In the end I realize that we are all going around in circles on the same things.
The basis of marketing is in deep knowledge of the customer
The more I think about the best way to do marketing, the more I realize that the answer is very simple and we have always had it in front of us: knowing and connecting with our customers .
The problem is that as we grow and try to scale our businesses, we lose perspective. We move away from the customer and focus on sales. Data rules, not people. We forget germany phone number list free that those who buy from us are people just like us.
I have been talking for years about the consequences that sales obsession has on companies (link to a conference where I summarize these consequences) and how we should change the way we do things.
Starting by defining who our client is is only the beginning of the journey. If we go deeper, we realize that we not only have to know them well, but we must also give them control of our company's marketing , or rather, be aware that they already had it and that the key to our success is finding a way to connect with them.
The problem is that we have been doing cause and effect marketing for some time now. I make this change and I get this result. I am not sure why, but I do know that if I do x I get y.
I am referring to our attempts to influence our customers' purchasing decisions by seeking higher sales. I offer a discount and sales go up, I make a change to the product, I change the way I communicate it, and…
These are all ways of boosting sales. The reality is that they work, the problem is the consequences for the company in the medium term.
I really like the phrase from my friend Javier de Rivera: “ we don’t have to sell, but help them buy .”
Well, I'm going to talk to you about all of this today. About the manipulations we use in marketing to get short-term sales. To do this, I'm going to base myself on what Simon Sinek says in his book Start with why , but told from my point of view.
Levers to trigger short-term sales
(and its possible negative consequences for the company in the medium term).
To increase sales in the short term, companies use certain levers. Levers like the ones I mentioned before, if I do x I get y , I'm not sure why, but I know I get y .
1. Price and offers
It's the classic sales accelerator. You lower the price and sales go up. You make an offer and sales go up.
It is a common practice for both B2C and B2B sellers. But what are the consequences?
Sellers : They focus their attention on price, as the product attribute that works best when selling, and forget about the rest. This leads them to:
Running out of sales arguments: they do not add value to the product or the company.
Getting into a downward spiral: Once you've lowered the price and your customers have become accustomed to it, what's the next step to boost sales again? Lower it further, right?
Get used to the easy sales: They handle that argument and get used to it.
Buyers : If we give them the same thing for less money, we are taking away value from our product and brand.
Furthermore, if the brand has this policy as a habit, if they already know that prices are going to go down, why not wait for them to go down further to buy? What will happen when the lower price is no longer enough of an incentive? And the most complicated thing is, how do we get them to buy from us when we raise or maintain the price?
Company : As we have seen in the previous points, the company is the one that ends up losing. At first everything seems to be going well because sales are coming in, everyone is happy (both the company, buyers and sellers). But as time goes by, the negative consequences of the obsession with short-term sales begin to become apparent:
The brand is diluted : By getting the same thing for less money, brand and product attributes lose value. And little by little we have a scenario in which our audience would not care whether they choose our product or the competition's. They see no difference.
Price war : We are getting into a price war with our competitors. Our customers do not differentiate between brands and change, our competition lowers prices to follow us (and vice versa).
This is a scenario that few emerge from successfully. They must look for a competitive advantage that allows them to maintain this dynamic. Otherwise the most normal consequence will be closure.
Profitability : Of course, profitability is reduced to a minimum (hence the risk of crisis that I mentioned).
Loyalty disappears : and therefore the recommendation.
Undifferentiated products : All of this leads us to make our products undifferentiated. We have been removing the layers of positive attributes to end up making products that are clones of the competition. Think of internet access services, telephony, many packaged products, banking, etc.
Selling at a lower price is relatively easy. Selling by highlighting the company's attributes and profitability is the challenge.
How many companies do we see talking about record turnover?
Company X has had a 15% increase in turnover in 2019, entrepreneur Y “how I doubled my turnover”, the launch of 1 million euros…
There is no doubt that billing more is positive, but how are the profitability, recurrence, and recommendation indicators going? And on the other hand, what is the rate of customer cancellation, returns, complaints, etc.? And how has the brand or your professional reputation been affected?
The same thing happens in B2B. It's very easy to win clients if you lower prices, but then you have to be profitable and provide good service. You spend your time on a client who is not profitable and you lose time to attract more profitable ones. You have a lot of work, but you don't make money.