Chapter 12: Sustaining and Growing Demand
In this final chapter, we're going to find out why high revenue companies can suddenly become much lower revenue companies. We'll discuss specific measures you can take to make sure you're not one of them. With these strategies you'll be able to maintain demand even keep it growing.
Creating demand with revenue overflowing is an admirable accomplishment, I can still recall a friend of mine with a reseller business online shouting with malicious satisfaction "We just get out of the way of money", as she uncorked the bubbly.
As you experience the joy of revenue rising I can tell you, these are great days, yet in many instances, once high-flying companies experienced major demand downfalls and sometimes they even end up in deep financial trouble. I'm a positive thinking man as you know but we can be as positive as possible and still take some real revenue hit from time to time.
In this final chapter, we're going to find out why high revenue companies can suddenly become much lower revenue companies.
We'll discuss specific measures you can take to make sure you're not one of them. With these strategies, you'll be able to maintain demand even keep it growing.
I've got some news for you that might shake you up a bit so you better brace yourself. Everyone who buys your product or service harbours some lingering doubt that buying from you is the right thing to do, even when they appear happy, they have doubt. They may not show it openly right now but somewhere in the back of their mind, they are questioning their decision to buy from you.
Oh no no you say, my customers are happy, they tell me so every day. Congratulations you must be doing lots of things right if your customers are happy. However as happy as they are outward, I can assure you that there is some doubt below the surface.
Have you ever had a customer or client that went from very satisfied to very unsatisfied seemingly overnight, how could they be so happy one day and so unhappy the next, what happened?
Here's what happened: As every buyer does, they had some doubt about their decision to buy your product or service. For quite some time there doubt was latent or benign, you saw no evidence of it.
Then one day something happened, perhaps your product didn't work as well as expected or your delivery was late or the colour was a different shade than what they had ordered or a series of errors had built up. It could be anything, even something so small and insignificant you weren't aware of it. But whatever it was, it was just enough to tip the scale.
Suddenly that customer's latent doubt became acute doubt.
Now you do see evidence of it, they squawk, they demand restitution, they take their business elsewhere.
Doubt will always be there, no use trying to eradicate it.
But what you can do is keep it latent, keep it from flaring up and affecting their buying behaviour.
Let's determine where this doubt is flaring up in the first place and then we will be able to address it.
There are three reasons why doubt exists in the buyer's mind. These are also the causes that can turn latent doubt into acute doubt.
The first doubt exists due to competitive propaganda.
Your competitors are no slouches, their advertising is out there too, their salespeople are spinning it in their favour. They may have a convincing argument that their product or service is superior to yours and the more a competitors bug swirls around in the customers' mind, the more the customer questions his or her decision to buy from you.
The second thing that creates doubt is blurred judgement.
Many buyers are simply unable to judge the benefits or results of a product or service accurately. If your company refinished the hardwood floors in my house, how do I know you've done a really good job. The floors made to look shiny but how do I know they are supposed to look twice shiny. How do I know if you've used a quality polish that will hold up or a cheap polish that will wear out quickly?
The buyers of your product or service may lack the knowledge or experience necessary to judge things accurately. This condition called blurred judgement is fertile ground for the growth of doubt.
The third reason why doubt exists is unmatched expectations.
For any number of possible reasons, a client may have been under the impression your product or service would perform differently than it. The validity of their expectation really doesn't matter, the fact is they had an expectation and the end result didn't measure up. With that unmatched expectation, doubt grows.
Luckily there is an antidote to doubt and it's called reinforcement.
When you reinforce the purchases in real proactive ways, you are keeping doubt under control, keeping it from rearing its ugly head hence affecting the buyers' behaviour.
Here is how reinforcement works:
After the customer makes the purchase decision, they want to feel like they made the right decision, so their brain graves information that validates or reinforces their buy decision. It is up to you to supply that reinforcing information. If you don't, you are leaving it up to chance.
Remember, the buyer is going to get doubt provoking information from your competitors or even from a colleague, friend, relative or neighbour who may offer a negative comment. You can't let that go unchecked, you need to make sure your clients receive information that positively reinforces their decision to buy from you.
Reinforcement can reach the buyer from four different directions.
The first is from other people who have purchased the same brand, most often a customer does not want to feel that they are the only one who has chosen your product or service.
They feel much better about their purchase when they see that other people have chosen your brand too. Remember the chapter where I mentioned how to turn customers into persuaders? and how to cause demand to spread throughout the marketplace?
In previous chapters, when customers display adoption or overtly recommend, they are influencing others to buy your product or service. This display or recommendation works for you in another way too. It reinforces the purchase when someone becomes aware of other peoples adoption after they purchased.
I'll assume you have implemented some of what I have covered before and you are starting to turn your customers into persuaders and you are causing demand to spread. In that case, you are also causing reinforcement to take place, at least from this first direction.
The second direction in which reinforcement can reach the buyer is through supreme execution and follow-through.
You can stunt the growth of doubt from the get-go by making sure your clients get a superior product or service and that you have pretty good customer service backing it up.
Pay attention to detail, customer service is all about the details. Here's another technique that falls under this category, gives the buyer more than they expect. If your package says it contains 16 ounces, make sure it actually contains 16.5 or 17 ounces.
If your pack of football cards says there are 14 cards in a pack, put 15 in there or occasionally 16. If you agreed to complete the job by the 20th, get it done before that. If you repaired a customers vehicle, throw in a free oil change or car wash while you're at it.
The idea is to nip doubt in the bud by making a positive and unexpected impression at the time the buyer takes possession of whatever they purchased. The key to making this work is that it has to be unexpected, you want the customer to be pleasantly surprised they got more than they paid for and this unexpected bonus has to work after they make the purchase decision.
There is an important distinction between bonusing a buyer before they make the purchase decision and bonusing them after they make the purchase decision. If you dangle one or more bonuses in front of them as an incentive to buy, that's fine and dandy but that's not reinforcement.
By definition, reinforcement occurs after they purchase not before.
The third direction in which reinforcement can reach the buyer is through printed materials and this is an important on.
Remember with an example: Say your company refinished my hardwood floors and I harboured some doubt about your work, do you think my doubt would have been squelched if after you completed the job, you handing me a brochure explaining how the process works, how to judge results and how to best maintain the floor and with my doubt had been diminished even further if you handed me a printed guarantee.
With printed materials, you can supply the buyer with information that addresses any number of doubt breathing conditions. You can counterpoint competitive propaganda, you can educate the buyer and how to judge results. You can tell them what to expect over time and of course, you can congratulate them for being the proud owner of top quality products, service or business.
Here are two examples of reinforcement, one bad and one good, these are real experiences:
Last year, I purchased a high quality, high priced mattress.
The salesman talked up the bed's superior quality, durability and so on. It was comfortable, it was on sale and I bought it but other than a sales receipt, he handed me nothing. Oh, snap! I really wanted to read about my new purchase.
My brain was craving reinforcement, in other words, I even recall the sales guy mentioning that the mattress had a 15-year manufacturer's warranty. But I got no paperwork on that, nothing, don't even know how to contact the manufacturer if I needed to use that phantom warranty. And here's the real shame of it all, I can't recommend the product even though the mattress feels great I sleep soundly and comfortably in it looks great too, I just can't speak highly of it to others.
My purchase has never been reinforced, so my doubt is just high enough to keep me from saying anything to anyone about it. With this customer anyway, both the manufacturer and the retailer lose.
Here's another example: I purchased a speaker from an electronics retailer, they slipped my sales receipt inside a folder, the folder contained information about their guarantee, their factory authorised service centres, their return policy and a special free from charge number to call if I need any help setting it up or using it.
Wow, that certainly makes me feel I bought from the right place and I've told others about my new camera and my great experience at that retailer. I don't feel I have any doubt about that place with all the great reinforcing material I've received.
Here's another example of the right way to reinforce:
I bought a rather pricey replacement door knocker for my front door. In the package was an 8-page full-colour booklet containing information on the proper care of fine brass. The historical significance of the manufacturer, a written guarantee and where to get additional help if I need it. This is a simple doorknocker, one moving part, all you do is lift it up and slam it down but the reinforcement materials I got with it, were psychologically advanced as you can get. To make reinforcement work you need to provide the buyer with tangible printed materials after they purchase. Can you just email them, yes you could assume:
(A) you actually got their email address although you may not and (B) your email materials look really good graphically.
There's a fourth direction in which reinforcement can reach the buyer. Your advertising, even though advertising is most commonly used to stimulate demand, you can use it to reinforce as well to be more accurate the receiver of your advertising can use it to re-enforce. Keep in mind, the brain craves reinforcement after the purchase decision has been made.
Thus awareness of and attention to your ads increases in the minds of those who already bought your product. So you might want to put a line in your ads that reinforces. A classic example of reinforcement in advertising was when a mobile network based in the UK, uses the line "The Right Choice" in their ads. They are blatantly telling people that when you choose them you've made the right choice, excellent. Now you do not want to stick those words in your ads, that's their line, you've got to create your own reinforcement copy.
There is five demand crushing pitfalls we all need to avoid. Interestingly, these pitfalls are not really marketplace driven.
They are internally driven, most often to be blunt, it is you and I creating our own downfall. All those clichés shooting ourselves in the foot, we are own worst enemy and the like are accurate ways of describing it. Even highly intelligent, highly successful people can inadvertently fall victim to their own negligence or just plain bad decision making. Let's take a quick look at the five most dangerous pitfalls and determine what we're going to do the dodge them.
The first demand busting pitfall is The Downward Spiral Trap.
Let's say a competitor suddenly mounts a full-blown attack or a recession takes hold or your flagship product or service grows out of favour, whatever the cause your revenue declines and your profit margin gets squeezed. A common reaction is for the marketer to cut expenses, to maintain margin and a common area to cut is marketing because it's a discretionary expense.
It's a lot easier than cancel an advertising campaign than it is to fire people or move the entire operation to a lower red building.
At this point, I won't argue with a marketing budget cut, we all have to cut expenses from time to time and there are times when you can coast for a while without spending as much.
A pilot can cut back on the throttle and the plane still streaks through the sky at least for a while. Now here's where the marketer can get caught in The Downward Spiral, he or she could fail to reinstate their marketing effort.
That throttled down the plane isn't going to stay aloft indefinitely without a throttle up, then it can get worse, the marketer begins cutting back on the quality or amount of product the customer gets.
How does the customer react? they notice that they are now getting less for their money so they do not buy as often. How does the marketer react to an even greater decline in revenue?
They raise their prices, now the customer is really unhappy. Not only do they get less but now they are paying more so they take their business elsewhere.
You can see that this marketer got caught in The Downward Spiral trap and it's a deadly condition. Once you are in a trap, there's no way out, most likely you need a major cash infusion to stay alive and rebuild. The way to avoid The Downward Spiral Trap is to cut expenses in areas that the consumer never sees.
There are ways to raise your prices but doing so at the same time you're coming back on the quality or quantity is it one of them. To stay in business and to create them and your clients have to feel they're getting good value for the money.
The second demand busting pitfall is Competitor Fixation.
Have you noticed that throughout this guide from chapter one, I've not offered any strategies or techniques designed to thwart or stifle your competition? Killing the competition is not the name of the game with the possible exception of sports I suppose.
In 1990 when Walmart surpassed Sears and became the number one retailer in the United States, the late Sam Walton was asked to comment on a Triumph: "We're not in business to beat Sears he responded" let me tell you Sam was a wise man. Of course, you want to stay aware of what your competitors are up to, Sam Walton used to walk through competing stores for that very reason but fixating on the competitor becoming driven by the notion of punching them into oblivion can be a real problem and that for the competitor but for you.
How do you avoid fixating on the competition, fixate on your customer instead, devote the majority of your resources to serving the customer rather than throttling the competition and you'll be okay?
Pitfall number three is Internal Strife. This is cancer that can eat you inside out, arguments amongst owners, non-ending debate, aspersion casting, blame throwing, subversive behaviour and the like are symptoms. A small amount of dissent at the right time and place is not the problem. It is when a group of people can't move beyond the debate and act in harmony that internal strife cripples you.
The way to avoid this pitfall is to set up a culture that allows for dissent and debate at times but there also mandates solid decisions be made and then teamwork prevails.
You set up systems and procedures that reward the behaviour you want. By the way, if you're an entrepreneur I'll pass along a piece of advice I read in Berry Gordy's autobiography. He's the founder of Motown records in case you don't recognise the name. He recommends you own 100% of the business and before he sold the company, he did indeed own 100% of Motown.
After I read that I set up my business in May 2020 so I owned 100% of my company. Let me tell you there is no internal strife around.
Pitfall number four is a failure to reinvest in the business.
You've got demand percolating and the cash is piling up, what do you do with all that cash burning a hole in your pocket? If you're part of a major corporation that's probably not your concern, the company will absorb the cash your division generated without you having to worry about it.
Hopefully, you'll get something, a raise or promotion or even an award in recognition but if you're an entrepreneur, watch out the temptation and this happens all the time, is to siphon out the cash in live like royalty.
Razzle dazzle your wardrobe, import contraband cigars, tour around town in a jaw-dropping ride, oh yes through lavish parties that would all even Hollywood elite. In short, do everything with the profits except reinvest in the business and then when the inevitable downturn in business occurs your golden goose is suddenly a cooked goose.
The final demand busting pitfall is Hubris. We all get points for positive thinking but we lose points for presuming that the good times will continue unabated. It's simply a matter of the odds, the odds are you and I and everyone else will run into a difficulty sooner or later. Laws change, people die, technology advances, products and services for in and out of favour, the economy tightens, catastrophes occur anything can happen.
Those who believe they are invincible are the ones who suffer the most when something bad does happen. They're just not prepared for downturns either mentally or financially. Humility works a lot better than hubris, be thankful for what you have and share your success with others. Show appreciation, be complementary and manage your finances. There is a reason why several high-tech companies hoard cash, it protects them when I hurricane hits.
I do believe you would be wise to do the same.
We've reached the end of creating demand for your products, services or business. I hope you had a good time reading and an even better time implementing. My final recommendation is to read again after some time goes by, chances are you'll find new things you missed the previous time through, until then this is Derek Shemlon see you later.
Congratulations on completing, believe me, that's an accomplishment to be proud of and the ideas and strategies you discovered are going to generate positive results immediately and for years to come but do you know that you've also discovered something even more valuable, you've actually uncovered the secret to achieving greatness in every part of your life the secret is this: When you read and attend to even a little bit of personal development each day you can help it dramatically improve your life. It's no coincidence or accident that the people who read and take action from research almost every day are at the tops of their fields or that there are more connected to their family and friends, earn significantly more, enjoy greater health and are generally happier people.
It happens because every day the greatest successful ideas known to man are effortlessly planted in their minds where they take root, grow and become an automatic part of their thinking, attitude, and actions. In other words, these people have literally programmed themselves to be done and have more in life and they've done it just by reading, scheduling meetings, and attending workshops.