2. An Important Message to Our Readers
This product provides information and general advice about the law. But laws and
procedures change frequently, and they can be interpreted differently by different
people. For specific advice geared to your specific situation, consult an expert. No
book, software or other published material is a substitute for personalized advice
from a knowledgeable lawyer licensed to practice law in your state.
5. Acknowledgments
With special thanks to Soni Richardson and Michael Eschenbach,
Daniel Phillips, Tom Hargadon and Mary Reid.
6. Full Disclosure Note
All the businesses and business owners mentioned in the book are real. The great
majority operate under their own names in the cities indicated. However, because
some of our examples are less than flattering, and for other reasons, including pri-
vacy, we have changed the names and/or locations of businesses in a few cases.
In some cases, the businesses used as examples in the book do advertise—their
marketing ideas are so good we included them anyway. In most cases, if a business
used as an example does advertise, it is a small part of their marketing mix.
7. Table of Contents
1 Advertising: The Last Choice in Marketing
A. The Myth of Advertising’s Effectiveness ............................................... 1/3
B. Why Customers Lured by Ads Are Often Not Loyal ............................. 1/8
C. Why Dependence on Advertising Is Harmful ...................................... 1/8
D. Advertisers: Poor Company to Keep .................................................... 1/9
E. Honest Ads ....................................................................................... 1/12
F. Branding ........................................................................................... 1/14
G. Listings: “Advertising” That Works ..................................................... 1/15
2 Personal Recommendations:
The First Choice in Marketing
A. Cost-Effectiveness ............................................................................... 2/2
B. Overcoming Established Buying Habits .............................................. 2/4
C. Basing Your Marketing Plan on Personal Recommendations ............... 2/5
D. When Not to Rely on Word of Mouth for Marketing ........................... 2/7
3 The Physical Appearance of Your Business
A. Conforming to Industry Norms ............................................................ 3/2
B. Fantasy: A Growing Part of Retail Marketing ....................................... 3/5
C. Evaluating Your Business’s Physical Appearance ................................ 3/11
8. 4 Pricing
A. Straightforward and Easy-to-Understand Prices ................................... 4/2
B. Complete Prices .................................................................................. 4/3
C. Giving Customers Reasonable Control Over the Price ........................ 4/6
D. Internet Pricing ................................................................................... 4/9
5 The Treatment of People Around You
A. Tracking Reputations via the Grapevine .............................................. 5/2
B. How Employees Spread the Word ....................................................... 5/3
C. Common Employee Complaints .......................................................... 5/7
D. Handling Employee Complaints .......................................................... 5/9
E. Finding Out What Employees Are Thinking ....................................... 5/11
F. Suppliers ........................................................................................... 5/13
G. Business Friends and Acquaintances ................................................. 5/17
H. Individuals Who Spread Negative Word of Mouth
About Your Business .......................................................................... 5/19
I. Your Behavior in Public .................................................................... 5/20
6 Openness: The Basis of Trust
A. Financial Openness ............................................................................ 6/3
B. Physical Openness .............................................................................. 6/5
C. Openness in Management .................................................................. 6/6
D. Openness With Information ................................................................ 6/8
E. Openness With Ideas ........................................................................ 6/11
9. 7 Deciding How to Educate Potential Customers
A. What Does Your Business Do? ............................................................ 7/2
B. Defining the Domains in Which Your Business Operates .................... 7/7
C. Providing Information on Businesses in Established Fields ................ 7/10
D. Businesses in New or Obscure Fields ................................................ 7/13
E. Whom to Educate ............................................................................. 7/15
8 How to Let Customers Know Your Business Is Excellent
A. Tell Them Yourself ............................................................................... 8/3
B. Help Customers Judge for Themselves ................................................ 8/7
C. Giving Customers Authority for Your Claims ..................................... 8/16
9 Helping Customers Find You
A. Finding Your Business .......................................................................... 9/3
B. Convenience of Access ....................................................................... 9/5
C. Signs ................................................................................................... 9/7
D. Telephone Accessibility ....................................................................... 9/8
E. Listing Your Services Creatively and Widely ...................................... 9/13
F. Getting Referrals From People in Related Fields ................................ 9/15
G. Trade Shows and Conferences .......................................................... 9/17
10 Customer Recourse
A. Elements of a Good Recourse Policy ................................................. 10/4
B. Designing a Good Recourse Policy ................................................... 10/5
C. Telling Customers About Your Recourse Policy .................................. 10/8
D. Putting Your Recourse Policy in Writing ............................................ 10/9
10. 11 Marketing on the Internet
A. The Importance of Passive Internet Marketing ................................... 11/3
B. Yellow Pages Plus .............................................................................. 11/5
C. What to Put on Your Site ................................................................... 11/7
D. Designing an Internet Site ............................................................... 11/11
E. Interactivity and Customer Screening .............................................. 11/14
F. How to Help People Find You Online ............................................. 11/16
G. Active Internet Marketing ................................................................ 11/19
12 Designing and Implementing Your Marketing Plan
A. Your Marketing List: The “Who” of Your Marketing Plan ................... 12/2
B. How to Evaluate Your List .................................................................. 12/3
C. Marketing Actions and Events: The “What” of Your Marketing Plan ... 12/5
D. Direct Marketing Actions .................................................................. 12/7
E. Parallel Marketing Actions ............................................................... 12/15
F. Peer-Based Marketing Actions ......................................................... 12/21
13 The Last Step: Creating a Calendar of Events
A. Marketing Calendar for an Interior Design Firm ................................ 13/2
B. Marketing Calendar for Jerry and Jess’s New Chiropractic Clinic ...... 13/4
Appendix
Index
11. Introduction
By the Publisher
T
ake a look around your whether you need a roof for your house,
community and make a an accountant for your business, a math
list of truly superior small tutor for your child or a restaurant for a
businesses—ones you trust so thoroughly Saturday night out, you ask for a recom-
you would recommend them to your mendation from someone you consider
friends, your boss and even your in-laws. knowledgeable and trustworthy.
Whether your mind turns to restaurants, Once you grasp the simple fact that
plumbers, plant nurseries or veterinarians, what counts is not what a business says
chances are good your list is fairly short. about itself, but rather what others say
Now think about all the ads for local about it, you should quickly understand
businesses that fill your newspaper, clutter and embrace the message of this brilliant
your doorstep, spew out of your radio, book. Simply put: The best way to suc-
cover the back of your grocery receipts or ceed in business is to run such a wonder-
reach you in dozens of other ways. How ful operation that your loyal and satisfied
many of these businesses are on your list? customers will brag about your goods and
More than likely, not many. In fact, I’ll bet services far and wide. Instead of spending
the most heavily advertised local busi- a small fortune on advertising, it’s far bet-
nesses are among the businesses you ter to spend the same money improving
never plan to patronize—or patronize your business and caring for customers.
again—no matter how many 50%-off spe- It’s the honest power of this honest mes-
cials you are offered. sage that made me excited to publish Mar-
If, like me, you have learned the hard keting Without Advertising ten years ago.
way that many businesses that loudly Uniquely among small business writers,
trumpet their virtues are barely average, Phillips and Rasberry were saying the
how do you find a top-quality business same things I had learned as a co-founder
when you need something? Almost surely, of Nolo—that the key to operating a prof-
12. I/2 MARKETING WITHOUT ADVERTISING
itable business is to respect what you do Marketing Without Advertising has been
and how you do it. This means not only updated to provide a new generation of
producing top-quality services and prod- entrepreneurs with the essential philo-
ucts, but demonstrating your respect for sophical underpinnings for the develop-
your co-workers and customers. ment of a successful, low-cost marketing
After many years of success, it’s a plan not based on advertising. But this
double pleasure for Nolo to publish an- isn’t just a book about business philoso-
other new edition of Marketing Without phy. It is full of specific suggestions about
Advertising. Yes, lots of things about small how to put together a highly effective mar-
business marketing have changed in the keting plan, including guidance concern-
interim. To mention just a few, today ing business appearance, pricing,
many of us routinely use fax machines and employee and supplier relations, accessi-
e-mail to keep close to our customers, and bility, open business practices, customer
some of us have learned to use the recourse and many other topics.
Internet as an essential marketing tool. But Consumers are increasingly savvy, and in-
some things haven’t changed. A trustwor- formation about a business’s quality or lack
thy, well-run business is a pleasure to mar- thereof circulates faster than ever before.
ket, and the personal recommendations of The only approach worth taking is to put
satisfied customers are still the best foun- your planning, hard work and money into
dation of a successful and personally re- creating a wonderful business, and to let
warding business. your customers do your advertising for you.
Ralph Warner
Berkeley, California
13. Chapter 1
Advertising: The Last Choice in Marketing
A. The Myth of Advertising’s Effectiveness ........................................................ 1/3
B. Why Customers Lured by Ads Are Often Not Loyal ...................................... 1/8
C. Why Dependence on Advertising Is Harmful ................................................ 1/8
D. Advertisers: Poor Company to Keep .............................................................. 1/9
E. Honest Ads .................................................................................................. 1/12
F. Branding ...................................................................................................... 1/14
G. Listings: “Advertising” That Works .............................................................. 1/15
14. 1/2 MARKETING WITHOUT ADVERTISING
“Really high spending on advertising broadcasting your message to many unin-
sales is an admission of failure. I’d terested members of the public, and “list-
much prefer to see investments in loy- ing,” which is directing your message to
alty leading to better repeat purchases specific people interested in the product
than millions spent for a Super Bowl or service, such as in the Yellow Pages.
ad.”
—Ward Hanson, Here’s where the figure about small
author of Principles of Internet Marketing. business and advertising comes from:
From The Industry Standard, 4/10/2000. There are about 20 million non-farm busi-
nesses in the United States. Of these,
about two million are involved in con-
M
arketing means running a struction; another five million deal in
first-rate business and wholesaling, manufacturing, trucking or
letting people know about mining. A small minority (30% of the total)
it. Every action your company takes sends generate customers by advertising. The
a marketing message. Building a business rest rely on personally knowing their cus-
image is not something invented by a P.R. tomers, on their reputations and some-
firm; it’s a reflection of what you do and times on salespeople or commissioned
how you do it. representatives. Of the remaining 13 mil-
A clever ad is what pops into most lion businesses, 70% are run by one per-
people’s minds when they think about get- son. It’s very rare for the self-employed to
ting the word out about their business. find advertising useful; the single-person
The fact is, most of us know little about business, whether that of a lawyer, doctor
advertising and a whole lot about market- or computer consultant, relies almost ex-
ing. We are really the marketing experts clusively on personal recommendations.
for our business because we know it bet- That leaves the percentage of businesses
ter than anyone else. who might even consider advertising use-
It may surprise you to know how many ful at less than 19%. We think most of
established small businesses have discov- them don’t need it either.
ered that they do not need to advertise to There are four main reasons why adver-
prosper. A large majority—more than two- tising is inappropriate for most businesses:
thirds in the U.S., certainly—of profitable • Advertising is simply not cost-effec-
small businesses operate successfully with- tive. Claims that it produces even
out advertising. marginal financial returns are usually
fallacious.
In this book we make a distinction • Customers lured by ads tend to be
between “advertising,” which is disloyal. In other words, advertising
15. ADVERTISING: THE LAST CHOICE IN MARKETINGS 1/ 3
does not provide a solid customer your picture. It reminds us of the man in
base for future business. Chicago who had marble statues of lions
• Dependence on advertising makes a in front of his house to keep away el-
business more vulnerable to changes ephants: “It works,” he said. “Ain’t no el-
in volatile consumer taste and thus ephants in this neighborhood.”
more likely to fail. James B. Twitchell, the author of Adcult,
• Because a significant percentage of notes, “Although elaborate proofs of
advertising is deceptive, advertisers advertising’s impotence are available, the
are increasingly seen by the public simple fact is that you cannot put a meter
(both consciously and uncon- on the relationship between increased ad-
sciously) as dishonest and manipula- vertising and increased sales. If you could,
tive. Businesses that advertise heavily agencies would charge clients by how
are often suspected of offering poor much they have increased sales, not by
quality goods and services. how much media space they have pur-
Let’s now look at these reasons in more chased.”
detail. Paradoxically, even though some small
business owners are beginning to realize
that advertising doesn’t work, many still
A. The Myth of Advertising’s advertise. Why? For a number of reasons:
Effectiveness because they have been conditioned to
believe that advertising works, because
The argument made by the proponents of there are no other models to follow and
advertising is almost pathetically simple- because bankers expect to see “advertising
minded: If you can measure the benefits of costs” as part of a business proposal.
advertising on your business, advertising It’s important to realize that your judg-
works; if you can’t measure the beneficial ment regarding advertising is likely to be
effects, then your measurements aren’t severely skewed. You have been sur-
good enough. Or you need more ads. Or rounded by ads all your life and you’ve
you need a different type of ad. It’s much heard countless times that advertising
the same type of rationalization put forth works. To look at advertising objectively
by the proponents of making yourself rich may require you to re-examine some
by visualizing yourself as being prosper- deeply held beliefs.
ous. If you get rich immediately, you owe According to E magazine, advertising
it all to the system (and presumably budgets have doubled every decade since
should give your visualization guru at least 1976 and grown by 50% in the last ten
a 10% commission). If you’re still poor af- years. “Companies now spend about $162
ter six months, something is wrong with billion each year to bombard us with print
16. 1/4 MARKETING WITHOUT ADVERTISING
and broadcast ads; that works out to about history of advertising. In the mid-1980s its
$623 for every man, woman and child in advertising agency, Foote Cone and
the United States” (“Marketing Madness,” Belding, used the first popular national
May/June 1996). Information Resources clay animation campaign. (Claymation is a
studied the effect of advertising and con- trademark of the Will Vinton studios.) The
cluded, “There is no simple correspon- annual budget was over $40 million. The
dence between advertising and higher dancing raisins and their song “I Heard It
sales.... The relationship between high on the Grapevine” created such a popular
copy scores and increased sales is tenuous image that sales from dolls, other toys,
at best.” mugs and secondary products generated
To illustrate how pervasive the “advertis- nearly $200 million in revenue and re-
ing works” belief system is, consider that if sulted in a Saturday children’s television
the sales of a particular product fall off program using the raisin characters. Raisin
dramatically, most people look for all sorts sales went up for the first two years of the
of explanations without ever considering campaign, largely because cold breakfast
that the fall-off may be a result of counter- cereal marketers were so impressed with
productive advertising. the popularity of the ad campaign that
Skeptics may claim that you simply can’t they increased the raisin content of their
sell certain consumer products, beer, for raisin cereals and joined in the advertising.
example, without an endless array of After four years, the dancing raisin cam-
mindless TV ads. We refer these skeptics paign was discontinued. Sales were lower
to the Anchor Steam Brewing Company of than before the ads started (Forbes,
San Francisco, which very profitably sold June 17, 1996). By the early 1990s, the
103,000 barrels of excellent beer in 1995 California Raisin Advisory Board had been
without any ad campaign. They believe in abolished.
slow and steady growth and maintain a The Internet and World Wide Web have
loyal and satisfied client base. (See Chap- introduced a new test of advertising effec-
ter 12 for details on how.) tiveness. Billions of dollars had been spent
And consider this: The fabulously on advertising before the advent of the
sucessful discount warehouse, Costco, had Web, yet no major offline advertiser was
profits of 25% in 1999 thanks largely to able to create an online presence of any
their cost-cutting business approach— significance. Even Toys ‘R’ Us, the major
which includes absolutely no advertising. American toy retailer, ranked far behind
Even apparent successes may not be eToys in brand awareness online, despite
what they seem. The California Raisin Ad- the fact that Toys ’R’ Us is a 25-year-old
visory Board ran an ad campaign that pro- company and eToys lasted barely two
duced the most recognized ad in the years. For Toys ’R’ Us, decades of advertis-
17. ADVERTISING: THE LAST CHOICE IN MARKETINGS 1/ 5
ing simply had no staying power (March they would obviously budget funds for
20, 2000, The Industry Standard). One of promoting personal recommendations. In-
the biggest successes on the Internet, deed, some businesses are apparently so
eBay, used no advertising at all. unwilling to believe what market research
One magazine with a significant audi- tells them—that personal recommenda-
ence on the Internet is Consumer Reports, tions work and advertising doesn’t—that
a magazine that carries no advertising. By they run ads like the one on the following
eliminating advertising from its business page.
model, Consumer Reports is able to main- It’s not only large national corporations
tain a high degree of integrity and cultivate that are disappointed in the results of ad-
trust among its readers, who value the vertising. Local retail stores that run re-
magazine’s objective information. deemable discount coupons to measure
“Unlike many others who dispense the effectiveness of their advertising usu-
online advice, Consumer Reports does not ally find that the business generated isn’t
accept advertisements, does not earn a re- even enough to offset the cost of the ad.
ferral fee for directing customers to spe- Despite this, supporters of advertising
cific merchants and does not repackage continue to convince small business own-
and sell its data as market research to the ers that:
companies whose products are reviewed” • The ad could be improved; keep try-
(The New York Times, 3/22/2000). ing (forever).
One giant aircraft manufacturing com- • All the people who saw the ad but
pany, to look at the effectiveness of didn’t clip the coupon were re-
heavily advertising an in-house computer minded of your business and may
service through one of its subsidiaries, use it in the future. Keep advertising
conducted a survey to find out how its 100 (forever).
newest customers had found out about it. • The effects of advertising are cumu-
The results: 13% of these new customers lative. Definitely keep advertising
came because of the advertising campaign, (forever).
23% because of sales calls, 56% signed up But what about the favorable long-term
because of recommendations of other sat- effects of continuous advertising? Isn’t
isfied customers and professionals in the there something to the notion of continu-
field and 8% weren’t sure why they had ally reminding the public you exist? Dr.
chosen that computer service. Julian L. Simon, of the University of Illi-
This is actually a fairly common survey nois, says no: “[attributing] threshold ef-
result. Yet, as we can see from their fects and increasing returns to repetition of
bloated advertising budgets, very few com- ads constitutes a monstrous myth, I be-
panies act on the information. If they did, lieve, but a myth so well-entrenched that it
is almost impossible to shake.”
19. ADVERTISING: THE LAST CHOICE IN MARKETINGS 1/ 7
Using advertising to make your business television programs. The public was well
a household word can often backfire; a acquainted with “ADM, Supermarket to the
business with a well-advertised name is World,” by the time it became embroiled
extremely vulnerable to bad publicity. in a price-fixing scandal and had to pay
Take the Coors brewery as an example. $100 million in fines. The moral of this
Thirty years ago, after it had vastly ex- little story is simple. If these companies
panded its original territory and become a had relied less on advertising, their prob-
household word throughout much of the lems would have been much less of a
country with heavy advertising ($100 mil- public spectacle.
lion per year in the 1980s), the Teamsters’ Sadly, many small businesses make sac-
Union waged a very effective consumer rifices to pay for expensive ads, never be-
boycott against it. In Seattle, a strong ing certain they are effective. Sometimes
union town, less than 5% of the market in this means the quality of the business’s
the 1990s was drinking Coors. The Coors product or service is cut. Other times,
of the 1960s, known primarily to its loyal business owners or employees sacrifice
customers in the Rocky Mountain states, their own needs to pay for advertising. We
where it had a third of the beer-drinking think it’s far better to use the money to
market, was far less vulnerable to such a sponsor a neighborhood picnic, take the
boycott. family on a short vacation or put the
Or how about the stockbroker E.F. money into a useful capital improvement
Hutton, which spent many millions creat- to the business. As John Wanamaker, turn-
ing a false advertising image: “When E.F. of-the-century merchant and philanthro-
Hutton talks, people listen.” The image pist, put it, “Half the money I spend on
backfired spectacularly when
Hutton was caught engaging in
large-scale illegal currency transac-
tions. The many jokes about who
really listens when E.F. Hutton
talks contributed to the dramatic
decline of the firm, which was ulti-
mately taken over by another bro-
ker at fire sale prices. Similarly, the
huge but little-known agricultural
processing company Archer
Daniels Midland, headquartered in
rural Illinois, made itself a house-
hold name by underwriting public REPRINTED BY PERMISSION: TRIBUNE MEDIA SERVICES
20. 1/8 MARKETING WITHOUT ADVERTISING
advertising is wasted, and the trouble is, I “When I advertised, I seemed to attract
don’t know which half.” people who came because of the discount
I offered. These clients often did not re-
turn, would cancel sessions and generally
B. Why Customers Lured by were not repeaters. The people who were
most enthusiastic, most loyal, and contin-
Ads Are Often Not Loyal
ued with their sessions were almost always
Perhaps the worst aspect of traditional ad- clients who had been personally referred.
vertising, one apparent to anyone who Had it not been for the economics in-
runs a retail store, is that customers who volved, I would probably not have learned
respond primarily to media ads don’t usu- this important lesson: Personal recommen-
ally return. The same truth has been dis- dation is the best advertising there is.”
covered by magazines and publishing
companies that rely heavily on junk mail
solicitations to sell their wares. The fact is C. Why Dependence on
that customers recruited through scatter- Advertising Is Harmful
gun advertising techniques such as TV
spots, newspaper ads, direct mail, contests, To an extent, advertising is an addiction:
unsolicited telephone sales and Internet once you’re hooked, it’s very difficult to
freebies rarely come back. Unscrupulous stop. You become accustomed to putting a
Internet businesses such as DoubleClick fixed advertising cost into your budget,
have used the Internet to invade your pri- and you are afraid to stop because of a
vacy and sell your e-mail address to other baseless fear that, if you do, your flow of
businesses who beseige you with so-called new customers will dry up and your previ-
”targeted” marketing based on sites you ous investments in advertising will have
have visited and purchases you have been wasted.
made. While of course there are rare occasions
An example of this phenomenon familiar when a particular ad can produce lots of
to most owners of small service-type busi- business, it’s as rare in the small business
nesses comes from the experience of Laura world as catching a 30-pound lake trout
Peck. She wrote to us that she used to ad- off a recreational fishing boat or winning a
vertise her assertiveness workshops, but $100,000 jackpot at a gambling casino. The
due to financial problems discontinued the story of the great advertising success (the
ads. Instead, she started cultivating her “pet rock” fad of years ago is an extreme
own community of friends and acquaintan- example) becomes widely known in the
ces for clients. Two years later, her busi- particular community and is picked up by
ness was thriving, and she noted: trade journals and sometimes even the
21. ADVERTISING: THE LAST CHOICE IN MARKETINGS 1/ 9
general media. As a result, many inexperi- occasions. Palmer was a victim of her own
enced business people are coaxed into flash-in-the-pan advertising success. Be-
spending money on ads. Overlooked in all lieving that “advertising works” had lulled
the hoopla is the rarity of this sort of suc- her into the false belief that she didn’t re-
cess; also overlooked is what often hap- ally have to learn how to run a high-qual-
pens to the person whose ad produced the ity business. There wasn’t much we could
quick profits. Flash-in-the-pan advertising really tell her except to start over, using
success may bring an initial influx of cus- the solid business techniques and personal
tomers that your business isn’t prepared recommendation approaches discussed in
for. This usually has two unfortunate con- this book.
sequences: many loyal long-term custom- Palmer’s business is in direct contrast to
ers are turned off when service declines as Gail Woodridge’s, who also specializes in
the expanding business stretches itself too wedding photography. Woodridge doesn’t
thin, and most of the new customers will do any advertising in the conventional
not be repeaters. sense, although she does list her services
Mary Palmer, a photographer in San widely in places likely to produce refer-
Jose, California, started her business with a rals, as discussed later in this chapter and
simplistic but traditional marketing strat- in Chapter 9. Her clients are primarily re-
egy, advertising on her local newspaper’s ferred to her by wedding planners, bridal
“weddings” page. Palmer was one of the gown and flower stores, friends and
first photographers in her area to insert an former clients—people who know her and
ad for wedding photos. She very happily trust her to do a good job. Since this ap-
took in $12,000 during the prime April-to- proach has meant that her business has
August wedding season. The next year she grown fairly slowly, she has had the time,
advertised again, but this time her ad was and the good sense, to make sure that the
one of many. Not only did the ad fail to many details of her business are in order,
generate much business, she got few refer- including her office work and finances, as
rals from the many customers she had well as her camera equipment, darkroom
worked for the previous year. Concerned, supplies and filing system.
Palmer called us for emergency business
advice.
Visiting her, we found her business to D. Advertisers:
be badly organized and generally chaotic.
Poor Company to Keep
The overall impression it gave was poor. It
was easy to see why so few of Palmer’s It is estimated that each American is ex-
customers referred their friends, or them- posed to well over 2,500 advertising mes-
selves patronized her business for other sages per day, and that children see over
22. 1/10 MARKETING WITHOUT ADVERTISING
50,000 TV commercials a year. In our ten or 20 pounds a week. True,
view, as many as one-quarter of all these some people just might shed some of
ads are deliberately deceptive. Increas- those unwanted pounds, but how
ingly, the family of businesses that adver- many will keep them off for more
tise is not one you should be proud to be than three months? According to
associated with. Joan Price, in her book The Honest
Truth About Losing Weight and Keep-
ing It Off, 90% of dieters regain their
What a Marketing Expert lost weight within one year. She ex-
Says About Advertising plains, “Sorry, folks, there’s no
miracle way to block, burn, rub,
“Increasingly, people are skeptical of
jiggle, vacuum, melt or wrap fat off
what they read or see in advertisements. I
our bodies. There’s no magic pill, in-
often tell clients that advertising has a
jection, cream or potion. If there
built-in ‘discount factor.’ People are del-
were, don’t you think it would make
uged with promotional information, and
the front page of all the newspapers
they are beginning to distrust it. People
and medical journals instead of being
are more likely to make decisions based
buried in an ad?” Nowhere in the ad
on what they hear directly from other
is there a mention of permanent
people: friends, experts, or even sales-
weight loss, because, of course,
people. These days, more decisions are
whatever the method it won’t work
made at the sales counter than in the liv-
over the long term. If the ad told the
ing-room armchair. Advertising, therefore,
truth, no one would use the service.
should be one of the last parts of a mar-
• Our friends bought their son a highly
keting strategy, not the first.”
advertised remote control car for
—Regis McKenna, The Regis Touch
Christmas. It had just hit the market,
(Addison-Wesley, 1985)
and our friends joined the long line
at the checkout stand picturing the
delight on their child’s face Christmas
Do you doubt our claim that a signifi-
morning. It was not clear to our
cant portion of advertising is dishonest?
friends from the ads that the car
Do a little test for yourself. Look through
needed a special rechargeable bat-
your local newspaper as we did one re-
tery unit and when they returned to
cent morning. Here are a few of the ads
the store a week before the big day
we found:
they were informed that the batteries
• An ad for a weight reduction center were sold out and wouldn’t be avail-
that promises its clients will lose five, able until after Christmas. They went
23. ADVERTISING: THE LAST CHOICE IN MARKETINGS 1/ 1 1
back week after week until finally, One type of dishonest advertising is es-
two months after Christmas, the bat- pecially irritating because it’s a bit more
teries arrived. To add insult to injury, subtle and involves magazines and news-
the charger unit for the $50 car cost papers that you might have respected be-
an extra $20. fore you discovered their policy. It works
• An ad that offers home security at a like this: The publication touts the prod-
bargain price in big letters sounds ucts and services of its advertisers in its
like just the ticket to protect your news stories. For example, some computer
family, until you read the fine print. magazines have been known to favorably
In very tiny letters the ad explains review the products of their heavy adver-
that the $99 price covers only the tisers, and small newspapers often fawn
standard installation and that an ad- over the products and services of busi-
ditional 36-month monitoring agree- nesses that can be counted on to buy
ment is also required. In addition, a space. Once you discover this sort of
telephone connection fee may also policy, everything the publication reviews,
be required. even businesses that are truly excellent, is
We won’t belabor the point with the thrown into question.
many other examples we could cite from Devious advertising is rampant in our
just one newspaper. Obviously, whether culture; from “enhanced underwriting” of
you look in a newspaper, magazine or the public broadcast shows, featuring an-
electronic media, it is not difficult to find nouncements that look identical to com-
many less-than-honest ads. Even if you ad- mercial television ads, to paid product
vertise in a scrupulously honest way, your placement (inserting brand-name goods
ads keep bad company. The public, which into movies and TV). And we have come a
has long since become cynical about the long way from the dairy industry giving
general level of honesty in advertising, will free milk to children at recess. School dis-
not take what you say at face value. For tricts across the country sell exclusive ad
example, suppose you own a restaurant, space to the highest bidder on school
and instead of extolling the wonders of buses, hallways, vending machines and
your menu in exaggerated prose you sim- athletic uniforms. Channel One, which
ply state that you serve “excellent food at gives participating schools video equip-
a reasonable price.” Many people, cynical ment in exchange for piping ads into the
after a lifetime of being duped by puffed- classroom, is the tip of the iceberg. Corpo-
up claims, are likely to conclude that your rations have begun writing the very lesson
food couldn’t be too good if that’s all you plans themselves.
can say about it. Thirty years ago, a study done for the
Harvard Business School made clear how
24. 1/12 MARKETING WITHOUT ADVERTISING
the American public felt about traditional • Just do it (Nike)
advertising: “43% of Americans think that • It’s a Maalox moment
most advertising insults the intelligence of • Winston tastes good like a cigarette
the average consumer. 53% of Americans should
disagree that most advertisements present • Not your father’s Oldsmobile
a true picture of the product advertised.” • Travelers Insurance TV ad showing a
The chief reasons for hostility to advertis- child with the caption: “This is not a
ing are that it is intrusive and patronizing 4-year-old; this is $3.4 million in life-
(73%), morally objectionable (50%), and time income.”
false and misleading (36%). That the judg- We’ve all heard these slogans or ones
ment of the general public about honesty like them for so many years, and they’re
in advertising has not improved is demon- so familiar, that we have to concentrate to
strated by this quote from the October even hear them and really pay attention to
1983 issue of Advertising Age: understand if they are hype or simply not
“Industry studies repeatedly show the true. And more of them bombard us every
image of advertising very close to the bot- day. You can undoubtedly think of many
tom of the ladder in comparison to other more with no trouble at all.
professions. A study presented at a recent People are apparently so sick of tradi-
industry conference shows advertising pro- tional advertising hype that occasionally
fessionals next to last, just above used car even counter-advertising is successful.
salesmen.” Bernie Hannaford, who runs a diner
Let’s take a minute to look at the adver- named “The Worst Food in Oregon,” was
tising slogans of some of America’s most quoted in USA Today as saying: “I’m a
prominent corporations. While the adver- lousy cook, and my father always told me
tising business considers the following slo- to tell the truth, no matter what.” Signs
gans “good” advertising and not dishonest outside invite diners to “Come in and sit
hype, ask yourself, is this good company with the flies!” and warn, “Food is ter-
for your business to keep? rible—service is worse.”
• Bayer works wonders
• Come to where the flavor is
(Marlboro) E. Honest Ads
• With a name like Smucker’s it has to
be good Lest you become completely discouraged
• You can be sure if it’s Westinghouse about the possibility of a better standard of
• We build excitement (Pontiac) honesty in advertising, there is hope. At
• Quality is Job 1 (Ford) least two nations, Japan and Sweden, en-
• You asked for it, you got it (Toyota) courage honesty in their advertising. In
26. 1/14 MARKETING WITHOUT ADVERTISING
neither country do ads have “fine print” minimal. The legal standards for advertis-
that contradicts the main message, nor do ing are discussed in The Legal Guide for
they permit the sorts of puffery and hype Starting and Running a Small Business, by
we are used to and which all too often Fred Steingold (Nolo.com).
amounts to little more than lying. We mention the Japanese and Swedish
Japan’s tradition of honest advertising is use of advertising to urge that, should you
a long one. In the first century A.D., Chi- ever decide to advertise, you be sure your
nese visitors were so impressed with the advertisements are scrupulously honest
honesty of Japanese businesses that they and that they are as distinct as possible in
recorded it as a main attribute of their cul- style, content and location from the gen-
ture. This 2,000-year-old history of honesty eral run of other ads. For example, if you
is today reflected in many details: Restau- limit an offering in a print ad in any way,
rants display samples of their food in the do so in print as large as the offer itself. If
window and quote prices in round num- you advertise a service, don’t overstate the
bers, including sales tax and tip. If you see likely beneficial result of using it, and in-
an 800-yen price advertised for an item, it clude a warning as to any risk.
is the total price you pay. Nolo.com’s
Stephanie Harolde, who lived and worked
in Japan, adds that Japanese businesses F. Branding
never put down their competitors or used
comparisons that intimated their product “Branding” has been a catch phrase in ad-
was better than the competitors’. vertising for the past decade and brand
In Sweden, whose culture is closer to managers can now be found in the mar-
our own, there has been a more deliberate keting departments of large companies.
political decision to foster truthful advertis- Branding is an ingenious response to the
ing. In that country, it has been against the fact that traditional advertising doesn’t
law since the early 1970s to be deceptive work. The idea is to make a product or
in advertising. To accomplish this, the gov- service so well known that its consumer
ernment not only extended its criminal recognition magically places it in the cat-
code to proscribe deceptive advertising, egory of widely recognized and respected
but also formed an administrative agency brands. The concept of branding is that a
to enforce the law. As a result, the Swed- minor brand, Electronic Product X, can be-
ish people now strongly defend the integ- come as well known as a major brand
rity of their advertising. Perhaps someday such as Sony Electronics if Electronic Prod-
we, too, will be proud of ours. uct X simply spends enough in advertising
Deceptive advertising is technically ille- to “establish” its brand name.
gal in the United States, but enforcement is
27. ADVERTISING: THE LAST CHOICE IN MARKETINGS 1/ 1 5
The problem with this concept is that many types of advertising do work for
true brand identity is created when a com- small businesses.”
pany produces quality products or services The types of “ads” that often work for
and stands by them with solid warranties, small businesses include the telephone
product recalls and other methods to en- Yellow Pages, business directory listings,
sure customer satisfaction. Running a busi- flyers posted in laundromats, good
ness this way—not spending a fortune on Internet Web pages and “notification” type
advertising—is what creates trust and ads placed in all sorts of appropriate loca-
goodwill. In recent decades, several brand tions, from free “penny saver” newspapers
names were devastated when they did a to, in the case of a restaurant with late
lousy job of handling problems with their evening hours, the program of the local
products. Perrier, Gerber baby products, symphony.
Sears Auto Centers and Firestone each mis- We make a major distinction between
managed product recalls and took years to these types of ads directed at interested
recover. Gerber was ultimately sold to new prospects and traditional print, broadcast
management, and Sears even damaged its and electronic advertising. In fact, we pre-
reputation with its non-auto business. On fer to call these sorts of notices, whether
the other hand, Tylenol handled a recall paid for or not, “listings.” One good rule
beautifully and made its brand even stron- to distinguish the two is that a listing is
ger. found where people are looking for it. A
For a branding strategy to be effective, a traditional ad, on the other hand, like a
company must be vigilant about its prod- billboard in front of some lovely scenery
uct and service quality—and be prepared or a deodorant commercial in the middle
for emergencies. Without addressing these of an engrossing TV show, is usually intru-
issues, a company’s reputation is a sitting sive and often annoying.
target, waiting to be ruined. No amount of Another aspect of traditional advertising,
advertising will be able to develop a good but not of listings, is that advertising agen-
repuation for a company unless there’s cies get what amounts to a kickback for
solid product integrity behind it. selling an advertisement: They make most
of their money from the discount the me-
dia offers only to them. For example, an
G. Listings: “Advertising” ad agency might sell you an ad for
$100,000 and then buy media time for
That Works
$85,000. If you list your business in the
“Hey, wait a minute,” you may be saying. Yellow Pages, even using a large ad, you
“Traditional media advertising may not be and the ad agency are charged the same
as worthwhile as it’s cracked up to be, but rate. Putting up a successful website can
28. 1/16 MARKETING WITHOUT ADVERTISING
draw hundreds of thousands of viewers, The Chamber of Commerce, employ-
even if you create it yourself. In other ment and rental agencies, professional
words, listings almost never have an ad newsletters, magazines and journals, and
agency discount policy. special interest books, such as those
We strongly encourage the use of list- geared to the writer or photographer, are
ings, and, for most businesses, insist on commonly accepted places to list goods or
the importance of having a website. In- services. And in some instances, newspa-
deed, for most businesses, listings are es- pers have developed such strong special-
sential, particularly Yellow Pages ads for interest sections that it also makes sense to
businesses that people use primarily in an list one’s services there. For example, a
emergency: a drain cleaning service, a travel agency specializing in charter flights
plumber or a locksmith, for example. List- to Asia might place a list of prices in the
ings in the phone book Yellow Pages— Sunday travel section. Similarly, small com-
and, where appropriate, the Silver Pages munity newspapers exist primarily thanks
for seniors and ethnic Yellow Pages—are to local advertising, which usually consists
invaluable. of listings of goods and services. Many
In a few instances, the concepts of list- merchants find that this type of listing
ing and advertising have all but merged. does produce good results. Local schools
For example, in many areas of the country, and theater groups also depend on the
Wednesday is traditionally the day grocery support of the business community. We
stores put items on sale. Thrifty shoppers consider those kinds of ads as listings of
therefore check the full-page lists (ads) of the best sort.
items for the best bargains. In our view, In this vein, we have long been associ-
this sort of advertising qualifies as a listing ated with the Common Ground directory,
as long as it is placed where consumers a very successful cooperative enterprise
normally check. that publishes information in newspaper
Similarly, in the computer software busi- form about businesses involved in per-
ness, a great deal of software is sold at dis- sonal transformation. Interested people
count prices by companies that regularly subscribe or pick up a copy at coffee
advertise their wares in computer maga- shops, health spas or wherever the busi-
zines. The ads feature, in very small print, nesses listing in Common Ground feel it is
long lists of available software. Sophisti- appropriate to leave a stack of papers.
cated customers know to check these list- Since distribution is taken care of by the
ings first whenever they need software, people who list in the directory, the paper
because the prices offered are usually has an uncanny ability to be located ex-
lower than in retail stores. actly where people who are interested in
the services listed are likely to find it.
29. ADVERTISING: THE LAST CHOICE IN MARKETINGS 1/ 1 7
Nonprofits face the same challenge that from home, you list this fact as poignantly
for-profit businesses do: They need to tell as possible on the corner telephone pole
as many people as possible about the ser- or fence post. This sort of listing is so
vice or product they provide. The Palo common that if someone in your neigh-
Alto, California, Information & Referral Ser- borhood finds a pet, she is very likely to
vice has come up with a clever way to dis- check out that same pole or fence. In rural
seminate a lot of information in a areas all kinds of information is posted in
convenient package. It puts out an easy- this way. When Salli was out on a walk
to-use directory that lists some 200 local along her country road recently she no-
agencies and organizations and gives the ticed a cardboard sign nailed to a pole:
Service’s number for further information. “Warning! Don’t buy! Carl Chase [not his
It’s important also to realize that listing real name] delivers wet wood and won’t
can take lots of forms other than paid return deposit. Ex-buyer.” There is nothing
space in publications. For example, in new about this. The Romans used to paint
many areas, if your cat or dog runs away information about upcoming gladiator
A PAGE FROM COMMON GROUND, A DIRECTORY OF BUSINESSES INVOLVED IN PERSONAL
TRANSFORMATION
30. 1/18 MARKETING WITHOUT ADVERTISING
fights on the walls of buildings, and the who live in a certain area will print a map
Greeks posted important notices on rotat- along with a short description of their
ing columns at busy locations. work and host “open studio” weekends.
For home service businesses such as Motels and bed and breakfast inns are
chimney sweeping, babysitting and house good places for many small businesses to
sitting, the laundromat bulletin board is be listed as part of the establishment’s rec-
where many people look for help. Col- ommended services.
leges and universities are a good source Having a Web page is automatically a
for language schools, tutors, dance instruc- “listing.” Helping people find your website
tors, typists and roommate referral ser- is a unique and specific marketing issue
vices. In rural areas, being listed on the that we cover in every chapter and in de-
Farm Trails Map (a guide for visitors inter- tail in Chapter 11. No matter what your
ested in buying agricultural products) is business, there are sure to be many excel-
one of the most important marketing tools lent places to list its availability at low
for people selling fruit, nuts, vegetables, cost. s
livestock and Christmas trees. And artists
31. Chapter 2
Personal Recommendations:
The First Choice in Marketing
A. Cost-Effectiveness .......................................................................................... 2/2
B. Overcoming Established Buying Habits ......................................................... 2/4
C. Basing Your Marketing Plan on Personal Recommendations ......................... 2/5
1. Trust ........................................................................................................... 2/5
2. Backing Up a Good Recommendation With Information .......................... 2/6
3. Responsibility ............................................................................................ 2/7
D. When Not to Rely on Word of Mouth for Marketing .................................... 2/7
32. 2/2 MARKETING WITHOUT ADVERTISING
“It is the thing you look for, ache for.” business obviously comes from selling a
—Charles Glenn, Orion Pictures product or service at a price that substan-
tially exceeds your cost to provide it. The
W
e hope we have succeeded three main costs involved in doing this in
in getting you to think any business are:
about the dubious value • Providing the product or service the
of advertising for your business, if you customer wants,
hadn’t already independently arrived at • Getting new customers, and
this conclusion. Now it’s time to talk about • Getting repeat business.
a marketing strategy that does work: per- Notice that two out of three of these cat-
sonal recommendations. In our view, pro- egories have to do with attracting custom-
moting personal recommendations is a ers. If you can accomplish both of them at
superior, yet often overlooked, strategy to a reasonable cost, your business should
attract and keep customers. prosper.
The idea of people making recommen- Clearly, the customer who is referred
dations to other people is so familiar to us comes to you at a lower cost than the one
that it often takes a big stretch of the who sees an advertisement. In addition, as
imagination to understand what a signifi- we will discuss in more detail below, a
cant factor it can be in improving the prof- customer who is referred to you is both
itability of your business. Most business more likely to return and more apt to tell a
owners have no idea just how powerful friend about your business than is the per-
this tool is because they don’t know how son who responds to an advertisement. To
to use it efficiently. Yet ask yourself how better illustrate this point, let’s look at
many of the interesting people you have some businesspeople who have prospered
met, places you have visited, and more to using a personal recommendation market-
the point, high quality small businesses ing strategy.
with whom you have had positive relation- Sam DuVall, who conceives of eating
ships, have come to you from friends who places as theater, has owned very success-
cared enough to tell you about them. ful restaurants: The Ritz Cafe in Los Ange-
les and the Elite Cafe in San Francisco.
The Elite Cafe was one of the first places
A. Cost-Effectiveness in Northern California to serve New Or-
leans cuisine. Money was invested in good
The overriding reason why personal rec- food, good service and in creating a
ommendations are a better source of new unique ambiance worth talking about, not
customers than advertising is that they are in advertising. DuVall neither advertises
more cost-effective. Monetary success in nor does any paid promotion in the con-
33. PERSONAL RECOMMENDATIONS: THE FIRST CHOICE IN MARKETINGS 2/ 3
ventional sense, yet the Elite Cafe has “gripe and praise” forum where people
been packed every night for years. When share their experiences, which have been
asked about his success, DuVall said, overwhelmingly positive.
“Nothing works as well as word of mouth. Substituting personal recommendations
People believe in it.” for advertising doesn’t mean that you do
The equally famous and exclusive Los nothing but hope that your customers will
Angeles restaurant, Ma Maison, takes an tell others about your business. In fact, for
anti-advertising stand still further, refusing most businesses, encouraging positive
even to list its phone number in the Yellow word of mouth is an active and ongoing
Pages and totally depending on personal endeavor involving the creation of a mar-
recommendations to produce customers. keting plan that goes to the heart of the
And should you doubt this sort of market- business. For example, the Caravan Travel-
ing approach can be successful except for ing Theatre Company of Armstrong, British
the most exclusive of restaurants, there is Columbia, relies heavily on personal rec-
TGIFriday’s, an estimated $500-million- ommendations to promote its shows. As
grossing restaurant chain that is part of the they travel from town to town in covered
Carlson Group (started in 1965 in New wagons pulled by Clydesdale horses, this
York) that caters to singles. According to a naturally colorful group attracts a lot of at-
July 1985 piece in Inc. magazine, Friday’s tention and creates good publicity in an
“has marketed itself successfully without honest, fun way.
spending a dime on advertising. And that is The Caravan Company doesn’t, how-
not likely to change. . . . [According to the ever, just rely on this sort of attention. At
founding president, Dan Scoggin], ‘if you’re the end of each performance, the cast asks
performing by a standard of excellence, members of the audience to encourage
you don’t have to advertise. People know their friends in the next town (they sched-
and they’ll tell their friends. If you’re a res- ule shows in towns reasonably close to-
taurant that is advertising, you must be me- gether) to attend. Often, audience
diocre.’” members get so excited about the show
The most highly recommended restau- that they not only call their friends but ar-
rant in the United States, the French Laun- range to join them at the next stop to en-
dry in Yountville, California, has never joy the show with them.
advertised. The movie industry is one of those most
eBay, as noted in Chapter One, doesn’t obviously affected by personal recommen-
advertise but encourages their users to dations. Even though well over a billion
spread the good word by hosting a feed- dollars is spent every year on promoting
back forum. To help assure new users that new movies, people talking to people is
the auction really works, eBay created a what really counts. According to Marvin
34. 2/4 MARKETING WITHOUT ADVERTISING
Antonowsky, head of marketing for Uni- B. Overcoming Established
versal Pictures, “word of mouth is like Buying Habits
wildfire.” This point is well illustrated by
the number of low-budget movies that Personal recommendations are also one of
have succeeded with little or no advertis- the best ways to overcome a big hurdle for
ing—and by the number of big-budget a business that wants more customers: the
flops. tendency of people to patronize the same
Like the movies, book publishing is an- businesses over and over. The average
other industry where lots of money is tra- number of significant monetary transac-
ditionally spent on advertising but can’t tions (not counting newspapers, carfare,
begin to compete with the power of etc.) for a family in the United States is
friends telling friends about their discover- about 65 per month. This means that if
ies. A few years ago, The Road Less Trav- you are typical, someone in your family
eled, by psychiatrist M. Scott Peck, was just opens a wallet, writes a check or hands
another psychology/relationship book lan- over a plastic card 65 times each month to
guishing on bookstore shelves. Then a few pay for something. For most of us, the
people read it, told their friends, and great majority of these transactions are
started a chain reaction that’s still going conducted with people we have done
on. Today there are well over two million business with before. Consider your own
copies in print. habits. You probably tend to repeatedly
The two people most responsible for patronize the same dry cleaner, hardware
spreading word of the book were one of store, dentist, plant nursery and exercise
the publisher’s sales representatives, who facility. If you’re like most people, it takes
was so impressed that he insisted that a substantial nudge to get you to change
book buyers at stores read the book, and a one of these business relationships.
teacher in Buffalo, New York, who gave Given the fact that most people are fairly
copies to teachers and ministers she knew. stable in their daily business patterns, how
As a result, two churches invited the au- do you encourage a significant number to
thor to speak, the local bookstore began give your business a chance? Or, put more
selling hundreds of copies, and the pub- concretely, how do you get people to try
lisher (Simon & Schuster) took another your stress reduction class, law firm,
look at the book. A promotional tour laundromat or the new computer you are
boosted sales, which have kept rising. The selling out at the shopping center? Per-
author has since published a teaching sonal recommendations are the answer.
guide to the original book and a new Overcoming buying habits is difficult.
book expanding on the ideas in The Road However, once you realize that the major-
Less Travelled. ity of people locate a new product or ser-
35. PERSONAL RECOMMENDATIONS: THE FIRST CHOICE IN MARKETINGS 2/ 5
vice based on personal recommendations, • Are your financial records in order
not advertising, you have at least half the and up-to-date?
battle won. To win the other half, you • Are your employees knowledgeable
must make your loyal customers, employ- about your product or service and
ees, suppliers and friends an integral part enthusiastic about working for you?
of your marketing plan so that your busi- • Do you offer top-quality goods or
ness will be recommended enthusiastically services?
and often. • Do your customers have confidence
that if something goes wrong with
the products or services you sell, you
C. Basing Your Marketing Plan stand behind them?
• Is your website being kept up-to-
on Personal
date?
Recommendations Just the simple exercise of asking and
answering these few questions may
Once you have decided to base your mar-
prompt you to make changes in your busi-
keting plan on personal recommendations,
ness. The rest of this book should help
your next job is to understand why people
you implement changes that will really al-
go out of their way to recommend certain
low you to take advantage of personal rec-
goods and services and not others. What
ommendations.
gets them motivated to sing the praises of
Before we deal with the many practical
a business they think highly of? Have you
techniques you can use to encourage cus-
told a friend about a particular business—
tomers to recommend your goods and ser-
perhaps a seamstress, gardener, dentist or
vices, it’s important to understand the
cheese store—in the last six months? What
elements that go into a positive recom-
were the things about each of these busi-
mendation. To succeed in the long run, a
nesses that caused you to recommend
marketing campaign based on personal
them?
recommendation must be in tune with all
Most of this book is devoted to analyz- of them.
ing these kinds of questions. But the an-
swers can be summed up as follows: If
your business is truly worthy of being rec- 1. Trust
ommended, you will be able to answer all
or most of the following questions in the Before you accept a recommendation from
affirmative: someone, you must trust his or her judg-
• Is your business running smoothly ment and integrity. Dr. Sidney Levy, chair-
on a day-to-day basis? man of the marketing department at
36. 2/6 MARKETING WITHOUT ADVERTISING
Northwestern University, explains it this “tasted fishy.” Did he confuse bouillabaisse
way: “More personal than advertising and with borscht? Would you take seriously his
smacking of ‘inside’ information, word of recommendation of a seafood restaurant or
mouth can be a uniquely powerful market- fish market?
ing tool. If somebody you trust suggests Another friend, Linda Richardson, spent
something is meaningful, that is more im- three months traveling around the U.S. and
portant to you than information presented Asia studying coffee roasting methods in
in an impersonal way.” preparation for starting her own coffee
A good example is when a friend goes shop. Linda knows more about coffee than
out of his way to introduce you to some- anyone else we know, so when we took a
one. Such introductions are explicit or im- trip to San Diego recently, we tried out her
plied personal recommendations, and most favorite shop. The espresso was great, as
people are careful about making them. we knew it would be. The difference be-
When you are on the receiving end of tween Walter’s and Linda’s ability to make
one, you evaluate the person making the reliable recommendations is obvious.
introduction as carefully as you do the Linda knew her coffee. Walter did not
person being introduced. For instance, know his fish.
think of three people you work with and Finally, think for a minute about how
then imagine that each recommends a dif- many people you know who almost al-
ferent pilot (none of whom you know) to ways steer you accurately, and others who
take you up in a small plane. Whom sound off on every subject whether they
would you be more likely to go with? know anything about it or not.
Would you go with any of them? How Word of mouth works incredibly fast on
much would your choice be influenced by the Internet. Even a seemingly innocuous
the person doing the recommending? e-mail sent to a good-sized mailing list
with an instruction to “pass this e-mail on”
can easily spread like wildfire. Some
2. Backing Up a Good people like to keep everyone on their mail
Recommendation With lists informed about things they deem im-
Information portant—which can sometimes be virtually
anything and everything. Our advice is to
We must also consider whether or not our carefully consider and check out informa-
friends know what they are talking about tion before passing it on. A friend or busi-
when they make a recommendation about ness associate might understand one “save
a business. One friend, Walter, once or- a starving child, click on this website”
dered bouillabaisse, tasted it, made a face scheme, but will quickly learn to mistrust
and quietly sent it back, complaining it your judgment if you do it over and over.
37. PERSONAL RECOMMENDATIONS: THE FIRST CHOICE IN MARKETINGS 2/ 7
3. Responsibility can really trust you to stand behind your
product or service should something go
Because of the nature of friendship, per- wrong.
sonal recommendations carry with them a
degree of responsibility for the outcome. If
your friend introduces someone to you D. When Not to Rely on Word
who turns out to be untrustworthy, it can of Mouth for Marketing
deeply strain the friendship, and your
friend must make a sincere attempt to We come now to an important warning
make the situation right or risk eroding about the power of word of mouth. There
your friendship. is an extremely good reason why many
Obviously, carelessly recommending a American businesses may not want to
business can also strain a friendship. Imag- adopt a marketing plan based on the sorts
ine your feelings if a friend recommended of things we discuss in this book. This rea-
a carpenter who tried to jack up the price son is simple. Word of mouth is just as ef-
in the middle of the job, or a computer fective in getting out the bad news about a
consultant who screwed up your payroll business as it is to spread good tidings. In
system and then disappeared two days be- fact, the Ford Motor Company estimates
fore payday. that a dissatisfied car owner tells 22
And if a product or service you recom- people, while a satisfied car owner tells
mend to someone doesn’t work out, it’s eight.
not always clear what you can do to deal These figures may be going up; with the
with your friend’s hurt feelings. For ex- Internet, it is easy for knowledgeable
ample, if your favorite hairdresser gives people to complain to tens of thousands of
your mother-in-law a frizzy permanent, other people—and they do.
you will probably hear about it for years, A good example is the former website,
whether you buy her a filet mignon dinner DrKoop.com. Dr. C. Everett Koop was a
or not. well-respected Surgeon General in two Re-
Given the responsibility that goes with publican administrations. He started a
making a recommendation, people will website that used his name to dispense
not recommend your business unless they medical information and advice. His site
feel confident in it. As a direct conse- spent $147 million to solicit business on
quence, your business policies and prac- other websites and was one of the most
tices concerning errors, mistakes and visited health sites on the Web. Why did it
problems are of great concern to your cus- fail? Negative word of mouth. Nurses in
tomers who make recommendations. They America had complained for years about
will recommend your business only if they rashes caused by rubber gloves and been
38. 2/8 MARKETING WITHOUT ADVERTISING
told by Koop when he was the Surgeon poor quality merchandise successfully to
General that it was an imaginary problem. gullible viewers but were eventually de-
When DrKoop.com was founded, word stroyed by word of mouth. One was a
got out that Dr. Koop had been on re- miniature fire extinguisher, about six
tainer to a rubber glove company at the inches long, designed to be placed near
time he dismissed the nurses’ complaints. the kitchen stove, and the other, an aero-
Moreover, “the site came under attack...for sol can of air used to inflate flat tires. Nei-
failing to notify visitors that a group of ther product worked in an emergency, as
hospitals had paid to be included in a sec- promised in the ads. In each instance it
tion on community resources, and that took about six months for enough people
Koop himself was receiving a commission to buy them, rely on them in an emer-
for products sold on the site.” (Industry gency, and tell their friends what rotten
Standard, April 17, 2000.) products they were. The advertising con-
Certainly, if your product or service is tinued, but word of mouth was so power-
no better than average, you should put ful that both companies were soon out of
down this book and avoid like the plague business.
a marketing plan based on word of mouth. We’ve also found, after years of giving
Businesses with average or negative at- marketing advice to small businesses, that
tributes succeed only if they rely on such it’s bad practice to help a business devise
things as extensive advertising and high- a marketing plan to encourage personal
rent locations. Such is often the case with recommendations unless it can handle
businesses that cater to (or prey upon) more customers. Even if your business is
tourists. For example, in Boston’s wharf in decent shape, it may still not be run
area, there are numerous restaurants that well enough to handle the expansion that
Bostonians sneer at but unsuspecting tour- a marketing plan based on personal rec-
ists are eager to patronize. Many visitors ommendations will bring and still maintain
don’t know any Bostonians and don’t have its quality. When a business is not ready
the benefit of the natives’ negative word of for expansion, a large influx of new cus-
mouth. They don’t know that when they tomers can easily produce a waking night-
trustingly order local lobster, far from get- mare complete with dissatisfied customers,
ting a freshly caught crustacean, they are low employee morale and general frustra-
being served lobster fresh from the freezer. tion at not being able to provide good ser-
Even a media blitz won’t save an inferior vice. Naturally, when this happens,
product from bad word of mouth in the customers will tell their friends, and a
long run. Two products come to mind downward business spiral begins.
when we think of expensive national TV For example, a well-known shoe manu-
advertising campaigns that initially touted facturer sent out a mailer advertising a
39. PERSONAL RECOMMENDATIONS: THE FIRST CHOICE IN MARKETINGS 2/ 9
sale. Rasberry was excited as she has a catalogue was updated, the names of doz-
very narrow foot and they advertised her ens of businesses that had failed in the in-
size in styles she liked. When she went to terim had to be omitted. In a significant
the store, she was very disappointed as number of instances, the reason for failure
not one of the styles was available in her was that the business didn’t know how to
size. She was told by a frazzled sales- cope with the large volume of new orders.
woman that they only stocked one of each It’s not only small businesses that are
style in each size! Still, since she was vulnerable to this phenomenon. One of
promised the shoes she wanted were the largest HMOs in the country continu-
available from the warehouse, Rasberry ally spends large sums of money advertis-
decided to order two pairs. A week later, ing for new clients while leaving their
she received a phone call saying one pair current clients standing in long lines at the
was actually no longer being made. A pharmacy and unable to get appointments
week after that came a rather poignant with their doctors. When they finally are
note from the salesgirl and her manager able to schedule an appointment, they are
saying the other pair was also unavailable. allotted such a short time as to leave both
They did enclose a 20% off coupon for her patient and doctor frustrated. The results:
next visit. Needless to say there won’t be a an exodus of doctors who can no longer
next time. tolerate the situation and dissatisfied cus-
Another, dramatic example of this phe- tomers who are not shy to tell anyone
nomenon occurred when The Last Whole who will listen. One of the authors lis-
Earth Catalog (Random House), a publica- tened to the complaints of an elderly
tion that reviewed thousands of high-qual- woman propped up on her cane as she
ity products designed for simple living, waited in line for her medicine while an-
sold over a million copies and produced a other patient went ranting down the hall-
huge upsurge of orders for some of the way shouting, “Stop spending money for
products reviewed. When a year later the commercials and get me a doctor!”
40. 2/10 MARKETING WITHOUT ADVERTISING
Marketing Without Advertising Checklist
1. My product or service is up-to-date and is the best it can be.
2. I have an open, visible, understandable and very generous recourse
policy, which is clearly posted on my website.
3. I can clearly describe my business and so can most of my clients, sup-
pliers, friends and employees.
4. My pricing is clear and complete and tells customers what they need
to know about my level of expertise and my target clientele. The price
allows them to tailor elements to their needs.
5. My business is open in its financial information, management policies,
physical layout and its operating functions.
6. My clients know as much as they want to know about my product or
service, including the ways it is outstanding and unique. Referrals and
evaluations from other respected people in the field as well as from
customers are easily available and posted on the website.
7. Old clients and others who have lost track of the business can easily
find it in countless listings, reference materials, Internet search en-
gines, Web directories, and through neighbors and business associates.
8. I have a complete list with mailing addresses and phone numbers of
my current and former clients as well as my suppliers, friends and in-
terested parties. When relevant, referral sources are noted.
9. I have a current calendar of marketing events and regularly schedule
activities of interest to which I invite my customers and other appro-
priate associates. Everyone who attends feels a part of my community
when they leave.
10. I know how big I want my business to be and am prepared to handle
growth created by my marketing. I am prepared and alert to cutting it
off whenever a new customer gets better treatment than an old client.
s
41. Chapter 3
The Physical Appearance of Your Business
A. Conforming to Industry Norms ..................................................................... 3/2
B. Fantasy: A Growing Part of Retail Marketing ................................................. 3/5
1. Cleanliness ................................................................................................ 3/7
2. Smell ......................................................................................................... 3/8
3. Clutter ....................................................................................................... 3/9
C. Evaluating Your Business’s Physical Appearance .......................................... 3/11
42. 3/2 MARKETING WITHOUT ADVERTISING
M
ost of us give the physical be a customer and ask yourself whether
appearance of our business the appearance of the business would in-
a great deal of thought— spire your trust. If you feel you are just too
at least at the beginning. Signs, packaging, close to your business to really see it with
window displays and office layout are all fresh eyes, elicit the help of a friend, or of-
given great attention. Unfortunately, as the fer to check out another business in ex-
months turn into years, we tend to de- change for getting an assessment of your
velop sloppy habits. Window displays that own.
were once cleaned weekly and redone Keep in mind five goals for your
monthly now stay up a couple of weeks business’s appearance:
longer and are rarely cleaned in the in- • It should conform to, or exceed, the
terim. Employees who were once required norms of the business you are in.
to look fresh and clean now sometimes • It should be squeaky clean.
work in T-shirts and raggedy jeans, and no • It should have an appropriate smell.
one has gotten around to fixing the dent • It should be uncluttered.
in the delivery truck or thought to run it • Your website should be updated as
through a car wash. often as is possible and appropriate.
While the graphic presentation (espe-
cially packaging, promotional material and
listings) of most businesses improves with
time, carelessness almost always creeps A. Conforming to Industry
into other areas. Sloppy storage areas and Norms
restrooms, messy bookshelves in offices,
boxes of files piled in inappropriate places When your business’s appearance isn’t
and half-dead plants in the corner of the what your customers expect, you risk
office are all things that a business owner making them uncomfortable—even when
may hardly see, but are sure to turn off the divergence improves the look of your
customers. If this is what it looks like in business. Customers have a fairly clear im-
the visible parts, customers wonder, what age of what most businesses “should” look
might lurk in the file cabinets and drawers like. If they don’t know it from their own
hidden from view? And more important, observation, they rely on movies, televi-
who can have confidence in the skill of sion or magazines for models.
management? When they encounter a business that
Whether you are about to open a busi- doesn’t conform to these ideas, they feel
ness or have been in operation for some dissonance, the sense that something is
time, review all of the key elements of the out of whack, out of balance. It’s an un-
appearance of your business. Pretend to comfortable feeling that many people
43. THE PHYSICAL APPEARANCE OF YOUR BUSINESSS 3/ 3
won’t be able to verbalize; they just know appliance store which displays a relatively
something is wrong. small amount of merchandise works fine if
The point is simple. If you give your it clearly communicates to customers that
customers something that they don’t ex- the appliances displayed are samples and
pect, it is essential that you examine how orders are filled from a nearby warehouse.
they will react to this divergence. In retail- Consumer Distributing, a discount retail
ing, for example, a large amount of hard goods chain, uses this model.
densely packed stock is generally associ- Many types of businesses traditionally
ated with low prices, while widely spaced have miserable surroundings. Auto scrap
stock conjures up images of high price yards are an extreme example; many
tags. A clothing store such as Ross’s Dress laundromats are another. This is almost
for Less, displaying racks packed with certainly one of the reasons why many
clothes, is presumably cheaper than a small yards have failed in the last few
store such as Comme des Garcons, of San years. Customers will no longer put up
Francisco, Tokyo, Paris or New York, with greasy, dangerous surroundings. If
where each display features a very limited the appearance of typical businesses like
number of items. By tinkering with these yours is generally considered to be poor,
customer expectations, you risk creating rising above the industry norm is an essen-
confusion. A customer shopping in a jew- tial part of building customer trust. An ex-
elry store that offers a few items, widely ample of a business that exceeds the
spaced, would very likely find low prices industry norm is an optometrist who has a
disconcerting and might wonder if the clear, meaningful display in the window
pricing were wrong, the goods were fakes, instead of the usual pile of empty eyeglass
or worse yet, stolen. Disconcerting cus- frames and faded photos of models wear-
tomers a little is by no means always bad. ing last year’s sunglasses. Another is a
The store selling bargain jewelry in an un- plumber with a clever and educational
cluttered atmosphere might well prosper, window display featuring different types of
assuming other marketing techniques were pipes and fittings instead of a couple of
used to reassure the customer. pink toilets. Similarly, auto repair shops
Carefully planned deviations from the with clean offices, waiting areas and spot-
norm can be effective. For instance, an in- less restrooms are a welcome improve-
expensive restaurant can emphasize ment over the usual dirty, battered-looking
widely spaced tables and a quiet atmo- garage waiting areas we have all come to
sphere if this deviation from the expected dread.
is clearly understood, as might be the case Professional office waiting areas provide
if it used a name such as “Beggar’s Ban- another example where standards are
quet.” Similarly, an uncluttered discount commonly low. A doctor, dentist, architect
