“Of course, they know us!”

By John Graham -- Industrial Distribution, 11/1/2006

Of all possible marketing mistakes, two are more damaging than all others combined. The first is assuming that customers know a company and its products. The second is not having a value concept.

When someone says “Starbucks,” we immediately think of personalized coffee. In the same way, Hyundai conjures up value, Maytag, durability, and, of course, Ben and Jerry’s means premium ice cream to just about everyone.

Meanwhile, when you think of BMW, the “ultimate driving machine” comes instantly to mind. In 2005, BMW was the top European vehicle brand in the U.S., but that wasn’t always the case.

Marketer Al Ries has pointed out that in 1974, the year before BMW launched its “ultimate driving machine” campaign, Volkswagen was the top selling European auto brand in the U.S. and BMW was number 11. What’s striking today is that Volkswagen sold 110,000 fewer vehicles in 2005 than in 1974. But while striking, it is not a complete surprise.

What word pops into your head when someone says “Volkswagen”? Do you spend a few seconds trying to figure it out, only to realize you just can’t think of exactly the right word? There is no clear Volkswagen picture, is there? It’s not like when we say “Volvo” and instantly, we think “safety.”

Now, think about the dozens of manufacturers, real estate firms, insurance agencies, medical organizations, banks and just about every other business category large or small. To the average person, they blend together. Rarely, does one stand out. And if it does, often it’s because of a negative occurrence, such as a bus company with record of accidents with injuries and fatalities.

However, the goal of marketing is name value, not name recognition.

It’s a myth to think that a business needs to be as big as BMW to accomplish this goal. It isn’t. To go beyond the competition, ask yourself and others in your company three critical questions:

1. “Why are we in business?”—The safe, obvious and wrong answer is “to make money.” I have opened many seminars and workshops with this question and the response is 100% predictable. The almost knee-jerk response is always the same – “To make money.”

While making money is certainly a central business objective, it’s not why companies are in business. “To serve our customers” is the second most popular and incorrect answer. Again, serving customers is necessary, but it’s not a reason for being in business.

The only reason to be in business (that’s right, the only reason) is to create customers. When all the other reasons we can think of are peeled away and the core is exposed to the light of day, creating customers emerges as the most basic element driving any business.

It’s amazing how many companies––big and small––open their doors convinced that customers will flock to them and then are shocked when nobody walks through those doors or the phone doesn’t ring. Even having a great idea isn’t good enough if it doesn’t attract customers. Others send out salespeople only to discover either that the market’s overcrowded or that there’s no demand.

If a business doesn’t create customers, it won’t last.

2. “Why should someone do business with us?”—This question generally brings out another laundry list of wrong answers.

“We have great people” usually tops the list. While there’s no denying the value of having bright, hard working and engaged employees, this answer doesn’t do it. For example, you may have a terrific staff that is helpful, knowledgeable and responsive, but customers don’t want what you’re selling. Employees – even outstanding ones – aren’t the right answer.

Then, we often hear more than one person jump in with, “Our service is the best.” Needless to say, exemplary service is an endangered quality. Anyone who has ordered a meal at a fast food restaurant knows how frequently the meal you are handed is not the one you ordered. You ask for “light starch” in your shirts and they come back stiff as a board. And, of course, what list would be complete without this one: a lack of knowledge?

Having run through this scenario and dismissed the usual responses, the question still remains: “Why would a customer want to do business with us?” The answer depends on the value a company brings to the customer.

While it’s popular to talk about a company’s “value proposition,” such discussions often miss the point by focusing on the company instead of the customer.

Here’s the bottom line: Unless a company delivers value that’s compelling to the customer, there is no value. General Motors describes its new 100,000-mile warranty with the powerful phrase, “A new level of confidence.” Cingular’s “Raising the bar” focuses on fewer dropped calls. All of these express what customers consider as value.

3. “How can we make sure we’re ‘top of mind’ with our customers and prospects?”—It’s a disastrous mistake to assume that any company is as well known as it thinks it is. IBM doesn’t fall into that trap. Even though no three letters are better known than IBM, the company is relentless at communicating the value it brings to its customers.

Yet, repeatedly, business executives say, “We’ve been around a long time. Everyone knows us.” What’s surprising is that they actually believe it.

There’s only one safe rule today: Always act as if no one knows you or recognizes the value you bring to customers. If this seems to suggest that effective marketing includes both paranoia and persistence, it does. In fact, they are what drive successful marketing. Don’t think that Anheuser Busch doesn’t anguish over brand perception? Isn’t this why General Motors changed its value proposition by coming out with its 100,000-mile warranty?

GM has done it right. They admitted the buying public didn’t have confidence in their vehicles and set forth a solution that had value for the customer. Paranoia and persistence were allowed to work at GM.

On the other hand, Ford and Firestone failed to act with paranoia and persistence when Firestone tires were found to be faulty. Firestone tires are gone and Ford continues to flounder.

The way to stay focused and break through the barriers is never stop asking the three critical questions: Why are we in business? Why should anyone do business with us? And, how can be make sure we stay “top of mind” with our customers and prospects?

The way to overcome the two most damaging marketing mistakes is to get the answers to those questions right.

John R. Graham is president of Graham Communications, a marketing services and sales consulting firm based in Quincy, Mass. He can be contacted at (617) 328-0069; www.grahamcomm.com.