Podcast
55
min to LISTEN
November 17, 2020

How to Crush Human Biases & Make Your Marketing Great (Again)

John James
John James
Founder
,
Hybrency

Hybrency founder, John James, believes that humans are the most important single reason businesses fail to thrive. But how do you weed out internal biases in your business? 

As host of the podcast, Champagne Strategy, John specializes in deconstructing world-class strategies and growth marketing. 

In this episode, he explains how to crush bias to enable your business to flourish.


Listen to this episode:

We covered:

  • Looking at human biases from inside business
  • Look at the areas where there’s no growth and that’s where you’ll find the biases
  • Consider your business as a system
  • Reductionism and what that means to your business
  • Disproportionality bias. Where small little things can make a huge difference.
  • What is the biggest mistake you're making right now that prevents you from growing further?
  • How Steve Jobs and Apple gave marketing a bad name
  • How to fight bias.
  • Deconstructing a products layers to find its real value

Resources:

Full transcript:

Louis: Bonjour, bonjour, and welcome to another episode of Everyone Hates Marketers.com. The no-fluff, actionable marketing podcast for people sick of shady, aggressive marketing. I'm your host Louis Grenier. In today's episode, you'll learn how to crush human biases that prevent you to grow and make marketing great.

Again, my guest today is the founder of the marketing agency, Hybrency, is the host of the show champagne strategy as well, where he deconstructs world-class strategies, growth marketing with a sprinkle of champagne. And he's going to explain to us why is champagne so important to him in his life. John James welcome aboard.

John: Very nice to be here. Thanks very much.

Louis: So one thing you believe in is the fact that the largest thing that prevents businesses to grow are people, humans, right?

John: Yeah. It's of ironic right.

Louis: Why is that?

John: You know, humans buy products and create the revenue, but also, in my experience anyway, the thing that prevents growth is the humans that operate these companies.

And some of the human biases go part and parcel with running a company. That's the thing that I come into trouble with and that's the thing that I try and solve.

Louis: So tell me more about this. What are the, we're going to talk about biases. Are we going to talk about biases from an internal perspective, folks inside businesses? Are we going to talk about biases from outside, like consumers and whatnot, or both?

John: I'm actually going to go in mostly from an internal perspective. So as a marketer, acquiring market, I think it's quite relevant. and also if you are working in other departments within a business, how to view marketers in the right way and maybe why they're acting in certain ways.

I think it's good for no matter what position you're in your working life to know about some of these biases.

Louis: All right. So let's go.

John: Look. Let's just set a context a bit here because I specialize in marketing that's related to revenue generation. I think sometimes marketers get a bad rap because that is one of the hardest things that they can do is tie their actions back to revenues.

I need to go really deep into some areas and cover a lot of different disciplines within marketing. When you talk to me about what I should talk to you on the show, that's what I want to talk about. because I think biases really play into this, this problem that we have. 

Let's define a couple of things first. The question I get asked the most is what's the secret of growth. I'm sure you might get that as well in your life. So what's the secret to marketing. What's the secret to growth. And I always answer in the same way, first of all, define what growth is, stop believing in reductionism and, take a constraints perspective instead.

So let's look at the things that are preventing growth and that's where these biases really play into it. Look, let's just go straight into it. probably the biggest thing I see is the stigma around marketing. So yeah. I think non-marketers view marketers as a bit shady like you say.

So I think this really affects the confidence that some marketers have in themselves and, the way they're treated by other departments really plays into that. I think we need to talk about that stigma first and this creates the first major bias, in the industry.

Louis: Okay. So before we go into that, let me just interrupt you and go back to one thing you said earlier, which is, so instead of thinking about how can you grow more it's more in terms of thinking in terms of a system, like a system thinking, which is, what is the biggest thing preventing you to grow right? If you consider your business to be a system, and you talked about reductionism, I've never heard of that before, what does that mean?

John: Oh, right, so reductionism is like when you take something that's really complex of which marketing is, especially if you're trying to tie it back to revenue, there are heaps of variables out there. It's a really complex wheel that you need to be over. And reductionism is when you're trying to take lots of different things and then simplify them into a little model and academics do this all the time in universities. 

They're trying to take this really complex beast and they go, okay, let's, because of, XYZ. They create a little model around that, the seven steps to this, the four Ps, or whatever. And they simplify it so everyone can understand it, but what's lost in that process is some of the complexity. And, those are the little bits that are often the juicy bits that you really need to be over, and will be the difference in your career in terms of being really effective at marketing.

Louis: So I think it's important here to talk about the difference between complex and complicated, right? If I'm not mistaken, I'm going to butcher this, but something can be, can something be simple and complex or that can't be happening?

John: Yeah, I think complex is like the number of variables that you're going to look at, that will, yeah. But then you can have simplicity within that and that is like maybe the way you approach that complexity is quite simple. so yeah. Look, do you want to get tied up in semantics here, but, I think you can handle it.

Yeah. it's probably best to use a couple of examples. and this is. Probably one of the things I want to talk about, which is, disproportionality bias, which is, where small little things can make a huge difference, especially when it comes to revenues. you might have all the wheels of your marketing machine turning really well.

And this is one little thing that's preventing everything from working really well. And I see it all the time. maybe if you’re expensive, like lead funnels and things like that. there could be this little technical glitch that's causing 50% of your yield to dissipate. If you're not over all those little things, in detail, then these little things can go missing and nobody notices them.

Louis: And I've heard about it in a different, slightly different way, but a different name, but different same thing, which is, there's always one big thing that prevents you from going where you want to go or going faster. And you can do whatever you want on the other thing as long as you don't remove this thing, it's not going to happen. It's like retargeting for ads, for example, most people, the major mistakes they make, the big mistake. Yeah. That's the way, that's the way I've heard about it, which is what is the biggest mistake you're making right now that prevents you from growing further?

In marketing to get to just a quick example. Retargeting is usually where we see in paid marketing, one of the biggest mistakes, which is retargeting everyone and anyone visiting the website.

John: Yeah over and over.

Louis: Exactly. So you're basically. using so much money, on 90/95% of people that don't give a shit. And instead, you should focus. you should stop doing this mistake and focusing, all of the money on that 5% that show some intent on your website, make them come back. So that's one example. And so you mentioned two already, so let's maybe, go back to the first one you mentioned and [inaudible].

John: I think, especially the, I do a lot of work in the tech field. I know you work for a tech company as well. So I think, we need to address that one, which is the elephant in the room, which is, Peter Teal and the PayPal crew back in the day were very dismissive of marketing as a discipline.

And, the irony is he, he talks about, the power of distribution, Which, last time I learned marketing was one of the four Ps, so I find that a touch ironic, but that sort of started this tech versus traditional versus digital, debate in the industry.

And, in tech companies, you'll probably notice it's quite prevalent. The engineers and the product people view marketing with a bit of an uncomfortable disdain. And, I find that very interesting and I think, as tech grows, that's becoming quite ingrained in the culture.

And that whole Steve Jobs, Apple story as well is really fascinating. Steve Jobs has sent a lot of misinformation around the tech community in Silicon Valley, around the amount of marketing that they were doing, especially research. And a lot of those stories came out in that court case. I know this has been mentioned a couple of times before, but, I think that general sort of culture has, of misinformation, has really changed the narrative around marketing, created the stigma.

And then, that creates sort of the bias of people viewing marketing and marketing's worth that creates a self-fulfilling loop within marketing. They attract worse employees. the expectations are really high. no one wants to work for these tech companies, even if they are good at marketing. They attract worse and worse talent. So then it's this loop that goes down and down.

Louis: So just to go back to the example of Apple versus Samsung, which I think was the Samsung through whatever they were suing Apple for, won the case and they got access to the highest amount of market research. Anyone could have fucking...

John: I think any company in the history of time has spent on market research.

Louis: And the bias, the bullshit there was that Steve Jobs was very good at making everyone believe that no, they don't do market research. They're just fucking winging it. And they just, are so innovative and so intuitively connected with their people that just come up with stuff which is far from being the truth.

Like they did more market research than anyone else on the planet. And yet. This kind of bias against marketing thinking that it comes after the product. And now we have a good product now how the fuck did we get a customer is one of the reasons why, as one of the origin stories is because of that bias, right?

Like what Apple, what people think, thought of Apple was doing. And you mentioned this loop, so that's interesting. So people consider marketing to be an afterthought or not that, not that interesting, not that important, therefore, less and less people are interested in joining...

John: Well, who would join a company, if like the management view marketing as like some sort of afterthought, you don't really feel valued as an employee or if you're not respected or you're just someone that's respected. then the expectations are really high then you know...

Louis: Why are the expectations high when you didn't give a shit about marketing?

John: Oh they have high expectations about marketing, so they don't want to get a shit marketer, because, obviously, they're looking for marketing to fill a whole, of the department and yeah, they look at marketing as filling the gap of demand gen basically, we've got a revenue problem, whatever problem we have marketing is going to solve that. This is a political thing as well, and it happens in all departments. I'm not saying marketing is the only one, but I see it quite a lot as the scapegoat for miss performance. and I think some people over-rely on it and there's a lot of areas that you could work on as well.

Louis: Okay. So that's an interesting one. This loop, this self-fulfilling prophecy in a sense of marketing being shitty because you make it shitty in a sense, I know first hand about this story, that tech companies talk about a lot, which is, once you build a good product, once you have an innovating product, then things then take care of themselves.

And marketing is just a way to put ads in front of people. And they almost sound like marketing has, when done right, marketing has a seat on the table from the very start. The ability to really understand people and their problem and the jobs they are hiring, stuff to do so that you can design the right product for them, in conjunction with design, UX, product engineers, and whatnot.

So how do you fight this bias? How do you convince people? Because you probably have work with an already... are working with clients who somewhat believe that. How do you find that?

John: Yeah, look, if it's in a tech context, generally you're dealing with sort of engineers or head of product, or, technical people like that.

And, one of the things that I use, it's quite important is, there's this fallacy that, technically good products sell themselves. And we know in marketing there's heaps of failures, the tech companies themselves wash these failures under the rug where they're constantly iterating products.

It's just part of the process, products fail all the time. But there's this sort of fallacy that, technically good products sell themselves. and I would argue that it's more about, products that are in congruence with the market's need that sell themselves to a certain extent. And even then you still need to give them a leg up and get the public to find out about them.

So I think one of the things that I use is that I ask the engineer. Okay. if you think that's true about the product that we're talking about. Okay. Tell me about what your shirts made out of. what fiber is it? What's the diameter of, what is the stitch or the weave on the shirt that you're wearing? What is the brand? When was it started? And ask all these questions and, they can't answer any of them. And then I get them to admit to themselves that, they probably bought this brand because they saw, Jeff Bezos, wear it on the weekend on a blog or something, or then that's why they bought their Patagonia.

Louis: Yeah. An obvious example, right? Yeah. and it's to go on top of what you said, And the interesting thing to think about is that most products that people buy are out of wants, not needs, not primal needs. And so anything makes zero sense. Once you deconstruct them a bit, why do you need to buy a $600 handbag?

Not me or you, my wife, for example, it's not about functionality or anything. It's not even, what a proof, or anything like that like it's not functional. It doesn't really make... it's all about status and it's all about feeling good about yourself and projecting this image that you can afford it and you follow trends.

And once you deconstruct it this way, nothing makes sense. Why do I make wearing a fucking t-shirt with barrels on? Why are we? Why am I? Why did I just buy this microphone? Which is very high-quality sound. But the previous one I had was pretty good, nothing to do with functionality. It's all about status and seeing Joe Rogan fucking having this one and feeling, I need to have this one.

John: You know what I knew it looked familiar. I knew it was Joe Rogan's. Yeah.

Louis: It's not because I bought it. It's not because of him. It's because of the tone of the voice that this microphone gives you, which all of the ones I had before were too high pitch, even though I don't have a necessarily high pitched voice. And I was looking to find a radio voice microphone, like something that gives you some sort of, anyway, that's all about nothing to do with functionality or human needs. It's really a want, anyway, sorry to cut you, but it's interesting.

So you make them deconstruct. Features of a theme that they bought and make them realize that it's nothing to do with the features.

John: Yeah we could delve straight into product and value strategy here, if you really want to, where I say that products consist of layers, right? And there's emotional benefits, functional benefits, which is what everyone obsesses over and self-expressive benefits. And then you've got costs on the other side as well. Everyone talks about cost as being priced as the main one but there's also other costs like emotional costs as well.

Time costs that have to be factored in. Once I deconstruct the product layers and show that all of these things contribute to the value perception, then they understand it quite well. And then they really value where marketing comes from. but that's the strategy.

Louis: But that's what we do here. So to go back to the Patagonia t-shirt, let's say one of the engineers has a Patagonia t-shirt, and you've deconstructed. Let's deconstruct it a bit with the layers, because to me it's proved that you need to be a good product person, like a good product manager to understand those. But you don't necessarily need to be a marketer to design it that way, or to think of time, cost, opportunity cost, or emotional cost or all the benefits on the other side.

Let's talk about Patagonia. let's say I'm wearing a Patagonia t-shirt. How did you deconstruct it?

John: Yeah, sure. Let's just take the example of, of a technical person or maybe a founder or an engineer that comes from a product engineering background that buys the shirt, Unless they're really into textiles, which I know a lot of guys aren't, I've had to learn it because I've had clients that are in that industry.

So the stuff that I know is pretty crazy, but, let's just say that they're not aware of the functional weave or the fiber, even, they just know it's polyester it's, and then, they know something about the brand because. They have seen other people wear it in the tech space.

So they feel that there's an emotional benefit in terms of connecting with the Bay area community as a whole. so they identify themselves as wanting to be one of those persons. So we call it like a self-expressive benefit if you want to get technical. And then, there's the emotional benefits on top of that?

Maybe when they wear it, they feel more confident during the day. maybe the brand themselves Patagonia, obviously a very sustained sustainable sort of brand. And they give back. They’re about slow fashion, so repairing things. So maybe that makes them feel good in terms of, protecting their environment.

Cause that aligns with their values, may be, they like the retro sort of colors and. Yeah, they're into eighties kind of colors I don't know. and yeah, and look, the functionality benefits there as well. It's warm, it doesn't rip very easily, and there's quality factors around the make of the shirts.

So we're talking about sort of functional benefits there. And then, when it comes down to cost as well, maybe, That's pretty hard to talk about that, but, they're pretty expensive if you've ever bought one.That is a value perception within itself is that it's high price.

And we know in marketing, that's a pretty high correlation between, value, perceptions and price, regardless of the quality of the product, the actual quality of the product. that all plays into creating this perception in that person's mind that, Hey, Patagonia is a good shirt and I should buy it.

Louis: So that makes sense. But to me, to play devil's advocate a bit, it still sounds like a product person designed the t-shirts or whatever I can think of, all of those. How do you make the connection with marketing and reaching out to people and what not, how do you convince them that marketing has to be involved in and that they didn't buy it just for the product itself?

John: Yeah, look, that's where sort of product placement comes in. There's no surprise that all the tech people in Silicon Valley wear Patagonia and are photographed wearing Patagonia and those photographs, find themselves in the blog posts and media and sessions and things like that.

That is no accident. And a brand sponsor influences in that space, to be ambassadors and then other friends or influential friends, see that person wearing it, they'll buy it as well. That's all crafted by a marketer. And, if we're just talking about high fashion here as well, that is one of the core things that they do.

It's all about connecting with other people who embody that brand. And, then other people notice that and they'll buy it as well. So you know, that those things don't happen by accident. we can talk about distribution and things like that as well. But, if we're talking about fashion, that's one of the main things that's used to grow a brand.

Louis: Yeah. so people notice marketing pretty well, bad ads and, they're able to identify other shitty marketing, but they're very [inaudible] good marketing because it's invisible. It's... it just works. People talk about it, your friends wear it and you think it's just word of mouth, but no,

John: Isn't that a Tom Fishburn quote, is that what you're referring to? Where, the best marketing doesn't feel like marketing.

Louis: Probably, copying everyone here. I'm not going to say anything about it.

John: I love that quote and you’re right, the best marketing you won't even notice. It's... I think Apple's a good example of that, when people will explain to you, why do they buy an iPhone?

Or why do they use Mac and not Android or some of the other competitors? They can't really explain it very well to you. They'll they'll start rationalising it. All right. it feels good or, I don't know, it just works. and it's all these like little emotional triggers. if you want to deconstruct that we could be here all day, but, I just find it really interesting.

They don't talk about functional benefits or, it has three cameras. That's why I bought it. they'll talk about other things. And I think...

Louis: I think they do. I think they do because they rationalize an irrational decision. I have to fill the gap. They say, oh, it's better than windows, less longer. It's... the OS is better, when in fact they only signal to others that they also have a Mac and they can afford it. And, the sick classiness and download just like a gamer and blah, blah, blah. So just to go back to the biase and sorry to cut you, I keep cutting you, but it's very interesting.

So should I need to contribute a bit? Do you have any other ways to find this field space of everyone thinking that marketing is shady and shitty and ineffective? 

John: Yeah, look, I think it comes through, people listening to this, where I go through some of these biases and, we all get... become better marketers because of it.

And we read up and, we can explain the value that we provide, really succinctly and clearly and tie some of the actions back to, business fundamentals, which is contributing to the bottom line, or reducing costs, for example. then I think, you'll get a lot more respect within the board level.

So I think it really starts at being better at what we do and better at articulating the value that we provide.

Louis: And you said something at the start. I don’t want to challenge you on it too much. but we've been talking for 20 minutes and I think I can now... You said you actually specialize in a branch of marketing, which is like revenue generating and it makes me think.

What else then, like if you're not contributing to revenue, what else are you supposed to do as a marketer?

John: Yeah. look, it's, it's pretty interesting. there's a lot of marketing activity that goes on that isn't about, generating revenue, Is dubiously connected to creating revenues.

So there's some things that, and this is a good bias. let's talk about this actually. this is one of the things that I wanted to bring up, which is, when you're planning your marketing budget, how do you spend it? And, you'd probably know there's this company called gong.io, sales, automation, software.

Yeah. A really interesting study that they did a little while ago, and I heard this when I was learning marketing, that a good sales person speaks less and listens more in proportion to, what most people think salespeople do, which is just talk and yabba and the gift of the gab. Some people say 70/30, some people say 50 /50, but the point is you should be publicly listening more than you are talking.

Yet, when it comes to everyone's marketing campaign, they spend the vast proportion of their budget on marketing communications, really expensive ads, What I call talk. And they spend a very residual amount, if anything, on research and half the time that research expenditure comes out of the agency's fees anyway.

And that research that they do is just confirmation bias, Trying to prove the decisions that are already been made by their strategist. So I find that very interesting. If we really want to sell things, why are we spending so much on talking?

Louis: Yeah. Why. it's funny. There's a lot of biases against research, right?

There's a lot of, like the one that I hear the most that pisses me off the most is the fact that it's this Henry Ford quotes, we were asking people, what they wanted, they would have asked for faster horses. And that drives me nuts because the point of research has never been to ask, what do you think we should be doing?

What solutions should we build? Because people will always ask more, they would ask for better, faster, cheaper, The key of research is to understand their pain, the jobs they're hiring the product to do with the identities they are using. What did they do recently? And that's it, your job as a marketer is with the emotional labor of joining the dots between what they're saying and what you can offer.

Do you agree with me or, that's a very...

John: I think, in a lot of these sort of famous quotes, there's an element of truth in that, and that is, and I was reading this really interesting book by, Adam Ferrier, about this, like he says, stop listening to the customer, hear them instead.

And I think, customers, and this is where one of the biases has come in really, which is called response bias in market research where, sometimes the responses people give you aren't really the things that you should listen to. So people, classic example is a restaurant, you’re sat down, you've had a terrible meal, right?

You're with your significant other, and a lot of just cultural politeness when the restaurant owner comes up to the table and he goes, oh how is the meal? You go, Oh yeah, it was great. this kind of weak smile, you don't say, Oh, it was fucking terrible. I'm never coming back here again. You just pay your money and walk away.

That's a really explicit form of response bias, but this creeps into a lot of market research where, you know, and we could go on examples about this all day. Like new Coke is another example. Sometimes they are asking the wrong question and you need to use different sources of market research, because they all have their strengths and weaknesses, to find out what's really going on with the customer sometimes.

It's not just, ask them what they want. Sometimes you should ask them. Okay. if we gave it to you, would you buy it or would you switch brands for it? That's a better question to ask. so yeah, that just comes down to market research.

Louis: One of the things that I find interesting is looking at behavior and then trying to do the emotional labor of understanding why this behavior happens.

So online you can see how people behave anonymously nowadays, but you can also do that in real life. mystery shopping and, poor man's ethnography as Mark Ritson would call it is super effective. Like just going, if you, if [inaudible] retailer and then go inside the fucking shop and look at how people actually behave and you'll understand that people don't read the label, from start to finish and look at every and compare every single fucking thing.

No out of habits. Most of the time, it's just pick one and go. And trying to understand, trying to link this behavior, this actual behavior with what you described a few minutes ago about the benefits, functional, emotional, the self-expressive benefits, the cost and all of that. It's the work we have to do as marketer to be more effective.

John: Yeah, look it's not an easy job. And I think, this comes down to this sort of reductionism thing that I mentioned before, it's a really complex environment. If customers told you the truth about what they wanted and how much they're willing to pay and I think it would make it so much easier just to, just go out and ask your customer, but they tell you lies all the time.

That's what I was, I think it's a good point. the tech. Community is bold and people get obsessed with being data-driven and I always ask them, what kind of data? And these people can't really understand, or explain to you what kind of data they just go, data from our programs online and I'm like, what about all the other types of data?

Like secondary data, marketing journals that have already been written and published, observational data, like you just mentioned going to a shop. That's observational research. you need to use all the different data points to get a really good, comprehensive view of what's actually going on.

And I think sometimes, we get into the sort of measurement bias, which is, we measure the things that are the most easy to measure. and we ignore the things that are hardest to measure and sometimes, in my experience as well, when it comes to revenue, those are the things you should be spending more time trying to measure.

I'm not saying that they're easy and I think this is where sort of brand gets lost in this, this tech industry as well. and it's coming back full circle. I was just talking to Robin Daniels the other day, ex We Work CMO and, he's seeing that. And I asked him this question and he's yeah, look at the tech community.

It's all been focused on demand gen, andsales activation. and it's really coming back and back into brand, what's the story. And I think that's anonymous with just, when industries become more competitive, you need to go move more away from just transactional and functional benefits of your product and you just to wrap a story around it and all these other layers and emotional benefits on top of that was just talking about before with the case of, that Patagonia, brand that's definitely happening in the tech community. And I think, maybe the tide is turning a bit, as the industry becomes more competitive, so maybe we'll see some more respect to come into the marketing discipline.

Louis: And so give me an example of, of something that is important to measure yet hard to measure. So most people miss it, like in the marketing sector.

John: Yes. Sure, look, there's a guy in Silicon Valley actually called Chris Walker. He does a lot of demand gen work. And, he's been talking about this a lot and I really liked the way he phrases this. but I've noticed the exact same thing.

So let's just take the concept of, we're working for a tech company. We're trying to get more leads, and close them. And, I think one of the mistakes people made is that they view sales like a funnel. And we all do this because we hear about sales funnels and we learn it at school.

And, what goes into the top, filters down and each layer, we get down to the bottom where we close the sale and, that's the revenue. And so the mistake people make is they go, okay, look, we just need to put more into the top. so they go, okay, more leads and that will increase their ratio at the bottom. What they miss sometimes is that there's a disproportionate amount of leads that contribute to the bulk of your revenue down the bottom. So it's not the same. and often that's because there's a certain segment of the target audience that you're targeting that, is more receptive to your brand.

And, maybe you've got other clients that are in similar industries and can show sort of social proof and case studies that your product really does a good job in those industries. And, that segment is converting at this like crazy high rate.

And could you be into like 80% of revenue? If you don't go full funnel and look at all the way down to the bottom, you're going to miss that. And, I think that's a mistake. A lot of companies may get at all levels. And, just coming back to, let's go back to B, to C, which is, Byron Sharp does a lot of work in this space and he talks about light and heavy buyers and the same sort of proportionality comes into that argument as well.

So you should really look at it. That research as well, because he says that, you get most of your market share from the people who buy the least from you and the least often. And so if you want to grow a really big brand, you need to focus on those light buyers rather than what they teach you sometimes at marketing school, which is get a segment. 

And that's going to be this 80/20 rule, 20% of your customers give you 80% of the profit and Byron Sharp actually proved that wrong. it's just, it's a very interesting, disproportionality problem that sort of affects metrics and measurement in marketing.

Louis: So let's take a moment to tell you listening to this episode right now, to pause it. And buy the two books called How Brands Grow and How Brands Grow Out too, which are basically the summary of Byron Sharp and his colleagues, on marketing as a science. And exactly as you said, it's a phenomenal book because it's proving a lot of things that we've been taught in school and for those who didn't follow proper traditional marketing training, that you've probably have heard around which exactly, as you said, there is no Pareto when it comes to profit and customer. The Max that they've seen across industries, companies, countries, and whatnot is 20% of the buyer responsible for 60% of the revenue or the profit.

I don't remember which one, exactly, and that, The light buyers with other ones that don't buy that often are responsible for a huge percentage of your revenue. And he's making the point there for, that you shouldn't only focus on your heavy buyers because those people would buy anyway, that you're, you can't really squeeze more out of them.

And instead you should focus on market penetration and trying to reach as many people who are category buyers as possible, even though they've probably been just once or twice in the last five years, right?

John: Yeah. Yeah. Big time. I think it's really important. One of the things I do, and coming back to your initial question, like, how do we improve this, this stigma? And I think it comes down to using sources like that of scientific peer reviewed articles, that if you argue against that, you're basically like proving yourself wrong. And the problem with that, and I've done this before, is that some of the, I don't want to be ageist here, but let's just say, some more experienced marketers who have been in the career for a lot longer, these findings are quite confronting to their belief systems and they'll be very antagonistic if you present this new theory, because they've learned the old way and those two things don't mix. 

You need to be really careful how you present this. so I just go, look, this is the way it used to be done and this is some new studies that were done and it shows XYZ. If we want to do this, then, I think we should at least read this study and he'd have some of the outcomes from the study. So that's the way. but that doesn't always wash. Sometimes there's people that are just too set in their ways and then they just don't want to hear it.

The 10 years or five years away from their 40k or their pension to mature and that just want the lowest risk thing and just ride the tide out until they go. Growth, isn't an option for a lot of companies. if I see that at the top, I just walk away,

Louis: Which is why most companies fail to innovate and stand out and to differentiate because they can't take risks. They can't afford to take risks.

To go back to one thing you mentioned, like briefly what you mentioned about it's very, it's actually almost impossible to convince people with beliefs that are so anchored into their identity, otherwise. And so this is also why it's been argued in marketing that you shouldn't really waste your money. 

One of the behavioral scientists talking about marketing a lot recently makes these points. You shouldn't really focus too much on those people who don't necessarily believe in what you believe in because there'll be hell bent in their own way. But the only way to convince people who are completely against you, he argues is to use subtle cues.

So you don't go head to head, mentioning this airline, I think Southwest airlines, or maybe another one, maybe not Southwest. They were perceived to be very, cheap and shitty and poor service. And instead of going at it heads on saying, Hey, we've better salaries, we’re good. They used in their commercial, classical music that is associated with quality and refinement and whatever. And over years of doing that, perception started to change. So it takes years as well. So I'm not surprised that you couldn't convince them. It's almost impossible.

John: And look to get a bit geeky on you, behavioral science again. and this comes into sales and in marketing quite a lot and especially if it's B2B, I had this conversation just today with someone who wanted me to just set up some demand gen, operational system for them. And, I was like, okay, who do you wanna target? And he's Oh, look, we can't go with the people who have already chosen a competitor because of the sunk cost that's gone into that and everyone's bought into it. And, they're not going to switch when it comes to the software. And he's, we find, we get the most customers from the people who are switching from like a non-cloud system to a cloud system, which, yeah, this product was, and he'll cause those, 50% of the time versus the other guys might be 1%.

The whole strategy shifts to those people and, coming back to what you said about the belief systems, it's because there's this sunk cost of mental energy time reinforcement over a long period of time, that has reinforced this belief as behavioral conditioning and, they're not going to let go of, because it's a such a big cost. We use this actually to our advantage.

I can't name the companies, but there's a very big, CRM automation company out there that starts with an H and they use this in the sales process. So they purposely waste, the prospect's time, over a long period of, multiple onboarding calls, over a period of weeks. And, they can implement this thing within an hour, but they drag it out as long as they can, because they know that if I've invested all my time up to that point, I'm not going to like chicken out at the last minute. I'm going to go through with the deal, no matter how expensive it is. I think the same thing plays here with our belief systems, this, sunk cost fallacy, they call it. and it's really powerful if you use it in sales, especially in a B2B context.

There's another very big company that starts with, O, that uses this in their enterprise sales as well, sometimes intentionally causing friction, in the sales process actually, contributes to more revenue and more sales, which is very contrary. if you've ever talked to a product team, they're always about getting rid of customer friction . We want it to be as painless as possible. And that's just often not the case.

Louis: Yeah. and that's a fantastic example to prove that. Adding friction, as you said, cannot value very much like having a huge queue in front of a, I'm fucking, I'm going to forget the name. but discotheque, would make you believe that it's more of a liberal inside as well.

So there's social proof, but there's also the commitment of time, which will bring value. Which is. the more time I'm spending, the more engaged I am, the less likely I am to leave the queue very much. Like when you're in a shitty relationship. And the last two years have been held together for 25 years, very, way less likely to quit because the sunk cost fallacy is there, but it doesn't matter actually, but you've invested over this time it's gone. So you should think about the time right now. Yeah.

John: And I learned this actually playing poker and meeting other entrepreneurs. And, entrepreneurs are really ruthless, like when it comes to this sunk cost because they know people use it against them.

They may have dropped a 100K or 200K or Millions into a company and they will have that discipline to just drop it and walk away and go, Nope, this isn't working rather than, okay, let's sink more money into this. Let's, what's the problem here. Let's get some more marketing dollars.

And the same thing happens with poker hands. I play Texas hold 'em. If you start bluffing and you get to that point where you can't carry on with the bluff, sometimes the best option is to just fold and walk away with your loss. that's where I learned that.

Louis: Anecdotally, anyway, poker is actually a very good school of life in general. I listened to this webinar recently, I'm going to, not to remember the name as always, but she talked, she made a point about poker being a really good school of life. and I'm going to have to pick up the note here, bear with me one sec, because that was super interesting.

John: And just while you're finding that, poker to me is a game of perception. Like they always say, don't play your hand, play the other person's hand. And it is true. it's all about sales and bluffing somebody else and convincing them that you have a better hand and then they should back away and vice versa. That's where marketing perceptions are so valuable.

Louis: She's making the point, it's the book called The Biggest Bluff. She's making the point… she says the only person that actually knows the cards is you, no one else can see them.

And they only know what you're projecting, which is the same in marketing. The only person, the only one that knows that has a card out, is your company. Unless you externalize them, people won't know. and she also made a very interesting point. The only people who don't lie to themselves, and to others are the ones who are clinically depressed, and she's making the point that everyone else makes like lies all the time.

Your white lies and it goes back to your research. It's yeah, it's a fantastic allegory altogether. I need to read the book, but I found that interesting anyway.

John: Yeah. And I think, you raised a good point there about. I do a lot of work in ivory tower syndrome. When you work with a lot of big brands, and ivory tower syndrome is when, you're so enamored and in your own institution that you lose perspective about maybe how other people view you in reality.

You're at the top of your tower and you're looking down at your little customers down below, and you're working as a senior brand manager. And, I find the best companies to prevent this, the problem with perception and getting too caught up in your own little bubble is that they force senior executives to work a week at the other bottom floor of the shop.

There's a supermarket here in Australia that does that. So every single employee from CEO executives, GMs. They have to do a week, beeping people's shopping through the till and saying, hello. And at any one time you could be getting served by like the CEO of this multi-billion dollar supermarket chain and, I think, other companies do the same kind of thing to prevent this ivory tower bias.

And, this especially affects marketing teams, where they, once they, I think the further away they are from the customer, they become detached and they make really bad decisions because they, get on their high horse and they're talking about your brand purpose and all this kind of thing. And that's where a lot of this marketing piece comes from.

It comes from this detachment, from the roots, the nitty gritty of frontline, things that every marketer should be doing. And look, even in tech, this happens, you hide behind your digital analytics program. Oh, look at my little useless tracking between here and here. And you're like, dude, just get the phone, call one of them and go, Hey, how was your experience and do that every day. and if you do that, you'll become way better at your job because there's a lot of stuff that you won't see without asking the question.

Louis: Good. Very good question. Simple question. To understand how good a marketer is or how much they are willing to change. And ask, when was the last time you talked to a customer?

And usually that question, I like to ask that in conferences on events, I don't go to them anymore. obviously with the situation right now, but even before, because they couldn't handle it, but, it's very telling and another part of this is statistical numbing. Very much like in a charity setting, when you ask for donations, it's much easier to focus on one person telling their story, and their suffering and pain, and to make people donate.

Instead of saying 10,000 people died from hunger every day, because numbers don't mean shit for people. And it's the same for Google NetX. when people look at numbers all day in Excel and Google analytics and Adobe analytics and Tableau and whatever they complete, I would argue. They don't think, my users, they completely forget those are real people behind the screens, To a point where they're gone.

John: Yeah. they use the term users. I'd be saying humans, or customers, customers to the website. I wouldn't use the word users and then they start, talking to the customer as a user.

I might, it's very, it's very, galling, it's talking to you and me calling you human, for example. you'd be like, that's really strange. so yeah, look, I think that comes from maybe, people who are a bit afraid of talking to customers. And I think, cause I've worked in sales and obviously, maybe you have as well, and you've talked to people and had small talk.

Maybe you've done a retail job, or worked at a bar or whatever. you don't have that, problem talking to complete strangers. But I think, if you're stuck behind a computer screen all day and you've never done that before, I think you will immediately have your own bias of not wanting to cross that threshold because you're afraid of a customer.

And look, at university, one of my first jobs was, I was working for a market research firm. And, I had to call up from maybe 5 to 7:00 PM. So we had this like two to three hour window, where everyone would be home and we'd call that landline phone. And this is back in the day where people actually had landlines and, they had already opted into the market research database to be called about studies.

But of course, half of them would forget. So I call them going, look, it's, John here from XYZ company. we're calling it cause you're on our database, to give questions for my research purposes. And like half of them would swear at my face, Or hang up straight away.

And the first day I did, I was like, what the, what the F These people have opted in what's wrong with them?Bbut they just don't remember. I think that really, made me a better person and then doing outbound sales, I think is one of the most character building things you'll ever do as a marketer.

You might ask me some questions to end this podcast on that vein. I'm going to answer like sales is one of the best things any marketer can do. whether it's a retail assistant clerk or, outbound sales, tele sales, whatever you gotta do that. because I think as marketers, we can get detached from the end result from all our activity, which is fucking, a commercial outcome.

You need to get someone to buy and there's no point building a brand. If that brand doesn't lead to a purchase, there's absolutely zero commercial value. And I think coming back to some of the stigmas that we need to get rid of, that's why it's so important to, maybe you don't measure it exactly, but you have a hypothesis and you've got some metrics around it and you can take that business case to some, someone up the chain and go, Hey, look, it's not perfect, but these investments in this podcast, for example, the’ve been mentioned five times by customers when they inquired with us. I think it has, XYZ value and look, a manager is going to go, okay, that's actually pretty good, we should continue doing that versus the opposite conversation where you come and go, Oh, that's the brand, of course you should have asked the brand, haven't you read, some advertising book by Olga Video, whoever. so that's a much weaker argument to have. So I suppose a lot of the job that I do is tying this measurement back to revenue.

Louis: So to go back to research and you're afraid of talking to customers. There's two things to think about. One is, you're actually helping them out. it's like a mindset shift. You're not annoying them. If you're not sending them anything, actually you're making their life better because they have someone to talk to for the next 20 minutes, people pay a £100 - £150 an hour to talk to a psychiatrist, a psychologist genuinely, if you ask them the right question, that's how it is.

John: Even if they're angry on retention calls, if you call them, and this happened, this GM of this big bank in Australia, called unhappy customers. And then all the other GM started doing it as well, like one per day, every day.

And they ended up creating advocates out of these people who are really pissed off and in fact sue them. And they turned them all the way around, into an advocate of the bank's brand. So like you can take a shitty situation and make it better, really easily as well.

Louis: And the, and I'm going to forget the second from the second, recommendation, to actually talk to customers.

But I think what you said about it is better. I'm not going to remember it now. I'm sharing I'm going in the next few minutes. Okay. So you've talked about linking, making a business case for the. let's say a podcast. Okay. We don't know for sure how many clients it brought, but we know frustrated brought five, for example, making a business case for that.

Is that the approach you use to prove, or to try to prove hypothesis when you're doing things, doing things that are not directly related or related to revenue that you can directly track back, or do you have another method?

John: Ah, look, I go pretty deep on this. I mix, sales activation with brand, so the two sort of separate metrics or bags and metrics, and, we need to be tracking both and investing in both, at all levels.

And I think there's a bit of a fallacy that when you're a small business, you shouldn't invest in brand, but you will vicariously do that because you are the brand, the reputation of the business early on. So you are already investing in brand. and I think, as the company gets bigger, that just the concept of brand changes.

So I don't buy into Peter Teal’s. Don't invest until you've got 50 million recurring revenue a year. don't invest in Brown at all. I think that's completely false. So look, without getting into the nitty gritty, there are very complex mathematical models that I use to do these calculations.

Some things are very much easier to prove than others. But I think, even accountants, at a very high level will understand the value of the brand and the need for it. Data's don't know how to measure it properly. So I don't think you'd get much pushback on that. but if you're investing a lot of the bulky money in that, and not in other activities, which are easy to prove, then you know, you're going to get in trouble. And I think this comes back to, one of the biases that I see a lot as well, which is, investing in outcomes, and other marketing departments, getting really tied up with outputs. And I think, I focus on the outcome and I don't really care how you get there.

A lot of other departments that are focused on, getting another blog, post out, getting another ad made, this sort of output churn this machine. And they don't really stop to think sometimes what is it actually doing? Is that affecting the commercial outcomes of the business or not?

And that's why I work more of an outcome approach and work back up the chain to do some of the activities that we could be doing completely different.

Louis: I'm a bit annoyed because you mentioned something very interesting. And I know we won't have time to go into in-depth. You talked about complex medical mathematical models, and that makes me interested, straight away.

You mentioned two things. So the difference between say activation and brand building, which are the two activities, says activation is more short term. You can directly link what you're doing or quite easily link what you're doing with revenue. Like typical stuff would be paid advertising, like AdWords stuff like that.

Facebook retargeting, social media ads, stuff like that. But brand building would be much more. beyond podcasts or CBC CEO being on podcasts. So I'll just lead genuinely thinking of the touch point of your journey, making sure that every single thing contact with our customer is fucking awesome.

That is much more difficult to measure, but there are ways to do so without you going too much in depth and talking to me about, your secrets, black books, if you had to simplify that in the next 3 minutes.

John: It happened last week. we were doing, okay. A tech company again, but that's not all the classes I have. It's very service industry focused. we're mostly investing at this stage in this company, search and social is like lead generation for this SaaS company. And, that was going really well. I'm getting lots of demand. so I had my baseline measurements and hadn't changed things in a month.

And then, I'm like, look, we really need to probably invest in some brand here. So the soft sell approach, we need to support those actions with other touch points along the journey, because the theory is that a person doesn't get sold just on one interaction.

Normally it takes a period of time and multiple interactions with different people, departments, ads, whatever. so we're like, okay, let's do some YouTube, ads on, this sector that they operate in and just see no call to action, no link, nothing. And of course I'm already tracking all the brands such as to the website.

In this case, the company's got XYZ, let's just say, and I was already tracking that on a line graph every single day. As soon as we started a campaign, the metric baseline went up by 20%. On all the other channels, so that's a really clear way, and that was that exact date.

And then I just shut it off and it stopped again and went back down slowly, back down to the level that's called exclude testing and I'll use that a lot when we're trying to figure out, okay, is that channel investment actually doing anything or not? So I'll turn it on and off for a significant amount of time and check how it affects the other things. So if you want to know what that's about, it's, it's a branch of mathematics, but, probably shouldn't go into that detail right now.

Louis: That's interesting. And the keyword here I believe is baseline, right? So to measure brand, you need a baseline of how many inquiries you have roughly per week or per month or whatever. A good way to do it, as it has been mentioned on podcasts before is, for example, if you do TV ads, you do TV ads in specific States in the U S and you don't do any in the other like roughly the same population or whatever. And then you compare brand search, like number of people searching for you in those States and see whether there's a difference, right? 

That's another way to test it. But it's super interesting, because that really starts to give you some, you can actually model out the channel independently of the other and saying, roughly TV will bring. X number more. Have you done that before? It was very comparing, like to two markets where you don't expose one to the two aspects,

John: That's just is, it’s another form of that sort of testing or AB testing? so yeah. And that's coming back to biases, like maybe I think I know I come from a TV background and I know the TV is powerful, but I've never actually measured it before. And once you start doing that, it really changes the conversation.

Yeah, look, some of the big brands can do this, but I think at a small level, it's really hard to do some of that because you don't have the budget, you don't have the expertise. you can't turn things on and off. You don't have that luxury. So I'm not saying that this is an easy thing to do, but, you can do small little tests, have a hypothesis, prove it, and then go, okay, we should do a bigger test and go from there.

I think that's a really smart way of doing that. if you're having that exact issue at your workplace,

Louis: There are ways like Twitter ads at the minute just as we are recording this episode in 2020, maybe next year, it’s not going to be whatever, but Twitter ads for example, are quite cheap at the minute.

And there's ways to test brands this way by exposing your message to so many people and looking just at Google search console or, all the ways to know how many people actually search for your brand name. and so it's not, you don't need millions, sometimes $500 and you can actually start seeing a difference.

John: Yeah. Google search console is actually, look, it's not the most robust form, but if you've got a big enough sample, it's pretty accurate. I know I have, I made it in finance. He works for a big investment bank and he uses that, as a predictor for the, one of the companies that he covers and in terms of their valuation, when they go into new markets.

So they use that metric and it pretty much exactly correlates with the revenue figures in that country. I've talked to him at length about his model there, and I talked to other people about these things and yeah, you don't need an expensive brand listing tool for a thousands of dollars a month.

it's a free tool.

Louis: John. You've been a pleasure. Thanks for deconstructing all of those biases. I have a few questions for you before you go, but yeah, it's been pretty in-depth I didn't see the hour go. which is a good sign.

 So what do you think marketers should know today that we're heading in the next five, 10, 10, 20, 50 years.

And you already talked about it. But maybe you have a different answer.

John: Yeah. Look, I think, sales and copywriting is a big thing, because you know how to articulate yourself and sell something, but, let's just talk, contextualize it around, maybe, some technology that's happening now that will get bigger in the next little while.

And I think, I'm working with a client that does 3D modeling and, in the world of AR and I know. Apple is bringing out augmented reality glasses very soon it's though the, probably the worst kept secret. So that's going to be the next big device. The world is going AR with a lot of advertising technology and the way we interact with brands and products, and to run AR you need to have 3D models of a product.

So I think if you get any skills around, virtualizing products in high detail, even using gaming engines, Things like that. And you can combine that with AR and that will be the new breed of marketing channels. It's going to be out there. I would definitely get on to that sort of bandwagon if you can, because we're really crossing that threshold of, hardware and the capabilities of the hardware to do that properly in a valuable way for customers .

Louis: Interesting makes me think a lot about, but yeah, what we knew, it's going to be an interesting few years.

What are the top three resources you'd recommend listeners today?

John: Yeah, look, I suppose I got onto Brian Belfor, he really changed my perspective and galvanized some of the things that I thought were true. and he's got a free blog, online. I think it's brianbalfour.com and he runs this education course called Reforge.

I've never done any of their courses. I've never actually met Brian, but I really gel with the way he looks at things. He has some shortcomings as well, which I won't go into, but, really good resource. and you mentioned Byron Sharp. I think he's one of the better academics out there, but there's another one called, I'm going to mispronounce his name, but Cohen Paul's or something.

I think he has a website. He just changed the domain. So I'll tell you what it is, but I think it's like marketing science.com or something like that. and he is another academic that does some really good stuff that. Isn't paid by, certain interests in lobby groups in the industry. So some of his research is really interesting around this exact thing we're talking about exclusion testing and tying it back to revenue. He's done some really good work there. So that would be my three that maybe other people haven't mentioned.

Louis: Great. Yeah. I had the pleasure to talk to Brian. he does have shortcomings. He's a very smart guy, but I think he's too obsessed with product, not enough marketing, et cetera,

John: And no brand either. there's no mention of brand, which is, a bit weird isn't it.

Louis: You mentioned it a bit as a growth loop, but it's drowning in all of the other growth groups, which I don't think they're all equal, brands or growth groups are like phenomenally. Like it's phenomenal against all of the other purely because it resists anything like Volkswagen resisted the worst crisis in their fucking history thanks to their brand, like it just works. Anyway. John, you've been a pleasure. Thank you so much for spending time and talking about all of those stuff that most people don't.

John: And I'm going to think about my microphone now. So you've convinced me I'm going to go on the brand bag where I can, and I'm succumbing to my own biases and buy a better microphone.

Cause I think you've outdone me.

Louis: Awesome. John, talk to you soon. Cheers.

John:Thanks very much.


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