From Sales Promotions to Sales Promoters

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This speech I gave in Bucharest makes a case for consumer brands to reduce the weight of ’sales promotions’ in their marketing plan. Instead, I call for an increased focus on delighting consumers to the point that they become "sales promoter" for the brand.

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From Sales Promotions to Sales Promoters

  1. 1. FUTURELABFromSales PromotionsToSales promoters Bucharest, September 2011
  2. 2. Hi I’m Alain @FLB_Alainthyswww.futurelab.net FUTURELAB
  3. 3. This will be a slightly different presentationI’m going to advocate a new perspective on sales promotions3. FUTURELAB
  4. 4. FUTURELABFromSales PromotionsToSales promoters
  5. 5. Stepping back a momentBut before we go there, let’s take a 10 minute detour5. FUTURELAB
  6. 6. Let us start with a few questions:Why do the space shuttle engines have the diameter they have?6. FUTURELAB
  7. 7. Let us start with a few questions:OK, that’s pragmatic, but why is the tunnel that width?7. FUTURELAB
  8. 8. Let us start with a few questions: That makes sense, but who decided on the width of tracks?8. FUTURELAB
  9. 9. Let us start with a few questions:Remarkable, but why choose this base for trams?9. FUTURELAB
  10. 10. Let us start with a few questions: OK, but then why make the axes this wide?10. FUTURELAB
  11. 11. Let us start with a few questions: So if the ruts lead to the cart, what caused the ruts?11. FUTURELAB
  12. 12. Let us start with a few questions: Standardised imperial chariots? Where did Ceasar get that idea?12. FUTURELAB
  13. 13. Let us start with a few questions: OK, but some Egyptian must have had an original idea! 2000 B.C.13. FUTURELAB
  14. 14. Let us start with a few questions: And so we find the answer: it’s all because of a horse’s ass. 2x14. FUTURELAB
  15. 15. Orthodoxies drive our behaviour We copy and build on what we know to work15. FUTURELAB
  16. 16. Orthodoxies drive our behaviour In fact, it’s in our genes ... behaviour ...HUMANS ... ways of working ... COPY ... processes .... ... organisational structures ...16. FUTURELAB
  17. 17. Orthodoxies drive our behaviour It is the secret to human success and achievement Reading and print Industrial progress Agriculture Apps17. FUTURELAB
  18. 18. Orthodoxies drive our behaviour But they can create orthodoxies that close our mind • We’ve always done it that way • This is “best practice” • That’s what everyone does • Our world-view is right18. FUTURELAB
  19. 19. Orthodoxies can “lock in” behaviour If they get too strong, they may be difficult to change19. FUTURELAB
  20. 20. Orthodoxies can “lock in” behaviour School holidaysImage: (cc) State Records NSW 20. FUTURELAB
  21. 21. Now wait a minute …Wasn’t this aconference aboutmarketing andsales promotions? FUTURELAB
  22. 22. Well, here is my point Many marketing practices are driven by orthodoxy and lock-in22. FUTURELAB
  23. 23. FUTURELAB Marketing is full of orthodoxies Question: Where did the 30 second spot come from? FUTURELAB We will continue with this programme after these important messages. FUTURELAB
  24. 24. FUTURELAB FUTURELAB Orthodoxy alert Pat Weaver & Leonard Lavin FUTURELAB
  25. 25. FUTURELABLock-in AlertWe keep doing the 30 seconds, while the reasons disappeared FUTURELAB
  26. 26. FUTURELABMarketing is full of orthodoxies?Where do banner adverts come from FUTURELAB
  27. 27. FUTURELABLock-in alertWe keep doing them, while hardly anyone is watching 78% of consumers consider in-stream advertising as “intrusive”. Half of viewers stop watching an online video once they encounter an in-stream ad. Source: Burstmedia, January 2008 29% of consumers leave a website that appears to be cluttered with advertising. 52% do not tolerate more than 2 ads per page. Source: Burstmedia, December 2008 Only 13% of UK consumers pay attention BANNER/AD BLINDNESS to ads on social networking sites. Source: Ebay Advertising, March 2009 FUTURELAB
  28. 28. FUTURELABSales PromotionsWhy do we do many sales promotions?Keep thefactoryrunning(at all cost) FUTURELAB
  29. 29. FUTURELABSales PromotionsBut today there is much more flexibility Lean supply chains Outsourcing FUTURELAB
  30. 30. FUTURELABSales PromotionsIn which many sales promotions defeat their purpose % of US sales % of POP materials are never promotions which used or used incorrectly. are unprofitable “the net impact of deeper discount activity is almost 85% invariably to decrease ROI even if cash returns are increased” 40-50% Billetts, Warc Online, 2009 UCLA, 2004 Advertising Promotion and Other Aspects of Integrated Marketing Communications, 2008 FUTURELAB
  31. 31. FUTURELABSales PromotionsWhile they may attract customers today, they don’t build loyalty If they come to you for price, they will leave you for price. *note: the same applies to gifts, freebies, etc. FUTURELAB
  32. 32. FUTURELABLock-in alertAnd may even pose a reputation risk for your brand Trade your reputation for a short term sales fix? A 2011 study by John Byers and Georgia Zervas from Boston University and Michael Mitzenmacher from Harvard University reviewing 56,000 yelp reviews of 2332 merchants offering 2496 Groupon deals FUTURELAB
  33. 33. FUTURELABMy caseStart focusing at least 25% of your efforts on sales promoters Keep doing “smart” sales promotions, but start shifting your attention. FUTURELAB
  34. 34. FUTURELABMy caseSales promoters are so happy, they actively promote you FUTURELAB
  35. 35. FUTURELABThe sales promoterAn illustration of the impact sales promoters can have Video http://youtu.be/b0OeM6UUAoI FUTURELAB
  36. 36. FUTURELABThe sales promoterAn illustration of the impact sales promoters can have “I’ll have what she’s having” Sales promoters get others to buy your product FUTURELAB
  37. 37. FUTURELABThe sales promoterBut there is more beyond advocacy Customers that are so happy they are likely to recommend a company  spend more  negotiate less  stay longer as customers  are more open to upselling  are easier to service  upgrade quicker  are ready to refer to others  increase staff morale  etc. FUTURELAB
  38. 38. The sales promoterHow likely are you to recommend? Detractors: Dislike Passives: Satisfaction Promoters: Delighted 0 1 2 3 4 5 6 7 8 9 10 FUTURELAB
  39. 39. The sales promoterCase: an automotive brand € 15,000 Detractor Promoter - € 1,500 FUTURELAB
  40. 40. The sales promoterCase: UK FMCG Leading by recommendation, July 2010 120 Brands – 4000 consumers TOP 5 Most actively recommended FMCG brands in the UK “55% of FMCG consumers Activia 76,9% Kellogs Special K 76,0% had made at least one Innocent 74,2% recommendation” Lucozade 72,7% Red Bull 72,2% A 7% increase in NPS = 1% increase in FMCG Growth FUTURELAB
  41. 41. The sales promoter Case: UK FMCG Average revenue impact (own expenditure + recommendation) Promoter: + $ 208 Detractor: + $136 Differential: +53% Image: (cc) Joe ShlabotnikSource: http://www.futurelab.net/blogs/marketing-strategy-innovation/2009/04/the_net_promoter_score_and_the.html FUTURELAB
  42. 42. The sales promoter Case: Allianz InsurancesPromoters defect less Promoters buy more Promoters drive businessIndexed average gross Indexed average of newly Indexed average new GPVpremium volume cancelled per concluded gross premium generated throughcustomer per year volume per customer per year recommendation per customer Promoter Detractor 100 100 83 Detractor - 100 Promoter - 271 -200 Promoter Detractor FUTURELAB
  43. 43. Likelihood to Repurchase (B2B-markets) Share of Wallet (B2B-markets) “delighted customers are 5x more likely to “at the point of delight, there is an exponential (recommend) repurchase” increase in the share of wallet”Being blunt about it … you’d make (a lot) more moneyAlso in B2B MarketsSource: http://www.ipsos-ideas.com/library/dl.cfm?pdf=IpsosLoyalty_WP_Delight.pdf
  44. 44. The sales promoterCase: Growth correlation FUTURELAB
  45. 45. The sales promoterIn summary Creating and activating sales promoters is one of the most profitable type of sales promotion you can pursue. FUTURELAB
  46. 46. FUTURELABThe sales promoterHow can you turn your customers into active sales promoters? FUTURELAB
  47. 47. Mmmhhh … I’d like some of that … I just have to tell you about Alain…Let’s stay “in theme” with a case studySay I seek sales promoters for my skills as a lover.
  48. 48. Which would be the most effective method To turn you into a sales promoter for my skills as lover.Direct Sales? Advertising? Sales Promotion? Recommend a friend & get e-coupon www. greatlover 60 Minutes Extra .com This voucher cannot be combined with other promotions. Hi, I’m a great lover. 2-for-1 Promo Tell them he’s a Bring a friend & collect Would you mind great lover!! double loyalty points to telling your friends? get those wine glasses! FUTURELAB
  49. 49. The only thing that could work is to provideAn experience that sweeps you off your feet?
  50. 50. FUTURELABAsk yourselfAre you a one night brand? Or do you want a relationship? FUTURELAB
  51. 51. FUTURELABMany brands are or have already moved thereMore and more brands are taking the latter direction Massive investment in customer facing staff with as goal to create super-promoters Global roll-out programme for creating (sales) promoters for their business. (Case: Romania, acts of kindness) Global change programme to focus the organisation on creating (sales) promoters. Orange Business Services - Zappos – KLM – Virgin - P&G - Carglass - … FUTURELAB
  52. 52. FUTURELABMy recommendationStart considering it too • Shift 10-25% of your sales promotion budget into “promoter creation”. Sales Promotions • Run the business case to calculate the value of a sales promoter for your business to justify this action. • Launch initiatives aimed at your existing customer base to WOW them into sales Sales Promoters promotership. • Give people who are already sales promoters tools and support mechanisms to convert their friends and family. FUTURELAB
  53. 53. FUTURELABIn other words MAKE MORE MONEY MAKE THE WORLD A MORE CUSTOMER FRIENDLY PLACE FUTURELAB
  54. 54. Thank you @FLB_AlainthysIf you want to be morecustomer-centric, get in touchvia www.futurelab.net www.amazon.com FUTURELAB

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