Tests Time! (Part 2 of 2)

Now let's have fun with a little game: I will put here 3 examples of real tests that have run on newspaper advertising, with 2 different Headlines (this is called “Split-Run”: the newspaper/magazine prints half of the copies with one version and half with the other and distribute uniformly both of them on the territory). Only what indicated changed, nothing else in the advertisement: same pictures, same text, same offer.

The idea is for you to guess which version did better: Case A or Case B? Solutions at the very end of the post (ehi, don’t look at the solutions right away, come on!):

Example 1: Advertisement of a Retirement Income Plan

Case A) Headline: A vacation that lasts the rest of your life

Case B) Headline: How you can retire on a guaranteed income for life

Example 2: Advertisement of a Home-Study Course in Business

Case A) Headline: To a $25,000 man or woman who would like to be making $50,000

Case B) Headline: Here’s proof that this training pays financially

Example 3: Advertisement of The Wall Street Journal subscription

Case A) Headline: How 27$ started me on the road to $75,000 a year

Copy Plot: the story of a man who sent $27 for a trial subscription to The Wall Street Journal. Later he became a regular subscriber. Reading the Journal helped him get an income of $75,000

Case B) Headline: Some $75,000 jobs are looking for applicants

Copy Plot: there a e a number of jobs paying $75,000 or more that are available to trained men and women. Reading The Wall Street Journal will help you train for one of these jobs

Results at the very end of the post.

Surprised? You are probably not alone. You got all of three right? Congratulations, you are better than the majority of advertisement professionals.

Now, imagine if Case B in Example 1 is yielding 50% more than Case A: not running the test and sticking to Case A would mean not getting a good part of the responses. And for no cost difference…

What is the philosophical bottom line of this posting? Maybe that the only thing that really counts is imagination, the ability to think new things, new solutions to be tested and improved. As Mark Victor Hansen, co-author of “Chicken Soup for the Soul”, says “The only asset a company really has is human imagination”.

These examples are taken from the classic advertisement book “Tested Advertisement Methods” by John Caples, that I recommend to anyone involved in promoting his/her company.

Keep thinking smart,

Kramerilio in USA

PS Results of the test

Example 1) Case B

Example 1) Case A

Example 1) Case A

Tests Time! (Part 1 of 2)

Subjects: Testing
Principle: You don’t know what works best: the only way to discover is to test
Potential Worth: Extra sales at no extra effort
Referenced Reading:

• “Tested Advertisement Methods” by John Caples
• "Failing Forward" by John Maxwell

This post deal with a major factors in the success of any marketing or sales activity (not only for big multinationals, but also for small companies, 2-people shop etc): Testing.

If you are relatively new to marketing, let me share with you the worst kept secret in the industry: in marketing nobody knows in advance exactly what is going to work best and what will fail... Now that you know this, as Jack Burns in "Meet the Parents" would say, you are in the "Circle of trust" ;)

Nobody knows with certainty beforehand: not the managers, not the advertising gurus, not the sales people. Sure, people with experience in the field will have gut feelings, suspects, suppositions, hunches but the reality is that there is only one entity that will be judge and jury: the Public.

As a consequence, the only way to really see if the advertisement (or email, or fax, or small ad in the Sunday paper… anything you use to communicate with the world) version that you prefer will do better that the one your friend/colleague/business partner prefers is … to try both and compare the results. This is called Testing.

So, your mom was right: tests do not end when you finish school. “Life is a never ending test” would say mine.

It is the good, old “Trial and Error”: that’s the way we learn to walk, to talk, to ride a bike. We try, stumble, fall, try again, correct, cover more ground, fall again etc. But without the feedback mechanism, we would never improve our performances. A good book on how to learn to fail in life and move forward is "Failing Forward" by John Maxwell (you can see it here)

Basically, different versions of the same advertisement (or offer, headline, sales pitch, proposal) are tried in the same conditions and the results carefully collected and farmed into an all-powerful Excel spreadsheet to see which one is yielding the best results for the same investment. It looks simple, right?

The biggest obstacle is to actually start the procedure: it can be boring to continuously work on testing new combinations, new ideas, and new approaches. But the payout can be really consequential. Actually, this could be one of the highest return you get for the time you invest in any sales and marketing operation in your company.

For example, if you are a small entrepreneurial company providing car repair services and you are putting the same ad every week in the Sunday paper, you are missing a big opportunity to get more bangs for your bucks: Testing different headlines, different offers, and different copy plots could bring your response rate dramatically higher, even doubling or tripling your inquiries.

(Continues in the next posting)

A Price so Low that it is Illegal

Subjects: Pricing Presentation
Principle: Presenting Payments in Daily Terms Instead of Lump Sum
Potential Worth: Extra sales at no extra effort

With this Smart Idea we fly back to Germany: our good friend Stefano is providing this suggestion. Danke Stefano !

The Deutsche Post (National Postal Service in Germany) is offering small loans of 5,000 Euros (about 6,500$) to be reimbursed in super small 2.9-Euros-a-day (3.5$) payments.

Wow! This looks very interesting; the daily repayment is so low that if you don’t have the money, you can ask your son or daughter to borrow some from them…

The truth of the matter is that the payments have to be for 72 months and the resulting interest rate is 7.99%!

The principle behind this is very smart, so smart that it is illegal to use it in some cases. Payments are presented in daily terms instead of a lump sum: in this way, according to researcher John Gourville (1998), the prospect is more likely to consider the expense as another trivial daily expense instead of a major expense. This is true even if the expense has to be paid in a lump sum: the principle is to show the prospect the “daily amount” angle instead of just the big, scary lump sum.

“Thinking of payments in terms of daily amounts rather than annual amounts is so effective, that civil courts in some jurisdictions do not allow lawyers seeking punitive damages to express to the jury their sought-after compensation in daily amount terms.” says Noah Goldstein in her interesting article on this subject (for the complete article, click here).

So, from tomorrow, you can think twice about the cost of your cappuccino: for just one cappuccino a day, you could fly to Hawaii for your next vacation…

Till next time,

Kramerilio in USA

Interesting Tactic to Increase Attendance

Subjects: Residual Value of a Customer
Principle: Investment to acquire a Customer
Potential Worth: Your average sale per customer x the new acquired customers

It is very interesting what we receive thru email these days: I am always fascinated by the opportunity to study what other marketers use as techniques, in order to learn and redeploy them in other businesses.

Case in point: yesterday I got an email soliciting my participation to a conference call. The body of it said the following:

“The Ticket Price is set at $1,295 per person - but I've arranged a very, very special deal just for you. Instead of paying $1,295 per ticket, you just have to 'reserve your seat' with a $100 'seat deposit'.

And the best news is - that $100 is refundable once you show up -- making the event totally free!!”

So, the final objective of the initiative is not to make money in the short term, obviously: they want to get people to participate to the conference call. I like the fact they point out the “commercial” value of the conference call ($1,295) and that the price for this time is a rock-bottom $100. Great deal. But wait, there is more! We will get the money back.

So, where are they going to make money? I can already hear your answers… Residual Value of the Customer (sure, "Customer": they paid already $100…).

They know that, statistically, maybe 3% of the participants will purchase books, classes, courses, seminars whatever they will propose, and they know statistically, how much each one will purchase. So, it makes good business sense to invest the cost of the email offer (zero $), of the phone conference call (some hundreds of $) to reap the statistically quasi-certain benefits.

Till next time,

M in USA

Is my Steak Ready ?

Subjects: Residual Value of a Customer
Principle: Cost of losing a customer, Critical Interaction Moments (CIM)
Potential Worth: 1,000$ of lost profit per customer lost

Yesterday evening we went out for dinner: we decided to give a shot to a new steakhouse, where I could enjoy our position on top of the food chain and honor in the best way a great New York Strip.

After sitting and ordering, my steak arrives, and it’s lukewarm, not sizzling the way I like it. I tell it to the waitress: she takes my steak away and come back couple of minutes later with the same steak still tepid. She asks me “Is the steak way better now?” I reply with an unconvinced “Hmm, ok…”. And she leaves. And I mentally leave that place for ever. Amen.

I am intrigued by the Critical Interaction Moments (CIM) in a transaction. These are the moments in which the relationship between a person and a business can move to the next level of mutual trust. And when the customer has a problem, it surely is a CIM.

The waiter did not replace my steak: great, she saved money for the company. Well, in reality, there is a cost associated with that. Because I was not fully satisfied, now I will not go back there anymore. Let’s run some basic math

2 person party x 2 times a month x 3 years I live in a place = 144 dinners served that the restaurant will not get from me. If they make, say, 7 dollars of profit on each dinner, we are talking about 144 x 7 = 1,008$ of future profit that went in smoke.

Replacing the steak and make me a life-time customer would have costed probably 5$...

Hey, invest 5$ to get 1,008$: I am down for that kind of investment...

We just briefly analyzed the Residual Value of a Customer: few companies think in terms of future revenues potentially lost when they deal with problems. If they did think about those future dollars, I guarantee our complains would be addressed much faster.

But the reality is that a short-term view of the commercial transaction (“How many dollars can I get now? Is it worth to replace that item?”) prevails in the majority of cases, and this makes people shop around and leave a business…

My dream is a lifetime relationship with a customer: the cost of acquiring a customer is so high today that it makes sense to go almost to any extent to keep them from going away. And on top of that, it is a great satisfaction to deal with a circle of customers that now become your fans.

And remember, "You don't sell the steak. You sell the sizzle."

K in USA

Ok, I will upgrade you, dear Friend…

Subjects: Creative offers
Principle: Leveraging to full extent your assets
Potential Worth: Around 30 M$ additional profit per year

We talk again about Airline Industry today. I am a big time flyer: I fly so much that pilots greet me when I board the plane " ”Hey Kramerilio, long time no see on this route… How’'s going buddy?”". Just kidding... But I do fly a lot.

One area of business (and life) that fascinates me is the amount of assets that a company has that are unexploited. Those assets are not on the books but they have a clear commercial value. For instance, what is the value of a clients’ database? And how much more a very good database (with all kind of information collected, like Amazon does) is worth versus a mediocre one (where just name and last name are present)? Difficult to quantify, but we know that this difference can become worth real dollars, if the asset is entrusted in the hand of a savvy business person or a guerrilla marketer.

Along these lines, we talk today of a very creative way that American Airlines (AA) found to create some extra money: I love these examples because– they create wealth and value out of thin air.

A word of introduction: When a person flies a lot, she accumulates “500-mile upgrades”, that allow for that person to upgrade to First Class on domestic flights (if seats are available). Now, these upgrades are non-transferable: I got hundreds of them and they sleep unused in my account because I cannot humanly fly enough to use them all.

Now, instead of just allowing this upgrades to be passed to a friend, AA decided (smartly, may I add) to see if they can make some cash out of the transaction… Ehi, what’'s the downside? People not taking advantage of the offer… big deal...

So, now I can make friends, family, colleagues happy for just 15$ transfer fee: they are happy, I get big hugs+recognition+love+friendship and AA gets some money.

Let’s run some basic math about this: if I transfer just 2 times per year, AA makes 30$ out of the transaction at basically zero cost and zero risk. If 1 million travelers do that per year, that'’s about 30 millions in pure profit that AA gets, every year, forever, amen. (remember, upgrade is subject to availability, so they are not putting first class revenue at risk: if first class is full of paying customers, no free upgrade is allowed).

Oh, I love smart and elegant ideas like this one: just upside, no downside.

Have a great Sunday, fly safely!

Kramerilio in USA

What's inside this envelope...? Let me open it...

Subjects: Direct Mailing
Principle: Optimizing the opening rate of Envelopes

I am big on Optimization: if I do something, I love to get maximum yield from it. Especially if the price I have to pay for mediocre results or great results is the same ... "I was not put on this planet to lose money" as my millionaire friend Mike reminds me.

So, when we talk about Direct Marketing (basically, the letters sent to people directly in their regular mail box), we have several critical hurdles to clear (it's like playing a video game: there are obstacles along the way that we must pass in a certain order: if we fail even just one, we lose and our letter is trashed)

The first one is to get the envelope to be looked at: it’ is cute to see how much money businesses waste with direct marketing, creating a fantastic brochure or sales letter and putting it into a completely uninviting envelope. The result is that the envelope (with the content and the stamp) is sent straight to trash. What a great way to burn money...

There are a couple of main strategies to get the envelope looked at:

a) Make it look very personal, to encourage the receiver to consider it of high importance. Tactics in this case require the use of the personal name of the addressee (yeah, there are also letters sent to “"Resident of”": they go straight to trash), personal looking envelope (white, no company logo), return address of a person. The best result is obtained with hand writing: as this is pretty labor intensive, there are now sophisticated programs that can simulate relatively well human writing: this will surely increase the opening rate. Here the stamp should be a regular one, better if unusual, but surely not metered mail

b) Make it very interesting, forcing the receiver to open it out of sheer curiosity. This requires the use of smart headlines (see posting on March 27th). The receiver knows it is for commercial purposes, but the headline is so enticing that he/she cannot avoid opening.

An extra tactic in this case is to put, instead of a 37 Cents stamp, say, 7 stamps of 5 cents and 2 of 1 (5x7+2x1=37c): imagine the recipient, with an envelope with so many stamps, with great headlines on it… How can he/she not open it?

Another tactic is the one depicted in today’s posting: to glue a coin inside the envelope, to elicit even more curiosity: the tactile sense will be stimulated, adding to the curiosity. In this case is a coin: it could have been a plastic card as well, for instance.

As Claude Hopkins says, curiosity is a very strong motivator for people: if we are able to fuel the desire to know more, we are on the right track.

That’s it for today: I got to go throught my mail. There are a couple of envelopes with a bizarre looking content I want to check out...

Kramerilio in USA

May I have the check, please?

Subjects: Referral, Returning customers
Principle: Lead your customers to the behavior you want

By now you start knowing me: I am really passionate about making as much money as possible for the same effort, providing a better service.

Along these lines, I got some pet peeves: one of my biggest is at restaurants.

After a great dinner, I ask for my check and duly pay (leaving a tip: how much? hehe, there will be a post in the future on "How to increase the tip amount using social psychology": amazing stuff, so easy to make more money that way, knowing the right principles...).

Then something really disappointing happens every time (actually, it does NOT happen...): the waiter/waitress brings me back the receipt and that's it... Whoa ! They are wasting a golden (and free) opportunity to hand me 2 or 3 business cards of the restaurant, asking me, with politesse, "Sir, we truly enjoy having guests like you. If you loved our food, we would appreciate if you could pass our business cards to your friends: in this way, we can invest more of our money into great food and a great environment, instead of paying for advertisement".

Nice, short, sincere request: it would work on me like a charm.

Downside: nothing, zippo, nada.

Actually, half an hour later, I have been asked about that restaurant, and I was unable to provide the phone number to the person asking me... One new customer lost...

The principle is often unknown to business owners: “People are silently begging to be led”, people want to be, in a courteous and respectful way, educated about what to do next. Sure, some guests will still look for the business card and go out of their way to get it, but why making their life difficult? Why not helping them making you a favor?

Did any of the readers ever found a restaurant doing this? If yes, let’s give some free advertisement to the smart restaurateur on our little forum !

Enjoy your dinner,

K in USA

Home, Sweet Home…

Subjects: Mailings, Headlines
Principle: Headlines and outline of the card DO make a difference

Today we talk about Real Estate Investing. No, we will not go into the details of how to compute your monthly payment for a mortgage or how to choose the best house in the neighbors: we will analyze a sales card I got in the mail from a Real Estate Investment “guru”.

The card uses a lot of the smart-ideas-approved techniques to increase yield with no risk: the card has been designed well.

First of all, it’s a card, not a letter. The marketing letter has advantages: we can put more details, a brochure, a sales letter etc. On the other hand the use of an envelope adds one extra step to the marketing process: getting the envelope opened…

This is such a fascinating field in itself that we will have a posting in 2 days on “How to make somebody open your envelope”. But for now, we just have to remember that the advantage of the card versus the letter is that the card will be read: it’s already open… the person cannot avoid getting a glimpse of it.

Now, the glimpse is a fraction of a second: the good marketer knows that this is all she/he has to capture and retain the attention of the prospect (Steven Scott calls this step “the hook” in his good book “Millionaire's Notebook”. For more information, click here). And key words like “Secret”, ”Money-Making”, “Wealth building” do work: we can smile at them, we can scorn them, but they do work in retaining attention.

Together with the use of the word “FREE” for the tape “hand written” (which got my attention), I enjoyed the very elegant way to make people read the second page: the first page ends with the sentence “Here’s how” (see other side). DIABOLICAL! Still Steven Scott calls this technique “salting”: adding “salt” to the description to make the reader thirsty for more. To quench my thirst, I did turn to the other side.

This second side reserves a couple of pearls for us. One is the use of highlighting to direct the attention to specific areas. Another one is the picture of the tape: this add dimension to the promise, it make it more real. Last but not least, the Toll Free number, which is surely coded to understand which kind of card works best. I am pretty sure, in other part of the state or of the town, they received different versions of the card, and the results are monitored with discipline by the marketers behind this direct-mail campaign.

All right, that’s all for today: I gotta go check for a new house that I want to buy soon…

Till next time,

Kramerilio in USA

Nobody loves me...and I am getting older...

Subjects: Creative offers
Principle: Recognizing Birthdays' value for businesses
Potential Worth: 2-5% of additional sales and profit

Once again we talk about one of my favorite unexploited source of revenue and profit: birthdays.

If a business has 1,000 customers, statistically, 3 of them have their birthday each single day. What a fantastic opportunity to reach out, bind more closely with customer and make some extra sales in the meantime...

Case in point: last week it was my XXth birthday (ehi, I need to keep some mystery around my persona...). Of course, I was in spending mood: what better way to silence the inner voice the reminds me that I am getting old than spending money? I was really in the mood, I really wanted to spend, go out for a gargantuan dinner and drag with me an army of friends.

Can we imagine an easier target for a marketing mailing? I was a sitting duck, a cow waiting to be milked. I was eagerly awaiting for a cascade of coupons in my snail mail inbox, for a never ending stream of e-mails coupons eager to get the lion share of my easy money.

But the sad reality was different: nobody loves me… nobody even wants my money…

I did not get a single targeted offer at me, nothing, nada, zippo. What a pity…

Imagine the owner of a restaurant that is smart enough to start collecting the birthday (day and month, not year…) day of his/her customers. How? Just asking with sincerity, as Claude Hopkins and Jay Abraham advocate in their books. “Dear guest, we would like to extend you, for your birthday, every year, a special gift. But in order to do that, we need to know the day and month of your birthday: would you please share with us that information?”. Downside: nothing (how can somebody get angry at a request made with tact and politeness?). The worst that can happen is to get a “No, I prefer not to give you that information”. Big deal…

And the restaurant would be sure to get a bunch of extra customers: actually, why not suggesting me to bring a party of 5 or more to get a 20% discount? And if the party is of 10 or more, extra discount.

And we can go on and on… what about my hair stylist: don’t I want to look cool for my bday? Car wash, sir? New clothes, of course ! Banana Republic, The Gap, where are you guys? I got money, I want to waste it (ehhmm , spend it…), just come and get it.

The Bible (best selling book of all times, we can quote it right?) says “Ask and you shall receive”. What a great formula. And in our marketing world, it seems that nobody is asking for the money of the birthday-boys (or girls). Why? Because it requires the discipline (and understanding) in building a database, one step at a time, one name at a time. And obviously this is not considered important, valuable by close to 100% of businesses...

Some basic math to evaluate the business impact: if I go to a restaurant twice a month, that is 24 times a year and the birthday offer gets me one extra time, that increases by 1/25=4% the business a restaurateur can get from one guest. Not life changing, sure, but not to be laughed at: remember that there is no risk associated...

That’s all for today: next time, maybe, we will have a posting on anniversaries… wedding anniversary, graduation anniversary… keep them coming…

Till next time,

K in USA

Keep on Yodeling: check out Rentalps.com

Today is our Swiss day: after my lunch fondue, I am going to have a big Toblerone to make my day a sweeter day. And who knows... Maybe I will add some Swiss Cheese to my pizza this evening...



Ok, back to business.
Today we talk about a web service exclusively dedicated to renting apartments in the Alps: rentalps.com (full disclosure: Rentalps.com is owned and operated by a friend of mine).

I am glad to bring some attention to this site for his interesting risk-reversal policy for Owners:

• In two simple words, no risk. The site allows to post the ad about the apartment or chalet in few minutes for no cost (no cost = no risk)
• Owners can receive 3 free contacts from prospect renters, so they can actually see the service at work, delivering results.
• There is no time limit: the owner can leave the ad posted with no cost till results start coming.

It does not get much better than this: checking a service at work delivering sample real results without even paying a single Euro...

Ok, now I go to look for my next ski trip house: do I prefer Moleson or Verbier?

Kramerilio in USA

Pay first, get your money back - The SwissCom idea

Switzerland... The name alone is enough to evoke great memories of ski trips, tasty chocolate and great Ricola herb products ...

But Switzerland, together with the Swiss Army knife and the Swatch brand, gifted humanity with another great idea, from the country Telecom operator: SwissCom.

(By the way, this idea is contributed by Stefano from Germany. I love that our readers are now contributing to the blog, this is great! Thanx Stef!)



It's an offer to increase the adoption of ADSL technology for Internet access.

Let's see how the offer works (for our non-Italian speaking readers).

• First, the prospect commits to become an ADSL user signing a contract
• The contract allows for 2 months of "Trial period": in these 2 months, the prospect-now-turned-into-user can rescind the contract in any moment and get the FULL money BACK.
• After 2 months, the automatic condition is for the contract now to be fully valid
• SwissCom encourages the prospect voiding the "Set-up costs" of 149 Swiss Francs (about 125USD)

This is a very clever spin of the "Money-Back Guaranteed + Free Trial" idea: in fact, there is NO free trial... Basically, the Trial Period allows for the contract to be rescinded, but it does not provide for 2 free months... The subscriber pays for the 2 months, with the understanding that the money will be fully reimbursed in case of dissatisfaction. But still, he/she pays !

I love this, very well thought-out: it provides risk reversal but without the necessity to give away free months.

Ok, now I go to eat: we'll probably have some fondue in honor of the great country of Switzerland. And don't forget to yodel !

Till next time,

K in USA

Just Married... And some other smart ideas

Springtime... Perfect weather for weddings.
Birds are singing, temperature is mild, nature as a whole is waking up from the winter sleep: we all agree it's the perfect moment to tie the knot and start a new life with your loved one... To live happily thereafter...

Ok, now back to business.
I went yesterday to the wedding of 2 very dear friends and it was a great experience. But while enjoying the reception afterwards, with great food served at elegant tables, my business mind - marketing-oriented machine was cranking.

There we are, 8 guests sitting at a table waiting for food to be delivered. After few pleasantries, the expected moments of odd silence start descending upon us: in those moment, I would do anything to look busy, I would read anything... So, why not having something on the table promoting the catering company?

If you are the catering manager, think about it: 8 people per table, 15 tables, a total of 120 guests for a very captive audience. They are already experiencing the service and products your company can provide. They are in an excellent position to take your business card and pass it along to friends or to use it for their events.

Surely the pitch has to be done with tact: and about this, I refer again to our great teacher Claude Hopkins. Why not just being sincere and write some good copy to entice the crowd.

How about "Dear Sir/Madam, we are 3 friends that started this catering company, for 2 main reasons: we love food, and we adore helping in making happy events become reality. We don't have much budget for marketing: we prefer to invest our profit in making better food, choosing the top ingredients without compromises. So, it would be great if you could help us out in staying in business: if you found this food tasty and it made your palate delighted, please take some of our business cards and pass them to your friends. Or just give us a call for your next happy event: a wedding, graduation, Christmas banquet, Thanksgiving, Birthday parties or your wedding anniversary. We will make sure to make you a hero for your guests."

As usual, what do they have to lose?

Of course, the couple might object to that: great, in that case they should refrain from doing it.
But hey, if that's the real story, who would not want to help a young company with goodwill and high service ethics? Does it hurt to ask?

A little more basic math: if they cater today to 3 weddings a week, with 100 people each, it's 300 people seeing the "ad". If they cater for 3 months a year, that's about 13 weeks x 300 people = 3,900 people exposed to the ad and the services for zero cost ! ZERO !

But it requires to think about it, and that's the tricky and difficult part.

Till next time,

K in USA

The Performance Guarantee from British Airways

Oh, flying over the oceans, seeing the clouds below while the quiet buzz of the airplane engines keeps its hypnotic effect on the passengers… what a beautiful sensation of lightness and comfort…

www.ba.com/sleepwellguaranteed

Ok, now down to business. Today we will talk about the aviation industry and about one initiative I found publicized on this week’s edition of “The Economist”.

British Airways (BA) is now pushing a “Sleep Well Guarantee”: wow, what a concept.

How do they dare risk that people can take advantage of them and claim that the night was spent having nightmares and with the eyes open wide watching the ceiling? Would this initiative from a crazy marketer inside BA bring the colossus of world aviation in the brink of collapse? And, most importantly, should I use my BA miles before they fold?

I think we can literally sleep tight… the Guarantee is architected in a very clever way, helping both BA and the customers: our beloved BA will not go bankrupt because of it.

Basically, they promise a free upgrade to First Class on your next flight if you are not satisfied with the quality of sleep in Business (ups, the “Club World Business Class” as they call it).

Now, for the “risk” of giving away a Free upgrade to First, let’s see what BA gets in the deal:

• Increased willingness of prospects to prefer them: ehi, after all I noticed it. If I had the choice between BA and Air France, all things being equal, which one would I purchase? BA, of course! They took away the risk from me (Risk Reversal, as we described in the “Office Max” posting few days ago). If Air France would tell me “Monsieur, our Classe Affaire (Biz class, I would guess) is as good as BA, we don’t need to guarantee it”, I would say “Very well, au revoir Air France then. Hello BA!”.,
• They get something incredibly important: feedback from a dissatisfied customer. This is a very precious commodity in today business world. To give you a better perspective on how difficult is to get feedback from disgruntled clients, here are some interesting statistics regarding unhappy clients from a study done by the Research Institute of America for the White House Office of Consumer Affairs:
• The average business will hear nothing from 96% of unhappy clients who experience rude or discourteous treatment.
• Only 4% of unhappy clients bother to complain. For every complaint you hear, 24 others (6 of which are “serious”) go not communicated to the company – but not to other prospects or clients

• And this is hardly difficult to understand: we can easily relate to this… when is the last time that, if the food was not satisfactory at a restaurant, we took the pain to get in touch with the manager via email, phone, fax, smoke signals, flying pigeons to let him/her know about the worrying trend of the quality of the food at his/her establishment? Well… probably never… we vote with our feet: we just go somewhere else. And we take with us the very precious comments and insights about the potential cancer that is eroding the profit of the restaurant…

• Hence, from BA it’s a very smart idea to pay a small price (an upgrade to First Class) for such a precious opportunity: getting the opportunity to talk with a client that otherwise would leave the company forever
• They are not even risking to lose the potential money of the upgrade… if we read the small print, the upgrade is “Subject to availability”: basically “Sir, we will give you a seat that otherwise would go empty anyway”. They are not promising to give up a paying customer upgrade…
• They can stop the initiative at any time. There is no law that says that once they start, they cannot stop… if too many people take advantage in bad faith, just to damage BA, the company can stop the initiative just pulling the website down.

This initiative falls into the category of “Catalytic mechanisms”, very eloquently described in the fine article of Jim Collins “Turning Goals into Results: The Power of Catalytic Mechanisms” published by Harvard Business Review (for more information, click here). Basically this mechanism forces the organization (BA) to notice a failure in their operations because it creates an incident that cannot go unnoticed. In their reporting systems, that request for Free Upgrade will bubble up in the statistics and they will know that one extra person was unhappy. Then they can decide whatever course of action they deem appropriate to deal with the problem at the source.

I am at the Tokyo Narita airport now waiting to board an American Airlines flight. I will be in business class, but AA does not have a guarantee… I can only say “I wish I was on BA to sleep tight”

Au revoir, a la prochaine,

M in Tokyo

One Referral Here, One Referral There...

Ok, you guys are starting to know me: and you know I got a weak spot for referrals. Referrals are, statistical, better customers, buying more, more often and asking for lower discounts. Basically, they are the dream customers. I love the idea of a friend suggesting a product/company/service to another friend because he/she is happy with the interaction he/she had with the company.



Now, left to his/her own devices, the average person will NOT go out of his/her own way to voluntarily provide names of friends... That's why the Bible say "Ask, and you Shall Receive" is so great. ASK ! What a fantastic formula: if you ASK, you shall RECEIVE. But you need to ask to start the receiving process...

So, here we have a very clever company that, on the back of the envelope, uses a space that would be useless otherwise, to ASK for a referral. Just one? NO! They are very smart: they ask for TWO referrals ! Ehi, what do they have to loose...

Oh yeah, of course, if you have friends interested in this stuff, please send them the web address of SmartIdeas Blog !

http://smartideas.blogspot.com/


K in Taipei

Newsweek: an example in subscription cards

The well respected advertising authority Claude Hopkins writes in “My life in Advertising”: “Ad writers learn more from mail-order advertising than from any other form.”. I agree: mail-order is ruthless in issuing a feedback on the investment.

It’s very different from the institutional advertising that many large companies do: that one is not traceable in its results. And John Wanamaker famous say "I know that half of my advertising is wasted—I just don't know which half.” applies perfectly to institutional advertising…

Today we analyze an excellent example of mail-order advertisement: the subscription card to Newsweek (that I got on the Hong Kong version of the magazine traveling to Taipei).

There are so many interesting points in this piece of mailing; let’s start our discussion right away:

• “75% OFF” big in capital letters to catch attention right away. The use of capital letters has to be very judicious: not only Hopkins, but also David Ogilvy, in his excellent book “Ogilvy on Advertising” are very clear in saying that capital letters are good to attract attention but very bad in keeping it: a sentence written in capital is difficult to read as our eyes are not trained.

• “*75% OFF”: again the little *… but at least this time it’s clear the explanation: this is true for the 108 issues offer

• 108 Issues then 80, 54, 30: why not stating the subscription choices in the opposite order? Is this order random? No at all: it uses a principle called “Anchoring”: the first figure that is mentioned in a given situation will “anchor” our mind to it. Then another powerful psychological effect “The contrast Effect” kicks in: once we see the cost of the 108 issue choice, all the others will seem much cheaper in comparison. So, purchasing the 80-issue solution will not look too unreasonable: actually it will “feel” very reasonable, as our mind in anchored to the cost of the 108-issues, which is higher. If the card used the opposite order (30, 54, 80, 108) almost nobody would purchase the 108 and the 80-issue option

• “Best buy”: as marketing master Jay Abraham says “People are silently begging to be led”: as Jim McCann of 1800 Flowers was doing in yesterday’s posting, here Newsweek is leading us with good information: the 108-issue truly is the “Best Buy” and it makes sense to let the reader know it (and it increases the chance of people choosing that option…)

• 4 FREE ISSUES: again, very judicious use of the capital letters and the word Free.

• e-mail: Newsweek is taking the pain to collect emails: this is a very smart move, as email allows for free communication in a fast and very intimate way with the customer base

• “Offer expires in July 2005”: you are now champions of the Scarcity principle: just putting a time limit on an offer it increases the chances of getting readers to action

• “Your signature”: this is a very subtle one. Most probably that signature has no legal power, no legally binding commitment is made by signing. But, as dr. Cialdini explains in his excellent interview (click here), commitment/consistency is very strong principle of behavior in our society. So, having signed a card creates a public, voluntary and visible act of choice, that will increase the chances of us complying with it (ehhmmm, paying the invoice…) in the future

• “I do not wish to receive promotional material from other companies”: by default, it is unchecked. So, Newsweek is silently getting, by inaction of the reader, the permission to sell the name to other companies. Which, in many cases, it is a business more lucrative that selling their main product… this little box might very well be the most important box in the entire card

• “Pass this card to a friend”: Referrals – the source of free advertising at no cost, no risk

• “HT IC260-N”: a code! I love it! They will know exactly which issue of which magazine I found that card in, and they will be able to understand which magazines work best

Whoa, today it was a long article, but I am confident you found at least one interesting idea in it.

Now I got to go and post my Newsweek card: I should probably get the 108-issue and pass the card also to a friend

K in Taiwan

1800Flowers.com: a quick way to raise some cash

Flowers flowers flowers: it's spring time, just after Valentine day (well, couple of months...) and my soul still screams for more flowers...

And our friend Jim McCann obliges: as existing customer of 1800-Flowers, I got the attached in my email inbox



Very well architected: let's dissect the specimen to fully enjoy each nugget of marketing expertise hidden into this fine message.

• "I love surprises": this guy is great. He flashes right away in our mind a suggestion for a flower gift: a surprise !
  
• "This weekend only": time restriction ! It elicits the power of scarcity (see Dr. Cialdini's article in another posting few days before): as "we want more of what we cannot have", having a time limit statistically increases the percentage of people that will take action
• "Exclusively for our e-mail customers": Exclusivity ! This is not for everybody: just for YOU, my dear e-mail customer. Again, scarcity: we appreciate more the offer because it's not of public availability
• "Promotional Code": great for tracking the effects of the campaign: they will know perfectly how many people actually took advantage of the offer
• Now a negative: "save 15%*" - I hate the little * after the 15%... What does it mean? It's not specified in the email anywhere. I did not like it.
• "Send that belated birthday gift to your best friend, an anniversary arrangement to your folks or simply give that certain someone a reason to smile": again, he suggests us reasons for taking advantage of the offer. And those are damn good reasons: who does not have a forgotten a birthday lately? Anniversary with spouse, anyone? Very clever to suggest mental images rather than leaving the reader to his/her own devices in figuring out if he/she wants to send the flowers to someone
• "Surprise someone special and save money too!" One more reason to do it.
• "Offer valid through 4/10/05": scarcity at work again
• "Send this email to a friend": Referrals again

Now, after this long description, let's look at the economics of it.

• Cost: zero, nada, niente, nul - just an email to the customer database
• Upside: all the people that will buy
• Upside 2: the referrals, hence new people becoming potential customers
• Downside: Permission erosion. I mean, if they start sending me these emails every week, I will revoke the permission I granted them to send me emails. So, they surely have to walk a fine line (as Seth Godin, in the fine book "Permission marketing" very eloquently describes). So far, so good

Whoa, this was a long post, for sure.

Now I gotta go: I have to send flowers to my friend - her birthday was last week and I forgot it...

K in Taiwan

A moment of Relax: China is Different !

After so much description of business stuff, one moment of relax and enjoyment.
I got this little rarity from China yesterday: when I saw it, I immediately took action and captured this rare example of "Mystery Advertisement" with my faithful digital camera.



It's very clear: China is different from the Western world. Where would you find in Paris, Rome or London a similar Ad, with a baby together with ...with ... whatever it is...

Enjoy your expanded marketing horizons :)

K

A smart Idea from INGdirect - Referrals !

All right, let's move with our business scope to the fantastic world of banks.
One might think that, with all the money they have, they would not need smart little ideas to boost profit... You are dead wrong, dear reader.



We got this Idea Suggestion from GiuseC, a great blogger friend of mine (thanx GiuseC). He just opened an account at INGDirect and received an email telling him very directly that:
1) You introduce us one of your friends that does not have an account with us yet
2) You will get a better interest rate on your savings for 4 months.
3) Here is the unique Id code that he/she has to specify when opening the account: XXXXX

Let's look into the dynamics and economics of the situation:

• Cost: nothing. It's an email... not even the postage stamp
• Risk: nothing. If it does not work, no investment has been made, so no money will be lost.
  
• Upside: the ING people know very well the "lifetime net worth" of a new client. They run their numbers and they know how much a new client will bring to them in his/her lifetime: paying 4 months of extra interest on GiuseC account will be small money for what they get
• Upside 2: even if GiuseC does not bring a friend in, he will still feel good about the offer. The goodwill that GiuseC has toward ING will increase, and with it the probability that he will not switch to a competitor

Wow, so much gained with a little, cute and cheap email: this surely qualifies as Smart Idea!

Till next time,

K in Taiwan

You Got Idea!

By now you all know how romantic I am: “You got Mail!” immediately brings back my memories to the sweet comedy with the same title. Oh, so nice: Tom Hanks and Meg Ryan, two people from different walk of life meeting over the net and joining their lives…so sweeeeeeeetttt.

Ok, back to money making techniques: after all, that’s why you are reading this pages…

I stumbled upon the attached AOL CD sampler at a Blockbuster: nothing major there, just the CDs we are used to receive in the mail from our good friends at America On Line.

But alas! My attention is captured by a good idea: once they grab the attention of one person, for no extra price, they can have the chance to grab the attention of one of your (mine) friends! Ohhh, I love these money making ideas at zero cost!

I can already hear you guys thinking “Yeah, no cost… they have to have to generate twice as much as logins available, twice as much as passwords… their computers will start frying their electronic brains in the superhuman effort… Free…”.

And here comes the second strike of genius: every CD has the same 2 logins (yeah, your Kramerilio personally checked for you: I walked back in the Blockbuster to get a second and a third one…). So it really is a free hook for a second person, which will receive a recommendation from a friend (very powerful and cheap).

Oh, these guys are good, real good.

K in China at 28k

Minimum Risk at Office Max (aka: Risk Reversal)

I love places like Office Max and similar: so much great stuff useful for home business operations: envelopes, paper, printers etc. I would buy so much of that stuff…

But hey, how do they keep making money? Let’s have a look at one example.

I brought some stuff to print at Office Max and they gave it back to me in a box with the attached writing: “On time or it’s FREE”. This is called “Risk Reversal” and it’s a very powerful business acceleration principle.

The theory is pretty simple, yet profoundly effective: every time two entities have any kind of relationship (business but also friendship, sentimental etc) one is asking the other to assume part of the risk, all of the risk or more of 100% of the risk of the transaction.

Let’s see, for example, in the case of copy service at OfficeMax. If I have to make copies, and I bring them to Office Max I am taking a risk: what if they are sloppy? What if they are late in delivering it? This might be for a work presentation… In this case, Office Max is actively working to take 100% of the printing risk: if they are sloppy, they will absorb the cost.

Is this mechanism effective? Absolutely yes. If I have the choice between 2 printing centers and one is offering “Risk Reversal” like Office Max, they get my business.

This is just the first example we analyse of Risk Reversal: many more will come to these pages in the future.

For those of you that are avid readers, you might want to pick up the great book from Claude Hopkins “My Life in Advertising”, where he talks about the many successes he fostered based on this principle. Surely the book is somewhat dated (beginning of 1900) but it is still incredibly modern: as Mr. Hopkins himself writes, human nature does not change, these principles are immortal (although their application will have to adapted to the current media).

Till next time

K in China at 28k modem