This speech I gave in Bucharest makes a case for consumer brands to reduce the weight of 'sales promotions' in their marketing plan. Instead, I call for an increased focus on delighting consumers to the point that they become "sales promoter" for the brand.
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FUTURELAB From Sales Promotions To Sales promoters Bucharest, September 2011
Hi I’m Alain @FLB_Alainthys www.futurelab.net FUTURELAB
This will be a slightly different presentation I’m going to advocate a new perspective on sales promotions FUTURELAB 3.
FUTURELAB From Sales Promotions To Sales promoters
Stepping back a moment But before we go there, let’s take a 10 minute detour FUTURELAB 5.
Let us start with a few questions: Why do the space shuttle engines have the diameter they have? FUTURELAB 6.
Let us start with a few questions: OK, that’s pragmatic, but why is the tunnel that width? FUTURELAB 7.
Let us start with a few questions: That makes sense, but who decided on the width of tracks? FUTURELAB 8.
Let us start with a few questions: Remarkable, but why choose this base for trams? FUTURELAB 9.
Let us start with a few questions: OK, but then why make the axes this wide? FUTURELAB 10.
Let us start with a few questions: So if the ruts lead to the cart, what caused the ruts? FUTURELAB 11.
Let us start with a few questions: Standardised imperial chariots? Where did Ceasar get that idea? FUTURELAB 12.
Let us start with a few questions: OK, but some Egyptian must have had an original idea! 2000 B.C. FUTURELAB 13.
Let us start with a few questions: And so we find the answer: it’s all because of a horse’s ass. 2x FUTURELAB FUTURELAB 14.
Orthodoxies drive our behaviour We copy and build on what we know to work FUTURELAB 15.
Orthodoxies drive our behaviour In fact, it’s in our genes ... behaviour ... ... ways of working ... ... processes .... ... organisational structures ... HUMANS COPY FUTURELAB 16.
Orthodoxies drive our behaviour It is the secret to human success and achievement Reading and print Industrial progress Agriculture Apps FUTURELAB 17.
Orthodoxies drive our behaviour But they can create orthodoxies that close our mind • • • • We’ve always done it that way This is “best practice” That’s what everyone does Our world-view is right FUTURELAB 18.
Orthodoxies can “lock in” behaviour If they get too strong, they may be difficult to change FUTURELAB 19.
Orthodoxies can “lock in” behaviour School holidays Image: (cc) State Records NSW FUTURELAB 20.
Now wait a minute … Wasn’t this a conference about marketing and sales promotions? FUTURELAB
Well, here is my point Many marketing practices are driven by orthodoxy and lock-in FUTURELAB 22.
FUTURELAB Marketing is full of orthodoxies Question: Where did the 30 second spot come from? FUTURELAB We will continue with this programme after these important messages. FUTURELAB
FUTURELAB FUTURELAB Orthodoxy alert Pat Weaver & Leonard Lavin FUTURELAB
FUTURELAB Lock-in Alert We keep doing the 30 seconds, while the reasons disappeared FUTURELAB
FUTURELAB Marketing is full of orthodoxies? Where do banner adverts come from FUTURELAB
FUTURELAB Lock-in alert We keep doing them, while hardly anyone is watching 78% of consumers consider in-stream advertising as “intrusive”. Half of viewers stop watching an online video once they encounter an in-stream ad. Source: Burstmedia, January 2008 29% of consumers leave a website that appears to be cluttered with advertising. 52% do not tolerate more than 2 ads per page. Source: Burstmedia, December 2008 Only 13% of UK consumers pay attention to ads on social networking sites. BANNER/AD BLINDNESS Source: Ebay Advertising, March 2009 FUTURELAB
FUTURELAB Sales Promotions Why do we do many sales promotions? Keep the factory running (at all cost) FUTURELAB
FUTURELAB Sales Promotions But today there is much more flexibility Lean supply chains Outsourcing FUTURELAB
FUTURELAB Sales Promotions In which many sales promotions defeat their purpose % of POP materials are never used or used incorrectly. % of US sales promotions which are unprofitable “the net impact of deeper discount activity is almost invariably to decrease ROI even if cash returns are increased” 40-50% 85% Billetts, Warc Online, 2009 Advertising Promotion and Other Aspects of Integrated Marketing Communications, 2008 UCLA, 2004 FUTURELAB
FUTURELAB Sales Promotions While they may attract customers today, they don’t build loyalty If they come to you for price, they will leave you for price. *note: the same applies to gifts, freebies, etc. FUTURELAB
FUTURELAB Lock-in alert And may even pose a reputation risk for your brand Trade your reputation for a short term sales fix? A 2011 study by John Byers and Georgia Zervas from Boston University and Michael Mitzenmacher from Harvard University reviewing 56,000 yelp reviews of 2332 merchants offering 2496 Groupon deals FUTURELAB
FUTURELAB My case Start focusing at least 25% of your efforts on sales promoters Keep doing “smart” sales promotions, but start shifting your attention. FUTURELAB
FUTURELAB My case Sales promoters are so happy, they actively promote you FUTURELAB
FUTURELAB The sales promoter An illustration of the impact sales promoters can have Video http://youtu.be/b0OeM6UUAoI FUTURELAB
FUTURELAB The sales promoter An illustration of the impact sales promoters can have “I’ll have what she’s having” Sales promoters get others to buy your product FUTURELAB
FUTURELAB The sales promoter But there is more beyond advocacy Customers that are so happy they are likely to recommend a company spend more negotiate less stay longer as customers are more open to upselling are easier to service upgrade quicker are ready to refer to others increase staff morale etc. FUTURELAB
The sales promoter How likely are you to recommend? Detractors: Dislike Passives: Satisfaction Promoters: Delighted 0 1 2 3 4 5 6 7 8 9 10 FUTURELAB
The sales promoter Case: an automotive brand € 15,000 Detractor Promoter - € 1,500 FUTURELAB
The sales promoter Case: UK FMCG Leading by recommendation, July 2010 120 Brands – 4000 consumers TOP 5 Most actively recommended FMCG brands in the UK “55% of FMCG consumers had made at least one recommendation” Activia Kellogs Special K Innocent Lucozade Red Bull 76,9% 76,0% 74,2% 72,7% 72,2% A 7% increase in NPS = 1% increase in FMCG Growth FUTURELAB
The sales promoter Case: UK FMCG Average revenue impact (own expenditure + recommendation) Promoter: + $ 208 Detractor: + $136 Differential: +53% Image: (cc) Joe Shlabotnik Source: http://www.futurelab.net/blogs/marketing-strategy-innovation/2009/04/the_net_promoter_score_and_the.html FUTURELAB
The sales promoter Case: Allianz Insurances Promoters defect less Promoters buy more Promoters drive business Indexed average gross premium volume cancelled per customer per year Indexed average of newly concluded gross premium volume per customer per year Indexed average new GPV generated through recommendation per customer 100 100 Promoter Detractor 83 Detractor - 100 Promoter - 271 -200 Promoter Detractor FUTURELAB
Likelihood to Repurchase (B2B-markets) Share of Wallet (B2B-markets) “delighted customers are 5x more likely to (recommend) repurchase” “at the point of delight, there is an exponential increase in the share of wallet” Being blunt about it … you’d make (a lot) more money Also in B2B Markets Source: http://www.ipsos-ideas.com/library/dl.cfm?pdf=IpsosLoyalty_WP_Delight.pdf
The sales promoter Case: Growth correlation FUTURELAB
The sales promoter In summary Creating and activating sales promoters is one of the most profitable type of sales promotion you can pursue. FUTURELAB
FUTURELAB The sales promoter How can you turn your customers into active sales promoters? FUTURELAB
Mmmhhh … I’d like some of that … I just have to tell you about Alain… Let’s stay “in theme” with a case study Say I seek sales promoters for my skills as a lover.
Which would be the most effective method To turn you into a sales promoter for my skills as lover. Advertising? Direct Sales? Sales Promotion? Recommend a friend & get 60 Minutes Extra e-coupon www. greatlover .com This voucher cannot be combined with other promotions. 2-for-1 Promo Bring a friend & collect double loyalty points to get those wine glasses! Hi, I’m a great lover. Would you mind telling your friends? Tell them he’s a great lover!! FUTURELAB
The only thing that could work is to provide An experience that sweeps you off your feet?
FUTURELAB Ask yourself Are you a one night brand? Or do you want a relationship? FUTURELAB