I have heard it said that “a goal of marketing is to know your customer so well, that your business’ product or service sells itself.” This is somewhat analogous to what I once heard that every good trial lawyer knows and practices. That is, in court a lawyer never asks a plaintiff, defendant, or witness a question for which the answer is not known. An unanticipated response could be catastrophic for the trial lawyer’s case. For both professions, not knowing something that should be known could lead to a disaster. Thus, certain knowledge is key to the success for each respective profession.
Still, some businesses occasionally succeed on dumb luck alone, at least for some length of time without sufficient planning and marketing. An acquaintance of mine was a business owner who had such dumb luck – for a while that is. In the early 1990’s, he opened a mortgage brokerage company. Due to the then booming housing market, he made a lot of money from the existing strong demand for such services. The results of his success provided him with a false sense of confidence and security to the degree that he developed a self perception where he believed he was invincible, incapable of making errors and could succeed at any business venture. His luck began to change, however, when he hired an inexperienced bozo, to manage his company, who was incapable of developing any sense of business acumen due to his opinionated and incorrigible nature. The idiot managed to run it into the ground. My acquaintance ended up having to close his business while the housing-market was still strong. Following, he tried a series of similar related businesses without having any success. For the past several years, he has been trying to make a comeback in Multilevel Marketing businesses. To my knowledge my acquaintance has failed to achieve much in his Multilevel Marketing schemes. Thus, failing to plan, organize, market and overseeing day to day operations of your business may sooner or later, lead to business failure. Further, if a business owner does not understand the market in which he or she is pursuing, valuable time can be lost. Other times such negligence ends in colossal failure including significant loss of invested money.
Let me share an experience I had where poor marketing and business planning resulted in such colossal failure. Several years ago I was invited to interview for a company that purported to have come up with a unique and revolutionary concept. The business’ founder (who was also the company’s self-appointed CEO) came up with what he believed was a unique and brilliant concept that would revolutionize an industry. His idea was a DVD yearbook. He further envisioned that DVD yearbooks would replace traditional, hardcover yearbooks. His reasoning was: (1) DVD yearbooks could be produced and sold for a far less cost than traditional yearbooks; (2) every home has at least one DVD player and thus a market for such existed; (3) having moving pictures would have greater appeal than still photographs; and (4) students, faculty and parents would find the idea of having a DVD yearbook as being progressive and therefore “cool,” and thus be a “must needed” product.
The CEO was a very charismatic man, with a gift of being able to sell his ideas very convincingly. Using his sales skills, he was able to convince a group of his investors that DVD yearbooks would revolutionize the market and thus provide a substantial return on an investment. The group invested a substantial amount of money in order to establish the business, including purchasing quality equipment, recruit and hire talented and notorious personalities as company leaders in key positions. This including a nationally recognized former ESPN sports announcer, who he made Vice President of Marketing (it turns out she knew little about marketing even though she had an MBA degree, but, she did have many media connections). He also hired a CFO who had formerly been employed by a well known U.S. automaker. Invested money also provided high paying salaries to lure some of the company’s top brass. It was also used to hire a marketing firm that designed an expensive, attractive brochure featuring the DVD yearbook and was to be mailed out in batches over several weeks to about 150,000 to potential customers, schools within the United States. He also hired his father in law, a former cranky and crusty old military pilot, as a Vice President of something, for which I never understood his exact roll in the company. (What I remember most about him was that he wore “floods,” as they were called when I was a kid, which are pants that were about 3 inches to short, exposing his white socks and athletic shoes that were purchased from either Kmart or Walmart. I never saw the man smile. Rather, he always wore a scowl on his face seemingly to express disapproval). Invested money also was used to hire and provide payroll for support staff, computer geeks and editors. Finally, invested money was used to hire and provide a payroll to a sales team of ten, in which I was to be part of.
During the interviewing process it was revealed to me that a fairly good base salary would be provided, with a commission compensation that was projected for an average sales rep to earn between $85,000 and $100,000 per year, plus benefits and spiffs including ipods, cash give a ways, cruises, and all of the perks that go with good sales jobs. There were other attractive features about the opportunity which was revealed during the interviewing process that made the company seem like it was a great place to work. For example, I was told that employees who contributed to the early success of the company would be rewarded by having opportunities for quick advancement accompanied with pay increases. I noted that the company’s building was new and had nice, expensive furnishings. The conference room where the interviews took place had a nice conference table with expensive chairs surrounding it, and nice paintings hanging on its walls. While given a tour of the company, I noticed each desk had new computers and monitors. I liked the managers who interviewed me. They seemed like they would be a great people to work for. They were very optimistic and seemed laid back, yet, professional and confident about the company’s ability to revolutionize the yearbook industry and thus grow. For these and other reasons it seemed that the company was on the brink of success for which I could contribute and be a part of! So, I gave my two week notice at my then current position and accepted employment with this company anticipating perhaps an opportunity of a life time.
On the morning of new hire orientation, we were told about the company’s brochure mailing campaign and that it was scheduled to start that week. Also, by the end of the mailing campaign, every grade school, middle school/junior high and high school within the United States’ borders would receive a brochure. The brochures were being mailed direct to the schools’ decision makers. Our job as sales representatives was to take inbound phone calls resulting in interest generated by the mailed brochures, sell the features and benefits of the DVD yearbooks, then close the deal. “A very simple process,” we were told.
The CEO promised us it would be the “easiest sales job you will ever have.” He then talked about the careful and meticulous market research that had been done which yielded the conclusion that there definitely was a large market for DVD yearbooks. He also pointed out that the concept was unique, and after having done research, it was verified that no other company was publishing DVD yearbooks. Thus, the opportunity for large, expansive growth was eminent. He further explained that the marketing team anticipated approximately a 23 percent response rate, in which about half the inquiries would lead to closed sales. He further stated that it was anticipated that the minimal number of sales each rep would make was roughly 200, which would provide an excellent return on investment and huge commission earnings. All of this lead me to believe that the company had done some serious market research and knew what they were doing. “The DVD yearbook market research had been done using scientific accuracy” I thought.
The CEO then said that within a month’s time we would be hit with a barrage of inbound phone calls resulting from the mailed brochures. In the meantime, our job was to make outbound phone calls based upon a generated potential customer list and make sales that way until the phone calls started coming in.
Later that day the CEO called a company wide meeting where he introduced the new sales team. It was a fanfare event. The company bought its entire staff lunch, accompanied with a fine dessert. During lunch the CEO told everyone “this sales team is going to be this company’s heroes! I want everyone to make it a priority to help this team in anyway you can! They are going to be busy, and will need your help!” Rounds of applause followed his statement along with high fives! All of this excitement gave an appearance to everyone of the company’s employees that it just embarked on a mission that would change an industry. Thus, opportunity for everyone within the company was just over the horizon. Sometimes appearances are misleading!
The day following the fanfare event the sales team settled in and started making phone calls. We experienced difficulties at the onset! We immediately found that trying to find who the decision maker was was difficult. When calling on an organization we were told, for example, that “Ms. Jones,” the school’s 4th grade teacher made the decision as to what yearbook publisher the school uses. After making numerous attempts to contact “Ms. Jones,” she may say “what I do is organize the content that will go into the yearbook, but, the school’s principal, school’s secretary, PTA, President, and so forth makes the decision as to what yearbook publisher we use. In some cases, we learned that a committee of five or more people made the decision regarding which yearbook publisher the school would use. There were several schools who let the student body vote on such matters. Other things “Ms. Jones” may say, included “I oversaw the yearbook last year, and I would never do it again because it was such a time consuming mess! It is also such a political hassle as to whose organization gets the most content recognition or how many pictures the most popular students are placed in the yearbooks.” Then she would direct us to contact someone else. Or “Ms. Jones” would say “a DVD yearbook does sound interesting, but, I just don’t know if the faculty, students and parents would go for it, after all, a big part of the yearbook tradition is having students friends and peers write comments and sign them. You can’t do that with a DVD yearbook, can you” she would ask? “Ms Jones” would often request sample DVD yearbooks to review. So, we started mailing prototype samples. We would call “Ms. Jones” back a week later and inquire whether she had time to review it. Ms. Jones would typically say, “gosh, I just have been so busy, I have not had time to look at it,” or she may say, “I never received the sample, would you please mail me another?” Making outbound phone calls to obtain sales was by no means an easy process. In fact, after a month of making hundreds of phone calls, our team had not closed a single sale. In fact, only two schools showed strong interest in DVD yearbooks.
In spite of the difficulties everyone remained optimistic during that first month. The CEO reassured us that he expected that once all of the brochures had been mailed and and the school’s decision makers received them, we would be overwhelmed with inbound calls for months with in with customers anxious to purchase our product. After the first batch of brochures were mailed, we patiently anticipated phone calls. But, no inbound calls came. We were told “hey, we know these people are busy. Give them time to review the brochures, the calls will start coming.” So, we waited and continued making outbound phone calls.
A month went by, and the last batch of brochures were mailed. Then, early one morning, the first inbound call came. Everyone was excited. “The barrage of inbound phone calls are starting today” we thought. To our dismay it was the only inbound call we received that week. Several months passed and the total number of inbound calls was11. Someone had dropped the ball somewhere! (We learned later that most of the decision makers did not receive the brochures. Either they were addressed to the wrong person, lost in the mail, or many of the few decision makers they made it to had any interest in opening the brochure to see its advertisement, and discarded them).
During the first month of our employment, the CEO came to visit the sales team every morning. He would joke with us, talk about the success we were about to have. He would say to me with a big, enthusiastic smile “hey, don’t I know you from somewhere?!” He would then give me a high five. When the anticipated success was not forth coming, however, that morning ritual ceased. Rather, panic on all levels within the company soon followed. Two months after the last batch of brochures were mailed, the CEO met with our sales manager. He told her, “look, I admit, we screwed up, but, your team needs to make things happen. This is what I want your team to do. Start making as many calls as you can and ask whoever answers the phone ‘are you interested in a DVD yearbook?’ If they say no, hang up and move on. If there is an interest, go from there. This way we’ll be able to harvest the easy to pick fruit from the lowest hanging branches on the tree. There has to be at least some schools who are interested in DVD yearbooks.” When our sales manager told us how the CEO wanted us to proceed, we looked at her in dismay and unbelief. Vital communication errors within the company was starting to occur, setting us up for further failure. After all, she knew of the red tape involved regarding finding the decision maker at schools. Did she not communicate this to the CEO? Just making calls would not be a resolution to the problem.
The company’s Vice President of Marketing began making visits with the sales team on a daily basis. She would say “we need more sales oriented noise coming from your team. The company needs to hear sales noises so confidence will be restored.” This was only advice she offered. I remember thinking “now, that is a request made out of desperation.” It was like the company’s top brass thought that sales were not forth coming due to the sales team’s poor work ethic. The CEO’s father in law soon started making regular walk by’s, past our department. In doing so, he would look at us with his disapproving scowl, then move on. We later learned that one of his duties was to spy on the sales team, then report his findings to the CEO. Also, tracking software was installed on our computers. Because management feared that instead of doing our jobs, we were spending our time at work surfing the web. That was never substantiated.
Just before Thanksgiving that year, the CEO called our Sales Manager in for another meeting. He told her, “look, the investors are putting a lot of pressure on me! We need sales or we are going to terminate this project immediately.” When this information was communicated to our team, it created stress on each of us. We needed an income!
They say necessity is the mother of invention! Thus, we devised a method to “close deals.” When we first started the project, a signed contract was required in order for a deal to be closed. Out of the few deals we closed, we told the decision maker that we were going to fax the contract to him or her, who would then sign it, then fax it back. Without knowing better, one would think that this procedure would take a mere five minutes to complete. Of course that did not happen. The faxed contracts were typically lost in a shuffle of papers or misplaced by a careless secretary or student who worked in the office for credit.
This problem (unlike some others) was communicated to the CEO. At that point he changed the contract policy. Going forward, we only needed a verbal commitment to consider a deal to be considered a closed sale. The creative sales techniques began. For example, we would say “Ms. Jones, a DVD yearbook makes sense because it will be cheaper for your students to purchase than traditional year books, every home has a DVD player, etc, remember, we do not require a written contract in order for you to get set up. So, if for any reason, you do not feel that a DVD yearbook will work for you, you are not obligated to follow through OK? But, we are so confident in our product, we are sure your school will love it.” This and other techniques made it much easier to close deals. However, even with the new and creative approach, the number of closed deals was no where near previous expectations.
While tension eased a little due to our “success,” I had doubts that many schools would follow through with actually purchasing DVD yearbooks based upon a verbal agreement. As we continued our sales efforts, we learned other things that should have been understood and addressed before attempting the project. For example, in order for interest in DVD yearbooks to be maintained, required consistent communication with the decision maker. That was hard to do because school faculty members have a lot on their plates making it hard to reach them. This fact also gave them a reason to focus on what faculty members perceived to be higher priority issues rather than give much conscious thought on the concept of DVD yearbooks. Thus, things that are not a priority are more likely to be soon forgotten.
Also, the anticipated inherent interest in DVD yearbooks simply did not exist amongst the faculty, students and parents that was envisioned by the CEO. When we first started the project, a school was required to have a minimum pre-order of 300 copies of the DVD yearbook. Not one school was able to come up with that number in pre-orders. In fact, the typical pre-order numbers were between 100 – 150. (Many of the schools only got a pre-order number of 50 or 60). The CEO dropped the minimum pre-order to 100.
Another problem was with the marketing tools we used after a school expressed some interest. Once a school expressed interest in DVD Yearbooks, we mailed marketing tools like posters to the schools. They were to be placed on the walls of hallways, lunch rooms and in other common areas. What amazed me is that the posters did not readily market the concept of DVD yearbooks. They contained pictures of teenage kids having fun at what appeared to be a school function. But, the posters did not readily make a visual reference and impression of DVD yearbooks in which students and faculty members could connect with our product. (I later learned that the pictures on the posters were downloaded from a website and then printed onto poster paper).
Then there was the problem of assumption that upon its launching, DVD yearbooks would replace hardcover yearbooks, making them obsolete. That proved to be an assumption that lacked any justification whatsoever! In fact, students, faculty and parents love the idea of hardcover yearbooks. It is a very well ingrained American tradition in schools. So, to counter that problem, we began pitching the idea that the DVD yearbook was intended to be a companion component to hardcover yearbooks. That idea worked somewhat! But, the problem we encountered was many students, faculty members and parents were not willing to spend a combined sum of money on both types of yearbooks.
Probably the low point of that job experience occurred for me early one morning just before Christmas that year with the company. I was the first person to have arrived on the job that day. I was enjoying a rare moment of peace and solitude while at work that typically did not exist. I was sitting at my desk when a curious thought came to mind. That thought was “are we really the only company manufacturing and selling DVD yearbooks?” I had the presence of mind to do some simple research so that I may answer my own question. I opened the Google search engine and stared at my monitor’s screen for a long moment. Finally, I typed into the Google search engine field: “DVD yearbooks.” Wondering what this search would yield I paused for even a longer moment before I continued. Finally, I hit the enter button on my keyboard. The computer took a while for the search results to be revealed. When the screen finally populated, what I found was both shocking and yet not surprising for me at the same time! My simple search revealed the existence of many companies producing and selling DVD yearbooks! There were even several blogs telling students how to go about mass producing their own unofficial DVD yearbooks. The concept of a DVD yearbook was not a novel concept our CEO developed. I then began to wonder, how is it possible no one, out of all of the people involved with its creation at our company, took five minutes to research this? I was bewildered! After all, “isn’t part of the marketing process to find out who the competition is, what they are doing and so forth,” I wondered?
While I sat in disbelief I wondered what I should do with this information? Should I go to the CEO and share my discovery with him? I was hesitant because I did not know what his reaction would be!? Would it be valuable information that could be researched so that perhaps a working model could be found, copied and improved upon? On the other hand, however, I wondered if he would be embarrassed if not humiliated with this information. Out of frustration would he shut the program down and focus on other projects, leaving me and my team without jobs? Should I research these companies on my own and then approach the CEO with a solution? I thought about these and other things over the next few days. I decided ultimately not to say anything to anyone about my findings. After all of the things that had gone wrong in trying to market our DVD yearbook, news of there existing many other producers of DVD yearbooks could be weighty enough to just cause the project to be immediately terminated. I strongly suspected that the project would not continue the following year. Lots of money had been invested in it, and it appeared that much of it would be lost. I suspected that the company’s management wanted to make it through the year complete its obligations it had with the few schools that were going purchase DVD yearbooks, then terminate the project and then move on to bigger and better opportunities!