Thought Garage

If you have watched this wonderful talk by Rory Sutherland “TED Talk : Rory Sutherland: Life lessons from an ad man”, you must have seen this big Red button, showed while explaining that “interface” determines the behavior.

Paraphrasing a bit, “if there is a large red button on a wall in your home and every time you press this button it will save you $50, then you will save a lot. Because interface fundamentally determines our behavior. Marketing has done a very very good job of creating opportunities for impulse buying but never for impulse saving”.

And of course, as he admits, that is against consumerism and act against the very ambitions of companies that create these advertisements, so probably will never build such an interface.

So, when a company says they built an interface that makes saving money a lot easier, you better bring your instincts and not believe it at once.

When I saw the promotional advertisement “Keep the change” by Bank Of America that will make saving a lot easier, I did not believe it. It almost looked like that “simple red button” interface that could help you save more.

Well, its not. More over, this is a perfect example of marketing mentioned in that presentation. I went on to its website and read here the details of “Keep the change”.

Basically, when you pay with your charge card, BoA will round up to the nearest dollar and put those (your own) pennies in to a savings account.  What it means? BoA wants you to spend dollars with their charge card more so that you can save ‘your own pennies’ more. Of course, first 3 months they will match those pennies 100% and 5% afterwards. And the tag line, “keep the change” try to infer that you may loose the change if you don’t enroll in this program. Isn’t it true that you always keep your change?

And here is one thing to remember. If those pennies add up to a significant amount, if you think or BoA thinks, then your checking account is also depleted faster now. Here is the magic part. Now, if you accidentally run over your balance even by a few pennies, you may attract a hefty overdraft fee, which wouldn’t have happened if you had left those pennies in your checking account.

Hmmmmm!!!!!!!!!!!!

A better way to save money is if Bank of America offer to move some pennies automatically and for free from Savings account to the Charge card when it runs out so that customers don’t have to pay about $35 or more in overdraft fee to cover say 35 cents over the balance.

If they can move money from Checking to Savings for free, why can’t they offer to move money from Savings to Checking when needed for free.

What do you think?

Stumbled upon this great talk on ‘perception’ while browsing for a TED India talk. I simply loved it. The most interesting part of the talk is an example in the talk (one of the best and simplest) that illustrate how Marketers play with perception to sell products. 

Each one of us understand ‘perception’ to an extent. But this is quite unbelievable.

“Advertising adds value to a product by changing our perception, rather than the product itself.”

TED Talk : Rory Sutherland: Life lessons from an ad man

Now when you see an ad (any ad for that matter) next time, I bet, your ‘perception’ will be quite ……… not the same as ever.

One of the most intriguing presentations I have ever watched on how to market a startup. 

Key take-a-ways (in my own words):

• Don’t even bother, if you don’t have an insanely great product.
• Trend means end. Never follow the trend, but try to create your own trend.
• Charge early. Charge a lot. Your price could be your best marketing strategy.
• Spend as little money on advertising. Instead spend on developing an insanely great product. The product will speak for itself and your customers will advertise for you. You can never have enough budget to promote a crappy product.
• If you ever have to give out your product free, build a beautiful and amazing UI to give a much better experience to customer.

I must admit and warn you, if you ever watch this video or read about the presentation either on this blog or elsewhere, take the advice with a pinch of salt. While appear sound (and anecdotal and may have worked for him and his team), the advice is quite narrow and may not work for you.

For instance about advertisements. In his own words, if you are advertising means you have a crappy product. He presented Google and Yahoo on one side with great products and no advertisements while Coke and Pepsi on the other hand that spend a lot on advertisements to promote crappy beverages.  This is a twisted comparison to start with as you can clearly see he is comparing apples and oranges.

The Apple Test

Let us put Apple to test on this theory. Apple is known as one of the most innovative companies with truly insanely great products even before the pervasive iPod and iPhone. And Apple’s ads for iPod, iPhone and Macs are some of the best and most elegant advertisements I have ever seen. And fact of the matter is Apple advertises quite significantly about its products. Does this mean Apple has crappy products? No way!

Your money spent on marketing is as important as building a great product. In many cases, marketing is lot more important than the product itself. In simple words, Marketing takes you to the customer. If your product is better than a competitive product known to that customer, this is very important, known to that customer, you win the customer. Or you loose. So, first step to get to a customer is much more important than proving to the customer that your product is the best product. What is the point of proving you have the best product, if nobody know about product.

And its quite unrealistic to rely on your existing customers to virally spread the greatness of your product. It takes lot of time and if your product is particularly a niche product, time is quite an essence. So you must reach to as many customers as possible in the shortest amount of time through advertisements. And leverage all social media to facilitate spreading the message. 

I agree with another key message, charge early and charge a lot. Based on my little experience and learning, I would also add, charge as often as possible.

There are lots of sound bytes in his presentation that may help some  startups to tone their messages. But most important lesson to take away from this presentation is to break free from trends. Even if that trend is his own anecdotal experience about advertising.

Don’t forget to watch it. A strong opinion is always a lot better, as it would consolidate your own understanding of the topic. And this presentation has lots of them. One of the finest.

In a world of too many options and too little time, our obvious choice is to ignore the ordinary stuff. Marketing guru Seth Godin spells out why, when it comes getting our attention, bad or bizarre ideas are more successful than boring ones. And early adopters, not the mainstream’s bell curve, are the new sweet spot of the market.

TED | Talks | Seth Godin: Sliced bread and other marketing delights (video)