price | No Smoke and Mirrors

FOX and Warner Bros delaying new movie releases to Red Box and other kiosk vendors is like watching a new release of Dumb and Dumber.

In the Wall Street Journal article: Warner Bros. aims to lift DVD sales, will delay arrival at rental kiosks. They discuss how they plan to delay new releases to DVD rental kiosks.

The movie studios are concerned about their DVD revenues.

The market is not only speaking, but screaming how they are raving fans of DVD rentals Kiosks like Red Box.

The current big customers like Blockbuster and others are posting over 22% losses in revenues when kiosks like Red Box are showing consistent and impressive gains. Call me crazy… but your market is speaking guys…can you hear me now? Red Box Kiosks are described as; “The hottest thing in movie rentals is as old as the Coke machine — and just as red.”Their CEO Gregg Kaplan said “We are incredibly proud to achieve 200 million rentals and 10,000 locations nationwide.”

The studios have a choice, they can try to “control” the market, the buyers, or they need to intimately understand the market, buyers and needs and not only embrace the new ways consumers wish to consume content but enable it.

Thirteen years of my work experience was serving the movie distribution, rental and mass retail. How Warner and Fox are behaving is no different than how they all were behaving worried that this new thing called “movie rental stores “would erode their box office revenues in the mid 1980”s.

Market losers try to control the market and they protected their current cash cows while ignoring the consumer’s voice. They ignore the bright lights of growth and change trying to tightly hold on to past business models their markets no longer value.

Market leaders spend time getting to know their market and they quickly understand consumers who rent movies also go to movie theaters and some even buy movies and collect them.

When we rent content it is about wanting entertainment in a convenient and cost effective way for me as a consumer. You can try to control us, however when you do we find other ways to solve our needs and often they are much more severe to your bottom line. Besides, how long will it be before one of your competing studios blinks? Didn’t we live this same scenario “back in the day” And what happened…aggressive smaller studios emerged understanding the needs of consumers and and one of you big guys blinked. Some of you held your ground (more stubborn and stupid, driven by your own needs and egos instead of being strategic marketers) and how did that work for you back then? I remember, do you?

I can remember the 28,000 independent video stores and large movie distributors placing pressure on the studios to not ship new video releases directly to this 14 store chain in Texas called Blockbuster. At the time they were buying through distributors like Big State, Commtron, Ingram, and others. Well that little chain of 14 video rental stores quickly became a market leader.

I am a huge fan of Red Box.

They solve problems for me;

· I want to rent a DVD fast, I like the experience

· I want to rent a DVD and do my grocery shopping in one trip, in one location, one stop ( I am already late for dinner)

· I do not want to pay what Blockbuster charges , no late fees …but still a lot more than $1.00

· I only want the movie for one night

· I don’t want to have to join Net flicks or others and pre plan my month of movie viewing

· At a $1.00 rental, I feel like I receive a value , if I like it I go to Wal Mart and buy it

· I do not want to have to “shop” at a movie rental store only to find out they have all the new releases checked out

· I do not want to pay more for a new release than an older movie

· I do not want to buy movies through my cable provider as they are already raping me with what they charge

· The box office theaters are increasing their prices ( again, feels like they are thinking about their own needs and not mine)

So what are you going to do Dumb and Dumber? Are you going to repeat the past and focus on your needs or are you going to understand the market, it’s consumers and our changing needs and not only enable us to enjoy movie entertainment, but who knows you may even find new products and serves that solve our unresolved problems that Red Box fails to solve?

When I wrote my post : Attention leaders: Don’t look now but your lack of market knowledge is showing… I was talking about companies like you that have lost touch with their markets and they guess , assume, and use their gut and intuitions as their way of hitting their goals. They make inside-out versus market -in decisions and their shareholder values decline rapidly.

Your choice…focus on your internal needs and try to control the market… Or gain an intimate knowledge of your market today and it’s consumers like me and build products and service delivery systems that serve me and solve my unresolved problems.

Oh I can hear the movie exec’s now…”easy for you to say, we have billions at stake here.” Well you are right, you do. But you will eventually supply the kiosk companies with new releases at the same time as others. While you figure it out, Red Box will go to a mass retail store on the day of the new release and buy them. While you figure this out you will remove profit from your movie distributors.

So the question is how long do you want to be a “buggy whip” manufacturer saying this horseless carriage is a fad? Or, do you embrace your market, its changes and evolve into a new company that meets our needs today and into the future?

Maybe you develop a “imovies” since my kids seem to download their favorite DVD’s onto Apple laptops? The only hassle is the download from the disc. Not a big deal, but maybe you take the time to understand why they are doing this, the problem it solves for them and solve it brillantly?

We are all watching…

How about your company….

Are you trying to control your market? How’s that working for you?

Are you trying to control your vendors trying to slow down a new service model in your industry?

Are you the buggy whip manufacturer saying this new horseless carriage is a fad and will never last?

Or are you studying your market, your consumers and intimately understanding what and why they do what they do?

All is not lost by the way as some forward thinking buggy whip manufactures found as they learned to make leather seating for these horseless carriages.

Trying to control a market is foolish and expensive. Understand and embrace your market and become a market leader, not a market loser.

Technorati Tags: FOX,Warner Bros.,Red Box,Market leadership,Market leader,market loser,Blockbuster Video,Marketing,market change

88% of Those Surveyed Said Advertising Services Have Become Commoditized? Ad Firms Heal Thy Self!

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I am a problem junkie. I see problems everywhere. Problems are awesome as they provide an opportunity for new solutions that we can monetize. Over the years I have called this “the art of thoughts”. Recently I was on the Advertising Age website and participated in a survey that said 88% of those surveyed feel Ad Agency services have become commoditized.

This really bothered me as one of the favorite companies I helped was an integrated marketing firm in North Canton Ohio called Innis Maggiore . I had hired this firm over the years when I was the VP of Sales and Marketing for a local manufacturer, and when our company was acquired Innis Maggiore group asked me to do what I do, and help them grow. We served a variety of companies from a small Amish furniture maker to MSN.COM , Harry London’s Chocolates, and a local hospital as well as many more. It was easy to help them grow because their work …well it worked, it added measurable value to their clients’ revenues.

(Obviously they never let me help with client copy!)

Honestly, as a buyer of Ad firm services for years I lacked an appreciation of the what goes on behind the scenes. Many times the good firms just made what they do look too easy.The firms I hired would listen to what we needed and produce something that either drove the desired result, usually revenues, or their work had no effect, and I found another firm. Good Ad firm partners like Innis do a great deal of work to ensure their work produces a result. At Innis we often would listen to the client’s objectives, and after the meeting have more questions than answers. So we would go into our clients’ market and interview customers, non customers, and influencers. From these interviews we would gain a better understanding of the problem our clients’ product solves and then we were equipped to turn those amazing creative folks loose on the solution. They say you need to “walk a mile in another man’s shoes…”well having helped this firm gave me a new appreciation for what goes on behind the final work for market leading firms.

Good Ad firms connect to the problem in the market, understand buyers and speak to those personas in a voice that emotionally connects. When I wrote “blame-storming” I referred to an ad that is amazing. Whoever led the creative for this ad connected with something almost every executive has felt in a meeting at some time…”being thrown under the bus”. This firm nailed it so well that it made me feel Direct TV knows me…

What is the value of that kind of creative? Creative that cuts through the noise and gets your message to connect with a targeted buyer persona is not priced as a commodity.

When creative connects so deeply with your buyers that it creates an emotional attachment it shows you have a market leading Ad Firm partner.

Market Losing Ad firms will lower their billable hourly rates and write off more of their hours. They will replace their talented creative’s with young kids fresh out of college to drive down their costs. In a recent Ad Age article it discussed how firms are auctioning their services on EBay, offering free work and crazy low rates to capture large accounts from market leading firms.

If you are running an Ad firm today, you must” heal thy self.” Get out and understand the needs of your customers. Create buyer personas for your customers. For example, in today’s environment it should not shock us that the guy in charge of Ad Firms at P&G comes from a purchasing background. You have a new buyer persona. Like your clients, you now have many more people in the buying decision…make it your quest to understand them! If you speak to him in the voice you used with the past CMO you will fail. Get to know him, how does he make decisions? What are his problems, pain points? Just as you conduct focus groups to verify creative before you kick it off for clients, you need to test your new messaging before you launch your firms’ value proposition.

Or, you can keep playing let’s make a deal and keep complaining about how your accounts “just don’t value your work anymore…” And oh by the way, how is that working for you?

Advertising Age’s Jonah Bloom offered seven steps to fight commoditization;

1. Say No

2. Realize you are on the same side as your rivals

3. Specialize

4. Change the cost dialog

5. Accept risk

6. Stop selling ads as a solution to everything

7. Look for new revenue streams

Markets will always have bottom feeders doing stupid things, and rarely do they survive. It is your job to rise up and connect to your client’s needs of today and your firm will survive. If your entire business model is selling ads alone, then you are in trouble. When was the last time an Ad made you take action and buy something? An Ad may play a role in the overall buyer process, but buyers today are doing much more than waiting for the perfect ad to solve their problems. If your model feels like it has become commoditized it is because your customers have lost the connection between your work and the results your work produces. If all you have been “pitching” are more and more Ad’s then they have also lost trust in you.You are speaking to new buyer personas that make buying decisions differently than your buyers in the past. If you are selling a “one size fits all solution” in ads alone, you will fail.

I need to check in with Dick Maggiore. I learned a great deal working with his amazing team. Get to know the customer, buyer and users and speak to them authentically about how you solve their problems… my guess is Dick is struggling more with turning away clients than commoditizing his services.

Are “No-See-um’s” costing you revenue?

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One of our favorite family vacations is to go to Hilton Head Island and stay in Sea Pines. My family and I rent bicycles and we go to the beach every day. My routine includes waking up at sunrise and fishing in the surf each morning before my family is awake. Our first year at the beach left me with welts that looked like mosquito bites but I did not remember seeking any mosquitoes on the beach. I thought that perhaps I received jelly fish stings, or I was having an allergic reaction to the suntan lotion.

I went to the gift shop looking for some calamine lotion and the clerk said “I see you found our “no-see-ums.”I found what? She said “no-see-ums” (like it was some biological term) and she went on to describe small sand fleas that are so small that you often do not see them however their bite later becomes an irritation. If left untreated these bites can become infected and some people have allergic reactions to the bite.

Does your business have any “no-see-ums” that bite your customers? It can be things you feel are little like not accepting American Express credit cards because their fees are higher than Discover card. It could be little irritants like not being able to make a reservation online or packaging that requires your customers to repackage your product before distribution. It could be requiring customers to complete incoming inspection of quality or you will not honor returns as they may have been freight damaged. It could be a number of small quality problems and your technical service line is always busy because you have not staffed it properly. “No-see-ums” are inside out processes that only serve you and actually cause your clients pain.

In one of the companies I served we supplied plastic video cassette packaging for video rental stores. We sold our products through a network of video distributors. To help make our product price competitive we offered free freight for orders of $2500 or more. We analyzed our costs to process and stage orders of $500, $1000, $2000, and over $2500.At one point we decided to gain a larger percentage of our distributor’s business we would increase our free freight requirement to $5000. (That way our clients would buy more from us to get free freight)One of our first distributors was a company called Island Electronics on Long Island in New York. After increasing our minimum freight I noticed their sales had decreased substantially so I booked a flight to determine why sales had dropped so quickly. When we arrived we noticed a warehouse bursting at the seams with products. Since my last visit, Island Electronics had picked up a number of new lines all competing for the already limited space in their warehouse. As I walked past my competitors master cartons as we walked to the owners office it hit me…raising our minimum freight requirement was an inside out strategy that did not meet the need of my buyer. My competitor who produced product in Edison New Jersey visited this account every other week and offered free freight on orders of $1000. My competitor understood the bigger challenges Island Electronics faced (SPACE). Our new freight program was a “no-see-um” and it also bit us. No-see-ums always bite more than once. First they bite your customer. If your buyer’s irritation becomes painful enough, the bite will negatively affect your revenues.

Market leaders are constantly in their markets observing, listening and sensing their buyers’ needs. They identify each “no-see-um” and create processes and procedures to prevent future negative experiences.

Market losers are focused on their internal needs with little regard for customer challenges and limitations.

Do you have any “no-see-ums” when clients deal with you?

How often do you visit your buyers? Your users, and observe their use of your product?

Have your salespeople identified “no-see-ums” only to be quickly dismissed?

WARNING: Buyer’s say what salespeople do wrong?..PRICE is not on the list!

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Business development has been hard enough over the years. Salespeople work hard to grow their existing business while opening new business. When we look at strategies for growing a business we have a number of options;

· Sell more of what you have to your current accounts

· Sell your current accounts new products

· Sell your current products to new accounts

· Sell your current products to new accounts in new markets

· Sell new products in new markets

· Acquire another business, sell their products to your accounts and sell your products to their accounts

I am sure there are more, but above are some that I have used, and I understand the difficulty and costs associated with each. The best way to accomplish any of the above strategies, (and I recommend you only pick 3) is to know your buyers buying process and match your sales process to that buying process. Not many organizations accomplish this, but if you do, you will create tools for each stage of the buying process to help the conversation continue. If you study buyers, what would you say are “the top 5 Sins of salespeople?” As a reminder, the word “sin” means to “miss a mark, or target, goal”. So where are most salespeople missing the mark?

#1 not listening

#2 does not follow up timely

#3 does not understand the problem I am trying to solve

#4 they talk too much

#5 never built a foundation in trust

If you study your market, and conduct win-loss analysis you will find as I have that in most cases 50% of lost sales are neither about the product nor price. 50% of lost sales are due to the process the salesperson is taking to close the sale. Maybe they are doing the all too frequent; “ring the bell selling?” You know what this is…the salesman starts rattling off all the features and benefits he learned in the 15 power point slides of sales training he had and he waits for you, the buyer to ring the bell when one connects. Other words we waits for one of the things he said to hopefully connect to a problem you have, and hopefully you have been able to translate that particular feature into how it will solve your problem.

Based on the above “top 5 sins”, how can salespeople close more sales and drive explosive growth in the markets they serve?

#1. Listen and observe

#2. Ask open ended questions, seek first to understand

#3. After you understand the buyer’s problems, explain how what you are selling solves those problems (since your sales tools probably don’t)

#4. Story-Speak, don’t speak in features and benefits (ringing your bell) but instead share stories of how what you are proposing as a solution to the buyers problem solved it for others who had similar problems

#5. “Serve” your customers, don’t “sell” them

I have personally taught this system to sales teams in various industries and it drives explosive growth in sales and profits. Profits? Yes! When you sell by ringing your bell of features until one connects, (and you may or may not know why) you quickly jump to the negotiation of price. You have not built trust. Sales people who know the buyers problem, understand their pain intimately focus on solving that problem. A buyer who has a salesperson who is speaking to their problems becomes so focused on solving their problem they connect to the solution more than price.

So how is your sales team performing today?

When was the last time you observed your sales people in the targeted group you are trying to grow?

How are you trying to grow your business?

In your target group(s) what are their top problems?