Cost vs. Value: What Are You Really Selling?

Cost is What You Pay. Value is What You Get.

 I teach several marketing courses at the University of Maryland and one of the important parts of each  semester's class is the discussion on value. The example I use is as follows: Why do people continue to purchase Mercedes-Benz cars? When compared to a lower priced option such as Honda or Toyota, the differences seem hard to see at first. Both cars can easily be driven at 60 mph; both use the same readily available fuel; both meet government safety regulations; both come equipped with leather seats, superb sound systems, GPS, and other accessories that make the driving experience enjoyable. So why do some people spend $60, $70, or $80 thousand dollars for a car that provides nearly the same functionality as one costing half the price? It is because of the value to the consumer that the Mercedes brand delivers. For some consumers, that value comes from the status of owning the brand; for others, it is the perception of reliability; some may feel that the ride is smoother and more comfortable; and for others it is the overall customer experience from the purchase through the car's maintenance at the dealership. What Mercedes has so successfully done is use value as a tool to position itself apart from its competition.

As an association executive, you, too, should look at how your products are positioned in the marketplace. Are you competing on price or on value? When faced with price resistance from a prospect, the easiest thing to do, perhaps, is to offer a lower price in order to get the sale. Once done, you have established the price that customer will expect to pay for all future purchases and in so doing, you have lowered the product's value. Under these circumstances, it is far better to discuss the value of the purchased media, rather than its price. What constitutes value for association products? Several things:

1) Buying power and influence of your association's membership. Explaining that your readers/event attendees are the key influencers of purchasing decisions made within their organizations is key. If your members control the money, then the value of reaching them is very high.

2) Quality not quantity of readers/attendees. I recently managed a trade show for a client and spoke to an exhibitor about his experience at the event. He said the traffic to his booth was awful. His location was not well-lit, and was near the back of the exhibit hall. But, he left with three very lucrative leads that make those problems seem insignificant. For him, the quantity of exhibit hall attendees was poor, but the quality was excellent and he has committed to exhibiting again next year.

3) Add value by rewarding your biggest clients. When a company is consistently supporting your association and its products, rewarding them for their loyalty adds value to their relationship with you. Mutli-product packaging and discounting is one way to do this, but others may include offering a free ad to a client one time per year, or giving them special recognition as a supporter either in your magazine or at your event acknowledges their importance to your association. We work with clients who have a "corporate partner" status and others who offer platinum, gold, or silver sponsorship status for their largest supporters. Recognition and access are what most industry suppliers want, and providing both to your biggest customers will go a long way to maintaining those important relationships.

Discuss some of these ideas and others with your sales staff. Ask them what they think will work best. Then, give some of them a test drive. You will become the "Mercedes" dealer of your market while letting the "Hondas" and "Toyotas" fight it out for the rest.

Strategic vs. Tactical Approach to Sales

Most association sales directors are very good at managing the process and developing effective tactical tools. They produce attractive media kits, hire, train, and supervise good sales people, and manage the sales pipeline so that they know their market and the players in it. These are each important and valuable tools that are key to effective sales results, but they are all tactical in nature. In order to be more effective, a strategic approach must be integrated into the sales process before the tactical tools can be put to use. This approach helps your organization answer the question, "what do we want to be and how are we going to get there?"

I have developed a program called the 2 Hour MBA that takes the basics of business and marketing and applies them to the sale of print and web advertising, exhibits and sponsorships. This process involves analyzing each product and the environment in which it is competing. It looks at both the internal and external factors that have impact on an organization's products and the ability of the organization to sell them. Then, it assesses your integrated communications strategies by looking at who is really the buyer of your products and how to best deliver your value message to them. The result of this process is that you develop a highly effective strategy upon which the tactical steps are built and executed.

Feel free to contact me to learn more about this approach. It takes the methods used by corporations, product managers, and leaders in the business community and customizes them to fit the unique needs of the association leader. To learn more contact: rsilverstein@AdSalesExperts.net.

Is Your Association Behaving Like an Airline?

How do you feel about how airlines do business? Today, you have to buy your ticket, then pay again for selecting your seat, and another charge for checking your luggage. One airline even wants to charge you for printing out your boarding pass. This is like buying a ticket to the movies and then having to pay an additional fee to get the actual paper ticket you need to gain admission to the theater. Once on board, you are charged again for a snack or even the use of a blanket. Want to watch the "free" movie? You have to buy the headphones in order to hear it. The flying experience is really the constant feeling of the airline with its hand in your pocket charging for what used to be included in the price of the ticket. As consumers, wouldn't we be happier if the airlines didn't do this? Tell me what the ticket costs to go from point A to point B, and in that price include all of the services that make the flying experience easy and pleasant.

In some ways, associations do the same thing as the airlines. They price their products and services individually. There is a fee to purchase exhibit space. Want to advertise in the conference program? That is an additional charge. Want to be a sponsor? An even higher additional charge. There is one fee to buy an ad in a magazine and an additional charge if you also want to buy an ad on an organization's website. Is it getting to the point that your customers are feeling about your organization they way you are feeling about the airlines? And, how many people from within your organization are your customers dealing with each time they make a purchasing decision? It's confusing and inefficient, but worse than that, are your customers feeling about your association they way they may be feeling about the airlines?

The solution may be to create a single point of entry through which your customers can purchase all of your offerings at a single package price. You can create a number of different packaging options by combining, for example, print and web advertising, exhibits and sponsorships, or advertising across multiple products such as your magazine, conference program, and website. Price these packages so that they deliver fair value to your customers while providing your organization with a fair return in its investments in the products and events being offered. In today's value-driven economy, your customers may greatly appreciate this approach for its simplicity, flexibility, and ease of access. This will result an increase in overall revenue coming into your organization. This is a win-win solution that, perhaps, the airlines should adopt as well.

Spirt Airline's Bad Judgement

I have always respected the creative use of humor in advertising. It is what makes ad messages memorable while promoting a company's products or services in a positive light. Over the course of my career of selling advertising, I have seen both the best and worst of what has been created by advertisers. But, the other day, I received an e-mail from Spirit Airlines that, I feel, ranks among the worst examples of humor gone astray.

The email was promoting Spirit's "Weiner Sale" and included the headline, "Don't Lie, Size Does Matter." This was a clear reference to the recent news about the online activities conducted by Congressman Anthony Weiner of New York. I think this message went too far, and so, I sent the following email to Ben Baldanza, Spirit's CEO:

I am writing to you today to express my disgust at the promotional email I received from you recently. Headlined "the weiner sale" and with the opening line of the text reading "Don't lie...size does matter!" this is a clear reference to the latest news involving US Representative Anthony Weiner of New York. Not only is the reference inappropriate, it is not even humorous. Whatever the motivation behind Mr. Weiner's behavior, it is not appropriate for a corporation to use one person's character flaw as the basis for an advertising campaign. And, despite the fact that the ad had a picture of a hot dog, everyone who receives the news knows exactly what link your message was trying to make. I think this irresponsible judgment on the part of the person or persons responsible for it, as well as the advertising or marketing agency that created it should be addressed. I, for one, will consider the newly diminished impression I have of your company the next time I am purchasing airline tickets. I am not a prude, and I enjoy humor when it is used creatively and appropriately in advertising messages. This promotion failed to do that. A word from you to those responsible for the use of this juvenile humor will, hopefully, prevent such misguided messages from being sent again.

Of course, I have not, nor do I expect to receive a reply to this, but if I do, I will post it here. Advertisers and their messages can and should be better. Being funny is fine; being funny at the expense of someone's character and behavior is not. Yes, Weiner is a public figure, but does that entitle companies to use his failings as the basis for their advertising campaigns? What do you think?

Why I Am Back and Where I've Been

It has been quite a while since I have posted anything on this blog, primarily because I thought I had run out of things to say, and work and other commitments have channeled my time and energies away from this. But, the time away has also given me an opportunity to step back and look at what has transpired in the broad world of publishing and the more targeted world of association publishing in particular.

What I have observed is that everyone--commercial and association publishers--are continuing to try to figure out how to deliver content to rapidly changing audiences while still generating the revenues needed to support their products. Few, if any, have found a successful formula that can be applied universally. But, there are some things that have not changed and that are just as valid to publishers today as they were before the advent of online content. Here are some observations:

Continue to Deliver Value--This applies not only to the content you deliver to your readers, but to the quality of readers you deliver to your advertisers. In today's economic environment, advertisers want the most value they can receive in exchange for their dollars. When advertisers purchase ad space (print or web) they want to know that their message is being seen by the people most likely to be in the position to make a purchasing decision or recommendation. Value doesn't mean selling it cheaper; value means giving them more benefit for the money they are paying. It means documenting the buying power of your readership; it means providing your advertisers with a way to continue delivering their messages after each issue of your magazine has been read; it means regularly communicating with your advertisers about industry issues and trends that they can use in their sales and marketing efforts. It also means understanding the unique needs of each of your advertising clients and developing flexible strategies which meed those needs.

Bundling--Readers from different demographic and psychographic groups respond to ad media in different ways. Younger readers may not look at your print product, but rely on the content you deliver on your organization's website. Older readers, may do just the opposite. The bottom line is that one type of media can no longer be relied upon by your advertisers to maximize their reach and exposure to your market. If yours is like most associations, you deliver content through three forms of media: online, print, and face-to-face. Instead of viewing each of these as separate and independent profit centers, create combinations of two or more, price them in a way that makes it a better deal to buy the package than to purchase each separately, and market them as a solution that gives advertisers and exhibitors the ability to deliver their messages at the time and place that is most beneficial to them. I can assure you that the commercial publishers against which you are competing are doing this every day.

Increase Your Visibility--Most publishers are very good about their understanding of the marketing tools and goals of their advertisers, but are not good at marketing themselves. Today's highly competitive marketplace requires that you keep your products' names out in front of your customers and prospects. Consistent and ongoing communications with prospects, advertisers and ad agencies is essential. Even if they are not buying ad space from you today, you want them to know you when they are ready to buy. Use the multi-media tools available to you. Perhaps establish a micro-site on your web page devoted to information for the advertising community serving your industry or profession; do regular email promotions in which you highlight upcoming issues, bonus distribution at industry events, or any other incentive that will catch the eye of the media buying community. If your customers don't hear from you, and hear from you often, in these times of immediate communication, you and your products will quickly become invisible.

Beware of the Lure of Social Networking--One basic rule of marketing is that you have to go where your customers are going. Before committing your resources (time and money) to utilizing tools such as Facebook and Twitter, be sure of two things: are your members using those technologies? Are your advertisers using them as part of their media plans? If, for example, your association represents a profession comprised primarily of older people (by older I mean over age 35), how many of them are posting "Tweets" or have a Facebook presence? It's my observation that the social networking media is serving the broader needs and numbers of the consumer marketplace, but has not yet been successfully incorporated into the b-to-b world.

I will continue to post thoughts and observations and I ask that you make this blog part of your active community of blogs which you will share with your colleagues and to which you will respond and participate. A blog is a community and I hope that through this blog, I can be part of your community, as well.