Passenger Vessel Association Keynote

stephen-wayhart-passenger-vessel-association-brandmillBrandMill’s Managing Partner Stephen Wayhart was honored to present to over 100 members of the Passenger Vessel Association of America at their annual PVA Convention at Maritrends in Long Beach, CA. Our friends from Pittsburgh’s famous Gateway Clipper Fleet recommended us to talk about “How to Price for Profit.”

Wayhart’s 3-point program highlighted and outlined an hour long discussion about how brands need to clearly cultivate, communicate and keep their unique promise. And, by doing do brands will create a system of meaningful and memorable proofs of performances that enable them to command full price.

The key telegram of the presentation is that most brands do not command full price because they’re priced too low! And, the reason they’re priced too low is because they do not offer a unique valuable experience and/or haven’t clearly and passionately communicated their dramatic difference with proof!

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15 Marketing Lessons of St. Patrick’s Day

As a 50 percenter of Irish blood and a serial marketing professional, I thought I’d offer you dear reader, my 15 Marketing Lessons of St. Patrick’s Day to help you find your little pot ‘o gold at the end of a rainbow!

And, I’ll offer them quickly because I shouldn’t even be working this hard today as I’m 17 days away from – and preparing for – St. Patrick’s Day which is one of my many “high holy days” – and there’s a Guinness pint with my name of it at my favorite Pittsburgh Irish pub (Riley’s Pour House) and it’s getting warm! So here you go!

1. Green Marketing Lesson One – Making Money. Always keep money (making it or saving it) front and center of any marketing campaign. If you know anything about the Irish (and I do growing up in a large extended family), the majority have experienced challenging economic times and know the value of a dollar. So, incorporating zero based budgeting into your marketing processes will help you become more creative and help you do a lot more for less. 

2. Green Marketing Lesson Two – Sustainability. These days when you hear brands talk about sustainability, it’s related to the environment, but the basic pure definition of sustainability is “the capacity to endure.” Using the same color in your marketing communications reinforces your brand, makes your marketing work harder for you and enables your marketing to endure.

3. Green Marketing Lesson Two – Color. Design and color can help you communicate a great deal. Red – hot, stop; Blue – cool. etc., Keep in mind that all colors also come in a great deal of shades so don’t be boring and predictable.  Green has about 50 unique shades.

4. Create Multi-Sensory Emotional Appeals (e.g., appeal to people’s five senses of sight, sound, touch, taste, smell). In a prior post about, “Marketing with Sound,” I discussed the awesome power of sound, but you should also consider all of the ways you can appeal to your customer’s five senses. St. Patrick’s Day appeals them all with color, strong visuals of parades, people having fun; taste of ethnic foods like corned beef and cabbage and drink (pints of Guinness and shots of Jameson) etc.,

5. Appeal to One’s Ethnic Heritage. There’s nothing wrong with appealing to people’s ethnic heritage – net, different strokes for different folks.  In fact, it’s a growing and popular strategy due to our mobile society, immigration, single parent households etc.

Some of this strategy’s keys to success include knowing your market well, being aware of unique cultural nuances, being respectful etc.  Disney’s Epcot Theme Park’s World Showcase is a great example of ethnic marketing, but Denny’s Restaurants’ old Pancake promotion is not.

6. Be Inclusive with Your Marketing. As much of an Irish heritage appeal the holiday provides, St. Patrick’s Day is all-inclusive and welcomes everyone to celebrate – everyone is Irish on St. Patrick’s Day!

7. Special Event/Thematic/Celebration/Holiday Marketing. Giving a unique thematic association to your marketing messages makes it easier for your customers to understand you and more immediately recognize you too. Tie-ing in to a major holiday celebration gives your promotion authenticity and a “reason why” you’re holding a sales event.

8. Limited Time Appeal.
Having a hard date against a campaign creates urgency, excitement and traffic. Pretty obvious statement, but many marketers leave far too many campaigns without a clear end date and a sense of urgent appeal.

9. Spokesperson/figurehead/celebrity/image appeal. Having a Saint as your celebrity figurehead ain’t too shabby, but it’s the consistency of using the same appealing celebrity with a unique story is what works.

10. Iconic Marketing – Shamrock – brand, sell, profit. Mickey Mouse’s Ears, Ronald McDonald’s big red shoes, McDonald’s Arches and more.

Shamrocks do the same for today’s holiday – it’s the day’s badge of honor and identification. What’s your badge ID?

11. Rule of Threes. Legend has it that St. Patrick used the common Shamrock to teach the Celtic Pagans about the unique Holy Trinity of the Father, Son and Holy Spirit – 3 in 1 Godhead.

However, the “rule of three” symbolism in the good man’s teaching is relevant today as well because people’s minds are noisy and limited. Using the rule of three enables you to get them to remember you and buy-in a presentation or product mix selection. Small, medium, large; gold, silver, bronze; 3 bears; 3 blind mice; 3 Stooges (see more examples/proof here) – trust me – the rule of three rocks.

12. Be Positive. You won’t find a more positive group of people that the Irish. Despite all of their “Troubles” who else tells you that you can find a pot ‘o gold at the end of a rainbow? At Pittsburgh’s St. Patrick’s Day Parade this past Saturday, people throughout the day referred to the cold constant rain as nothing more, “a little Irish mist!”

13. Be Nice. You’d be hard pressed to find a nicer bunch of people than the Irish on St. Patrick’s Day too.

14. Have fun and don’t take yourself so seriously. In this age of “political correctness” the Irish are for the most part a happy and fun bunch and most Irish demeaning jokes bounce of them like water on a duck.

15. Plan Your Luck by Working Hard. In my opinion, “the luck of the Irish” is based on hard work – simple as that. You’ve probably heard the saying, the harder you work the luckier you get!” Well, its true. The majority of Irish are no strangers to hard work and I believe – all things being equal – people that work harder and smarter than their peers will meet with more profitable success in a shorter period of time.

Got to run, my pint is getting warm.

Slan (Gaelic for “farewell for now”)!

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How to Get Your Pricing Right

I’ve always been a big fan of Tom Peters of ‘In Search of Excellence‘ fame and its because of him that I’ve studied McKinsey a ton. In fact, in many ways I’ve worked hard to build BrandMill as a mini marketing consulting model of the firm – and have always loved McKinsey’s 7-S Framework (developed by Waterman and Peters) too.

At the recommendation of Peters via a Blog post, I read a few books from former McKinsey employee Ethan Rasiel – ‘The McKinsey Way’ and ‘The McKinsey Mind.’ These books were a great help to me (still are) in building the processes of my marketing practice.

One little nugget that was worth a ton to me, was Rasiel’s insight about how company’s price their products.  In short, McKinsey believes most companies price too low because they haven’t taken steps to quantify their value – to prove and clearly communicate their worth.

TELEGRAM ONE – Most brands need to do a far better job at value creation and value communication!

TELEGRAM TWO: Raising prices is the easiest, simplest and least expensive way to profitably increase sales!

McKinsey argues that most brands price too low because they haven’t done enough work to prove (offer real proof – or make brand improvements to add additional proof) that their products or services should demand a higher price. So, most brands lower and lower their price or, discount and discount to a level that customer’s will say, ‘OK, that price seems reasonable.’

In our initial brand engagements we nearly always find two alarming opportunities to profitably build a small business.

First, most brands simply price their products and services following the traditional cost-plus (mark-up) model and never consider these other 10+ ways to find their right price.

12 Pricing Models

  1. Cost-Plus Pricing building price up from cost ‘floor’ generally on a percentage basis
  2. Elasticity Pricing – pricing to take advantage of known or perceived price elasticity or inelasticity
  3. Flexible Pricing – Pricing to meet changing competitive/marketplace conditions
  4. Follow Pricing – Pricing in relation to industry price leaders
  5. Loss-leader Pricing – Pricing an item/items low to attract buyers for other products
  6. Phase-out PricingPricing ‘high’ to remove a product from the line
  7. Penetration PricingPricing below the prevailing level in order to gain market entry or to increase market share
  8. Pre-emptive PricingPricing to discourage competitive market entry
  9. Psychological Pricing –Pricing at a level that ‘sounds’ much lower than it is like $99.95
  10. Segment Pricing – Pricing essentially the same products differently to various markets
  11. Skim Pricing – pricing at inordinately high level to hit the ‘cream’ buyers
  12. Slide-down Pricing – Moving prices down to tap successive layers of demand

…and more here – and more good stuff on pricing here too.

Plus, value-based pricing packages and pricing and revenue management software tools for dynamic pricing rock too!

Second, we find that most small business brands have a tremendous opportunity to improve their unique ‘WOW’ experience (a bigger, more unique and meaningful ‘WOW’ – clearly communicated – should justify a higher price), but lack the process/es and/or a desire to raise their bar of excellence because they get caught up in the day-to-day business at hand.

Face the facts.

You can’t control what your government or competitors do to negatively impact your small business (so stop your whining), but you can control and lead your brand to more profitable times with an improved approach to pricing and innovation.

Right?

Ok – back to pricing.

There’s certainly not enough time/space in this blog post to cover all you need to know about it (hey, we’re happy to help – just call us at 412.401.0555 – or email me at stephen.wayhart@brandmill.com), but we recommend that you make time to improve your ‘WOW’ (The Experience Economy is an oldie but goodie) and read a few good pricing books (and study hard) to help you more effectively do it.

Here are three excellent pricing books we highly recommend.

  1. Full Price, by Winninger
  2. Pricing for Profit, by Furtwengler
  3. The Price Advantage, by Baker, Marn and Zawada

We wish you good luck and great marketing!

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How Losing Money Can Increase Your Sales

Throughout this past recession, I’ve been amazed by the amount of off base brand advertising telling me how much I’ll save by buying their product.

Telegram 1 – People are more interested in ways to make or avoid losing money than saving money.

A window replacement ad that proclaims, “Stop losing over $1,000 dollars a year with your old single pane windows,” will always outsell an ad that states, “Save $3.00 dollars a day in reduced energy consumption.”

It’s a big reason why buy one/get one offers work so well. People interpret the gain as a benefit – not the savings.

Interestingly, another insightful key to prove this theory is to conduct a Google search to determine popularity and interest.

When you do a Google search on the terms ‘make money’ (web – 931mm/892mm images) vs. ‘save money’ (web – 533mm/images – 436mm images) making money beats saving money by a 2 to 1 margin!

Also, keep in mind that losing money is more closely related to making money than saving money.  And, because losing money is more painful than saving money, promoting how people can avoid losing money will always outperform a savings claim.

Telegram 2 – All things being equal, people will do more to avoid pain than to gain pleasure.

Here’s proof.

I’m offering to flip a coin and have you call it heads or tails (equal odds) and promise to give you $1 million dollars if you win, but if you lose you have to pay me $100,000.  Will you take me up on it?  99% of average people (not multimillionaires) would not.  Why?  Because it’s so painful to LOSE $100,000.

OK. How about instead of 1,000,000 vs. $100,000 what about a bet on:
$100,000 vs. $10,000 (uh, no) or…
$10,000 vs. $1,000 (hmmm..no) or…
$1,000 vs. $100 (hmmm, OK) or…
$100 vs. 10 (Sure) or…
$10 vs. 1 ? ABSOLUTELY!

Same odds, same ratio but varying levels of pain!

The key is to test your customer’s levels of perceived and actual levels of pain and loss.

When you understand this simple exercise you cannot lose!

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10 Profitable Groupon Marketing Tips

I’ve been a fan of Groupon since one of our Pittsburgh restaurant clients launched the city’s first promotional campaign. And, I’ve become a bigger fan since other hospitality clients have achieved success and after discovering that Groupon founder Andrew Mason is a Pittsburgh (Mt. Lebanon) native – you go guy!

If you read the marketing trades you’ll find some complaints about the lack of profitability of using Groupon as a marketing tactic, but I’d bet that those complainers were not prepared to take advantage of the popular loss leader strategy.

Here are ten profitable Groupon marketing tips.

1. Say “NO” if you’re below. Below average that is. In short, you do not want to feature your brand in a Groupon campaign if you don’t “bring it.” That is, if you sell lousy food (even marginally or mediocre OK), have poor service etc., you do not want to do Groupon! If you do not “deliver the goods”, Grouponers may simply put you out of business earlier than you would normally through negative reviews online etc.!

2. Get buy-in to prevent crying. Far in advance of your scheduled launch, talk through the campaign pros/cons of Groupon with your staff. Get their buy-in early on and clearly explain why everyone needs to be engaged in this huge loss leader effort and why you’ll need all hands and minds on deck to flawlessly execute the campaign. Tell them, “what’s in it for them!”

3. Map your cap. Cap the total number of deals you provide to Grouponers. This creates urgency and protects margins since the offer deadlines are long. Plus, you need to make sure you can handle the traffic.  Sure you want to make short term money – you always do – but your eyes need to be on the prize of repeat business!

4. Don’t wreck your average check. Make sure your deal/offer does not match you average check/purchase to allow for upsell and add-on sales opportunities. And, a lower price tag protects you as well on total customer acquisition costs. Keep in mind that you’re earning around 1/4th of what you’d usually make in an average sale which means you’re losing 3/4ths on virtually every sale.

5. Don’t laugh – add staff. Trust me – make sure you add staff to handle increases in store traffic, phone calls and web hits during and after the sale. You’ll need it!

6. Right your Website. It’s highly likely that your Web site has never seen the kind of traffic it will see on your Groupon day. Make certain your brand’s value proposition is clear, meaningful and relevant throughout your Website and especially on your home page because it’s going to get pounded. And, fix your typos, broken links etc., – net, clean it up! Also, monitor your Groupon comments on your “game day” and answer questions there as well on your social media channels.

7. Up-sell, cross sell and do well. Train your customer facing personnel to up-sell and cross-sell and guide all Grouponers to more profitable add-ons. However, make sure you have lots of exciting ones to offer too.

8. Train to explain. Carefully review (and test their knowledge) your Groupon procedures and rules of the game with all team members so they in turn can explain the campaign to customers, friends and family. You need to do this crucial step to ensure viral communications and no surprised/unhappy customer experiences. Make certain everyone is happy to take Groupon customers and consider putting someone in charge to answer escalated questions and make on the spot decisions to satisfy customer concerns.

9. Retain and gain. Since Groupon does not give up its email database and/or the contact information of customers who take advantage of your offer, it’s critical you have a system (recording system and/or additional incentive for customers/staff) in place to capture valuable new customer contact information (e.g., email addresses, mailing addresses, cell phone numbers, birthdays etc.,). You’ll also want to track your success with regard to add-ons, average check/transaction, redemption rates,  repeat business and more to determine your success and key learnings should you do it again – consider a customer survey too!

10. Show how to WOW now. A ton of your Grouponers will be new customers (and might be bringing other new customers in with them) and may be unfamiliar with your unique value proposition, but you have a great – maybe once in a lifetime – opportunity to WOW them, make them repeat customers and spread your good word. Make sure you take advantage of this opportunity. Be a servant leader and SERVE lights out!

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How To Profitably Raise Your Prices

In your price increase or decrease discussions always remember this old marketing truism, “Price is only an issue in the absence of value!”

In these tough economic times (and even in good times) so many of us are afraid to raise prices primarily because we know in our hearts that we’re not offering a clear value and unique experience.

If you want to profitably increase your sales, you can start by offering some WOW and then make sure enough people hear, understand and can easily act on your offer!

No matter what times we live in, people do spend money.  Sure, shoppers may be a bit more wary and discriminating during down-times, but when you offer true, visible, demonstrative and meaningful value, you can make more money and be more profitable selling your products and services at higher prices.

Pricing is a skill and an art that requires some planning and testing. You might gain some short-term market share and sales with discounts, but it could take you years to gain back your competitive positioning. And, if you are a luxury brand you could lose your brand identity while competing on low prices and turn your brand into a commodity.

I’m certainly not a fan of taking advantage of customers with higher non-justified pricing, but there are win-win ways to build profits for companies and build customer satisfaction at the same time.

Here are just some of the ways you can increase your pricing. Some good…some not so good.

Change package/serving size. CPGs do this a lot by reducing the package size a bit and related price, but your cost per ounce and/or pound increases.  How does that make you feel when you discover you’re paying more for less?

Bulk/Bundle/Combo pricing/Price a la carte. Pricing your goods or services a la carte is a good way to increase prices and then show some extra value when a customer chooses to buy in bulk (think cable companies, McDonald’s combo meals, ride all day packages at amusement parks).

Raise grandfathered prices. You can rationalize a price increase message to your ‘pioneer’ customers because ‘costs do go up,’ but if/when you do raise prices on these folks, you need to recognize your customer’s loyalty with a little extra added value to soften the blow.

Raise prices for new customers. A much easier way to raise prices instead of a general price increase across the board.

Schedule a price increase. This helps prepare your customers and carefully inform them of the reasons why you’re increasing their cost of doing business with you.

Offer performance based guarantees. Providing performance based assurances on your higher priced products is a great way to justify higher priced goods and services.

Add a little extra value. Again, adding a little extra makes your offering a little bit better and helps people more easily digest price increases.

Be different – be unique. The very best way to sell your offerings at a higher price. In fact, add a guarantee and a little extra value and you’ll become a much admired and desired triple threat.

You can be a unique necessity or discretionary product or service too – it is profitably achievable.  When you strive to be the Apple, Disney, BMW of your industry you’ll be able to command your price and see your profits soar.

I guarantee it!

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Give the Finger Test to Your Work

A guy rushes into a hospital’s emergency room with blood gushing out of an artery and close to death.

A surgeon on call is immediately summoned and after taking a minute or two, puts his finger on the gusher, sews the guy up in 10 minutes and the patient is good as new.

A few days pass and the guy gets a bill for $25,000 for the 10 minute job. He’s ticked.

He rushes back into the hospital demanding to see the surgeon and they meet.

He says, “Doc…$25,000 for 10 minutes of work (e.g., $150,000 an hour rate) and for a few stitches and a Band-Aid?

“Whoa,” the Doc says, “Let me see that bill.”

“Sorry, we should have been more clear on your bill,” says the Doc. “It should been broken down as $2.00 for the thread, needle and Band-Aid and $24,998 for knowing where to quickly put my finger to save your life!”

Telegram: Next time you’re thinking about justifying your hourly rate, give your work the finger test. No one’s hourly rate is the same especially if there’s no clear substitute for you and your one-of-a-kind work!

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You Take Dollars to the Bank

…not percentages.

Following yesterday’s post about testing, someone asked me about testing promotional offers and wanted to know which has more appeal, a dollar off coupon or a percent off coupon.

After saying, “Test them both,” I told him that in my experience a “dollar off” promotion typically outsells a percent off promotion. Dollar offs, BOGOs (buy one get one free, cash rebates etc.,) rock harder than a simple percent off promotion.

Why?

One big reason.

Money talks and you know the rest.

It’s far easier for busy people (aren’t we all) to understand the value of a dollar figure vs. calculating percentages.

But hey, don’t take my word for it

Check out this Marketing Sherpa article which supports my view and highlights how one brand’s test proved that its dollar off promo delivered 170% more revenue.

Test people test.  And, always remember you take dollars to the bank not percentages.
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AMA Pittsburgh Marketer of the Year

Over the next two days, we’re participating in two separate presentations to the Pittsburgh American Marketing Association at the Duquesne Club downtown and to students at Chatham University.

My client John Graf – co-owner of the Priory Hospitality Group – and I are co-presenting and will review the success of our Winter White Wedding program which has driven first quarter wedding bookings by 400% and continues to rock – it helped us win the Pittsburgh American Marketing Association’s Grand Marketer of the Year Award!

The Priory’s Winter White Weddings are a true testament to the success of  “Blue Ocean Strategies” that profitably transform brands by pursuing low cost brand differentiation that makes your competition irrelevant.

To help you sail in Blue Oceans, click this link to review the Priory’s PowerPoint deck:
AMA Pittsburgh Marketer of the Year Priory Hotel 3.16.10

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All Football Field Goals Aren’t Worth 3 Points

Did you ever wonder why all football field goals are worth three points or all touchdowns are worth six points? I have…and the more I think about it, the more outdated the tradition seems to me, and changing the values would make the game more exciting.

Aren’t 50 yard field goals tougher to make than 20 yarders? Certainly they are, so why aren’t their values different?

In gymnastics and other sports, the degree of difficulty is rewarded so why not football.

Here’s a thought…how about…

  • Making all field goals between the goal line and 10 yard line worth 1 point
  • 11-20 yard line = 2 points
  • 21 – 30  = 3 points (probably today’s average kick)
  • 31 – 40 = 4 points
  • 41 – 50 – 5 points
  • 51+ = 6 points (double the average)

Wouldn’t this single idea create cool new strategies and more game excitement in the NFL, College etc.? Yes it would – it would open up the game a ton. I’m not sure about changing the value of touchdowns, because the degree of difficulty getting a touchdown in the Red Zone (20 yards in) can be tough, but why not look into it.  Why always stay with the status quo especially when the environment you exist in has changed?

The NBA finally adopted the 3-point shot in the 1979-80 season after seeing it tested over the years, so why can’t the NFL change?

Bringing this marketing idea home to you and your business, what can you take away from this discussion?

Well, for starters take a hard look at your pricing and see if the pricing of the selling of your goods and services (goals) truly reflects what their real and perceived worth is to your customer.

Here are a few questions to ask yourself when reviewing your pricing policies:

  • Do you offer better terms of service than your competitors
  • Does your stuff last longer
  • Is your stuff simply better
  • Are you nicer to do business with – more trustworthy
  • Do you offer guarantees – replacements
  • Are you faster
  • Are you cleaner
  • Are you more thorough
  • Do you offer more prestige
  • Do you offer more value-added services
  • Is it harder to do what you do
  • Is your error rate smaller
  • Does the quality you deliver reflected in the time and care you take to deliver
  • Do your ideas transform businesses into more long term profitable brands vs. short term easy to lose small gains

Certainly this list isn’t exhaustive, but you get the idea.  You get the picture.

In my experience, over 80% of the pricing problems I see with brands, turns out to be that they should raise their prices and clearly demonstrate their true value .

The problem most brands have (if they have a quality product) is that they do not clearly communicate and demonstrate the value they offer, so they simply resort to lowering their prices until their customer believes their effort to be of some value.

I contend that 50 yard field goals are worth a lot more that 25 yarders and should be valued accordingly – it’s certainly easy to demonstrate the value because they’re longer and harder to make!

What do you do that’s better than your competitors, but your prices are similar?

Figure out what your dramatic difference is and clearly demonstrate your value-add and win! If you don’t have a dramatic difference that you can clearly demonstrate…get one!

Photo: James Clear

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