Perhaps my greatest discovery in my journey as an entrepreneur was from Peter Drucker’s statement about marketing. Here it is;
“The purpose of marketing is to make selling superfluous”.
Now, not many people understand what the last word in that sentence mean, so I am going to explain. Superfluous means unnecessary, period. Meaning marketing is supposed to make selling unnecessary.
Excuse me, isn’t this contrary to popular believe? In fact, a lot of people now regard marketing and selling to be one and the same thing. Here’s the brutal truth, no such thing exists.
“Marketing is what lays the foundation for effective selling”.
This is the 5th article of the business growth 101 series. If you haven’t been following, here are the previous articles of the series;
BG 101: What to do when business is slow
BG 101: How to diagnose the problem of low sales
BG 101: How Entrepreneurs Are Unknowingly
BG 101: How To Increase The Market Share Of Your Business
How have you been selling?
Back in the industrial age, manpower was the domineering force behind the success of every business. The more labourers you had as a company working for you, the more products you could eventually produce. There existed a direct relationship between the number of employees with the eventual turnover of good and services. More sales force equals to more revenue.
We are no longer in the industrial age, so manpower has become obsolete. We live in an era of the knowledge worker where brain power is the competitive edge. The size of your company’s workforce doesn’t account for its success, but rather, the quality of their brain. Size no longer counts, but insight.
In this new era, you find one man conveniently selling to thousands without a big workforce. The secret? Marketing.
Welcome to the Era of FREE
Prior to the advent of the internet, once a product is manufactured, a lot of sales men and women are deployed to sell these products or services. Their typical approach is to persuade the prospect to buy whatever it is they were offering. In most cases, they end up becoming a pain in the ass due to their pressing tactics.
The focus back then wasn’t about building a long term business relationship with the client. The focus was about making the sale. How do I mean?
The primary focus of the industrial age sales force was turning in revenues per prospect. Meaning, a prospect is only as good as buying now. No such thing as a potential customer, they had to buy or no relationship would be created. The basis for initiating a business relationship was money.
Today, the reverse is the case and only those businesses that are aware of this change will succeed.
Today, selling is always postponed till a future date when the customers are convinced to make a purchase. Today, the focus is on initiating and building a business relationship with your prospects.
The objective is no longer selling, the objective is now marketing bringing us back to Peter Drucker’s statement;
“The purpose of marketing is to make selling superfluous”
Selling is about the exchange of good/services for money. Meaning no money, no goods/services. Rarely was anything done for free. You want it; you’ve got to pay for it. Selling therefore is money driven.
Marketing is about initiating a long term relationship with people. That is, the focus of marketing is getting close to people. Meaning marketing is relationship driven rather than money-driven.
In marketing, because the objective is building a relationship, the pressure to sell is removed and certain things are exchanged for free. These things are what make relationship building with prospects possible. Unlike selling where money is collected before any relationship is initiated, in marketing, giving something for free is what facilitates relationship building.
Why FREE is the new Money!
In 2007, Newchild, the IT Company I co-founded consulted for a defunct cyber-café. We were able to turn things around, but the change wasn’t sustained because of the managerial lapses on the part of manager at that time.
In 2008 we came in and took over the management of the business. Today, that business is close to 1700 customers’ base. The secret? Marketing
From the outset, our focus was on initiating, sustaining and growing profitable long-term relationship with customers. Our focus was on ensuring a return purchase every time the customers came in contact with the business. Our focus was on increasing our share of the market.
So our main assignment was giving them a valid reason for wanting to go into a business relationship with us. That valid reason was a membership program.
We decided we’ll no longer let a customer leave our sight without first joining our membership program for free. That singular decision required that we change our focus from selling to marketing by giving out a lot of valuable things for free.
First, to get people to sign up for our membership program we had a policy in place for every first time customer. What was this policy? All our first-timers had to “taste” our service for 10minutes for free before making up their minds to make a purchase.
On several occasions, the free 10 minutes of browsing time we gave out to first time customers were enough for what they had to do and so many walked away without actually paying for the services they enjoyed. Foolish strategy, right?
And this is where the power of free really shows. 100% of the people who walk away without paying on their first visit to the cybercafé usually came back for a return purchase.
Now that’s what I call “The power of free”. Believe me, it works all of the time. Getting something for free creates a sense of indebtedness from you to those from whom you freely received. This indebtedness lowers the barrier to making the sales which brings us to the second thing we did.
On their second visit we introduced them to our pricing plan. This was our conversion strategy, from first timer to member. How did we achieve this conversion? We had set up two pricing plans, member and non-member. Member paid less for all our services and got more value.
Meaning, they bought more browsing time at cheaper rates than non-members. This obviously wasn’t the only benefit for members, other free stuffs were Included too. Such as; free daily 30minute browsing time between the first hour of every business day, birthday gifts, monthly promo/bonanza, membership ID cards and many other support services.
Our brand grew tremendously and we began to enjoy the best form of marketing ever invented – word of mouth advertising. Word quickly got around as a result of the freebies we were dashing out to our customers. People couldn’t stop telling their friends about us and how generous we were and eventually sales increased almost automatically.
We didn’t have to pressure people into coming to our cybercafé to browse anymore. Their family and friends were already doing that for us due to the freebies we gave away. Before long, we became the most preferred cybercafé in the neighbourhood and our 1700 customer base was all the proof we needed.
Over to you
How are you attracting, keeping and growing profitable customers; do you sell or market?
What are the free things you are giving away in exchange for a initiating a profitable business relationship with your customers?
What you are describing is so important for anyone building a business to understand. Years ago when I started down the entrepreneurial path I didn’t know much about marketing and would even go so far as to say that I didn’t appreciate the difference between marketing and sales. After a solid year of studying marketing by reading nearly all of Seth Godin and David Meerman Scott’s books (among others) I can say the important concepts of permission based marketing as well as inbound marketing are soundly understood. I find that the distinction between marketing and sales is not recognized by most, which can be frustrating once you’re in the know 🙂
I just recently finished a new book called “Not For Free” by Saul J. Berman. He argues that one of the unintended consequences of “free” is the unintentional devaluing of product/services. He provides some great strategies for varying business and revenue models which take some experimentation. Your article seems to reinforce some of these points – begin the relationship by providing a sample and then the customer begins paying full price for the product or service. The transition between free and regular price is difficult for many businesses to transition. Only time will tell if some best practices will emerge.
Another unusual contribution, I couldn’t help but read it twice. Great Insight Man, thanks a lot for the immense value you add to my post and members of this community. I am so grateful.
The difference between sales and marketing is very subtle, perhaps this is why many entrepreneurs confuse the two. The focus should really be on marketing -the relationship building side – as it ultimately brings the sales almost effortlessly.
The need to provide free samples as baits to capture your target audience is much needed. That patience to postpone the sale to a future date must be deliberately cultivated as an essential skill for we entrepreneurs.
Thank you very much for the input John, I saw a lot of your post about the “Not For Free” book on your blog. Will go have a more detailed look at some of the things you shared.