Interview With Seth Godin
Recently, on an EntreLeadership podcast, Dave Ramsey got a chance to interview Seth Godin. He's an entrepreneur, author, and a leading voice today on the subject of marketing in the digital age. Don't take my word for it? Just type in "Seth" in Google. By his own admission he's in the business of helping people make the change that they want in their lives. You can listen to the interview here on the official site, but it was packed with so many gems I decided to summarize it here for you.
Everyone is in the trust business. If you have no choice, then you'll buy from someone you don't trust. But if you have a choice, you're either only going to pick the cheapest one or the trusted one. And the former is a problem because if you race to the bottom....you just might win.
The Customer Pays 3 Ways: Money, Trust & Referrals
- Money: self-explanatory
- Trust: When I trust you, I'm giving you something that's emotionally difficult. I'm out on a limb. If you violate my trust I will carry around that feeling far longer than the money I lost from you. Getting people to give you their trust is way more difficult than getting them to give you their money.
- Referral: If people give you their trust and you treat it with respect, they will respond by giving you a referral. Trust that leads to referral has a deep relationship component, and businesses that are transactional- vs. relationship-driven are doomed to fail in the coming economy. As an example Seth talked about an HVAC repairman who gave Seth a 4-page, single-spaced referral list during his initial estimate visit. He was hired on the spot.
Being Marketing-Driven vs. Market-Driven
A marketing-driven company lets the Marketing and Sales Departments have a lot of influence and authority about the products and policies they make, but a market-driven company makes product decisions based on where the market is and where they think it's going.
There are also sales-driven companies, which are influenced by what their customers want. But by the time your customer knows what they want and pick up the phone, they're only looking for the lowest price.
Dell & Apple Example
In 2002 Dell was driven by the Sales and Production Departments. Sales dictated everything that would make the phone ring and how sales get made, and the primary job of Production was to make everything cheaper. At Apple, neither of those things influenced any of the decisions they made. Rather, their goal was to continually ask, "What do we need to do to lead this market?" And that's why the 2 companies have switched market positions over the past 11 years.
This resonates w/ the core mantra of the entrepreneur; "Find a need and fill it."
If you have a product that's market-driven then you're not selling, you're serving. You're just helping people. But you can't wait for them to "raise their hand" because once they know the product they're looking for, they'll simply look for the lowest price. The way to cut through that is to understand that what the market really needs is a sense of trust, safety, belonging or achievement. Aside from life and death choices, we mostly buy things for the way it makes us feel.
How Becoming "The One and Only" Requires Connecting People w/ Your Story
Every successful business is a monopoly. Being the "one and only" in your business is as much about atmosphere and story as it is about quality and service. For example, most people who make an effort to buy quality wine (ie. more than just the cheapest) do so not because the taste is unique but because they're somehow connected w/ the brand or the story behind it.
Universally, the cost of making a bottle of wine is about $5. A wine doesn't cost more because it's more costly to make. It costs more because more people want to buy it.
Unless they're trained, most people can't tell the difference between a $30 and a $200 bottle of wine....but they CAN differentiate between stories (ie. where, why or when it was grown, or the story of the founders). No one needs different wine molecules for their $100. What they need is a story worth telling themselves, and then maybe one worth telling their friends.
The Yellow Pages Story
100 years ago the Yellow Pages came out as a partnership between AT&T and R.R. Donnelly. To get regular businesses that don't normally think about marketing to buy ads they gave them a yellow phone, whose number would be connected w/ their "free" ad. Three months later they would come back to remove the phone and the shop owners would resist because "that's the phone that rings all the time!" This story highlights that small business owners think "How do I avoid pain?" instead of "How do I go for gold?" This shift in storytelling built a business that, over time, became worth $1 trillion!
The Value of Being Generous
For Seth, he struggled on the edge of bankruptcy for 8 years. His business only started to work when he finally pushed himself to let go and disconnect the making a difference from making a living. He learned that he absolutely had to be generous, calm and patient. If you let yourself get stressed out you'll make stupid decisions and pull back your generosity, both of which are death knells for your business.
Since, with the Internet, the marginal cost of being generous and putting yourself out in the world is ZERO, you need to do it. All of us can now own our own media company. Seth's blog, for example, only costs $19/yr. to run.
Question: That last quote, more than anything I've been able to articulate thus far, explains why I built this blog. What part stood out the most for you? Be sure to include examples from real life if you thought of some.
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