If you're negotiating to buy something--a house, a company, even as the purchasing agent for a big company--you're also selling. That's because it isn't a faceless transaction involving a list price and a credit card. The purchase involves faith and trust and risk and someone caring enough about the other person to do more than seek the highest possible/lowest possible price. If you hope to buy for less than the clearing price, or get better work than average, in fact, you are selling when you're buying. A friend was selling his house, and every time he showed one particular prospective buyer a new feature, the buyer discounted it, demeaning its value. This is a common strategy--denigrate the thing you are hoping to buy, question the judgment of the seller, make them feel desperate. After all, the thinking goes, a desperate person will sell for less. Perhaps. But more often, a person being made to feel desperate will take her valuable goods somewhere else, to someone who cares more. Why not say, "that's fabulous! It makes the house worth even more, well done." Recognizing the good work of those you hope to buy from puts you on precisely the same side of the table as the seller. The brutal purchasing manager who uses RFPs like a club and nickels and dimes (not to mention dollars) suppliers--do you think he's actually getting their best work? When we're talking about emotional labor, it's not often about the money, it's about how the transaction makes the seller feel. Or consider the used car dealer. His business is only as good as his inventory, of course. So where to get the cars that get sold? One strategy is to only buy cars from desperate folks, folks with no options. (Or to make the people you meet with feel desperate). What sort of inventory does that leave you with? Last resort cars from people with no options. When the dealer who sold me a car recently tried this tactic with the car I hope to sell, I walked away. The good stuff is more likely to be sold to people who care. The things you'd like to buy are probably going to be sold by people who have other options now. Posted by Seth Godin on October 09, 2013 | Permalink | TrackBack (0) inShare 559 Your hall of fame Baseball, sure, but also roller derby and other worthy endeavors have a Hall of Fame. It says a lot about an industry when it cares enough about its work (and the people doing it) to go to the trouble of organizing this story. The music industry is particularly good at this--not only do they have a hall of fame, but they have gold records, Grammy awards and multiple ways to highlight and honor people doing the work. Why doesn't your company have one? A wall honoring the driver who broke a stupid company policy and got the shipment there on time... A diorama highlighting a particularly generous middle manager who always managed to find the resources to make something happen... A little glass box holding the purchase order that an heroic salesperson brought back from her long trip... I got a note a few weeks ago, letting me know I was being inducted into the Direct Marketing Hall of Fame. 101 people --Eddie Bauer, Lillian Vernon and of course, LL Bean--are there (real people, all of them). And also my friend Lester Wunderman, who pioneered the very idea of Direct Marketing and helped launch the American Express card. Three of us are joining this year--Don Peppers and Martha Rogers are the real highlights (if you haven't read their books, you should). Their first book (1996) completely upended my view of the world. The thing about direct marketing is that it's always been a bootstrapped industry. Lillian famously started at her kitchen table, a few blocks from where I was born (she took her last name from "Mt. Vernon"). Buy some stamps, do some tests, repeat. That approach, the leverage that comes from having big-time media for low-budget money, is here for all of us. We are all direct marketers now. That means you don't need a permit or permission to start your Hall or your walk of fame. The web makes it easier than ever to have a virtual institution, one that exists solely to find and highlight people that might be worth highlighting. You should start one. Even better, in a world where we can chart our own course, you could figure out a path that gets you in to the Hall you care about. Not tomorrow perhaps, but, drip by drip, over a career. Posted by Seth Godin on October 08, 2013 | Permalink | TrackBack (0) inShare 454 The easiest way to disagree with someone ...is to assume that they are uninformed, and that once they know what you know, they will change their mind. (A marketing problem!) The second easiest way to disagree is to assume that the other person is a dolt, a loon, a misguided zealot who refuses to see the truth. Their selfish desire to win interferes with their understanding of reality. (A political problem!) The third easiest way to disagree with someone is to not actually hear what they are saying. (A filtering problem!) The hardest way to disagree with someone is to come to understand that they see the world differently than we do, to acknowledge that they have a different worldview, something baked in long before they ever encountered this situation. (Another marketing problem, the biggest one). There actually are countless uninformed people. There are certainly craven zealots. And yes, in fact, we usually hear what we want to hear, or hear what the TV tells us, or hear what we expect, instead of hearing what was said, and the intent behind it. Odds are, though, that we will make the change we seek by embracing the hard work of telling stories that resonate, as opposed to dismissing the other who appears not to get it. Posted by Seth Godin on October 08, 2013 | Permalink | TrackBack (0) inShare 699 The Show Me State (of the art) I could ask you to bear with me through this urgent and important post, but I'm not optimistic that many people will. The punchline matters more than it ever has before. "Show me what this is about before I commit to it." And the follow up: "Now that I know what it's about, I don't need to commit." It started with the coming attractions for upcoming movies. By packing more and more of the punchline into the TV commercial or the theater preview, producers felt like they were satisfying the needs of the audience to know what they were going to see before they bought their ticket. Instead, they trained us to be satisfied by merely watching the attractions. No need to see the movie, you've already seen the best part. SportsCenter piled on by showing fans a supercut of every great or heroic play of the weekend--a sports fix without investing the time or living through the drama of the game itself. Record albums used to require not only listening to the entire side (no fast forward on an LP) but actually getting up and flipping it over. The radio wasn't going to play anything but the A side of the single, so if you liked an artist, you surrendered yourself to 45 minutes of her journey, the way she had it in mind. A performance artist was on the local public radio station the other day. He didn't want to talk about the specifics of his show, because giving away the tactics was clearly going to lessen the impact of his work. No matter. The host revealed one surprise after another, outlining the entire show, because, after all, that's his job--to tell us what we're going to see so we don't have to see it ourselves. We don't want to organize the course or go to the lecture or read the book until we know precisely what it's going to be about. College wasn't like this. You committed to four years, you moved somewhere, and then you saw the curriculum. That's part of why it works. A huge part. We hesitate to surrender our commitment so easily today. It's easier to read the 140 character summary or see the highlights or read the live blog, so we can check the box and then move on. But move on to where? To another box to be checked? We become like the tester in the ice cream factory, surrounded by thousands of flavors, but savoring none of them. We each have a fixed amount of time. One thing you can do is invest it in knowing the summary of what 23 people said. The other thing you can do is to commit to living and breathing and learning from one of those people. Perhaps you will get more by being exposed more deeply to fewer. One reason an audiobook can change your life is that you can't skip ahead. And the other reason is that you might listen to it five or six times, at the pace of the reader, not at your pace. My full-day live seminars have impact on people partly because I don't announce the specific agenda or the talking points in advance. It's live and it's alive. I have no certainty what's about to happen, and neither do the others in the room. A morphing, changing commitment by all involved, one that grows over time. Yes, I get that there's never again going to be a need to buy an album or to listen to all the songs in order, that you can get the quick summary of any book you're expected to have read, that your time is so valuable that perhaps the only economic choice is to live a Cliffs Notes version of your life. [Oh, that's right, Cliffs Notes' sales are way down because they're too long.] In fact, you could do that, but when you do, you've surrendered to efficiency and lost some life, some surprise and a lot of growth. Posted by Seth Godin on October 07, 2013 | Permalink | TrackBack (0) inShare 547 Looking a gift card in the mouth "You qualified." I'd just purchased $102 worth of stuff at the sporting goods store, and the clerk happily handed me my ten dollar gift card. What a nice surprise. I turned around to the stuff next to the checkout, searching for a $6 item I could now purchase, for free. "Oh, sorry, you can't use it today. It becomes valid tomorrow." Not only that, but I noted that it expires in four months. Not so much of a gift. A manipulation. I better hurry back, the thinking goes, or that thing of value in my wallet will disappear. Just as insightful is the recent promotion that they did at Staples. Pay $15 to buy the ability to save 10% on most things in the store (not online) for the next sixty days. It turns out that most people spend about $50 on a visit, which means that part of the card pays for itself in that first visit. But, and it's a big but, you've now purchased something that feels like a debt, one that you can only profit from if you head back, and soon. These, of course, are not gift cards at all. They are motivational cards. And they work. People are not machines, and purchasing just about anything is as much about emotion and the story we tell ourselves as it is about economic calculation. Charging you for the chance to save money one day is one more step in a dance about feelings. Posted by Seth Godin on October 06, 2013 | Permalink | TrackBack (0) inShare 527 Understanding marginal cost How much does it cost Wikipedia to have one more person read an article? How much does it cost Chanel to produce one more bottle of perfume? How about one more digital copy of a Grateful Dead concert? The cost of the next item produced is called 'marginal cost'. It doesn't include set-up fees, rent, years of training, insurance or all the other huge costs an organization might pay. It's merely the cost of one more unit. In a competitive, undifferentiated market, the price will generally be lowered by competitors until it is just above marginal cost. Think about that... If it costs a dollar to make something, and your competitor is selling for $1.10, then in an efficient market, you have every incentive to sell your item for a penny less than that. It's better than not selling it. There are many implications of this, the first being the explanation of why so much stuff online is free. Free is a magical concept, the place where trial and virality live. If the marginal cost of a new user is virtually zero (and in an ad supported business, a new user is actually profitable, not a cost) then it's no surprise that it's hard to charge for your app when there are other apps that do precisely what yours does. Big, established companies have traditionally had a difficult time understanding this concept. The market for ebooks, for example, ended up in Federal court because otherwise smart people in book publishing couldn't get their arms around the idea that their marginal cost of an ebook delivered by Amazon was precisely zero. No paper, no shipping, no ink. Their response was to talk about all of their fixed costs (which are real, and which are important). Things like typesetting and advances and editing and promotion... But none of those things are marginal costs. That means that someone entering the market, someone with nothing to lose, is happy to wipe out as many fixed costs as he can and then price as close to zero as he can get away with. It's not nice nor does it feel fair, but it's true and it works. The only defense against this race to marginal cost is to have a product that is differentiated, that has no substitute, that is worth asking for by name. If your product has a low marginal cost and a traditionally high price, particularly if it's one of a kind in its market, then you're in a great position to benefit from sampling. Which is why vodka companies are happy to sponsor parties and why cell phone companies will do almost anything to get you in the door. Until you understand the true marginal cost of your products or services, you can't make smart decisions about pricing or customer acquisition. Industries with zero marginal-cost products and services are inherently unstable until someone figures out how to become the king of the hill, the leader, the one worth picking because everyone else is. When that happens, the truth above about efficient markets goes away... because a market with one dominant leader isn't efficient any more. Posted by Seth Godin on October 05, 2013 | Permalink | TrackBack (0) inShare 677