The Glass Ceiling
Every business that tries to rise to its full height will bump its head on a glass ceiling they didn’t realize was there.
That glass ceiling is created by the business owner’s core beliefs about the customer.
Traditionally, 5 out of 10 customers will be in transactional shopping mode. The other 5 will be in relational shopping mode.
Shoppers in transactional mode are looking for information, facts, details, prices. Their thoughts revolve around the product itself, not the purchase experience.
Relational-mode shoppers are looking for a pleasant experience. They want to find the right place, the right person from whom to buy, an expert they can trust. Meanwhile, the transactional shopper is gathering the information that will allow them to be their own expert.
A customer can be a relational shopper in one category and a transactional shopper in another. The labels don’t define the customer. They describe only the mode of shopping, the momentary mindset of the decision maker, the type of ad to which he or she will respond.
Here’s what’s currently happening in America:
One of the 5 relational shoppers has begun to think transactionally.
The reasons are:
(1.) concerns about the economy,
(2.) access to information via search engines.
Americans spent $29.7 billion online at Christmas (Nov. 1 to Dec 31,) approximately $100 for every man, woman and child in the nation, up 19% from the previous year. In other words, there was $100 fewer dollars per person spent in brick-and-mortar stores in your town than was being spent just a few years ago at Christmastime.
And for the first time in the history of Starbucks, traffic is in decline.
Starbucks has always sold relationally. We pay for the atmosphere of the café with its half-lit earthtones and iconic logo - the idea of affordable luxury - as much as we pay for the coffee. But some of us have begun to compare the quality and price of the coffee itself to the quality and price available from other providers.
Beginning to get the picture?
Starbucks has found the glass ceiling. In other words, they’re selling as much coffee as can be sold relationally.
I’m sure you have your own idea about how Starbucks should respond to their decline in traffic, but the point of today’s memo is this: A glass ceiling exists when you overestimate the number of people who prefer to buy the way you prefer to sell.
People never really change their mind. They merely make new decisions based on new information. Will Starbucks give us new information, a new perspective in 2008, or will they just whine at their marketing department for the inexplicable decline in traffic?
More importantly, what new information will you deliver in 2008? (You realize this memo isn’t really about Starbucks, right? I don’t care about Starbucks. I care about you.)
The Tiny Giant is that 1 relational shopper in 5 who is moving to a transactional perspective. This effectively shifts the marketing balance from 5/5 to 6/4. This doesn’t sound like a big thing until you realize that 6 is 50% more than 4.
Do you have the clear answers that 6 in 10 shoppers demand? Are you willing to provide the growing tribe of transactional shoppers with the information, facts, details and prices they expect?
Or will you simply demand that your marketing team deliver more customers in relational shopping mode? (Please, I’m begging you for your own sake, don’t fall into the trap of believing the answer is to “target” relational shoppers though some magical mailing list, email list, or sponsorship package.)
Think about it, won’t you?
Your financial future hangs in the balance.
Roy H. Williams
PS - It’s been an interesting couple of weeks, each day spent in planning sessions with clients who came to Austin to get an early handle on 2008.
Here are the opening lines of an email I received from one of them after he got back home:
I can't thank you enough for saying the hard things that I needed and wanted to hear. I may need to be reminded from time to time but I am definitely on the right track. My trip to Austin was over the top.
His business had annual sales of just $475,000 when we began working with him 15 years ago. Today his volume is 43 times what it was and his personal income exceeds $2.7 million a year. But he’s still open-minded, still learning. You gotta love a guy like that.
A more recently added client has been with us for only 4 years. He was already successful before we took over his advertising. But in our 4 years together his sales volume has jumped from $2.1 million to $9.7 million per location. He mentioned he’s planning to send us a bonus check with five zeroes to the left of the decimal. I’ve been waiting next to the mailbox ever since.
On the downside, we parted company with a couple of clients I believe are in denial about the changing business landscape. I wish them both the best, but I fear the worst. Time will tell.
On the upside, my staff is looking for new challenges. If you own a business (no ad agencies, please,) and have been reading the Monday Morning Memo for awhile and you don’t think I’m insane and you’re ready to go a new direction in marketing, consider attending our New Client Orientation on Tuesday, Feb. 5. We’re planning to accept a few new clients this year. We haven’t done that in a very long time.
Money and Jews is the title of the very interesting rant you’ll find in the rabbit hole this week. (For the uninitiated, the rabbit hole is entered by clicking the photo at the top of each Monday Morning Memo.)
I rarely mention the rabbit hole but there’s a new one every week. And sometimes it goes deep, with lots of side-tunnels and secret passages. – RHW
The Memo's home on the Web is at http://www.mondaymorningmemo.com