Originally posted – May 29, 2012
A fellow hands me a bag containing six marbles – five of the marbles of white and one is black – and he asks me to blindly draw a marble from the bag. If it’s white, he says he’ll pay me $20; however, if the marble is black, I must pay him $50.
Of course, I will gladly play that game. The odds are heavily in my favor, since there is an 83.3 percent probability that I will win the game and collect $20, while there’s only a 16.7 percent chance that I will make an unlucky draw and thus lose 50 bucks.
But what if he instead suggested a game Russian Roulette, employing a revolver with five blanks and one live shell – the probabilities are identical, but the cost of being wrong…
It’s a dramatic example, but I hope it got your attention.
After all, it seems like those of us in the self-service laundry business are always dreaming up some kind of marketing promotion or another. It’s just the nature of the industry.
And these promotions can take all kinds of forms and cost all kinds of money to kick into gear. Then, once the promotion is up and running, we just hope that it achieves the desired result and that we end up with an increase in business.
The normal chain of events usually goes something like this:
- We decide that we need more customers.
- We decide on a promotional method.
- We pay the cost of the promotion.
- We project how many customers this promotion will attract.
- We launch the program.
- We expect the results will be outstanding and worthwhile.
- We wait for the expected results.
- We examine the actual results.
- We either become ecstatic – or we run for the Maalox.
Notice that the common pronoun in each step is “we.”Yes, we do it all, except for one step – we don’t sell the advertisement, we just pay for it.
The advertising salesperson or printer is guaranteed to make money on your promotion, which you may have noticed he or she enthusiastically encourages you to launch. You are simply taking a chance because you’ve convinced yourself that it will work. Because of this, there’s a huge difference in the quality of sleep between a buyer and a seller. (Hint: Those selling the ads typically don’t require sleeping pills.)
As you’ve likely noticed, many marketing promotions simply don’t work as expected and are not worth the cost. Most laundry owners know the cost of being right but fail to take to heart the cost of being wrong. In other words, the cost of being wrong can hurt you big time, despite the best of intentions.
Being positive and optimistic about a marketing idea is admirable, but you mustn’t ignore the hard facts, because an error in the premise will always appear in the conclusion – with the light at the end of the tunnel most likely being a freight train heading your way.
Here’s a great analogy: You get all pumped up about a given stock for one reason (valid or not) or another. Once you purchase that stock, the only good thing that can occur is that it rises in price. In other words, it’s a one-directional trade, so you better be right.
Right?
But what if you’re wrong? And, since the odds are relatively small you will be right (unless you know more than the Wall Street pros), the cost of being wrong can greatly exceed the cost of being right. So much for listening to your brother-in-law’s stock tips, I guess.
Why do you buy the stock in the first place? The answer is that you “know”(believe) you will be right, and the stock will increase in value. The same is true when putting together a promotional marketing program for your coin laundry. You believe your program will be right, and it will bring in more money than it costs. In other words, it will be synergistic.
People are funny. They can talk themselves into just about anything, including a new marketing program that they just know “in their gut”will work great.
Unfortunately, small-business owners, such as coin laundry operators, all too often think in terms of the pronouns “me”and “we”and “I,” when instead they should be preoccupied with the pronouns “they”and “them.”
In other words, it’s not what “you”think is good; it’s what “they”or “them”perceive to be good. Therefore, don’t let emotion overtake your logic when planning an advertising campaign. It’s very costly to do so, especially when you include the additional cost of Maalox.
Fortunately, there are interesting, educational and cheap ways to test your marketing and/or advertising promotions before you actually spend big bucks on them, and assume the risk and potential cost of being wrong.
But, first, here’s a quick, related example: I trade stock options, and I often will discover a trading strategy that I want to test out, but not with real money. Luckily, the company I trade with also offers a virtual trading website on which I can make the actual trade but not with real cash. By doing so, I can familiarize myself with the nuances of the trade before I actually risk any real dough. In essence, I can practice – or test out – the trade first with no actual financial cost of being wrong.
You can do the same thing within the coin laundry world. Here are some practical ways to do this:
For instance, let’s say you want to do some television advertising for your store. The best way to select the cable channels on which to appear is to conduct a survey within your laundry, asking about 100 customers what channels they typically watch. You can design a form to use for collecting the results, and your attendants can actually conduct the survey.
With such a survey, you will need to stratify the sample, meaning you have to interview a diversified sampling of your customers, including (but not limited to) men, women, various age groups, various cultural backgrounds, etc. By doing so, you dramatically improve the chances that you will reach your actual target audience. Remember, it doesn’t matter what you watch; it only matters what they watch.
Here’s another example: Perhaps you want to establish an enter-to-win loyalty program in your laundry. Let’s say that each time customers come in to do their wash they can enter to win something. What exactly is that “something?”It can be lottery tickets, free gasoline, McDonald’s coupons, whatever.
But, rather than projecting your likes or dislikes into the rewards being offered, why not conduct a survey in your laundry that asks your customers what they would prefer? In other words, exactly what would motivate them to frequent your coin laundry to enter to win a prize on a monthly basis?
Also, testing a marketing program before you launch it is the most practical way to determine the validity of that particular program. In doing so, you improve the probability of success and prevent the large cost that’s associated with being wrong.
Of course, even large corporations need to test their marketing plans. However, on occasion, they don’t, and in certain cases it has become mighty costly – and embarrassing – to some of them. For example, one memorable Pepsi ad slogan in China became so garbled in the English-to-Chinese translation that it literally translated to: “Pepsi brings your ancestors back from the grave.”
So, aside from the direct financial costs of being wrong, there are additional side-effect costs. These can include the time you have devoted to the project, the possibility of customer confusion and irritation, inconvenience, potential embarrassment for you and your company, and perhaps even legal issues.
Invalid marketing programs (meaning there is an error in the premise) are like clouds. When a cloud forms, you’re never quite certain whether it will drizzle slightly, rain a fair amount or develop into a huge and destructive storm.
So, it’s best to try to prevent the formation of any clouds at all.
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