The 80/20 Rule

The overwhelming majority of our business is generated by a relatively small group of our customers. We generally use the 80/20 ratio to characterize this concept but the actual ratio may be closer 90/10 in many domains. Our tendency is to cast our promotional nets broadly but we need to avoid this temptation as it can undermine our competitiveness and destroy profitability.

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The Two Targeting Criteria That Matter Most

Category potential and brand share are the two criteria that matter most in building an effective targeting strategy.  Third party data can help you assess these criteria but profiling surveys are often needed to provide more granular insight into the relative value of different customers. Surveys are subject to bias so care must be taken to avoid the obvious sources.

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Existing Customers are More Valuable Than New Ones

Existing customers are more valuable than new ones for two reasons. The first is that they represent the overwhelming majority of total customers over the lifecycle of a brand. The second is that they’re more psychologically open to expanding their usage of an existing brand. New customers remain an important source of growth. We just need to be selective about the types of new customers that we approach.

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Timing is Everything

Timing is critical because the windows of opportunity for behavior change are small. We know from research that the potential for behavior change is greatest when traditional cues are no longer present. Savvy companies develop mechanisms for spotting these windows and engaging with their customers. Promotional efforts that fail to acknowledge these windows have the potential to squander vast resources.

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Some Prospects Are Easier to Convert Than Others

The two targeting criteria that matter most are a customer’s category potential and brand share. For new products, however, brand share is not yet available. In these instances, a customer’s propensity for adopting new products can be a valuable, second targeting criteria. To establish an accurate ranking of adoption potential, there needs to be a high correlation between past adoption behavior and future adoption behavior. If this link cannot be established, you may want to survey actual adoption behavior shortly after launch and then re-prioritize your customers and adjust your promotional efforts accordingly.

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Three Facts About the Mind that Every Marketer Should Know

The three facts about the mind that every marketer should know are that 1) minds are limited, 2) minds are insecure and 3) minds hate confusion. To navigate daily life efficiently, the mind leverages short cuts to make good decisions. By understanding these short cuts, marketers can develop offers that resonate more effectively with the customers they are pursuing.

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Choosing Your Strategic Role (Part 1)

Strategic roles are guiding stars that tell you when to fight, how to fight and when to avoid a fight. Competitors either defend, attack, flank or pursue niches. What these roles share in common is that they all rely on concentrating resources at the right point of attack. While the defensive role is by far the strongest, the niche role is the one that most of us should be playing.

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The Six Principles of Persuasion (Part 1)

According to Robert Cialdini, there are six basic principles of persuasion: Scarcity, social proof, authority, consistency, reciprocity and liking. These principles are deeply rooted in our behavioral psychology and that’s what makes them so compelling. Consequently, effective communication campaigns should begin with an assessment of the principles that can be leveraged. While the application of a single principle is good, the use of two or three in combination is almost certainly better.

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Choosing Your Strategic Role (Part 2)

Strategic roles are guiding stars that tell you when to fight, how to fight and when to avoid a fight. Competitors either defend, attack, flank or pursue niches. What these roles share in common is that they all rely on concentrating resources at the right point of attack. While the defensive role is by far the strongest, the niche role is the one that most of us should be playing.

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The Six Principles of Persuasion (Part 2)

According to Robert Cialdini, there are six basic principles of persuasion: Scarcity, social proof, authority, consistency, reciprocity and liking. These principles are deeply rooted in our behavioral psychology and that’s what makes them so compelling. Consequently, effective communication campaigns should begin with an assessment of the principles that can be leveraged. While the application of a single principle is good, the use of two or three in combination is almost certainly better.

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Deciding Where to Play

One of the most critical strategic imperatives is the decision about where to play. This decision requires you to clarify “which jobs you will perform for your customers” and “which jobs you won’t”. This decision demands tradeoffs, requires the courage to ignore the herd and becomes even more important as the level of competition intensifies. Effective where to play decisions must answer three fundamental questions: 1) what jobs can you be best in the world at, 2) what jobs can you do profitably, and 3) what jobs are you passionate about doing?

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Making Your Ideas Stick (Part 1)

According to brothers Chip and Dan Heath, there are six principles that dictate why some ideas stick and others don’t. The first of these principles is simplicity. Ideas must be compact in order to stick but they must also capture the core of a concept and express it clearly. The second principle is unexpectedness, we capture and hold attention by opening gaps in our audience’s knowledge and then filling those gaps so they can repair their faulty assumptions. The third principle is concreteness. While concrete ideas are easier to understand and remember than abstract ones, they also make it easier to coordinate activities across large teams and disparate geographies. To learn about the other principles that make ideas stick, visit the second part of this video.

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Establishing the Right Frame

Establishing the right frame of reference for your product or service is important because prospective customers hate confusion and have a tendency to default to incumbent options whenever it’s present. Effective framing signals the job that your product or service will do. It also dictates the types of associations that will function as points of parity and points of difference. Finally, the right frame of reference accelerates understanding by leveraging mental frameworks that are already familiar to potential customers.

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Choosing the Right Tool for Each Job

The first level of integrated campaign proficiency is choosing the right tool for each job. To do this, we begin by assessing our campaign objectives. Promotional campaign objectives help guide our selection of promotional vehicles. There are four main campaign objectives: Raising awareness, generating trial, increasing usage and building loyalty. Each objective has specific requirements that relate to exposure quality, location, precision and cost. By ranking promotional vehicles on each of these requirements, we are able to identify the ones that best support each objective.

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Defining How to Win

Defining how to win describes the activities that you will do differently than rivals to distinguish the jobs that you have chosen to perform for your customers. One of the most common strategy traps is to failure to perform a different set of activities than your rivals do. The alignment of activities is also critical because individual activities often affect one another. When activities are consistent and reinforcing, the competitive advantage accumulates rather than eroding or offsetting. Companies like Southwest Airlines and Ikea outperform rivals because the cumulative effect of their activity systems are hard to replicate.

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Introduction to Market Segmentation

This segment explains why traditional market segmentation methodologies often improve products in ways that are irrelevant to customers’ needs. It also explains why jobs-based market segmentation enables us to more reliably predict the product and service changes that will result in increased customer demand.

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Making Your Ideas Stick (Part 2)

According to brothers Chip and Dan Heath, there are six principles that dictate why some ideas stick and others don’t. In this segment we highlight the remaining principles. The fourth of these principles is credibility. Ideas become stickier by leveraging external and internal sources of credibility and by allowing audiences to test them for themselves. The fifth sticky principle is emotion. If you want people to take action, you first have to make them care. The sixth sticky principle is the power of stories. Stories are like mental flight simulators that prepare us to make better decisions. To learn about the other principles that make ideas stick, visit the first part of this video.

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Establishing Points of Parity

One of the most common misperceptions about positioning is that it should focus almost exclusively on differentiators. Points of parity are the minimum requirements to compete in a given category and they can be just as important to your success as differentiators. But establishing points of parity isn’t enough, they must be communicated repeatedly to prospects in order to lower their barriers to uptake. Finally, points of parity are always evolving so brands need to keep pace with their respective categories and develop new sources of differentiation when necessary.

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