He's Just Not That Into (Your Price)

This morning's announcement of the Apple iPad (and the stock market reaction) got me thinking about the whole idea about prices. Prices, like, why don't you just tell us the price?

Here's a stock chart that demonstrates why knowing the price of an item is so valuable.

At 1:00 pm, Steve Jobs starts talking about this wildly anticipated new product. By 1:15, it becomes clear to investors that the specs alone are not compelling for a device that is rumored to have an MSRP of between $700 and $1,000. No one knows, so the stock price drops.

But look what happens after Steve finally reveals the price of the iPad about 45 minutes later. The value of AAPL stock rises $9 billion (!) as analysts and investors recalibrate the earnings potential of this new device based on a MSRP that is well below what was feared anticipated.

The importance of price as a context for a purchase decision is so powerful and yet so stubbornly ignored by the savviest marketers.

Case in point: I'm playing 'tag' with a demented sales rep from an on-line web information service. (I won't mention the name because, a) it isn't important, and b) he may be reading this.

The basic storyline: while I actually inquired about the company's services several weeks ago, I am now reluctant to spend time talking on the phone with this guy.

So, why, you may ask, did I bother inquiring in the first place? And why dodge his calls?

Glad you asked!

The product itself is (was) interesting - an XML feed that would allow my client's web-site to host a "find-it-local" service provider. There are four basic configurations based on the list you want. Not much to decide upfront. The website is self explanatory, except there is NO pricing information.

In my experience, no pricing info = too expensive. It is the basis of the phrase "...if you have to ask (the price than you can't afford it.)"

This following sounds a bit twisted, but I think prospects might impugn the motivations of a company that doesn't advertise its prices. If I were transcribing customer thought bubbles, they'd look like this:

1. If we tell you the price then you'd quickly see our value proposition is weak and you won't even make an inquiry to buy.
   
2. Therefore, we won't show you the price and we'll force you call or write just to find out.
   
3. And, just to maintain our advantage, we won't answer your questions even when YOU call us. We're just too darn busy to drop everything and speak to YOU.
   
4. But we assume you're never too busy to talk to US, so, to maintain our power position, we will call YOU when we feel like it. And only then will we answer your questions. This is better for us since we will (hopefully) catch you off guard...and not prepare all your questions. [hint: that's why we don't talk to you when YOU call US!]
   
5. If you're too busy to talk (or you try to screen us with CallerID), don't worry. We'll call YOU back when it's convenient for US.
   
6. And we'll relentlessly hound you until we close you."
7. When we finally talk, we'll quickly work down OUR list to determine just how much you have to spend. (Don't worry, we won't waste too much time trying to understand what YOU need...). Not surprisingly, your budget will seem inadequate.
   

I'm convinced potential customers like me are not alone in jumping to these "Costanza-like" conclusions. Rationally or not, I think customers choose not to even bother calling when they don't see pricing information. They will assume the worst (it costs too much; the process is too much of a hassle, yadda, yadda, yadda) and just move on.

To me an outbound phone call (without warning or permission) in response to a web inquiry is an old school failure. Today when marketing generates an inquiry, it is typically well informed and further down the conversion tunnel. People can do so much to educate themselves these days that every prospect is (or should be) much easier to close.

Sales calls are expensive. If you absolutely need a rep, why shouldn't you do everything in your power to make sure that that rep is closing virtually 100% of his or her calls. Why can't you answer a prospects basic questions (i.e., 'how much does it cost'?) first without subjecting me to the ABC call process?

This probably seems harsh (and perhaps a bit paranoid) but I think I'm onto something here. Return phone calls from quasi-intelligent, native-English speaking reps cost money and delay the close. It also signals that you have to pay a rep, which (in my mind), inflates the price.

So, instead of $50 per month for simple, self-configurable XML feed, I'm assuming the cost is going to be $1,000 to $2,000 per month for a "solution." And 95% of the cost of the "solution" is to pay for the sales commissions for this guy to call me back because the price wasn't on the website.

I'm no interested in wasting my time with the rep., and I certainly don't need the hassle of answering "profile" questions, simply because I want to know 'how much?'.

Old School vs. New Age

Today I think anyone in a marketing function should apply some common sense and use the website to signal at least some information about price. If you are selling highly customized services like, ahem, marketing consulting, then I can understand a certain reluctance to post standard, commoditized prices.

My rate, by the way, is $225 per hour. If you think that is a good value, please call me. If you think it is too expensive, there's no reason for either of us to call.

Selling a standardized product or service (like a user-configurable XML feed for my website) is different. If you provide a product or service that can be standardized or self-configured by the customer, then it should be. If not, ask why not. You could get change the game and rid yourself (and us) of the wasteful, old-school "always-be-closing" salesguys, endless unwanted phone calls, needless "profiling" and high commissions.

Think about it from a financial viewpoint: salespeople should be about leverage. A sales & marketing program should add margin by reducing incremental sales expense. Sales people that sit in judgement and withhold vital information from customers probably cost more (in lost sales and heft commissions) then they'll ever add in value.

Yes, old school sales reps might filter *out* undesirable business (from people like me who are cheap), but that business is "undesirable" only because of the high-cost sales process. Let your website inform on everything (including price) and let customers qualify themselves by drilling deeper into conversion tunnels before they're ready to buy. Then speak with them only if they can't configure and buy themselves (with a credit card).

Inquiries will thusly be more valuable (easier to close), which will shorten sales cycles and improve marketing ROI. Less commissions = less overhead = lower prices and (potentially) higher volumes or at least better margins. Plus a nifty entry barrier since your old school competitors can't match your prices with their high-cost sales process!

*SPS*

Luck Favors Prepared Minds

I came across this broadcast PR placement (CNN) recently that references a "viral video" of the rappin flight attendant. Watch and observe the following corporate message points:

• Customers: "Flying Southwest is (continues to be) fun and entertaining"


• Recruiting:


1. "Southwest is a fun place to work"
2. "Southwest employees are empowered to apply creativity to their jobs"
   
   
• Government: "We take flight safety seriously (by emphasizing passenger comprehension and attentiveness to pre-flight instructions)"

Based on the interview clip, I can only believe that this began as a naturally occurring placement (the customer uploading the cellphone clip to YouTube). However, the broadcast placement shows what happens with a savvy corporate communications department capitalizes on a serendipitous event.

Is your PR organization sufficiently smart, creative, empowered and prepared to capitalize on such happy accidents? If not, ask them why and help them get ready for the next rapper.

Six Ideas to Help Grow Your Business Right Now

1. Clean Up (and Segment) your ACT! (of GoldMine)...

E-mail to your existing clients and prospects is the least expensive and most productive on-line marketing activity. For less than $0.03 per delivered e-mail, you can get a quickly remind a customer or prospective customer about a hot new product, a new business initiative, a recent PR story or simply to share an interesting article from a business publication.

As Woody Allen once remarked, 80% of success in life is merely showing up! Send that e-mail today.

2. ...And Check To Be Sure Your Mail Was Received

Everyone has a sent mail folder but how often do you check what happened to that e-mail (or vital e-mail solicitation) you sent last week. Too often we get consumed with the critical, must-respond tasks that we ignore or forget that we sent a few e-mails that never got a reply. Why? If no one responded, call a few friendlies on the list. Reach out. Be warm and think of something to say.

3. Write up expert commentary on a topical issue.

Blog is a fancy name for a commentary on a current issue. Millions already do, which speaks equally about the popularity of the technology as well as the problem of being oversaturated. If you do decide to start a blog, the best advice is...don't stop. Keep a pace of two to three posts per week. Be brief, be brilliant and be gone! If you can't do all three, hire a professional writer to write for you. Comment on industry trends, wax about business issues, help clients save money. Think about ideas and notions that keep your customers thinking about you.

To help get started, check out this recent article on blogging.

4. Rennovate/update your website...or create one (if you don't have one).

In the old days (five years ago), creating even a small but decent looking website cost money to hire designers and programmers. Today web publishing tools are free, thanks to content management systems (CMS) like WordPress, Joomla and Drupal. While not quite as easy as firing up a Word processor, web publishing today is much easier, to the entry barriers are lower.

A perfectly credible website can be had for less than $3,000 including graphics and programming. Content providers (a 21st century term for copywriter) can be had for $1 a word .

5. Upgrade your web marketing strategy

While the entry barriers to creating a website have gone down, what has increased is the importance of search engine ranking. It is not a sufficient marketing strategy to create a nice looking website. You must consider driving traffic to that site and then set and measure, specific performance goals.

If you sell products via the web, performance goals are relatively simple to understand. One primary goal is sales, and the performance goal is to either increase the average revenue per transaction or reduce the cost of customer acquisition.

However, if your business is not set up for on-line sales, you should still create and drive performance goals. Every site should carefully watch metrics such as unique visitors, average page views, bounce rates and keywords. These are basic metrics that determine your site's popularity, focus and quality. Goals could be simply to improve traffic (unique visitors), improve search engine results (keywords that describe your business with or without using its name), and content quality (average page views and bounce rates).

Here's an excellent primer on setting and measuring web goals.

6. Credit Monitoring in Reverse: Call big customers who have not ordered lately.

A customer may or may not owe you money, but subtle shifts in buying or call patterns can presage big changes in behavior down the road.

Customers who are happy, ordering regularly don't typically attract much attention. Things are running smoothly. But what about customers who haven't ordered regularly. We recently conducted a study for a B2B e-commerce company. Many of our clients' customers would reorder at regular intervals, generally once per week to once per quarter. However, more 60% of those regular customers had not ordered in more than six months! What happened? No one knew because no one was watching.

It is important to keep up relations with your current customers but it is even more important to monitor order patterns to detect...and prevent customer defections, unresolved issues or competitive overtures. Start today by looking at simple average order patterns. You can get fancy by looking at order size or historic patterns, either by individual customer or by customer's market. The point is: don't get blindsided by smoldering problems and passive aggressive customer behavior.

Mr. Brooks is president of SPS Group, Inc., a marketing and PR consultancy based in New York. He is also a member of the Manhattan Business Network.

What Does 'Managing Brand Integrity' Really Mean?

Yesterday I had one of those 'V-8' moments during a client meeting that reduces something abstract into something incredibly real.

My client was hosting a presentation from an outside visitor. The group meeting was attended by seven client employees. The visitor sitting next to me had dutifully collected all seven client business cards and lined them up, roster style.

So far, pretty mundane. Since our company helped implement to logo, create the corporate credentials and style manual, I took more than a casual interest in the display.

Much to my horror, however, the ink and paper color of three of my client's business cards did not match the other four. WTF!

As it turns out, some people simply ran out of cards and dug into a hidden cache of old cards before we arrived. We quickly advised the client to toss out any pre-SPS Group printing.

The lesson in all this. When people talk about brand integrity, it is an abstract concept. I know plenty of ex-clients that are deeply suspicious of branding since it implies "high cost" marketing. True enough.

But the lesson here is fairly basic: when your team of executives meets a demanding client, will something as simple as mismatched business cards send the wrong signal about quality and consistency about your products or services?

Brand integrity means caring about consistency of the message -- all messages -- to deliver a uniform impression to a customer.