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The $8 billion story/scam

In case you had any doubt that human beings are irrational creatures, driven by stories, consider the case of the gift card.

Christmas has become a holiday about shopping, not about giving. Case in point: the $100 gift card, now available from banks, from stores, even in a rack at the supermarket.

Last year, more than $8,000,000,000 was wasted on these cards. Not in the value spent, but in fees and breakage. When you give a card, if it doesn’t get used, someone ends up keeping your money, and it’s not the recipient. People spent more than eight billion dollars for nothing… buying a product that isn’t as good as cash.

Along the way, we bought the story that giving someone a hundred dollar bill as a gift ("go buy what you want") is callous, insensitive, a crass shortcut. Buying them a $100 Best Buy card, on the other hand, is thoughtful. Even if they spend $92 and have to waste the rest.

The interesting thing about stories is that the inconsistent ones don’t always hold up to scrutiny. Consumer Reports and others are trying to spread a different story. One that sounds like this:

Gift cards are for chumps.

If enough people talk about this new story, people will be embarrassed to give a gift card. It’s a waste. It’s a scam. It’s a trap for the recipient.

The irony is that the gift card companies could easily spend, say, half the profits and create a wonderful, better story… where every $100 gift card also generates two or three dollars for a worthy cause. That would resonate with a lot of people… But I think it’s unlikely.

If I were a creative non-profit, I’d start marketing alternative gift cards. They would consist of PDF files you could print out and hand over to people when you give them cash. It could say,

"Merry Christmas. Here’s your present, go spend it on what you really want. AND, just to make sure we’re in the right holiday spirit, I made a donation in your name to Aworthycause."

Stories come and go. It’s up to marketers to spread the good ones.

Conceal vs. Reveal

Marketing spends a lot of time concealing things.

Take this box of Whole Wheat Ritz crackers. The #1 ingredient? White flour.

Or consider the fine print read in a hurry at the end of the car ad or the fact that most bottled water comes from the tap… Most contracts are designed to conceal as much as to reveal, which is one reason lawyers get a bad rap.

If you set out to conceal as a marketer (airbrushing a photo, leading with your strengths, staying within the letter if not the spirit of the law) it's easy to invent creative new ways to achieve your goals. It sure feels as though you can stay ahead of the game.

A different technique is starting to gain traction, though. Working to reveal instead of conceal. My fish monger in Grand Central has started placing signs in front of each fish. They describe exactly where the fish came from, whether it's healthy and how endangered it is. You'll never see fine print saying "previously frozen." They don't have any fine print. The first few times you visit the stand, it's actually off putting. It takes the romance and pleasure out of buying the fish, because you realize that there's a cost to it. The meat guy across the way doesn't have pictures of cows being slaughtered, does he?

But after a while, because the information is out there, because smart fish buyers already know some fish is endangered, the signs give you power. They allow you to make smart choices. They send a message to the customer about the honesty and intent of the seller. They build trust.

Once you embrace the idea of revealing as much as you can (consider Amazon's policy of selling the cheaper used copies right next to the new ones, as well as featuring ads from competitors on the same page) it's a lot easier to live and thrive online.

[Jess sends us this post from her blog. Apparently, Monsanto has made it against the law for Pennsylvania dairies to reveal what's in (and not in) the milk they sell. Astonishing.]

Who pays the messenger?

In just about every business, the last mile accounts for the bulk of the cost of the service or good being sold. Retailers get half. Insurance people get commissions. Distributors make their share.

When the internet drove the cost of some things to zero, the equation could change, because you don’t need to pay a messenger when your offer is so irresistible. So, free email could be free not just because it’s so cheap to run and because you have ad revenue, but because you don’t need much of a marketing effort to get the word out.

As we enter a new stage of post-industrial businesses, it’s easy to forget to build in the cost of the messenger. A great idea isn’t a great idea unless you can pay someone to help you spread it, to help you overcome our natural inclination to ignore you or to say "no," purely out of habit.

If you’re not going to plan on paying the messenger, your offering better be so remarkable and have such a viral story that your investment in product eliminates the need for media and sales.

Meatball Mondae week 9: The Long Tail

[Somehow, this post disappeared. I’m trying again!]

(Almost) everyone wants choice

Choice makes some people stressed and unhappy. But it also makes lots of people happy. And now people have the choice

itself, a bias for choice is interesting but not particularly
surprising. What’s surprising is the magnitude of this desire. My
favorite example is the comparison of a typical Barnes & Noble
store with Amazon. If you examine the sales of the 150,000 titles in a
big store, you’ll see that they account for perhaps half of Amazon’s
book sales. In other words, if you aggregate the millions of poorly
selling titles on Amazon, they add up to the total sales of all the
bestselling books in the physical world put together.

way of looking at it: More people watched more video on YouTube last
week than watched the top ten shows on network television.

way: A quick look at your grocer’s beverage aisle will prove to you
that Coca-Cola is no longer the most popular soft drink in the country.
The most popular soft drink is "other": none of the above.

The mass of choices defeats the biggest hit.

curve shows up over and over. It describes travel habits, DVD rentals,
and book sales. Give people a choice and the tail always gets longer.

The Long Tail has been around forever, but only now does it really matter. That’s because of several trends working together:

a. Online shopping gives the retailer the ability to carry a hundred times the inventory of a typical retail store.

b. Google means that a user can find something if it’s out there.

c. Permission marketing gives sellers the freedom to find products for their customers, instead of the other way around.

d. Digital products are easy to store and easy to customize.

e. Digital technology makes it easy to customize non-digital goods.

The question isn’t, "Is this real?" The question is: "What are you doing about it?"


The rest of the series is here.

What brand is your mattress?

According to a Times interview with the head of Tempurpedic, you don’t know.

That’s how they built a built a billion dollar company. By getting 2% of a market that doesn’t care about brands to care about them. A typical marketer looks at this and says, "great marketing! You branded a product in an unbranded marketplace."

I actually don’t think that’s what really happened. I think what happened is that every single product in the mattress market was perceived as the same, so there was no reason to care about which brand, because, frankly, it didn’t seem to matter. Like brands of gasoline or milk.

Many marketers are excited about a brand-free market. They walk in wads of cash and try to buy share. They believe that the brand can build the product. That’s backwards.

When you change the product enough, branding happens.

There are two traps here:

first, entering a brand-free market where people have been trained to ignore the various competitors is really expensive, because people aren’t listening, no matter how great your offer is. I think Tempurpedic got a little lucky.


second, believing that you can have the brand before you have the product. You almost certainly don’t have the money to pull that off.

He also said that 95% of his customers have recommended his product to others. Not the brand, not the experience, but the product. I have, it’s true. I’ve recommended a thousand dollar mattress to someone. Go figure.

The internal blog

I think it’s time you put up a blog for internal use.

Use a password if you like.

Use it as an internal diary, a way of tracking each day so that a month or a year from now, you can look back at where you were and how you dealt with the issue of the day. Even if no one else on your team reads your blog, the act of creating it will be worthwhile.

Perspective is worth a lot more than it costs.

“A potential spoiler”

Here’s a quick way for the mainstream media to enrage people: In a New York Times review of Ron Paul’s latest TV commercial, Julie Bosman concludes, "The advertisement accomplishes what the Paul campaign said was its modest goal: to introduce Mr. Paul to voters in that state, where he is emerging as a potential spoiler in the Republican primary."

But this isn’t a post about politics, it’s about spoiling things.

When you’re trying to sell something new, particularly in a business to business setting, there are always people like Julie Bosman. They are the defenders of the status quo.

They have an important job to do: to point out to everyone the risks of change. To identify potential spoilers.

You don’t have to like Ron Paul’s politics to be annoyed at this (I’m not voting for him), particularly if you’re an agent of change, someone who tries to sell growth or new ideas or even a product.

The thing is, being annoyed at it doesn’t do you any good at all. The status quo police aren’t going to go away, and in fact, they are often a big help in that most of your competition is held at bay by them.

So, how do you persuade the status quo police to stop treating you like a potential spoiler? You don’t. I don’t think you have a prayer. Instead, you create an environment where her colleagues and her family persuade her.

The establishment didn’t like the microcomputer (the president of Digital Computer thought it was dumb), the iPod or even Nike sneakers. The establishment didn’t like Jimmy Carter’s chances the first time out either. You can spend all your time selling the establishment, or you can just work around them. Sell to people who are listening. Create stories that spread, from the converted to the skeptical.

Go spoil something!

The Seth Godin Boxed Set

I’ve been playing with this idea for about eight months and it’s just about ready. I’m really pleased at the finished product.

I’ve never offered a video or a training product, despite the fact that I get asked about it a lot. I figured (pre-glasses) that it was time to give it a try.

These DVD products usually run about 45 minutes and sell for $900 to a thousand dollars. I thought I’d try something a little different. In addition to my seminar, I wanted to add some other elements that make it more interesting and useful to a wider audience.

I’m producing a four DVD set.

The first DVD includes a full speech I did in Denver in March, along with an hour-long interview with Charlie Rose. The next three DVDs include six hours of informal Q&A from a seminar I did this fall. Eight hours of me (heaven forfend!) and the price is $800. $100 an hour, more if you nap.

I’m going into production now and I realize that I have no idea how many to make. So, here’s the deal:

If you’re interested in buying a set for your company, click here and drop me an email. I won’t bill you or even make you promise you’ll actually cough up the money. But I will add you to a list and alert you when it’s ready, and I’ll use your note to guesstimate the interest. I’ll keep the email lines open for two weeks and then let everyone who responded know what’s up. All I need is your contact info… it’s not for correspondence, please.

You get the rights to watch the thing as often as you like, and to show it to groups as large as 30. It’s pretty clear I can’t visit as many places as I’d like in order to give my seminar, so this is a chance to go places without flying. Not included are the rights to do large group presentations or to post it on a public or private server. Unfortunately, it’s not an erasable DVD, so you can’t delete me and put Seinfeld on instead.

Anyway, let me know if you want me to plan on making a set for you. Thanks.

Put it in your portmanteau

Jonathan points us to FreeRice.

Sites like this rarely have a valid business model, but it doesn’t make them less fun. I was amazed at how well I did. If you’re a web developer, notice how interaction leads to involvement which leads to learning and exploration. In that order.

Small business success

Three things you need:
1) the ability to abandon a plan when it doesn’t
2) the confidence to do the right thing even when it costs you
money in the short run, and
3) enough belief in other people that you
don’t try to do everything yourself.