Magic Beans Marketing

Sometime back Motoko Rich, economics reporter for Times, wrote this about the lessons he started seeing in children’s stories.

These days, perhaps because I’m covering the national economy — or because current economic troubles are too much to ignore — I often stumble across passages in children’s books that inadvertently teach economic principles.

When Rich reads story of a little girl buying back an item wrongly sold by her sister for lot more than what the seller paid for it, he sees pricing lesson

Pricing is often a function of who wants something more, and what that person is willing to pay for it.

Note that Rich is well grounded and knows why he is seeing these lessons in unexpected places.

It’s just that once economics is on the brain, it suddenly seems to pop up a lot in children’s literature.

And it is likely the news items that were current in his mind were the lessons he saw. Had he been a marketing guru whose school of thought is – all marketers are liars tell stories – that is the type of lessons he is going to see. Unfortunately those could be just plain wrong interpretations.

It appears Mr. Seth Godin, marketing guru (and author of All Marketers Tell Stories), seems to have read Jack and the Bean Stalk and no surprise he sees lessons on telling stories and word of mouth marketing. Before you join the 999 others who shared the story on LinkedIn, ask some questions on the three steps to successful marketing

1. The individual has to be open to hearing the offer at all –  What is your role as a marketer here? You could start with the right segment to target and reach them through channels in which they seek information. Or take a calculated and deliberate scattershot approach so some individuals will self-select themselves to hear your offer. Either way it is about your action.
   An example of second approach is the Nigerian money laundering mails. I see lot of similarity between the magic bean scam and email scam,

   Since gullibility is unobservable, the best strategy is to get those who possess this quality to self-identify. An email with tales of fabulous amounts of money and West African corruption will strike all but the most gullible as bizarre… Those who remain are the scammers ideal targets. They represent a tiny subset of the overall population.

   So it is not about the individual being open to hear your story, it is about you finding those prospects using segmentation and analytics.

2. The person hearing your story has to want to believe it – I do not get the subtlety Mr.Godin says this point has. It is not about the person wanting to believe the story as much as how you are positioning the product in his mind. If segmentation is about identifying customer jobs you want to serve, positioning is about telling those customers, “what job is your product applying for and why it does it better than alterntives”
   And his Uber ensuing example seems to put down Uber and confuses me.

   Uber, for example, offers a newfangled way to call for transport in big cities. Many people haven’t heard of it or used it, largely because they don’t think they need it, aren’t open to something new, or are unwilling to go through all the steps necessary to get the app, etc. So, even if it works as promised, there’s no urgent need felt by some, so they don’t care.

   It does not matter to Uber or other such marketers that not all people use their product. Marketing is about segmentation. Uber as a product targets those who are willing to pay higher price for better value. You do not want everyone who wants your product to be customers, only those who willingly pay prices that maximize your profit.

3. It has to be true – This is mom and apple pie advice. I cannot argue with this. More like a ‘deepity‘. On one hand the statement is trivially true. But the truth is indeed relative, it is in the minds of the customers. If you are selling on economic value add to customers then you are not making a marketing promise but showing proof of value you create and get your fair share of the value created.  On the other hand, think of all the luxury products out there – do the stories have to be true? Or what is true other than the utilitarian aspects?

Marketing failure occurs because you failed to – start with customers needs you want to address, choose those that you can profitably address  and tell them how your product fills those needs better than alternatives.

What biological platitudes and scientific cliches do to our brain

Leo Widrich of BufferApp writes,

Our brain on stories: How our brains become more active when we tell stories

We all enjoy a good story, whether it’s a novel, a movie or simply something one of our friends is explaining to us that they’ve experienced. But why do we feel so much more engaged when we hear a narrative about events?

And he goes on to quote some scientist to make his case about brain activation.

Popular marketing guru Seth Godin writes,

How can I explain the never-ending irrationality of human behavior?

The Lizard brain.

The lizard is a physical part of your brain, the pre-historic lump near the brain stem that is responsible for fear and rage and reproductive drive. Why did the chicken cross the road? Because her lizard brain told her to

Remarkable!

Remember this author called Jonah Lehrer and his books Proust is a Neuroscientist, How We Decide and Imagine? All based on the discredited authors interpretation of brain science? Too bad he got busted for plagiarism and not for his ideas.

We cannot leave out the numerous books on neuro-marketing that claim to have uncovered the truth to product marketing, product placement, pricing,promotion etc through an understanding of our neural activity. Every time I write about Segmentation someone comments on my post saying it is not supported in brain science of marketing.

And then there are numerous TED talks. The list goes on.

Well meaning people with no training or understanding in brain science, more importantly without the will to seek contradictory evidence use some correlation based research as indisputable evidence, drawing conclusions that even the original researchers would not.

In a length piece in The Guardian neuropsychologist Vaughn Bell takes down the flimsy cases popular gurus (and quacks) make based on complex brain science.

The “biological proof” argument makes about as much sense as saying that you have confirmed that pancakes and pizzas “really are” different because you have chemically analysed the ingredients. It’s only in rare circumstances where two things appear to be identical that a biological analysis will be the deciding factor in confirming whether they differ or not.

instead of revealing the beautiful complexity at our core, we live in a culture where dull biological platitudes make headlines and irritating scientific cliches win arguments. In response, we do not need a simpler culture but one that embraces complexity.

Neuroscience holds a prism up to human nature. Be suspicious of anyone who says there are no colours to be seen.

Next time you hear a guru advice you about doing an activity because it is supported by data in brain research it would serve you well to reread Bell’s article.

 

 

Questioning the inanities

Here are five extremely well written articles this week (except may be the fifth one) that take down popular and feel-good but false theories and claims.

1. Power of Positive Thinking
   “Nearly every technique in which positive thought is meant to bring about better results may actually backfire”. Don’t go walking on coal based on Guru’s goading.
2. Role of Luck
   “Work by Watts, Sagalnik, and Dodds suggests that although market success does depend on the quality of a product, the link is extremely variable and uncertain. Even the best contestant in a product category may fail, and even the worst one sometimes wins. And for an overwhelming majority of contestants in the intermediate-quality range, they found success to be largely a matter of chance.”
3. Ideas not worth spreading 
   “Today TED is an insatiable kingpin of international meme laundering—a place where ideas, regardless of their quality, go to seek celebrity, to live in the form of videos, tweets, and now e-books.” One TED video I watched about a man standing up and dancing and everyone joining him comes to my mind as classic example of stories told without considering alternative explanations.
4. How to write a Malcolm Gladwell book
   Or a Seth Godin book, or a Chris Anderson book. They are all the same. Just ask Mr. Godin to explain what he means by “remarkable“
5. Effect of Boards on Stock Performance
   Do board of directors have any influence on a stock’s performance? Given that how can a study make a case that companies that have at least one woman board member performed better than those that did not?

Finally here is another article about Nigerian scammers that can explain why Gurus seem to be producing theories and articles that have no evidence other than the only stories they used to develop the very theories. They are not writing for the thinking public. They are targeting those who have willfully suspended their thought.

If you already have a publishing career,like Seth Godin does, you likely will also be successful on KickStarter

Seth Godin had runaway success with the KickStarter project for his book. His stated goal was $40,000, but the project reached that goal in little over two hours of its launch. The total, at last check, stands at $256,691 with two more weeks to go. Likely it will go on to add few more thousands before the final date.

What does this success tell every aspiring writer who wants to use KickStarter as a way to self-publish their books?

According to Godin,

“What this shows is that if you build a tribe, you can use it to calmly build a publishing career that doesn’t involve a roulette wheel experience where you only have a week to succeed.”

Godin neglects the fact that he is a popular published author, speaker, Idea Man and most importantly someone with thousands of loyal followers (who seem to have remarkable cognitive similarity). It is not a surprise that his first KickStarter project, launched through his extremely popular blog as marketing channel, became a tremendous success. He can thumb his nose at publishers seeking to control what we get to read.

His success is irrelevant to the rest of us. Godin got the causation backwards. If you are already popular, have a sucessful publishing career, built an online following then you can translate that power to any channel. Not the other way.

What is the base rate of success on KickStarter? According to their statistics page,  1,617 of  62,032 total projects reached their goal of $20K to $99K (picked this range to line up with the $40K target Godin set for his project).  That is 2.6% of all projects secure funding that is big enough to provide career income to the author.

But wait, that is the average across all projects. As an aspiring author who wants to “calmly” build a publishing career you should look at the success rate for Publishing projects. For this category the number drops to 1.5%.

If you are not Seth Godin and you started a KickStarter Publishing project today, your chances of making your $20K-$99K target is no more than 1.5%.

Getting successful funding for one book is one thing, turning that into a career is another. The chances go down quickly for repeat successes.

Finally let us not forget the fallacy of composition in his argument. These are early days for KickStarter. Just because they showed up (first) some  may get successful, but will that extend to every new author trying to make a career through KickStarter? As Thomas Sowell, succinctly put it,

If one person stands up in a stadium, she can see better than others. But if everyone stands up …

Remarkable

Anyone who attacks such [weak, incorrect] ideas must seem to be trifle self-confident and even aggressive. The man who makes his entry by leaning against an infirm door gets an unjustified reputation for violence. Something is to be attributed to be poor state of the door. – Galbraith

There is a one very popular marketing Guru known for this word. You could say he owns the word. His followers take the word as self-evident truth, no questions asked. Other Gurus who came in his footsteps have written books on marketing that use the word “remarkable” hundreds of times but never once use the word, “segmentation”.

The Guru favors simple stories and homilies, which he incessantly doles out in the form of blog posts and books. Through these stories he goads everyone to be remarkable, sometimes in a tone that borders on condescension.  He tells you to stop being perfect and start being remarkable.

Remarkable you say? What does that mean, Guru?

Remarkable doesn’t mean remarkable to you. It means remarkable to me. Am I going to make a remark about it? If not, then you’re average, and average is for losers.

And you know what happens to those who are average? The Guru later tells us,

If you are average you going straight to the bottom.

So if you are not remarkable, not doing remarkable things, not developing remarkable products  etc. you are going straight to the bottom.

We don’t want anyone to go to the bottom, be it straight or through a circuitous route.  We can avoid this fate only if we can get the Guru to remark about us, our ideas, our products etc.

But you ask, “What would make the Guru remark about my product?”.

Have you not been following?

Remarkable products get remarked on and only products that are worthy of Guru’s remarks are remarkable.

Or may it is being Purple is same as being remarkable.

See also:

Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management by Jeffrey Pfeffer and Robert I. Sutton

The Real Limitations of Evidence Based Marketing

This is not a reply to Seth Godin’s post. While his post triggered this, the usage of the term Marketing is different between the two articles. To me, Mr. Godin’s article’s use of marketing reads more about marketing communication and messaging. I cannot agree more on the need to present the message in more interesting and acceptable format than just gobs of facts and data. We cannot hope that the rational automatons will figure it out, years of behavioral economics research has shown that we are anything but rational.

Marketing, to me,  means strategic marketing – activities that come way before we get to messaging. Like choosing the segment to target, the product versions to deliver, the pricing strategy and how to reach these customers.  This article is about that definition of marketing. However, Mr. Godin’s use of the phrase “Evidence Based Marketing” for a messaging tactic will create confusion in the minds of many. Using data and facts in messaging is a tactic, it is not Evidence Based Management.
Read on.

Evidence based marketing is flawed, it is rife with multiple errors. The common error types are

Inherent Data Errors: Data is noisy and incomplete. Sometimes the readings can be just plain wrong due to probabilistic nature of data source.
Environmental Errors: Context and environment collude to further muddy the water by tricking our eyes, minds and tools. Due to no fault of our own we see mountains when there aren’t any (like John Ross’ Croker Mountains).
Observer Effect: Call it Heisenberg uncertainty principle or Hawthorne Effect. The very act of reading the data can taint it.
Methodological Errors: Call it sampling error or survey error, our methods of data collection are inadequate. They introduce their own errors that are sometimes unquantifiable.
Data Collection Errors: We do not know what or how to measure. We ask the wrong survey question or add the wrong stimulus  but treat the received data as answer to the question we had in mind.
Analysis Errors: Test for statistical significance is flawed and misused. Not just Type-I and II errors, the very method of hypothesis testing is flawed. We collect data conditioned on the hypothesis being true and declare, “since data fit the hypothesis we conditioned to be true, the hypothesis is true”. We take comfort, wrongly, in using lower p-values. When data fit the hypothesis we stop, ignoring the fact that data can fit any number of hypotheses.
More Analysis Errors: We take comfort in adopting more rigorous and computationally intensive analytical methods. We treat correlation as causation and even regression as causation, look to the past to guide the future. We ignore lurking variables that could explain common causation.

Yet, Evidence Based Marketing is preferable to the alternative – based on guts, fads, Guru’s revelation, opinion of the person with highest title, and just plain observations.

The alternative is rife with errors that are not easy to see or measure – Cognitive errors. We suffer from multiple cognitive biases like Recency Effect, Availability Bias, Selection Bias and Survivorship Bias.Worse, the alternative rely on Commitment Bias and Agreement Bias (peer pressure) to push through a version of truth. Here the truths are unfalsifiable and it is forbidden to look for falsifiable evidence. Anyone stepping outside the accepted norm is labeled and shamed into compliance.

Evidence Based Marketing is flawed but it is clear and explicit about the flaws and lets the decision maker be the judge. The good practitioners know its flaws and bad ones cannot overlook it for too long.

Evidence Based Marketing eliminates the need for a charismatic leader and survives across leadership changes. The Alternative relies on the words and presence of the leader and the methods change when leadership changes. One myth is replaced by another.Both Evidence Based Marketing and its Alternative will take us to Madagascar but will try to tell us it is actually San Diego. Evidence Based Marketing would do that with data selection error, Alternative will just tell with authority.

When  uncovering new data shows otherwise, Evidence Based Marketing will reduce its certainty and state the likelihood that its prediction is correct.

Evidence Based Marketing is about forming a repeatable and falsifiable theory. The practitioners know that their is theory is true only because there isn’t data to prove it otherwise.

Which pill is it going to be for you?