Marketing Rules!

Whenever we visit a potential new client, the first question to us is usually, “How do I attract new customers to my business?”

We usually tell our clients they may be competing in the wrong playing field. New customers are notoriously fickle. Half of them leave you after one purchase. New customers are rarely your best or most profitable customers. Existing customers count for more than 80% of the sales of a typical business.

Yet most businesses spend six times as much money on new customers as they do on existing customers. Although the grass may look much greener on the other side of the field, there is much more green to be made by sticking with the customers you know rather than the ones you wish you could attract.

The web is changing. Instead of being a grouping of “information” sites, it’s starting to become a grouping of “participation” sites, where people can express their comments or opinions about a wide variety of topics.

This new use of the Internet is called web 2.0. It comprises blogs (like the one you are now on!), podcasts, videos, wikis (such as wikipedia, where users can add their own entries).

This month’s Raphel Report discusses a project we are working on for our hometown of St. Johnsbury, VT. We’re trying in our small way to bring web 2.0 to our town. We’re including blogs and videos on our site. We’re going to cover local events with photographs and videos. If we’re successful, we think maybe other towns in Vermont will join web 2.0. Then we can all link up and provide another level of “participation” for locals and visitors to Vermont.

We believe when you write an advertisement, you should pay particular attention to fashioning a headline which pulls the reader into your story. See our recent Raphel Report for examples of effective headlines.

From time to time we will show an ad and give you an alternative headlines. Please feel free to weigh in with your comments and thoughts. To start with, here’s an ad from a maker of a healthy snack:

Headline What good is healthy food if nobody wants to eat it?”

The problem: Is the advertised Kashi product something “nobody wants to eat”?

Better headline: The healthy food that everyone wants to eat!”

When you are a writer of advertising or marketing material, it’s always worthwhile to see research into how people actually “read” your copy.

Some of the best research into “eye tracking” has been done by Siegfried Vogele, Dean of the Institute for Direct Marketing in Munich, West Germany. His groundbreaking study on how the eye actually reads advertising material was first presented in 1986 at the Montreux International Direct Marketing Symposium.

His conclusions, shown in this visual, are quite interesting and show that people want to know who the letter is from and what the PS contains before they read the body of the letter.

More recently, one of the world’s best usability experts, Jakob Nielsen, showed how the eye takes in copy and visuals on the Internet. This article presents Nielsen’s interesting research, and some of the comments that accompany the article are quite amusing.

When writing a headline, an ad, a newsletter, turn the focus from “I” – the business – to “you.”

This isn’t a new idea. Forty-eight years ago Ed McLean proved it in his famous subscription letter for Newsweek in which he used some version of the word “you” 58 times.

“Dear Reader,” the letter began. “If the list upon which I found your name is any indication, this is not the first - nor will it be the last - subscription letter you receive. Quite frankly, your education and income set you apart from the general population and make you a highly rated prospect for everything from magazines to mutual funds.”

For 15 years, no other Newsweek advertising letter was more successful in gaining new subscriptions than Ed McLean’s letter. After the magazine sent 107 million of McLean’s subscription letter, it was replaced with a new letter offering a free calculator. Free – another dynamic marketing word.

Now re-write your ad with “you” in mind and create your own marketing success!

P.S. Here is the full version of Ed McLean’s famous subscription letter.

As a time-to-time service for our readers, we want to give you some interesting websites (mostly marketing related) to explore. If you have some suggestions, please comment below or send us an email and we’ll include the best marketing sites in future listings.

Here’s our first list:

1. Marketing Sherpa — Maybe the best site for anyone interested in online marketing. Lots of worthwhile articles and information.

2. Media Post – A very informative site for marketing and advertising professionals. Geared more for industry insiders than Marketing Sherpa.

3. Morning News Beat — A great site with daily updates about the supermarket and other retail industries. If you want to know about food news, this should be your first stop.

4. DM News — Here’s where to go if you want to know what’s happening in direct marketing.

5. McKinsey — Good quarterly newsletter, often with great marketing stories.

6. Wharton School — Try this site for some good marketing articles.

7. Colloquy — Great site for info on loyalty programs.

8. Blainesworld — Blaine is a marketing professor whose friendly newsletter gives out great information on a variety of topics.

9. Zapdata — Interested in business to business marketings? Here’s a site where you can build your own mailing list without a list broker.

10.Target Marketing — Great resources for anyone in the direct marketing industry.

Any suggestions for future inclusions on this list?

Tom, the tie salesman was an annual visitor to our store. The problem: his selections were all polyester fabrics. All our ties were made of natural fabrics: cotton, silk, wool. So we never bought anything from Tom. One day, when he appeared, I said, ‘Tom, you know we don’t carry polyester ties. When are you going to stop coming to see us?”His answer: “It depends on which one of us dies first.”

Suppose you’re an operator of an Atlantic City casino. The city has just made a requirement that 75% of your casino space must be non-smoking by April 15th. Do you:• Protest loudly that the new regulations will hurt the economic base of Atlantic City by making gaming patrons go elsewhere?

• Say that you will make 100% of your gambling space smoke-free to benefit employees and customers alike?

• Hedge your bets and say that you’ll think about making one of your four casinos completely non-smoking?

Atlantic City casinos did all of the above. The Harrah’s organization, which owns four casinos there, and a couple of other casino operators said they would make 100% of the casino space smoke-free. Carlos Tolosa, Eastern Division president for Harrah’s Entertainment, said his company likely will establish non-gambling smoking lounges for its Harrah’s, Bally’s, Caesars and Showboat casinos sometime next year, pending regulatory approvals.

“We will have two or three smoking lounges at each property and then have the casino gaming space smoke free,” Tolosa said. “My long-term solution is that none of our employees will be exposed to smoke.” The Tropicana, another casino in Atlantic City, pledged to be the first casino with a completely smoke-free floor.

The Trump Organization, which owns four casinos, said they will set aside smoking areas on the casino floor for now, but are considering making one casino completely smoke free. The newest and most successful Atlantic City casino, the Borgata, said it will conform with the new law and identify smoking areas on the casino floor.

Even though the casinos would probably all prefer to maintain their current smoke-filled rooms, the new regulation is providing a textbook example on how companies employ different marketing strategies to confront new regulations.

Sure, casinos have never wanted to confront this issue. They don’t have clocks or windows in casinos – nothing to encourage a gambler to leave his or her comfy chair at the table. How many gamblers also want to smoke while losing their shirts? Why would any casino operator want to encourage a patron to leave the table to smoke? It looks like Harrah’s has thought about this, and chosen to go non-smoking anyway. The short-run benefit to the casinos of having smoking areas can have negative long-term health effects on customers and especially employees. Smoking is a health concern to employees and subjecting thousands of workers to cigarette smoke over many years is bound to create many employees with long-term health problems.

The casinos that are voluntarily going completely smoke-free include Harrah’s, the most successful casino chain in the world. If anyone can solve the marketing problem, Harrah’s can.
The solution can include:

• Informing customers of the change;

• Explaining why Harrah’s is opting for a total smoking ban.

• Giving incentives to customers to come to Atlantic City in the near future.

• Highlighting the availability of smoking lounges off the casino floor.

A marketing campaign that explains Harrah’s reasons for embracing non-smoking casinos will be helpful in customer retention.

We think this may be a tough sell for some casino customers, although nonsmokers will revel in the news. Do you think Harrah’s can do it?

In early February, Kroger, one of the nation’s leading supermarket companies, began offering personal finance offerings. According to the Lexington Herald-Leader, “customers can now sign up for a mortgage on a home equity loan, sign up for identity theft protection, purchase pet insurance or get a credit card.”

The chain has recently offered gasoline, DVD rentals, and health clinics. Merchandise offers include toys, furniture, and lawn and garden products.I have a couple of reactions to Kroger’s latest forays.

The Good: Using customer information gathered from frequent buyer cards is an excellent way for a supermarket to expand its offerings from grocery items. Tesco in Great Britain and Costco in the United States are great examples of using consumer information in novel ways.

Also, because of Wal-Mart’s incursion into the grocery industry, supermarkets have to learn how to fight back. One way: to use customer information to sell items (such as financial services) that Wal-Mart might have a tough time imitating. Wal-Mart just recently failed in their efforts to offer more banking services. Also, by selling items such as toys and furniture, supermarkets have less dependence on grocery items as their sole source of bottom line income.

The Bad:

1. Privacy: Supermarkets have to be careful about not using frequent buyer card information without customer permission. Supermarkets must recognize that consumers are starting to take privacy scares to heart. Supermarkets must not give information to third parties without their cardholders’ permission. I don’t know if Kroger will be giving financial information to third parties, but they should only give information with customer approval.

2. Loss of focus: Supermarkets are food experts. They can compete in other areas, but they have to make sure that their food quality or focus does not suffer. If customers lose faith in a supermarket’s food selection or pricing, then they will stop going to that supermarket. All the variety in the world will not save a supermarket with poor food quality or selection.

What are your thoughts?

I enjoyed the premise and execution of “The Truman Show,” the 1998 Jim Carrey film in which an innocent Carrey is the unknowing subject of a 24/7 TV show which an adoring public watches with unabated curiosity.

In the latest version of life imitating art, I woke up with the “Today” show this morning doing a feature on Justin.TV, the brainchild of a San Francisco group of twentysomethings that puts Justin up live up on the web 24/7 for a fascinated group of voyeurs. Technology companies and others are waiting in the wings for the birth of a new expose-your-navel fad to be the next YouTube.

I guess there are marketing possibilities both online and elsewhere (can you imagine a cereal company paying Justin for product placement – why not if he can get on the “Today” show?)

The best thing about this spectacle being on the Internet is that people can decide for themselves whether to watch it. But for me, this sort of spectacle has something distinctly unappealing about it. It is a parody of “reality” TV, which in turn is a parody of real life. It makes me feel a kinship to the Luddites, a social movement which disapprove of advances in technology. To riff on Timothy Leary, it makes me want to tune out, turn off, and, especially, drop out. At this point in my life, a blog is enough public exposure.