Linked Graphic Book Review

Linked by Albert-Laszlo Barabasi helps explain how large networks work. If I'd realized how important math would be to Internet marketing I would have paid more attention :). Since no one reads anymore, here is my graphic book review of Linked: How Everything Is Connected To Everything Else and What It Means For Business, Science and Everyday Life.

Quirky Product Development

Quirky Manifesto from Quirky on Vimeo.

I've created six products: Poetryslam magnetic word game (scrabble with words), Dada Box (surrealist word game), Story Glasses (novellas on drinking glasses), Alien Questionnaire (answers the question, Are you an alien?), FoundObjects.com (only in the Internet Archive now) and Magnetic Line Art (art on refrigerator magnets). Creating products speaks to a human desire we all share. We create therefor we are.

Creating these six products almost killed me. After working for great product companies such as P&G and M&M/Mars I thought creating cool stuff was easy. It is "easy" when people return your phone calls because you work for a brand they know and trust. It is easy when there are hundreds of talented people helping. It is easy when money isn't as important as message. Every product I created back in the day, early 1990's to about 2004, required betting my 401K on hunches, dreams and desires. Creating products was like pulling teeth. It took twice as long as expected, cost three times as much and hurt more than was imaginable. Ben Kaufman has changed all of the product development pain.

Ben Kaufman is a "Startup Heroe". Ben's creation, Quirky, helps people realize their product development dreams without betting their house, retirement or marriage. Before I started creating stuff I was happily married for 20 years. After I became somewhat obsessed with creating products my marriage was the most expensive cost in a very expensive dream catcher experiment. Quirky uses the Internet to craft wisdom of crowds into actionable feedback and real products. The Quirky community votes on products, provides feedback and makes making stuff fun. Ben and Quirky understand social process creates a ready made market for their new products. Process, as I outlined in a 2009 ScentTrail Marketing post, is product. When you work on something (or vote on it) you are sure to buy it and tell five friends. Maybe the coolest difference with my product development days is Quirky foots the product development bill. They put their money where their wisdom of crowds tells them. Call this eating your own dog food, walking the talk or just being tool cool for school, Ben is my startup hero and he should be yours.

Ben and Quirky are examples of another favorite ScentTrail theme - the gift economy. My friend Seth Godin wrote about the gift economy in his great book Linchpin. Quirky uses technology to form the gift economy. Our new "gift economy" always starts with a gift. Ben freely gives his time, expertise and love. Seth Godin shares his creative, kinetic grey matter. You may write a blog, tweet or share stuff on Facebook. The gift economy always starts with someone willing to selflessly share.

Favorite authors including Robert Wright (NonZero), Michael Shermer (Mind of the Market) and Seth have written about our human desire to selflessly share. Internet rocket fuel is meeting our innate genetic desire to share discussed by Wright, Shermer and Godin exploding into new, cool creations like Quirky. I've added Ben to my Startup Hero list and one day soon, when I'm writing Hope, Heroes and Startups again for Technorati, I hope to speak with this special wizard of a man whose magic makes magicians of us all. Best part is we get to be wizards without betting our farms, 401K's or cherished loved ones :).

Thanks Ben.

Martin
Founder Martin's Ride to Cure Cancer
Founder Cure Cancer Store (coming soon)
Co-Founder FoundObjects.com

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How to Price your product or service.

Pricing may be the most important marketing decision. It is easy get pricing wrong and getting pricing wrong may be a mistake that keeps on giving. This ScentTrail Marketing post shares the first of five pricing tips. My background is B2C retailing (mostly), so this post walks and talks online retailing. B2B pricing strategies are similar at concept. Change a few of the words and online retail pricing strategies outlined here work for B2B. This post is the first in a five article series on how to price your product or service.

5 How To Pricing Tips (in 5 posts)

Pricing Tip 1: Price Consistent with your Business Model
Pricing must be an extension of your business model. Pricing inconsistent with your model creates dissonance and confusion. Confused buyers NEVER buy. Selling a premium service with ultra-low pricing is inconsistent, confusing and doesn’t work. There are five basic pricing strategies:

• Ultra-Low Cost (Amazon)
• Low Cost (Walmart)
• Market (Barnes and Noble)
• Value (Zappos, Apple)
• Value Plus (Tiffany, Brooks Brothers)

Ultra Low Cost
Amazon tends to set the basement price for retail products with velocity. Velocity, let’s call this V, is related to sales. Fast sellers provide quick return on capital and other retailer benefits. Count on Amazon to have the lowest retail cost on products whose V is greater than average. Amazon will probably be low cost on products whose V has the potential of being better than average. Amazon’s algorithm is so powerful and swift it reacts to any move, up or down, quickly. If your business model is ultra-low cost you must consistently beat Amazon pricing by better than 10% (good luck with that).

Ultra Low Cost “daily deal” retailers like Woot.com and Tanga.com are the best “beat Amazon” approach. They combine auction site (eBay) behavior with ultra-low prices. They sacrifice offering breadth (e.g. number of SKU’s) to turn marketing volume up on other features such as Woot’s unique voice and great product selection. Ultra-low cost retailers want high V products where they can beat Amazon, if only for a limited time, better than 20%.

Ultra-Low Cost = Change Model by limiting selections, focus on high V products, add unique features such as voice + beat Amazon by at least 10%

Low Cost
Low cost retailers mix low retail prices on products high V, market prices on slower moving products, and “price match” strategies to curate the most profitable mix. Low Cost retailers such as Walmart, Walgreens and Target know price fluctuates faster than they react. “Price match” strategies enlist customers as an “early warning” system. Customers tell Low Cost retailers when they are out of sync with competitors. Price match is more important as a brand concept than a pricing strategy. Low cost retailers know few “price match” requests will be made. The strategy is drive home the concept of “low price leadership” without having to be the lost cost provider on 150,000 stock keeping units (SKU’s and the average number in a super store, online stores may merchandise millions of SKU’s). Low cost retailers count on shopping baskets containing low price high V products AND higher margin lower V products. If you read, “higher margin lower V products” to mean Low Cost retailers are NOT the lowest cost retailer on every single product all the time then you get a cookie. Low cost retailers price at or around Amazon and they use “price match” as an early warning when they are out of alignment.

Low Cost = Price around Amazon + Enlist shoppers to use “Price Match” to move back into alignment and create a “lowest cost” brand without being the lowest cost retailer on all products at all times + look to sell as many combinations of low cost high V and higher cost low V products as possible because SALE + NON-SALE baskets = MOST PROFIT

Market
Market retailers are usually Amazon + 5% to 10% (give or take 3 points). Market price retailers such as Harris Teeter (southern grocery stores), Nordstrom’s, Barnes and Noble and Macy’s use brand strength to create float above their Ultra-Low Cost and Low Cost retail competitors. They use loyalty programs and affinity credit cards such as Barnes and Noble’s Members and Macy’s “Star Rewards”. Ironically market pricing is harder if your product or company is new. New products and services need a pricing strategy that DOESN’T DEPEND on established brand strength. New products and services need to think BELOW or ABOVE market pricing.

Market Price = Requires Established Brand Strength to justify pricing above Amazon by 5% to 10%

Value
Value retailers combine growing brand strength, more customer service (in direct or indirect ways) and other unique ideas such as Zappos’ free shipping on all purchases AND returns (a revolutionary unique idea that won). Value can come to mean hundreds of variables in consumers’ minds. Variables such as word-of-mouth, reputation, return policies, reviews and urban legend create consumer perceptions. Toughest thing to learn as a P&G trained marketer is value and brand perceptions are set by the mob especially an Internet fueled wisdom of crowds mob. It is possible to nudge mob perceptions. It is impossible to control mob brand perceptions. Great examples of nudges from value retailers include Bass Pro Shops excellent Q&A user generated content (UGC) and Apple’s revolutionary retail stores complete with “Genius Bar”.

Value = Some Unique Selling Proposition (USP) + More Customer Service (people, content or social) + Growing Brand Strength + can afford to price Amazon +10% to 15%

Value Plus
Value Plus or “extreme value” must have some compelling, popular and sticky unique selling propositions tested over time. Extreme value retailers such as Crate and Barrel, Tiffany, Saks and Brooks Brothers combine strong brands, highest levels of customer service (or the perception of this), great “house brands” and unique selling propositions to justify higher prices.

Value = Strong Brand + More Customer Service (or perception of same) + USP + can price Amazon +15% to 20%

Pricing Strategies Bottom Line
If you are creating a new product or service pricing options are more limited than you might think. Your brand isn’t established so other things such as a unique selling proposition (USP), customer service and a cool idea are the hooks to hang your marketing plans on. New products or services pricing options include:

• Ultra-Low Cost - find a way to consistently beat Amazon like Woot.com.
• Value Pricing – provides the most leeway for incorporating market feedback and is less risky than being David to Amazon's Goliath. Price is always easier to move down rather than up.

The best solution for startups with a new product or service is Value Pricing. Value Pricing can go down to ultra-low cost if space is too crowded and you don't get traction. Value Pricing can go up to Value Plus if brand becomes established, sought after and able to carry more of a premium price

Product prices rarely successfully go up. Product prices usually go up when generally understood raw material costs such as oil are going up. Many manufacturers raise prices when generally understood raw material costs are increasing EVEN IF their product doesn’t rely on those increasingly expensive raw materials. Price increases and decreases tend to be cyclical creating a “climate” or “mob mentality” for price pressure. When I sold candy we raised prices one year because we could. We tied the increase to commodity pressure but our commodity purchases where hedged for more than a year. We put through the price increase because the market would pay the extra nickel without hurting profits. The “what will the market approve” price conversation is almost as important as pricing consistent with your business model and will be covered in detail in Pricing Tip #3.

Next Pricing Tips posts:

Pricing Tip 2: How To Price Your Product or Service II: The Myth of “Suggested Retail Prices”

Pricing Tip 3: How To Understand What the Market Will Bear

Pricing Tip 4: Pricing and Social Media Marketing

Pricing Tip 5: B2B Pricing Strategies

#Beatcancer Best Social Media Marketing Ever?

Wish I knew about BeEverywhere.tv before leaving Duke's Morris Cancer clinic on Martin's Ride, a 3,000 mile bicycle ride to raise money and awareness for cancer research last summer. Everywhere, an Atlanta communications agency, created the first social media campaign / brand. Breaking a Guinness World Record for fund raising via social media marketing is not small thing, but Everywhere's genius doesn't stop there. Here are some thoughts on Everywhere's magical #beatcancer social media marketing campaign:

• #beatcancer is the first social media brand.
• #beatcancer campaign demonstrates Twitter's Long Tail
  
• #beatcancer is magical thinking

#beatcancer First Social Media Brand
Marketers want to sell and brand on top of things. Branding alone is expensive, takes too much time and doesn't work (mostly). Good marketers look for trends thinking of trends as waves to surf, waves to hop on and ride to shore. Using #beatcancer meant Everywhere's campaign got a tremendous head start. They marketed on the shoulders of an existing Twitter convention - the hash tag. They turned an established Twitter convention in #beatcacner's favor creating new meaning and the first social media brand. What I mean by "social media brand" is hard to explain. Everywhere created a brand WITHIN social media developing following and legitimacy using social media marketing. This turn convention inside out and then use the tool (social media marketing) to legitimize a brand created within social media marketing has never been done before. It will be done again. BRAVO! This "build on something existing" is genius.

#beatcancer and Twitter's Long Tail
I wrote an extensive post about Twitter's Long Tail for Technorati and #beatcancer creates a better example than my Facebook and Social Media Marketing post.

#beatcancer is Magical Thinking
If you would like to read my Thank You note to Everywhere friend Martin Marty Smith on Facebook as I've included the note where friends can read it. Every one of the 12,000,000 people living with cancer in America and the roughly 100,000,000 people directly impacted by cancer knows the importance and need for magical thinking. Everywhere's social media marketing magicians helped a lot of people think magically.





Is #beatcancer the best social media marketing campaign ever? Everywhere and #beatcancer has my vote!

Thanks,

Martin Smith
@ScentTrail

ScentTrail on Technorati

Martin Marty Smith on Facebook

Turn Negative Reviews Into Money

It’s happened. Someone posted a negative review on Amazon, Yelp, and Alexa. You read the erroneous slander in horror. Someone just called your baby ugly or the Internet marketing equivalent. You are mad, angry and thinking of reasons this horrible person is wrong, all wrong. You fire up your computer loaded for bear. You will show them!

STOP! STOP! STOP!

A site with only positive reviews is lying. Lying hurts sales more than any negative review can or will. Here are five ways you can turn negative reviews into money:

1. Include Reviews and Review Everything
   Hearing problems from external site reviews first or most means you have work do on your site. Do you solicit reviews? Do you review everything that can be reviewed? Do you have clear “Suggestion Box” type links and Contact Us buttons? Can I reach your site on Facebook, Twitter and LinkedIn? Do you have easily accessible executive emails? Executive blogs? Executive Twitter accounts? Increase your contact points by 2x or 3x to reduce external flames.
   
   
2. Throw Water on Flames
   When someone flames a product, a service or your policies and procedures on your site use it. Respond as STAFF. Be considerate and appreciative. Change what you can and explain what you can’t change and why. If you need time to think an issue over or get approval for change say that. Be specific about when you will close the loop. Customers will give you and your company the benefit of the doubt as long as you are open, honest and care.
   
   
3. Empower The People
   Who are your best salespeople? I’ve been selling one thing or another for 30 years AND I had a GREAT marketing team. We couldn’t hold a candle to our customers. We formed a “Buzz Team” providing some rudimentary training in review writing and were astounded by results. Our Buzz Team wrote specific, detailed reviews using real language our customers understood instantly. You don’t create authenticity it just happens. After thirty years of marketing I know when the crowd can do something better. Creating our Buzz Team was one of my proudest career accomplishments.
   
   
4. Reward And Love Bomb Throwers
   Bomb throwers aren’t enemies. Your ego IS your enemy. Bomb throwers want to be heard so hear them, appreciate them and learn from them. Change what you can, thank them publicly and often and reward their ability to wake you and your company up. Don’t fight with them! Don’t correct them! Don’t try to shame them! VALUE THEM!
   
   
5. Listen and Respond, Listen and Respond
   This is not the post to review listening applications, software that monitors social media and the web for mentions about your company, products and employees, but you should have one. Things move too fast for people now, math is the only way to keep up. Use a tool, instruct it on what to listen for and create honest, caring responses on your site using the same keywords as flames.
   

Take these five Internet marketing steps and to turn negative reviews into money.

Martin Smith
Director of Marketing
Loyalese.com
@ScentTrail

Keep Calm and Carry On is my favorite "beat cancer" GealSkin. I have it on my iPhone and it helps :).

Value Marketing and Paneras Four Dollar Cookie

I just paid $4.00 (US) for a chocolate chip cookie at Panera. I had a couple of thoughts about buying a four dollar cookie:

• This cookie’s margin, the difference between its asking price and creation costs divided into the asking price, must be astronomical. Even if the cookie cost $1 to make Panera gets a 3X return.
• Panera has earned the right to charge $4.00 for a cookie.
• Four bucks for a cookie is a good value as part of Panera’s overall value proposition.
  

The Panera $4.00 Cookie Value Marketing Lesson
Panera doesn’t sell on price, or Panera doesn’t sell on price alone. Panera understands something many Internet marketers don't - value is the only sustainable marketing. Value Marketing is a strange stew. Bass Pro Shops value stew is different and the same as high end jewelry retailer Tiffany’s.

Bass Pro Shops		Tiffany's
Great Creation Story		Great Creation Story
Broad Product Selection		Broad Product Selection
Middle and Lower Price Points		Upper and upper middle Price Points
After Sale Support		After Sale Support
Community and crowd wisdom		Elite Branding for special few
Promote OPB (other people's brands)		Tiffany Brand First all others 2nd
United States		Global Brand
Men 18 - 60		Women 18 - 60
Truck Owners		Mercedes and BMW owners
Active outdoors		Museum Memberships
Exclusivity		Exclusivity

Great Creation Story
Story is key to value marketing. Value marketing is built on a company’s creation story. If your “About” page is boring you aren’t a value marketer. Your company’s creation story must be Harry Potter brilliant, engaging and exciting. You can’t sell stuff if you can’t sell your company first. I will write a post soon on great About pages since they may be the most important page on a web site (despite their low traffic).

Value Marketing: Same Yet Different
Bass Pro Shops and Tiffany are value marketers. Many value-marketing characteristics are similar merchandising ideas but with different emphasis:

• Broad Selection
  Long Tail web marketing economics mean adding one more digital product is inexpensive compared to its return potential. Selling every widget in a vertical is one implication of Anderson’s Long Tail and both Bass Pro Shops and Tiffany understand the more Stock Keeping Unites they merchandise the larger their search engine marketing (SEM) net.
  

• Price Points
  Bass Pro Shops will sell a few high-end fishing rigs, but their sweet spot is in the middle of the price bell curve. They don’t sell ON price but price is a factor. Bass Pro wants to have a lot of $5 and $10 merchandise. Fishing lures are consumable. They get lost on stumps and stuck in trees, so fishermen buy them over and over again. Most fishermen only buy one or two fishing polls and reels a year, so turnover is slower on the higher end.
  
  Tiffany flips Bass Pro Shops value proposition using ultra high-end merchandise to reinforce key brand perceptions and sell more attainable higher middle price points. Bass Pro Shops includes the higher end to get their customers to dip down. Tiffany includes ultra-higher end to get their customers do dip down to just not as far down ☺.
  

• Support After The Sale
  Both companies have solid customer service reputations. Bass Pro Shops understands customer service is necessary to support their middle and lower price point model. Things break and middle and lower price point things break more often. Bass Pro Shops knows not to trip over a customer’s lifetime value (LTV) to pick up the small change.Tiffany bakes more quality in so they expect fewer breaks. When breaks happen they understand LTV trumps small change of fixing whatever is wrong too.
  

• Community
  Both sites want community, but community does different things for each. Bass Pro Shops wants shared wisdom of crowds and esprit de corps. Tiffany creates an aspirational brand that says “elite” and “special”. See how value marketing is the same but different? Both merchants are creating community with the same over arching goals but with different end results in mind.
  

• Branding
  Bass Pro Shops wants to promote key outdoor brands and leach some legitimacy toward its house brand. Tiffany knows any brands they include will leach legitimacy from the Tiffany brand so they are highly selective and award “carried by Tiffany” stamps of approval to a select group of merchants. Bass Pro Shops lives in a 50% to 50% give and take relationship with major brands such as Shakespeare and Shimano. As Bass Pro Shops builds its house brands scales may tip in their favor, Bass Pro brands may be as sought after as major manufacturers brands; major manufacturers will watch growth of house brands carefully. “House” brands are usually made by branded manufacturers acting as original equipment manufacturers (OEMs), but the label on the outside creates the brand inside of consumer’s minds. Tiffany’s “house brand” is the big dog in the space. Tiffany is in an 80% to 20% relationship with sub-brands. When they include a non-Tiffany brand it is newsworthy FOR THE OTHER BRAND. Tiffany wants to limit partnerships since each partnership depreciates the Tiffany brand (ever so slightly).
  

• Demographics and Psychographics
  There is a common set of Bass Pro Shops and Tiffany customers, but I’m betting that set is not as big as the Bass Pro Shops Ford F150 overlap or the Tiffany and sailboat ownership overlap. Each retailer knows their customer’s demographics, where they fit on the statistics of life (education, income, kids, home owners vs. renters). They also understand and market to their customer’s psychographics – what they want out of life.
  
  Bass Pro Shops advertises Family Summer Camp addressing their customers desire for togetherness and family.
  
  Tiffany talks about how the Royal Couple sponsored a polo match allowing their customers to live vicariously Royal lives.
  

Don’t Sell On Price
The web is awash in prices and sites selling on price. Selling on prices is not sustainable. Price is a death march. It reminds me of riding my bicycle across America last summer. As much as I like to think of myself as a fast bicycle ride there is always someone faster. Trying to be the fastest bicycle rider is a zero sum game. There can only be one fastest. If you run an e-commerce site you will not be the cheapest widget seller on the planet. Amazon will crush you 9 times out of 10 and Woot will crush you on the one out of ten you won from Amazon. Someone is going to sell what you sell cheaper.

Value marketing means you understand your company’s value stew. Your prices are within market (no more than Amazon + 10%) on high velocity, popular items and your prices generally never leave market pricing in the distance. You understand your business model and ALL implications such as Bass Pro Shops understanding customer service will be important when selling middle and lower priced things that break more and Tiffany building quality in so their brand doesn’t suffer. You create partnerships with companies and brands that support your company’s business model. If your brand needs to be established you leach from bigger brands. If your brand is LARGE and IN CHARGE you reward partners carefully knowing each relationship diminishes your brand a little. You walk and talk your customer’s demographics and psychographics. You do a thousand things leaving only one you NEVER do...NEVER SELL ON PRICE.

:) Martin
@ScentTrail

Hidden SEO Power of Q and A

Quora is magical. You can feel Quora's magic the moment you visit founders Adam D'Angelo and Charlie Cheever's creation. Quora's simple user interface is the magic hat all manner of rabbits can be pulled from. In the land of Questions, Answers and community Quora is king.

Turns out there is something search engine optimization magical about Q&A content. Will Critchlow founder of UK based Distilled wrote The Hidden Untapped Potential of Q&A content for SEO on SEOmoz:

You can see the attraction to search engines of indexing Q&A content. While they have made leaps forward in natural language processing, they are still dumb text query engines at heart and having both the question and the answer in plain text on the page clearly supports them in providing efficient answers to many natural language queries.

This is a GREAT, generous and helpful article confirming a gut feel. As a Director of E-Commerce I liked Q&A content. Several years ago when I saw how Bass Pro Shops handled Q&A I was instantly envious. Bass Pro's questions and answers from customers was fresh, engaging and real. Creating fresh, engaging and real content is hard to PAY FOR. Bass Pro Shops was harnessing the wisdom of their very knowledgeable crowd. AND they were creating amazing Google-juice as Will confirms on SEOmoz.

I'm following Will now on Twitter and digging into Distilled (which looks very cool).

Poll - What Are You Loyal To?

Help add "things I'm loyal to" email suggestions to Martin(at)Loyalese.com

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