultants. We had a program back in those days called The Master Consulting Agent Program or MCA Program for short. We went out all over the country and recruited people to become marketing consultants. Brought them in, trained them, and supported them in their endeavor to become marketing consultants. We’ve since gone a different direction. We are not focused on that as much anymore. We do a little bit of that still. We’ve got a program called the Mentor Program. It’s similar, but it’s on a much smaller scale. We’re talking in the early 2000s, literally over 1,000 consultants.

One of the challenges with those consultants was getting them completely up to speed so that they could go out into the marketplace and be effective with different kinds of companies. We set out in those days to try to categorize businesses and put forward strategies that would work as a general rule of thumb for that type of business. In other words, we try to take something that is extraordinarily complex, like marketing for any kind of a business. We tried to at least to create some general guidelines for categories. This is based on our experience and observation having worked with different kinds of companies.

What we came up with was industry category strategies. The idea here—as you can see on your screen—really is creating guidelines for

Industry Category StandardsStrategic Marketing Webinar5/2/13marketing for any industry. This has to be taken in the spirit that it’s intended as we look at this at this approach. This is not meant to be an exhaustive approach, like, here’s everything you do for this industry.

What we are trying to do is say, here are some guidelines. A place to get you started. I think that this has a lot of real value. We originally tried to create—I don't know, maybe something like 10 or 15 industry strategies. It became a little bit unwieldy. Hard to understand. There was too much overlap. You may see that there is some overlap in these strategies here today.

We came up with these six different categories. We are going to go through them today. I think there is some benefit to you regardless of the industry. I’d like to think that this particular webinar falls into the category of great marketing training, regardless of what business you are in if you are the kind of person that just wants to understand marketing. If you’re looking at this in terms of what can I take out of this webinar for my particular business. The answer is, well, whatever we get to the part that talks about whatever kind of business you have, then there’s something you can take out of that. The other five out of six categories may not be all that useful to you.

That’s a fair enough analysis for what I’m trying to impart to you is this concept that says if you’re true student of marketing—and I don’t say that in a condescending kind of a way—if you don’t want to be a true student of marketing, that’s perfectly okay. There are lots of things that I’m not a true student of that I am a casual observer of. If that’s you as it relates to marketing, that’s okay. But if you do want to become a true student of marketing or if you consider yourself a true student of marketing, then what you are really looking or is information and strategies that can help you be

Industry Category StandardsStrategic Marketing Webinar5/2/13successful in any kind of a marketing environment, regardless of what the product is.

I want you to think about the career arch that I’ve taken and others that are in similar situations as me. I do a lot of work now in the home improvement industry. In fact, the vast majority of the clients that we take on now are in the home improvement remodeling industry, probably you, listening to this call. But in my career, we’ve done a tremendous amount of work with all kinds of companies. List any kind of company that you can think of and we’ve done business in that industry. These are some useful, helpful guidelines to sort of get you started in the right place, as it relates to different kinds of industries. That’s what we are going to do today.

Let’s go ahead and take a look at some of the things we are going to talk about. First of all, what are industry category strategies. I’ve talked about this already. General guidelines, key word general guidelines strategies that can be used in broad industry. Helpful for understanding the best way to approach marketing. Not necessarily tactical.

This is where this strategic thing is on our webinar. That’s why it’s called industry category strategies, not industry category tactics. We’ve got six different ones we’re going to talk about. Service providers, mass retailers, specialty retailers, companies that sell to resellers, and products that are sold to end users. I'm actually missing one here. I don't know how I did that. One of them that we are missing is professional service providers. We’ll talk about it. It’s not on this list her, but it’s in the webinar.

Let’s start with the first one and we’ll go through these six different ones. Service providers. I’m going use this format. It will be consistent throughout the entire webinar. The types of companies I’m talking about for service providers, things like plumbers, roofers, funeral homes, copier repair,

Industry Category StandardsStrategic Marketing Webinar5/2/13pest control, movers, landscapers, auto repair, printing companies, and remodelers. These are companies that provide services to the marketplace.

Now, let me just do a little bit of a step back and say you might be a little confused as you go through this as to exactly what industry category. This is why it’s not industry strategies it’s industry category strategies. The industry category is service providers. There is a little bit of ambiguity in this because some companies might fit into more than one category. If that’s the case, then this is a high level learning exercise. We’re really looking at the marketplace from the proverbial 30,000 feet, not from 10 feet above the ground, okay?

So, some of you might say, well, I don't know if this is really me or not. Some of you, it’s fairly straight forward. For instance, if you repair copiers for a living, guess what? You’re a service provider. Here are some of the common mistakes that are made in marketing in this industry category. Using platitudes to try to communicate we’re better, we have more experience and things like that. It’s just a typical, crummy marketing. I mean, think about most plumbers or roofers or copier repairs. Think about what kind of message they are putting out there. It is typically something very similar to we’re different, we’re better, but there’s really no backing to that.

Here’s what you need to understand. Most people don’t know how to judge value in these industries. If you look at a copier repair and you say, okay, well what is it that you’re looking for? What do people know about copier repair? You use, we’re the best copier repair place. Can people quantify that? Can they put their brain around that? Does it mean anything to them? The answer is it really doesn’t. The strategy we want to use is called standard fare. Industry category, here’s some strategies. Does this mean that this is the only thing that your marketing should focus on? Of

Industry Category StandardsStrategic Marketing Webinar5/2/13course not, but we do like this strategy for industry category called service providers.

Here’s how it works. You create a list of standards that consumers, customers should expect when doing business in that industry and show how your company complies. Now what’s going to happen is confirmation bias is going to kick in. We’ve talked about confirmation biased before but in the context of this discussion it’s important to review what confirmation bias is. Confirmation bias simply says that people will look for evidence to support what they believe and they will discount or minimize evidence that goes against what they believe.

The idea behind this is that we want to create confirmation bias that works in our favor by putting standards out there that people can look at and say, “Oh, that’s what you should expect that’s from the perspective of the prospect. That’s what I should expect. Because you are the company that is giving the standards and showing how your company complies with how it works, then they look at your company as the company that does things right, does things the way that they should be done.

We’ve seen this within the remodeling industry a lot. We call it a contractor standards guide. We put together the strategies starting back in about 1995 or 1996. First put it in place for a company called RH Design Build. Then we put it in place for a company called Lawn Smith Remodeling. Since then we put this in place for hundreds of remodeling contractors all across the country. It works really, really well because it sets these standards and shows people what they should look for and what they should watch out for. Let me just show you a couple of examples of this.

This is something called an assured recover checklist. This is not for a remodeling company, this is for a company that does skip tracing. Are you familiar with what skip tracing is? Well, skip tracing is accompany that is

Industry Category StandardsStrategic Marketing Webinar5/2/13hired by a bank to go find cars that the bank cannot repossess because the car has “skipped.” In other words, if you don’t pay your bill for your car, the banks going to send you a nasty letter that says, “Hey, you’ve got to give us the car back.” They are going to ask you to return the car. Well, not everybody is so willing to return the car, so they come by to pick it up. The car is not there, the person is not there. They hire this company called a skip tracing company to go out and find that car. They are kind of like detectives for cars, right? They are kind of like bounty hunters for cars. They go out and look for rouge missing cars. It’s difficult work because the kinds of people that hide cars that need to be turned back to the bank tend to be less than stellar people.

We put together this assured recover checklist. We didn’t put in a massive amount of detail that everything that needs to be considered when hiring a skip tracing company, but look at what we’ve got. 50 percent of cases settle in 21 days. Your current agency, yes or no. Agency you are considering, yes or no. What we’ve done is simply put the standard of settling cases, half the time in 21 days or less as a standard.

Now, this is something I want you to walk through this mentally with me. We’re selling this service to banks. The bank looks at this and it gives them an opportunity to audit something that maybe they had not taken time to audit before, which is what percentage of cases are settled within 21 days. We’ve just set a standard of 50 percent. This is what this company can do. I’m here to tell you because we put this first on the list, it’s a really, really high percentage of that. You probably don’t know that but the fact is that the banks probably haven’t thought much about what that standard is.

We’re not trying to get bogged down on skip tracing and selling things to banks. I want you to take this concept and look at it and say, “Is this

Industry Category StandardsStrategic Marketing Webinar5/2/13something that we can put in place for our business, if indeed, you are a service provider.

Provides liquidation reports. No more than 50 files per investigator because we’ve found that when an investigator gets too many files, they can’t apply the appropriate amount of focus on finding any one particular car. They get reassignment after 25 days. If a guy can’t find the car in 25 days, we give it to somebody else. Direct phone access to collectors. That’s probably outdated. They probably don’t lose the CD ROM in 2013. Investigators on straight commission. Online access to credit agencies. Personalized placement forms. You can read this as 800 trap lines. These are phony numbers that they setup. They send people fake mail to get them to call and they trap them. Don’t worry about the details of this. The point is you are trying to take things that are important that customers need to know and we are putting them in the form of this checklist that makes it easy for them to see.

Look at the very last one of these. Member of the ACA, American collectors association. This is something that a lot of competitors might just put on their website or throw into their promotional materials. And say, “Hey we’re a member of the ACA.” The banks may know who that is, but I want you to know that associations with industry types of groups are okay and they’re important to some people, but they are not nearly as important as you probably think they are. I didn’t just tell you to quit all your associations that you are a member of, I just caution you that they are probably not holding as much weight as you think they are. That’s why we put it lower in this list.

What do you think the most important thing is on this list? Number one, number two, number three. We put these in a particular order, so that people can see that. When we started working with Lawn Smith Roofing

Industry Category StandardsStrategic Marketing Webinar5/2/13back in 1996, one of the things that we put very high on their checklist and in their contractor standards guide was something like a lien release waiver form, which is a document that the suppliers of this roofing company would sign that says, “If you go out of business or skip town or for whatever reason you don’t pay your bills from the materials you bought from us, we cannot go put a lien on the house of your customer that you bought those materials for.”

Let me be very specific. When a roofer goes to a supply house, they don’t just go buy materials. They go buy materials for specific jobs. The supply house knows that the $2,000 that you just spent on supplies were for a specific house. If you, supplier, don’t get paid by roofer, then they will go put a lien on the house. That’s kind of a pain in the buns if you live in that house. If you gave $2,000 to the roofer and he took off with it, bought supplies and never paid for it and he’s skipped town. You probably need to get the skip tracing agency involved.

We put this on there as something that we knew that very few roofing companies would be able to get. Why couldn’t they get it? Because most roofing suppliers know that a lot of roofers are a bunch of thieves and jackals. I’m not calling you a thief and a jackal if you are roofing company. I’m saying that they are out there. Most supply houses say they are not going to sign a blanket release form on our ability to go put liens on your customer’s houses. That’s the only recourse we have from running away and dodging your responsibility.

Lawn Smith Roofing, their supplier said “absolutely we’ll sign that document because number one we value you r business, but number two, we’ve done business with you for 25 years and you’ve never missed a 2 percent ten day discount. We know that you are good for your money.”

Industry Category StandardsStrategic Marketing Webinar5/2/13They signed that document. We put that as the number one thing—or at least high on the list.

Here’s what I’m trying to say, look for things that people need to know. Create standards, create a checklist, and create a more comprehensive guide. “We put together these contractor standards guides. There are maybe 20 or 25 pages long. They tell people, here’s what you need to look for, here’s what you need to watch out for. This standards guide helps customers understand what they are supposed to be looking for.

Here’s a good example. Southlake daycare ranks, see how area daycare centers stack up when it comes to teacher qualifications, quality of facilities, student teacher ratios, safety records, nutrition and diet, and eight other important areas. Compliments of Totally Tots. Again, this is just a standards list that says here’s what you should expect when doing business in this industry.

Let’s move to the next one which is professional service providers. What kind of companies are professional service providers, financial planners, accountants, consultants, doctors, attorneys, those kinds of things. These are professional service providers. Common mistakes, using credentials to prove their worth or waiting for referrals.

I did not just say that professional service providers should not have or use credentials. I didn’t say that they shouldn’t get or wait for referrals. I said this is the common marketing mistake they made is simply relying on credentials. They say, well, I’m an attorney and I’ve done 30,000 cases and went to Harvard law school and I’ve got all this experience. That’s good. People want to know that. The problem with it is that there are a lot of different companies that have lots of experience and good credentials. It’s kind of hard to stand out based on credentials. You can stand out compared to some guys that don’t have many credentials. Think about your average

Industry Category StandardsStrategic Marketing Webinar5/2/13attorney, the financial planner and the kinds of credentials they have. They have all those letters. People look at that and say, all right. Some people know what that means and some people don’t know. It looks good. That makes me feel warm and fuzzy, but when you look at ten different financial planners and they’ve all got those letters, it ceases to be an important distinction. If you were the only one then you could promote and tout that.

Here’s the thing. Let’s talk about referrals. Referrals are good too. The problem with referrals they are not very scalable. You’re not going to grow your business by waiting for more referrals. They are going to come in at a fairly linear rate. Maybe you put a referral generating program in place to generate and stimulate an additional amount of referrals. I encourage it, but it has a fairly limited amount of ability to scale. You can’t really scale it up.

What we want to do is we want to use a different strategy. Here’s what you’ve got to understand. People don’t understand what you do if you are a financial planner, at all. They don’t understand it. Some people understand it, of course. But you take the average guy whose sitting there trying to manage his finances and the guy has been in business his whole life as an entrepreneur who owns the 13 car wash locations, you say, what does this guy know about financial planning. He doesn’t know anything about financial planning. He knows about car washes or whatever his business is. Maybe he’s been an executive in a technology company and really understands technology. He doesn’t understand financial planning. You show up as a financial planner and you say, here are my credentials from XYZ School and here’s all my clients.

People look at that and say, great, but I don't know what you except to manage my finances. I don’t even know what that means. Your job is to provide a way to get inside of your brain and get a glimpse of how and why

Industry Category StandardsStrategic Marketing Webinar5/2/13you do things. We call this strategy cliff notes. Just like the cliff notes you see in school when you didn’t want to read the whole book from Shakespeare, you went and bought the cliff notes. Then you read the short version of it.

The reason you read the short version was you just wanted to know enough so that you could pass the test. I mean, let’s face it. If you were in school and you might have been in that 10 or 15 percent that really loved it and wanted to know that stuff. If you were in the 80 or 90 percent, you looked at that and said I don’t care about any of this garbage. Did I just call Othello garbage. Whatever you know what I’m saying. You don’t want to read that back. All you wanted to know was the main stuff so you have a working knowledge of what the plot was and the characters so you could walk in there and take that test. That’s all you cared about.

You know what? When a guy is looking at a financial planner or marketing consultant or a sales consultant or any other kind of professional, he wants to know what is it you’re going to do. What is it you are going to do? Guess what most professionals say? They say, I’m experienced and I’ve got credentials, give me your money. People are like, geez, I don't know what’s going to happen. I can’t tell you as a consulting company how many times I’ve heard this story.

We’ve done business with marketing consultants before and it just never worked out, so you know, we don’t have a lot of confidence in this entire industry. I’m thinking, you don’t have confidence in an entire industry because you’ve had a bad experience in the past. Hopefully, you never got your heart broken during dating so you never went back to the dating pool.

The reality is your job is to help people navigate and understand what they need to know, okay? What we want to do is download a quick version of what you know into their brain. You can use video, audio, reports,

Industry Category StandardsStrategic Marketing Webinar5/2/13webinars, online information, whatever format you want. Tactically speaking, it’s not really that important. There’s some formats that tend to lend themselves better to certain situations. We found that using video for a business environment, where I’m trying to help people understand how to do their marketing, really doesn’t work very well.

Why do you think it doesn’t really work very well to use video for a business environment. Think about it for a second. Are you going to take a DVD of a video of business type of solution home and watch it on your home DVD player? Or are you going to sit at your desk for 90 minutes or 30 minutes and watch a video while you are at work? The answer is no, you’re not. You are going to get distracted and interrupted and it doesn’t work that well.

What we found works well is audio. That’s why we use a lot of audio CDs even in this age of digital, we still give download because here is what we know. Our best chance of catching a guy is when he’s driving, and he’s got time that there’s really nothing else happening and we can say, “Here just listen to this.” Now we’ve got their undivided attention. That doesn’t work as well for consumer products or consumer situations.

We use a 26 minute long video to promote an insurance program. You say, well geez who is going to watch a 26 minute on insurance. That sounds like torture. The answer is that it is torture if you have a crummy video. If we tell somebody on a radio ad, “hey there’s this great way to save money for retirement. Your taxes at retirement are zero. Your money grows untaxed. You can transfer your money to your heirs tax free. Instead of getting killed on taxes like you do on your IRA or your 401K and your pension plan, and there’s no market risk. If the market tanks like it did in 2008, you won’t lose your principal. People read that and go, that’s pretty cool. Call us and we’ll send you a DVD, we’ll tell you all about it.

Industry Category StandardsStrategic Marketing Webinar5/2/13

We tell them to call for a DVD because that sounds pretty tangible. When they call, we offer to send them a DVD but we really want them to go online and watch this video. It’s not a business thing, we are not trying to help business plan their retirement or their employee’s retirement. We are coming to you as an individual and saying let us help you with your retirement.

Here’s what we’ve found. If we got a good video and we can get it in front of them, it’s very interesting and people will watch it. Here is what I’m trying to say. We want to download a quick version of what you know into their brain. Use video, audio, printed reports, online reports, stuff you send to their iPad, whatever. Professional service providers, here’s how that works. They just want to know that you know what you are doing. The best way to prove it is to educate them as to your procedures, your methods, and the method to your madness. If you are a financial planner, I would recommend getting extraordinarily specific.

Financial planning for dentists. Financial planning for executives. Financial planning for car wash owners. Financial planning for entrepreneurs who make between $300,000 and $1 million a year. Niche it out so that people think it is for them. Then it allows you to speak to strategies that are going to be more likely to be accurate, correct, and specifically for that particular target market. It’s the difference between coming to the marketplace and saying, I have marketing strategies for the world.

Ours is, I’ve got marketing strategies for remodelers. Remodelers, I’m talking about contractor standards guides, I’m talking about websites that are related to their business. I’m going to encourage you to be as niched as possible. It doesn’t mean that if you are a financial planner, you can only sell to dentists. What I’m suggesting is that if you sell to dentists and to

Industry Category StandardsStrategic Marketing Webinar5/2/13entrepreneurs and executive that you have a download for entrepreneurs, executives, and dentists.

So you get the idea. We want to download. False concern. People will say, if I do this then people will take this information themselves. If I show them, they are going to do it themselves. Not true. A very small amount will. Here’s what you’ve got to understand. You’ve spent how many getting good at what you do? How many of college? How many years perfecting your craft and somebody really thinks that they will listen to your one hour program or 14 pages and get good enough themselves. They don’t want to do it themselves. They just want to know what it is that you know. Then you when you give them that information, when you say, “Look, here’s what you need to know, here’s how this works.” I’m telling you, it become extraordinarily powerful because they know that you know and they look at your competitors and they don’t really know if they know.

Yeah they’ve got their credentials, but everybody’s got credentials. They look at you and say, I know what strategies this guy is going to use to manage my money. How much is one good marketing idea worth to you? I’ll give you five good ideas for free.

Our whole marketing program is based on let me give you some information, so you’ve got enough information to know one thing. Not how to do it. You know that we know how to do it. That’s the whole idea behind all the marketing that we do. You show up to a two-day seminar for me, so you can learn how to do this stuff and learn how to do it. That’s true. You can learn how to do some stuff, but you are really there to understand one thing. Here is a company that actually knows how to do this stuff. That’s what all professional service providers should be doing.

This is a cliff notes version of what the doctor knows. Let’s shift gears now. Let’s talk about mass retailers. Mass retailers, companies that sell the

Industry Category StandardsStrategic Marketing Webinar5/2/13same kinds of brands at retail as their competitors do. It can be large or small companies. It can be national or local. This is Best Buy, this is Target. If you walk into Best Buy, do they have any particularly different products than www.amazon.com has? The answer is no. It’s the same junk. You know, if you go over to Costco, they’ve got 17 different TVs. You walk into Best Buy and they’ve got 37 different kinds of TVs, but they are basically the same thing.

Well, wait a second Costco has a particular vision that this other company doesn’t have. There may be some truth to that, but in reality for the most part, it’s exactly the same. It’s exactly the same. You’re trying to decide, should I buy it here or should I buy it there? Should I buy it at Wal-Mart or should I buy it at Target. I don't know it’s the same dumb set of Legos. Do you want to buy at Wal-Mart or Target? It comes down to where you feel comfortable and how much do you want to spend.

Here’s what you see, you see people that have ways and means to buy higher prices that still buy it cheap because in their mind it’s the same thing. Why would I buy it one place versus the other way. I was talking to my wife the other day, she went to Barnes and noble and bought three books. She came home and looked on amazon. Why did I buy these at barns and noble. I should have just ordered them off of amazon. We are prime members, we get free shipping, and it comes in two days. Save about $10 on three books. This is called mass retailers. That’s a problem. That’s a problem.

Here are some common mistakes that mass retailers make. First of all using menu board style advertising that simply says, we have it and then competing on price. Menu boards are like a menu, right. Here is what we have and you look at the advertising for most mass retailers. There’s their own particular company here locally. It’s an electronic store called Fry’s, another competitor of Best Buy. They run a full page ad every single day,

Industry Category StandardsStrategic Marketing Webinar5/2/13365 days a year, in the Dallas morning news on either the back of the sports or the back of the business or the back of the main new section or multiple pages.

On that ad it’s just a big one page thing that’s got about maybe, I don't know anywhere from 15 to 30 different products and they have a price next to it. It says, hey you want a computer monitor, here’s one for $199. If you want a DVR, here’s one. If you want, whatever we have. It’s all this different junk and here’s the prices. They’ve got all the different categories. They’ve got phones, laptops, TVs, computers, and all this stuff.

People kind of look at it and what they are trying to tell people is that we’ve got low prices. That’s what’s being communicated. We’ve got low prices. That’s okay, but you know—there’s more to the equation than low prices, right? Maybe, I don't know, if you can buy it here versus there, why would you pay more? Why would you pay less? People still need help deciding what to buy regardless of the product category.

I want to focus on this thing here. This is even more true as products get more complex and more expensive. Legos, that’s one thing, not very complex, not very expensive. How much is a Lego set? Anywhere from $10 to $100. The average is probably $25, not that big of a deal. The downside, if you make a mistake, is that you wasted $25. What about a computer? What about a phone? What about—let’s talk about phones for a minute. If you get the wrong phone or a phone that you don’t like or a phone that doesn’t function that well, its $200. Now you are stuck with it for two years. That’s kind of a big deal.

We’ve got to think through this. People don’t really know what to buy. I mean, a new Galaxy S4 phone just came out. Do you want to buy that one? Well, do you? My son works at Radio Shack. He’s 20 years old and works at Radio Shack in Provo, Utah. He has an iPhone, but he’s buying a Galaxy S4.

Industry Category StandardsStrategic Marketing Webinar5/2/13The reason he’s buying a Galaxy S4 is because he’s using the strategy that I’m going to show you here which is called Consumer Reports.

Consumer Reports. I’ll get back to my son at Radio Shack in just a second, but here’s what I want you to know. How it works. You take it upon yourself to do the comparative legwork for your prospects, then condensing information into an easy to digest format. Here’s why it works. People want to make the best decision but have limited ability to compare options. They don’t even know what the parameters are usually. When you do the work for them, they will buy.

Let’s go back to my son standing at Radio Shack. He’s 20 years old. To me, it’s really funny that he works at Radio Shack selling phones and other things because he’s really not much of a salesman type. In fact, he just not as personality at all, but—a funny little side story. Radio Shack got smart. Two months ago, they went from an hourly based wage for their store workers. They came back and said, we are going to pay your wage, but we’re also going to pay you 2 percent of sales. All of a sudden, everybody is selling like crazy and their sales have gone up something like 40 percent in the last two months because they’ve given a cut of the action to the sales consultants.

Here’s what my son did. He figured out which of the phones was the best. He did comparative analysis. He figured out this Galaxy S4 is an awesome phone. He also found out that when people are walking into the Radio Shack, the majority of them don’t want an iPhone. Don’t ask me why, it’s not really important for this discussion. Here’s what he found out. They wanted an android. So he’s going to get the Galaxy S4 phone so that when people walk in, he’s going to pull it out of his pocket and say I’ve looked at all the phones. I’ve researched them all. I’ve owned an iPhone. I’ve owned

Industry Category StandardsStrategic Marketing Webinar5/2/13a Galaxy S3. I’ve owned all these different phones. This is the best phone. Guess what people are going to say to him? Okay.

That’s number one. Consumer Reports. You know what Consumer Reports is the magazine. What you do is you go out and you find what the best things are so that you can then recommend them to people. Here’s what I’m trying to tell you. If I were in Best Buy, I would run it differently. Instead of saying here’s 37 different TVs, I would have probably closer to ten TVs. Maybe 12 or 15. I would say within these price ranges and within these size categories, we’ve analyzed all of the different TVs, and these are the best ones and here’s why. I would compare them at the point of sale.

If you remember the article or the webinar that I’ve done called “world’s greatest car salesman> this is exactly the heart of the strategy. I was talking about working for a mass retailer, a car dealership. I said, literally, find the number one best car within the category and go get a job at the dealership so that you can build up the confidence about that car. Then go and purchase or lease the major competitive brands to that car as an individual. Not necessarily as a dealership, but as an individual car sales people. When somebody comes in and you are selling the Toyota Camry and they are looking at the Chevy and the Honda, you can look at them and say, “Hey, how would you like to test drive the Toyota Camry that we sell here versus the Honda and the Chevy.” The guy says, yea I guess I would.

What if you said, let’s go test drive the Camry first cause it’s right here. I’ve got access to hundreds of them. Let me tell you why this is better. I’m going to tell you specifically why it’s better than the Honda. I’m going to tell you specifically why it’s better than the Chevy. We’re going to drive to an off-site location where I’ve got a Honda and a Chevy and you can drive those.

Industry Category StandardsStrategic Marketing Webinar5/2/13

You say, I don't know how it’s going to work out. Work it out because here’s what’s going to happen. When you tell people I’ve got these other cars, I will tell you why they are better and I will let you drive them all. I’ve got them sitting there waiting, people are going to say, holy freaking crap. Really? This is awesome.

Now here’s a guy that has a definitive opinion. Who has the ability to compare and contrast and this, my friends, is the way you sell cars. Despite what all the car guys think who read my article and write me nasty emails about how stupid I am. How that will never work I have no idea because it is exactly what people want.

Let’s go to strategy number two, Consumer Reports. There’s two strategies for mass retailers, first one is Consumer Reports. The next one is called value added. Find things you can give away or include in the sale that make the purchase worth even more money. It works because when the total value for the same money is greater, people will actually buy it.

We are not talking about competing on price. We are talking about adding extra value. We can go to people and say, I know that this Toyota Camry is the same amount as the Honda, or it’s more or it’s the same than the Toyota Camry. You can go get it at the other dealership, however, when you purchase from me and you start to list the peripheral benefits of things that you can give them.

What kinds of peripheral things can you give them? Here’s the question to ask yourself, what other things are useful, worthwhile, desirable, that can be given with this particular thing that’s being sold?

Back, early in my career, in the mid-1990s because we had such a great marketing ability, we actually got into the business of selling Sprint cell phones. The reason we got into that business is not because we had any particular interests in phones, in fact, we didn’t have an interest in phones.

Industry Category StandardsStrategic Marketing Webinar5/2/13Sprint came out with a pretty darned good phone, but most significantly, they came out with a rate plan that was way, way, way less expensive than all their competitors. It included I think something like 700 or I think it might have even been 1,500 minutes for $70 or something like this. This is in the mid-1990s. That was a phenomenally low price compared to everybody else.

I saw that and I thought I had to get in on the action. The problem with that is that here was a ton of other retailers selling the same exact phone with the exact rate plan. What did we do? First of all, value added. We only sold one phone. We didn’t even sell other Sprint phones. We sold one phone. The Sprint phone. We told people the story. We can sell any phone we want. We sell this one phone and here is why. Number two, we packaged all this other junk that everybody else that was trying to make big, fat juicy profits on—the charger, the extra batteries, and we created a package that said, if you buy this phone from us, we will include this stuff for free.

Now, we took a hit on our margins, but guess what we did? In two months, after that phone came out, we became the retailer we’d never been in that business before. We had no retail store. We did everything via phone and we delivered the phones individually. My two sales guys—one of them was 17 years old and quite honestly, an idiot. The other one was 22 years old and quite honestly, another idiot. These are the guys I had selling. They were the number one and the number two sales people in the entire Dallas/Fort Worth region. Two guys. We were selling phones like crazy. It was unbelievable. We were making money hand over fist. We did that for about six months until they changed the phone. They got another phone that wasn’t very good and we quit.

Value added. We took and hit on margin, but our volume was so high that it didn’t even matter. You know that stuff is really, really cheap. We

Industry Category StandardsStrategic Marketing Webinar5/2/13were paying something like $4 for a charger that was retailing for $30. Everyone is trying to retail it for $30 to bump their margins. We said, “The heck with that and take a $4, and take a hit on margin. It was a great deal. This is a strategy. Mass retailers, caution, make sure you run your numbers before proceeding. You don’t want to take a swipe out of your margins.

We’ve got to hustle here, we are running out of time. Quick ad, you may have seen this. This goes back a ways too. A typical ad on the left. Here’s an ad “compare and price out all 55 treadmills. Only 11 models pass our stringent test to become rated at Best Buy. Call for a free report. We know, we’ve tested them.” We look at the treadmill and go does anybody know anything about treadmills? We educated them, boom, we win. See how that works?

Mass retailer, Consumer Reports. Then added value. Piano buyers guide. Mass retailers and pianos. Specialty retailers. We are going to pick up a little speed here because, you know, I have this way of pontificating and going on and on, so I want to be a little bit more brief.

Types of companies, specialty retailers. Retailers and shops can differentiate by having different products and services than their competitors, restaurants, golf courses, entertainment venues, boutique shops. Not mass retailers, specialty retailers. Common mistakes that we just hang our shingle and there we are and hopefully people will buy from us. Understand, nobody is aware of things that they are currently not aware of. That’s a truism, I think. The fact that you are specialists probably unknown to most of your prospects.

Take the idea of a golf course. You’ve got a golf course. Your golf course is unique, it’s different. It’s not the same golf course. Sure it’s 18 holes and it’s got greens and flags and all of that stuff. It’s unique and different. It’s not the exact same phone that we sell at Radio Shack that you

Industry Category StandardsStrategic Marketing Webinar5/2/13can go down to Best Buy and get the exact same phone. It’s a different experience.

Restaurants are a great example of this. Last night, I was with my wife. We walked into a restaurant in downtown Fort Worth. We had not been there. We were going to a show a little bit later. We were looking for a restaurant. We saw a restaurant. It said, “Cow Town Diner.” We are in downtown Fort Worth and we thought, this looks interesting, this looks fun. We walked in and it looked like a restaurant that you would find in the middle of the generic Sheridan Hotel in downtown Cincinnati.

It was called the Cow Town Diner. I was expecting a little cow town-ish. There were a grand total of three other people eating in there at 6:30. We sat down and looked around went, wow, it feels like we just walked into, I don't know, a downtown Cincinnati Sheridan Hotel restaurant. We started talking about excuses to get out and we ended up—something came up with one of our kids and we left before they took our order. We right across the street to Whiskey’s which is a barbeque place, which was fantastic, interesting, fun atmosphere.

Specialty retailers, yes the both sell foods, but the presentation, the things that make you want to go there are different. People don’t know this. If you are marketing these kinds of companies, here’s what you’ve got to do. Build a case, plain and simple. Focus on building a case for your unique products, your services, your atmosphere, et cetera. Go through some of the innovation webinars that a recorded and posted on our website. There’s some interesting ones. Home of the blank. There’s one on there called—what’s it called? Pimp My Ride. We talk about this concept of home of the blank. If you have a restaurant, what are you the home of? If you are the cow town diner, what are you the home of? This was the home of boring, junk, and nothing. The home of what?

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Whiskey’s was the home of the $8.95 unlimited rib platter. Wow, okay, that’s something to be known for. In those webinars, I talk about things like the home of the 109 ounce Coca-Cola. You give somebody, literally, 109 ounces of Coca-Cola in a big huge cup. Why not? Who cares? What else are you going to do? Home of liquid insanity or home of the King Kong doughnut. You name it. Create something that’s unique and signature to your place so that it’s interesting.

If you’ve got a golf course, don’t just build a golf course, build something that’s got something really interesting and cool in it, something that’s got something that people will remember. I don't know what that is, heck if I know. Create one hole that’s got 42 sand traps in it called the Jackie Robbins in 42. If you can make it through this, you’ll be the first, whatever. I don't know. I just made that up off of the top of my head. That’s pretty stupid. Don’t do that. But you get the idea. Specialty retailers, build a case, build something interesting and unique. It works because of what’s called the Anchoring Effect.

Here is what the anchoring effect is, people tend to believe that things are similar to what they have previously experienced. You have to break them out of this. If you have a golf course, they will assume it’s like every other golf course. We’ve got a family fun center. Well, I’ve been to a lot of family fun centers. It must be the same. You’ve got to find and build and do things differently, and then communicate what those difference are, whether its atmosphere or quality or types of services. You’ve got to be different. In this case, specialty retailer, you’ve got to communicate that, okay?

Looking for a true and unique pool design? Pool store or a remodeling company, okay. Sunroom idea guide and portfolio. This is getting people an idea of what it is that you can do for them.

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Moving right along here. Selling to resellers. We’ve got two left here. Selling to resellers, here’s what this is. Types of companies, manufacturers whose customers are resellers. We’re talking about their marketing message to resellers. Now, this gets a little bit confusing here, so let me talk you through it.

I’m talking about a manufacturing who sells to resellers. If your name is General Motors, you sell cars to dealerships, but you also sell cars to end users through television advertising and other types of advertising. If you area manufacturing, you may have a multi-pronged approach. What I am talking about in this situation is the endeavor of selling stuff to resellers who are then going to turn around and sell it to somebody else. Are you tracking with me?

Here’s a common mistake. Focusing on the wow factor of their products. I’ll give you a good example going back in my career to a company I worked with called Dynamo. This is a pool table company. The manufactured and sold coin operated pool tables. If you owned a bowling alley, you couldn’t call Dynamo and buy a pool table. They worked through distributors. You would have to call a company that was a distributor—what are they called? Not dealers, not distributors? Anyway, its companies that buy and place and service these kinds of machines.

For instance, if you’ve got a bowling alley and your pool table breaks down, you don’t call Dynamo. You call the distributor who comes out, they service it. They take the money out of it on a weekly basis. They give you your cut. That’s how that business works. They create a product and they go to market to all these distributors all over the country and they talk about how great their products are. They assume that these distributors are going to care how great their products are.

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The reality is the resellers have one major goal in life, which is to make money. They don’t really care about your product except and unless it fills their number one need, which is making money. Here’s what I’ve found. The direct approach is almost, not always, but almost always the best approach. If you’ve got a product that you’re trying to sell to a reseller, you need to focus on how much money it’s going to make them. The strategy is simply called make more money. Here’s how it works, build a case that proves that selling your products will make them more money than if they were to sell other competitive products. It works because very few manufacturers have figured this out. When you adopt this strategy, you are going to be the one speaking their language. Everybody is going to be talking about how cool their product is and you’re going to be talking about how much money they can make.

Look at this ad by Dynamo. “Command $1 play with top brass by Dynamo.” We actually changed the name, but it’s Dynamo. “The countries number one upscale pool table.” Here’s what you need to know about this, $1 play back in those days was considered a really big deal. Most pool table cost .50 cents. As a distributor, you will make more money. “Upscale pool commands $1 play. The number of pool halls in the U.S. has increased over the last two years from 5,000 to 8,000. Most of these pool tables are upscale clientele.” You can read the rest of that.

“Dynamos Dynoblast blower keeps puck moving at speeds of up to 81 miles per hour.” Now we are talking about an air hockey machine. Is it possible that a faster hockey table can make you more money? Yes, kids love the fastest, most realistic hockey table. Here’s what I’ve done. I’ve taken more of a traditional approach, talking about how great the product is. We’ve got this really fast table, but instead of saying, “hey it’s really fast.” I draw the conclusion for the reader, which is its going to make you more

Industry Category StandardsStrategic Marketing Webinar5/2/13money. Kids like fast. They like realistic, so they’ll pay to play this table. Here’s the things that you need to know about the table. It’s got better blower and all of these other things.

Now, finally, number six, selling to end users. This is an interesting one, but probably doesn’t really apply necessarily to all that many of you. Manufactures and retailers that are focused on selling a specific product to end users. What I’m talking about now, this would be like Chevy selling a Chevy to you through television advertising. Saying, “Hey, if you want to buy a Chevy, here’s why you should buy our car.” Or it could be a mass retailer focusing in on a specific product.

Typically, most mass retailers is saying, “Hey, come to Target. Target’s the best place to come buy stuff.” What I’m talking about here is a specific product, so you are advertising to specific end users what you’ve got to do is create a strategy.

Common mistakes, menu board style approach, like we talked about already, institutional advertising, buy Coca-Cola, it’s the real thing. Understand this, you have to determine if what you’re selling can sustain a case. Build a case, if not, make one up.

Here’s what I mean by this, some kinds of products really don’t lend themselves to building a case. Let me give you a perfect example. Pepsi-Cola, if you are marketing Pepsi-Cola, what are you going to say that’s going to allow you outcompete with Coca-Cola? Can you say that it tastes better? You can say that, but is it true? Some people think that, but some people don’t think that. In fact, the majority of people are going to have a preference. Truth be told, most people can’t really tell the difference.

You come out there and say, “My name is Pepsi Cola and I’m going to try to figure out how to get people to buy us.” You know, we’ve got a better taste. Not really going to work. “We’ve got a better price.” They cost about

Industry Category StandardsStrategic Marketing Webinar5/2/13the same. “It’s healthier.” Actually, it’s not. “We have a cool looking can.” That’s an opinion. There’s really nothing to build a case on. Not like different treadmills, right/ I can build a treadmill case that says, “This treadmill is definitively better than that treadmill.” What about Pepsi versus coke? The answer is we use something called defendable position or phantom position. I’m going to talk about defendable position. This is where you can build a case for your product. It’s where your pool table is better than the other guys, or where your product is definitively better. It’s classic MYM, when people understand what you have, how it’s different, how it’s better, then they will buy it.

Let’s take the example of the Toyota Camry versus the Honda accord. Let me ask you this, is the Toyota Camry better than the Honda accord? You say, I don't know that’s an opinion. If I’m selling a Honda accord or a Toyota Camry, this is sufficiently complex and expensive decision that they’re things that I can point out, look out, point to and help people understand that this is actually better. I can look at the gas mileage or the handling, the steering, the amenities, the trim, the stereo, all these different factors, the horse power. I can find things and build a case that says, my car is better. In fact, it’s one of the great mysteries to me why the automobile companies do not spend more time building a defendable position because their cars really can be definitively argued that they’re better in many cases. Unless you have a crappy car.

Let’s look at this. “Come alive. You are in the Pepsi generation. Take your choice. Regular Pepsi or new diet Pepsi cola. Pepsi cools the thirst, tastes clean and alive.” Does Pepsi really taste clean and alive? Are those words that describe Pepsi? It taste clean? It tastes alive? Same goes for diet Pepsi. “Has the Pepsi taste without the calories. Pepsi is the official drink of today’s generation.” What the heck is that all about?

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This is what we call bull. I missed—it’s not on here. It’s called the phantom position. The phantom position is the opposite is the defendable position. It’s a position that cannot be defended because it’s made up. “We’re the Pepsi generation.” Let me go back to the ad. “You are in the Pepsi generation.” If you got a product like toothpaste or beer or soda pop or Kleenex, what you really got to do is make something up. The only way to really pull this off is to have a lot of money. This is probably not appropriate to you.

Here’s what I want you to know, this is a really good strategy for the right kind of company. In other words, if you say, I don't know if all this MYM stuff really works with Pepsi, then maybe it actually does if we understand this concept of the defendable position, so what we do—excuse me, the phantom position. What we do is create that phantom position and we build a case for it. It makes you more popular. It makes you more cool. It makes you more hip. We surround this brand with those kinds of images.

Here’s what I’d like you to understand. Let’s take for example another big company that everybody is familiar with, McDonalds. Do we need to create a phantom position for this or a defendable position? In my opinion, very strongly, it’s a defendable position. “I’m lovin' it,” right? What if we took and created an actual defendable position? We said, “What is so great about McDonalds?” We looked at the quality controls that this company puts in place to make sure that the food is delivered exactly the same every time. I won’t go into the details of the story. I’ve told them on a different webinar before. Let me just tell you this, it’s unbelievable how much quality control goes into delivering a McDonalds French fry or a McDonalds hamburger or a McDonalds Coca-Cola. You could actually take the various things they do, show them, definitively and help people understand. No, we are not just saying this is quality, there’s really a case to be built. This is a defendable

Industry Category StandardsStrategic Marketing Webinar5/2/13position. You can build a quality case, even for a company like McDonalds. It’s hard to believe, but it’s true.

That’s what I would recommend. That’s how this works. That’s about all the time we have. We are going to go ahead and end up. That’s it for today. Thanks so much. Talk to you later. Bye.