Direct Sales and Direct Response – they are not the same thing

peopleinvolvedindirectsellingShould you market your great new product or service via retailers or sell direct to the consumer? That’s a question that gets asked every time an entrepreneur considers how to bring their product or service to market.

On one hand, having a retailer sell your product is easy or easier in that you make the product or deliver the service and the retailer (or in some cases the distributor) is there at the point of sale to the customer. No individual orders to fill, less inventory headaches. But the retailers take a hefty cut of your profit in providing that service.

On the other hand, direct sales puts you in control of the customer relationship in every way. From customer acquisition, delivery of product/service, to customer satisfaction and a future customer relationship.  Direct selling also includes (but is not limited to) multi-level marketing companies such as Amway, Young Living, and Herbalife to name three.

I have often found that people really do not understand that direct sales – (i.e. selling directly to consumers or corporations organizations or institutions with no retailer involved), is an overall “strategy”, whereas direct response as a practice employs specific strategies and tactics such as claims, offers, guarantees etc. to generate customer response and sales.

You can use direct sales without using direct response strategies and tactics. Let’s say you have your product up on A potential customer finds your product, purchases it, and you ship it (or have it shipped FBA – Fulfillment by Amazon) to the customer.

How did the customer find you? Good question! That’s where the marketing comes in. Of course you don’t have to market the product or service. You can put up a website with some nice photos or your great product, a cool story, have your own Amazon store page, and wait for the customers to find you. Good luck with that.

When coming up with the idea for this great product or service, there were clear reasons for doing so. There had to be distinct advantages or innovations that made your idea viable and potentially desirable. This is precisely where many entrepreneurs fall down. Here are six examples how and there are many more:

  1. The company does not find ways to talk about the POD’s (points of differentiation), or promote the benefits to the consumer or corporation.
  2. There aren’t product or service claims (the only, largest, fastest, most elegant etc.) that help explain the value proposition to the prospect so they can make a more informed (and better) decision.
  3. There’s no offer or guarantee of customer satisfaction, (and yes I understand that REFUND is a four letter word to many companies).
  4. There’s no-follow up strategy for unconverted leads.
  5. There’s no effort to increase the size of the customer purchase and CLTV (Customer Lifetime Value).
  6. There’s no re-engagement strategy for lapsed customers.

Smart direct response marketers know that the days of YELL and SELL (think Billy Mays and I wrote about that almost seven years ago) are over. That does not mean that creating your brand and positioning your product/service for direct sales should ignore direct response marketing strategies and tactics.

And contrary to popular belief, your direct response marketing does not have to be cheesy. The techniques noted have been successful and will be successful because they acknowledge the way people behave and process ideas.

In creating your new product or service you’ve done the most amazing thing – coming up with it in the first place. A direct sales model can be the right approach for many brands. Using direct response marketing strategies and tactics is essential to helping you achieve the goal of having a successful business.

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Marketing 101 – Use evidence of success to drive decisions

evidenced-based-decisionsData-driven marketing, Big Data, and all the related terms should be at the forefront of the minds of marketers.  73% of all digital spending in 2016 will be purchased programmatically.

Do more of what works, less of what doesn’t. Today while marketing attribution of exactly knowing where success is being found is better than ever (but still not perfect), evidence-based decisions offer the most consistent path to marketing success.

I have the pleasure of talking to many entrepreneurs who all became entrepreneurs because they had passion for an idea or cause. It’s one of the most interesting things I get to do on a regular basis. Often entrepreneurs are doing many things in order to get their venture to the next level and marketing is considered a necessary or unnecessary endeavor depending on the business and individual.

A typical conversation might go something like “So we came up with this great idea to create X which will revolutionize industry Y. People love it and are buying it already. But we are having trouble scaling and getting the word out to enough people. We don’t know a great deal about marketing so that’s why we’re talking with you. The budget is limited but if marketing success can be proved there will definitely be more money to invest in marketing. How might you approach helping us”

Our answer as marketing consultants that execute plans is always the same. We will deeply research the category (if we are not familiar), make certain the ‘house’s’ brand is built on a solid foundation with an excellent user experience whether online or at retail, and emerge with a plan that enables us to test hypotheses, measure effectiveness and make changes based on what’s working and what is not working.

It’s always important to keep in mind built-in bias (even on my own part) which can negatively impact what and how ideas should be tested. Sometimes taking the outlier strategy is the best path, yet there are other times it’s critical to be compared to others in the category. When considering how to most quickly get evidence that will enable more refined testing, I often consider whether I myself am employing System 1 or System 2 (System 1 and System 2 are two distinct modes of decision making: System 1 is an automatic, fast and often unconscious way of thinking. … System 2 is an effortful, slow and controlled way of thinking) as depicted in his excellent book Thinking Fast and Slow by behavioral economist Daniel Khanamen. Keeping our own biases under control is a critical aspect of idea development.

It’s also important to remember that evidenced-based marketing decisions do not eliminate the need for creativity. Understanding the behaviors of people in the context of why they might be interested in your product or service and how to convey the value allows the creative approach to have a much better chance for success. There are times when a great creative approach can prompt people to try a product. Of course if the product does not live up to customer expectations there will not be an opportunity for lasting success. I had a business partner once tell me “You can’t polish a turd.” Too true.

I don’t want to leave out that when I talk with businesses and don’t end up feeling that there’s a high likelihood of success given their product and its potential in the competitive landscape, I either try to help find a path to a higher likelihood of success before marketing or pass on the opportunity altogether. See my comment in the above paragraph.

Of course you could just wing it. Good luck either way.

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SO busy. Dropping in just doesn’t work any more

so_busyIt’s gotten to the point where less and less frequently I call someone without arranging it beforehand. Do you schedule your calls with clients and prospects too? That happens with face-to-face appointments now almost exclusively. A far cry different from when I started in business in the 1980’s when you would just ‘drop in’ to see a client or prospect. You know what was interesting about that – the clients liked it and prospects would actually sometimes see me on a ‘drop-in’.

I did not have many arranged ‘play dates’ when I was a kid. We lived in a great neighborhood and after school the guys from the neighborhood would get together and most often play whatever sport was in season. But as we all had our own children the idea of arranged play dates became the standard. Not necessarily because the neighborhoods got any worse – some did and some didn’t, but because everyone was SO busy.

I propose that this spilled over into the professional world. When I was a young salesman, prior to the widespread use of mobile devices, people would call, there would not be caller ID in the office, and then believe it or not, you’d pick up the phone and have to talk to someone that you wished hadn’t called. That doesn’t happen today. Caller ID is pretty much the standard on mobile devices and even on many office phone systems.

In order to be sure you get to have that important conversation, people now ‘schedule a call’. More often these days people use a call-in number if there are multiple people on the call, or conference in others while on the phone with the first person called. The idea of an impromptu phone call to say how are you doing and to cover a few things is becoming a relic of my past.

The same is true of dropping in to see a client. Granted, in the 1980’s and 1990’s security in office buildings was pretty much non-existent (as well as unnecessary) save for companies like Exxon and Rockefeller Center/NBC in New York as I recall. You could walk into a building, take the elevator to a floor and canvas companies that were on your target list as future clients. Today for the most part, if you were to show up at an office building you likely could not even get upstairs without the security desk calling to announce your arrival. That does not work well even when you are doing business with the company as it somehow signals that you do not have respect for other people’s time. SO busy.

I am not being nostalgic here in pointing out that times have changed and so should approaches. Having scheduled appointments and phone calls accomplishes a very important business objective – actually having the meeting or call. People know when they are expected to be at the meeting or on the call and with a little luck have even thought about it and are prepared. Taking it one step further by preparing an agenda will make those meetings and calls even more productive. You need not necessarily send the agenda, just follow it so that there are come concrete outcomes. Then if you really want to go the extra yard, follow up with a summary of any pertinent thoughts or issues that occurred along with next steps.

There are aspects of dropping in that I do miss. The congeniality and ability to get to know people by seeing them frequently and not always so formally was beneficial as far as I am concerned. But those days are over and in the constant drive to be more efficient, random interruptions of people’s packed schedules are less desirable than ever. I admit that today I am no different.

I’m allowed to miss it a little bit right?

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Why aren’t you marketing your product at a State Fair?

big-e-entrancebig-e-ctI’ve only been to one other State Fair in Ohio and it was a regional fair and not for the entire state but it was pretty much what I expected. Animals, produce, music performances, rides, funnel cakes, and corn dogs. Did I mention it was fun? It was not only fun, it was a nostalgic slice of America. The Big E was much larger but had all of the above and more.

Also there were pavilions in which crafts and consumer products were displayed and sold. There were products for the home, car, travel, and crafts of virtually every variety. What was also interesting was that several of the vendors had multiple “booths” located at different areas of the Big E. Traffic was heavy but there’s so much there that it would be easy to skip a few of the exhibit areas/halls/buildings. By having more than one, brands are able to be more certain that they are seen. Smart, right?

Display booths to sell products (almost all products and few services although I did see GEICO there) vary in size and cost. One small booth inside for one of the vendors cost under $5K as described to me. $300/day in rent does not seem crazy. The display booth still has to be built and staffed so it will cost more than $10K for the exhibition for one small booth. Not surprisingly there were a number of direct response marketers exhibiting – and selling! However there were not as many as I expected.

One well-known national brand of pillows told me that at the Minnesota State Fair this year they sold 1.1 million pillows! For the record just under 2MM people attended this year’s 12-day Minnesota State Fair (167,000 people per day on average). To say I am impressed is an understatement.

We spent more than 5 ½ hours at the Big E and could have spent more time as we did not listen to bands playing very long and did not linger in every single exhibition although we covered just about every area. No I did not go on any rides, but I did have a couple of fried Oreos.

State Fairs – it’s something brands should consider to get right in front of their prospects and customers in an environment where people are happy to be there and often more receptive to new products. What do you think?  big-e-geico


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How U.S. Millennials are like Chinese tourists

u-s-millennials-traveling-in-paris chinese-traveling-to-parisU.S. Millennials clearly behave differently than their mostly Baby Boomer and Gen X parents. What I have observed from many millennials is a different value system when it comes to how they like to spend their time as opposed to their forebears. Generalizing is always risky so it’s important to acknowledge that in painting with a broad brush in no way do ALL millennials behave the same way.

Being the first truly digital/mobile natives, so many millennials (to me) appear to be ALWAYS engaged in something at any given moment. The default option is to look at their phone. Obviously that practice is hardly limited to millennials. A large number of college-educated millennials have taken to moving to cities in and around the United States. Living in a metropolitan area is often extremely expensive. It’s common to find millennials living 4 or more people to a two- bedroom apartment and even that does not make things necessarily ‘affordable’.

Today’s Chinese tourists also are digital and mobile savvy much like U.S. tourists. Their mobile devices complete with translation apps and great GPS enable those tourists to navigate foreign places with some degree of confidence. In fact, while group tours remain popular they are not the be-all and end-all anymore and individual Chinese people, couples and families are traveling apart from group tours more frequently than ever before.

U.S. Millennials behave much like Chinese tourists when it comes to what they want to do and how they want to have ‘awesome’ experiences. Living as inexpensively as possible and eating ramen to save money affords both Chinese tourists and Millennials the opportunity to create memorable travel and life experiences that they document in social media in real time. The days of inviting friends and family over to watch a slide show of a recent vacation to Yellowstone are over. Now you can watch it as it happens on Facebook Live or Snapchat. Thankfully.

An excerpt from this week’s China Skinny helps bring the point home.

At this time three years ago, we were celebrating the 94 million Chinese travellers expected to jet abroad in 2013.  Only three batches of mooncakes later, and that number is expected to grow to 133 million – an extra 39 million travellers spending up large overseas.

In 2013, the big tourism stories were the nightly TV clips from Beijing to educate Chinese travellers about behaving better and the ringing tills of luxury retailers abroad.  This year, a good shopping experience still remains the top reason for choosing a holiday according to an HSBC survey.  Yet when the top three reasons are factored in, nature/hikes and tasty food are more important than shopping to travellers overall, representative of the increasingly diverse Chinese tourist.

The attraction of nature and hiking is reflective of China’s youth growing more interested in healthy exercise, and the ability to escape the polluted concrete megacities that most Chinese travellers come from.

Mín yǐ shí wéi tiān: “Food is the God of the people” is an old Chinese idiom that is as relevant today as ever.  Increasing exposure to foreign cuisine in the Mainland has whet consumers’ appetites to experience more on their holidays.  On previous tourism-related marketing campaigns, China Skinny has found that food and beverage are some of the most engaging communications for Chinese.

Destinations are increasingly going beyond just talking about food and beverage to Chinese, and are enhancing related attractions to appeal to them. For example, New Zealand’s vineyards are hoping to tap into China’s growing taste for wine with one vineyard hiring the greensmaster from the “Lord of the Rings” movies to advise on landscaping around the winery and cellar door.

Food-related tourism is not just great business for attractions, but is also good for building sustainable sales of food back in China.  A study earlier this year found that Chinese tourists to Australia spend 40% more on Australian products after returning home to China.  But it’s not just the travellers who will buy more.  The obligatory social sharing on holidays is also influencing their family, friends and colleagues back home to buy those products in addition to influencing their travel decisions.

Sounds familiar right? And when it comes to educating tourists on behaving better there are some U.S. Millennials that could use more than a few tips (are you listening Ryan Lochte?)

There are still too many people who get left out of having memorable travel, dining and other entertainment experiences because it’s simply too expensive. But I would argue the desire is there particularly on the part of U.S. Millennials and Chinese tourists and they will go out of their way, to find a way.

Posted in China Marketing, Travel | Tagged , , , , , | 2 Comments

Assembling relationships – One of my favorite hobbies

build-better-relationshipsWhen strategy and development are critical aspects of your professional life, the people you know, meet, and work with are your most valued assets. I won’t say that it’s who you know more than what you know. Both are important and for different reasons. Who you know constitutes your network and everyone seems to agree that having a well-developed network of smart capable contacts is foundational to professional success.

For me, since I am truly interested in other people’s experiences and insight, developing new relationships is something I think about every day. To add value to any professional situation there has to be a mutual exchange of useful ideas and information. Many times sitting down and talking with someone one-to-one for the first time is the most important meeting with that person you will ever have. And sometimes that’s the only meeting with that person you will ever have – or at least have for a very long time. At least until you come across the right opportunity in which to involve your ‘assembled’ relationship.

In using the term ‘assembled’ I am keenly aware that it sounds a bit manufactured but my intent is to highlight the ongoing process of creating greater trust and professionalism between you and the people in your network.

The idea in taking meetings with people you don’t know at all is to hopefully create a circumstance in which you can help one another at some point in the future. It’s your job to keep track of the relationship. It does require thinking, and perhaps even the occasional interaction when something of mutual interest arises or comes to light. There often is not any particular future opportunity that is being explored, simply an exchange of ideas and thoughts/philosophies such that at some time in the future you might realize that this ‘assembled’ relationship might be the right person to be involved in something on which you are working.

My cousin came up with the idea that people like to “have a guy for that”.   Something breaks in your house or on your car – and he has a guy for that. Need tickets to a hot show? He’s got a guy for that. While metaphorical, the idea that you have a network that you can tap when you need something specific is useful in all aspects of your life – professional and personal.

How do I go about assembling relationships? In different ways of course. Movie director Woody Allen once allegedly said – “90% of life is just showing up”. Well I show up. At meetings, lectures, discussions and conferences. I never know whom I might meet. There are blind alleys and sometimes, wasted time involved in the process but I have had multiple instances where I showed up for something and met people that later on became trusted business associates, (and even personal contacts and long-term relationships).

Putting the right people together takes steady effort but if you like to meet people and learn new and interesting things then start to add to your assembly of relationships. It’s a great investment.


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The best investing opportunities are all about Deal Flow

deal-flowOne of the things I enjoy most about my daily professional activities is finding the right opportunities to help companies and individuals with their success. The term that I hear most often thrown around is ‘deal flow’. Whenever I meet with investors, angels, VC’s, or family offices and I mention that it’s so important to have good deal flow I am universally met with a nod and smile of acknowledgment.

In using the term ‘deals’ I paint with a broad brush. Deals can be simply finding the right investor for a hot opportunity and we (along with our team) may or may not work on the brand and marketing side although my favorite deals do involve both aspects.

As any good salesperson will tell you, having a deep pool of good opportunities is a key to success. I’ve written about the idea of making the most of those opportunities. Deal flow is obviously different from finding good sales opportunities as frequently matchmaking skills are employed. Bringing good people that have good ideas together with the right investment partners is tricky business.

Maintaining good relationships with entrepreneurs and even established companies seeking growth capital, along with various investors as described requires a delicate balance of putting the right people and right potential deals together. If you show an investor a few deals that do not match up well with what they like to do, you run the risk of losing the confidence of that investor. Correspondingly, putting the wrong investor together with an entrepreneur and or company seeking capital also can cause a loss of confidence and simply be a waste of time.

How do you know the difference? You watch and learn from people you admire, you read a ton of stuff on the subjects, and most importantly as far as I am concerned, you continually keep in mind the personalities and desires of all of the stake holders. I always go through the process of thinking how a meeting will go when I put people together. What is the best outcome? What is the worst outcome? Will a review of concept and subsequent discussion (whether by phone or in person) be worth everyone’s time? If I am not sure then I back off.

Keeping track of every deal should be a detailed and organized process. It’s no surprise that most deals take time occasionally there are quick ones). Since the deals are at varying stages of development given the many contingencies, staying involved, interested and in touch becomes important to all the stakeholders. Often times it’s go, go, wait, wait, wait, wait, wait and then GO NOW!   You need to be in touch so that you are not caught by surprise when tides change.

What about success rates? Well in my experience there are way more dead ends and even a few blind alleys than there are successes. But if you personally believe in the mission of the company and of the potential of their success, you have the best chance to add value while knowing you can’t win them all.

Deal flow. It’s all about deal flow. Happy hunting.

Posted in Entrepreneurship, Start ups | Tagged , , , | 2 Comments