Sunday, July 31, 2005

Big Ticket Decision Making

There was an article in the June 27th, 2005 issue of Fortune magazine that got me thinking about decision making.  In fact that entire issue was dedicated to the topic of making great decisions.

The article I read was called "Great Escapes: Nine decision-making pitfalls -- and nine simple devices to beat them" by Michael Useem and Jerry Useem.

In their article Michael and Jerry list some common decision making problems and devices to get around them.

Today, I'm going to give you that list and talk about it from a Big Ticket Marketing perspective.  I'll list the problem followed by the suggested device to work around the problem following it in parenthesis like this:

Common Problem (Device to Use)

Let’s get started…

Problem #1: Analysis Paralysis (The 70% Solution)

Analysis Paralysis is when you work on a problem by gathering information and other data FOREVER!

Instead of reaching a point where you make a decision you continue to research and pursue more information hoping to increase your certainty in any decision you make.

I know I’ve been there.

The truth is that its almost impossible to reach that point of 100% certainty.  For any complex problem you’re going to have to decide with incomplete or even missing information.

In the Fortune article, Michael and Jeremy talk about how the Marines battle analysis paralysis with the “70% solution”. “If you have 70% of the information, have done 70% of the analysis and feel 70% confident, then move.”

“The logic is simple: A less than ideal action, swiftly executed stands a chance of success, whereas no action stands no chance. The worst decision is to make no decision at all.”

I look at analysis paralysis as a form of overwhelm.  And overwhelm can halt your progress in any situation including your Big Ticket Marketing business.

And it applies to many areas.  Let’s look at a couple: Product Creation and Website Conversion.

You’ve done your market research. You’ve hung out in forums.  You’ve used Google and Overture to make sure the area you are interested in is in high demand.  You’ve checked out your competitors so you know how to differentiate your product.

So how come you haven’t created the product yet?

In most cases, the reason is that you still have some uncertainty about whether you can sell the product and are at the point of making the decision to move forward or not.

We’ll come back to this in just a minute.

Now, let’s talk about Website Conversion.  If you’re like me you’ve probably read or know about a ton of changes or tweaks that you can do to increase the number of people who see your sales page into actual buyers.  Increasing the number of people who buy when they visit your site is known as increasing your website conversion percentage.

You can change your headline.  You can change the font.  You can add graphics. You can add testimonials.  You can try different prices to see whether a higher or lower price is better.  You can add a personal audio or video message to your site.  You can have an exit popup customer survey that tries to find out why they are leaving without buying.

Anyway, you can see that there are many, many tactics to try.  And you should be trying them.  The reason many people don’t try them is again due to uncertainty about what to do and whether it will work.

In both cases, we’ve discussed, product creation and website conversion, the best thing to do is to stop analyzing and start moving.  You have plenty of information, now you need to try it!

The good news is that on the internet it is very easy to try things and fail quickly.  You can create information products very inexpensively and test market them.  If you really can’t sell the product you can give up and start on the next product.  You can also use what is called Split A/B testing to change one element of your website and test it against the original version. If the new version produces more sales then it becomes the master version.  You then change another element and repeat the process.  You can determine what works and what doesn’t simply by testing each of them.

Ok… on to the next problem.

Problem #2: Sunk-cost syndrome (Burn The Boat)

Sunk cost syndrome is where you are so attached to your existing work, products and methods that you refuse to abandon them even if they become outdated.

The Fortune article talks about Seymour Cray as an example.  Cray built sailboats and supercomputers. “But in computing Cray knew, there is no such thing as timeless perfection, only obsolescence.  To drive the point home, legend goes, he’d build a beautiful sailboat each spring, then burn it in the fall.”

I think this applies to your Big Ticket Marketing in two main ways.

The first way is the obvious one.  Don’t fall so completely in love with a product or way of marketing that you stop trying to improve it.  In some ways you should be working to make your own products obsolete before someone else does it for you!  Try to constantly think of ways to improve your products and to improve your marketing.  Try another traffic generation technique, another list building process, another tracking tool, EVEN if the ones you are using today work great.  They could stop working sometime in the future.

The second way that Sunk-cost syndrome applies to your marketing business is what Robert Allen calls multiple streams of income.  Even if you have a product that you love and is selling really well, you should still go out and create additional products and sell them as well.  Or have multiple big ticket backend products for an existing product. Then if sales bottom out for a particular product because a killer competitive product is introduced in the market or even if the market for the product slowly dries up.  You still have the safety net of other products and their revenue streams to rely on.

Problem #3: Yes-man echoes (Voice Questions, Not Opinions)

Yes-men (or women) are people who just always agree with you about everything because they want to stay on your good side.

And frankly, sometimes it’s difficult to give someone a tough message or even just a message that they don’t want to hear.

But sometimes its important to hear those messages even if you don’t initially agree with them.  They could save you from spending a lot of money on a doomed project idea. Or give you the kickstart you need to realize that it is time to branch off in a new direction.

The advice in this section of the Fortune article suggests that instead of indicating your opinion on a topic right away that instead you ask others what they think.  That way, no one knows which way you might be biased and prevents yes-men from just agreeing with you by default.

Another idea you can implement is to get yourself a mentor.  Find someone who is not afraid to tell you when he thinks you are way off base.  Or if not a mentor, create your own mastermind team but make sure that the team members all have something to contribute and are going to think independently.  Use your mentor or the mastermind team as a sounding board for ideas.  But still ask questions first before voicing your own opinion.  You might be surprised by what you learn.

Problem #4: Anxiety Overload (Look At The Clock)

The Fortune article  states: “Low levels of anxiety are productive: They concentrate the mind. High levels of anxiety or counterproductive: They panic the mind.  A panicked mind stops processing new information, reverts to tried-and-true responses, and is prone to snap decisions that make things worse.”

I totally agree with this statement.  When I worked as a software design engineer at Microsoft it was normal to have what we called a “sense of urgency”. This sense focused us on solving the tough technical challenges and made us really aware of staying on track to ship products. In fact we had to be very careful to slow things down as we reached the end of a milestone or ship cycle when the urgency and anxiety levels raised up significantly so we could avoid making rash decisions.

Having a “sense of urgency” is a good habit to get into in your own Big Ticket Marketing efforts.  You should consistently be pushing yourself to make progress everyday.  This is especially true if you are an entrepreneur and your own boss.  Not having a “sense of urgency” makes it easy to procrastinate or avoid things that you know you need to do for your business.

On the other hand, you need to make sure that your sense of urgency doesn’t overwhelm you.  You need to find a way to balance your efforts.  In the Fortune article, the authors talked about Navy pilots landing failing planes on aircraft carriers.  Dials and gauges are spinning like crazy and so to steady themselves the pilots focused on the on-board clock.  The clock was one gauge that remained stable despite the craziness around it.

You can do things like taking regular breaks after you accomplish a task.  You can meditate, you can go workout, you can go for a walk. Just pick something that works well for you and allows you to decompress after times of focused effort.

Problem #5: Warring Camps (Let The Battle Rage)

Sometimes you need to make an extremely important decision but you have people on different sides of the issue.  

You may be trying to decide yourself about where to focus your Big Ticket Marketing efforts with respect to a particular market. Or, you may have people within your organization (no matter how big or small) that are taking opposing sides. Or you may be analyzing the marketplace by examining your competition and they are divided into two camps.

In the Fortune article, the authors talked about Gillette in the 1980’s. Gillette was losing market share to Bic because they had introduced plastic razors, while Gillette was a steel razor company. The CEO at that time let the debate within the company go on for about 2 years before he stepped in and made his decision to stay with steel razors. 

Why did he wait so long?  Well a lot of data was generated by each side over that period which led to a more informed decision.

Microsoft has created “warring camps” internally at times to see what the teams will do.  One example would be the continued development of Windows even thought Microsoft had signed up to jointly develop OS/2 and Presentation Manager with IBM.  In the end, Windows ended up winning the day.

However, “warring camps” can be counterproductive if it results in a bunch of political infighting instead of constructive information gathering and investigation.

So how does this impact your Big Ticket Marketing if you are a smaller business without “warring camps”?  Well, you don’t necessarily have to be first in a market to succeed in that market.  In fact one sign of a good market is the existence of competitors in that market.

If there are competitors on both sides of a particular market, it could be better for you to let that competition run for a while to see if one side eventually conquers the other.  You can still compete with the winner as long as your product has a unique selling proposition and a competitive edge.

If you have the resources or the market lends itself to cheap product creation, you could create products that compete on both sides.

Just be careful not to let the competition and the information gathering run on too long.  Otherwise you’ll be stuck in analysis paralysis!

Problem #6: A Wily Adversary (Clone Your Opponent)

How do you compete when the competition is fierce?

Michael Useem and Jerry Useem used the example of the New England Patriots vs. the Indianapolis Colts in January of 2004.  Both football teams were vying to get to the Superbowl but the Colts quarterback was Peyton Manning. 

“Peyton Manning … couldn’t be contained by conventional means. His arm was too accurate, his feet too quick, his style too different. So a week before their big game, Patriots coach Bill Belichick gave his backup quarterback a challenge: Become Peyton Manning.”

The article goes on to describe how the backup quarterback learned about and adopted Manning’s style of play and mannerisms.  The entire Patriots team practiced against their own backup quarterback who played as Peyton Manning for a week.

The end result: the Patriots went on to defeat the Colts and advanced to the Superbowl.

So in you Big Ticket Marketing business, if competition is fierce you can do the same thing. 

Become your competitor. 

Buy all their products.  Use them just like their customers would. 

Find out what’s great about them and also what areas are weak or could be improved. 

Look at the type of advertising your competitor does.  Do they sell via direct mail?  Over the internet? Retail stores? Do they have an affiliate program? Do the advertise in trade magazines, radio, TV?

Who do they think their exact target market is? Who do they consider as their competitors?  Who are their joint venture partners?

Examine all of the copy on your competitors sales pages?  Are there weak areas?  Do they address all concerns their customers might have? 

Call their support line and ask about something related to their product.  How are you treated? What discounts do they provide, if any and why?

If you can find existing customers of your competitors products, call them and ask them what they like and dislike about the products.  Is there anything missing?

You are looking for areas that you could introduce into your own product that will give it a unique selling proposition or a competitive edge in that market.  You don’t need to be 100% better.  You might only need to be 10% better.  You are looking for your own share of that market, not necessarily to OWN the market.  But if you can do that, thats good too :-)

Problem #7: To Be Or Not To Be (Go With The Omen)

In the Fortune article, Jerry Useem and Michael Useem write: “When our rational brains tie us in knots, our natural preferences sometimes express themselves in non-rational ways.”

This is like analysis paralysis except from an emotional point of view. 

The example that was used in the Useems’ article was of Charlene Barshevsky.  She was asked by Micky Kantor, Bill Clinton’s Trade Representative, to serve as his deputy. The job promised the chance to shape US trade policy but was an incredibly difficult choice for Barshevsky because she was already a partner in a prominent Washington law firm earning far more than she could as a government representative and she was also the mother of two small daughters.

Barshevsky set a deadline for herself to make a decision but was still undecided on the last day.  How did she decide?

She saw a vanity license plate on the drive into Washington with her husband.  The plate was “Go4It”. 

Barshevsky had already made up her mind.  The license plate was the omen that made her realize it. She took the position with Kantor.

I know several people who have had a similar experience. 

I have experienced something similar in my own life although it was not as direct as the above example.

I had spent 12 years at Microsoft as a software design engineer lead in Exchange – their electronic email server.  I loved my job but my interests were changing.  I had discovered an interest in direct and internet marketing and like some people I had daydreamed about becoming an entrepreneur.

But I wasn’t really ready to leave Microsoft so I looked around to see if there were other positions within Microsoft that would align more closely with my new interests in internet and direct marketing but and let me hone my skills working with customers.

I found a position in the customer relationship management team as a program manager.  The actual project was to build a framework that would allow all the different business applications like Great Plains, CRM, Navision and Axapta exchange their business information seamlessly.

It was a very interesting project and would also give me more exposure to the customer aspects of a software project.  Plus the team was also investing in an email marketing module for the CRM system so I figured I could learn more about that as well.

Unfortunately, after about 6 months, there was some project funding cutbacks across the team and that project was shelved.

I found another project that interested me. This one was to build a customer client application that combined the best of several of the existing CRM applications into one and also allow people in different organizational roles to do what if modeling.  e.g. The CEO, the shop floor manager, the marketing manager, etc… could get valuable information related to what if queries in their areas.

After another 6 months, my division was reorganized and the new focus was put on an area that wasn’t as interesting to me.

And at about that time, my current mentor, Joel Christopher – The Master List Builder, decided to offer a mentoring program.  I applied and after a series of very intense interviews I was lucky enough to be accepted in the program.

These 3 incidents combined with my growing interest in internet and direct marketing were what finally convince me that it was a sign I needed to go out on my own. 

And my partnership with Joel created our first joint product in the area of Big Ticket Marketing.  You can find out more about his in the resource box below.

So the point here is to pay attention to outside signs.  Sometimes, even if it feels like you can’t make a decision, you may have already made the decision and are just looking for the right omen to validate it.

Problem #8: Inexperience (Educate Your Instincts)

Jerry and Michael Useem make the point that just because there are sayings like “Go with your gut” it doesn’t necessarily mean that your instincts will make good decisions.

They argue that it depends on your education and experience level.

If you have no or very little experience in an area then even if your gut says to go for it, that could just be naive optimism.

However, given the right set of prior experience, your intuition can be very helpful in making decisions.

Here are some suggestions for your Big Ticket Marketing Business.

If you are new in the business or even with a small amount of experience you should be reading and learning about others who have done what you want to do in order to see what decisions they made and how those decisions turned out in their business.

Better yet, find a mentor and take advantage of their experience.  Ask questions and make sure they push you into situations where you will get more experience without terrible consequences if you fail.

You almost always learn more from your failures.

Or if you can’t find a mentor, at least form a mastermind group and include people with diverse backgrounds and experience in your area. Use these people to validate your decisions or just to bounce ideas off of.

And one practice I’ve found particularly helpful is to always take time to evaluate how a particular decision or action turned out.

If you fail, try to fail early.  See what went wrong and spend some time thinking about what you would do differently next time. Use what you learn as your new experience.  Make the necessary changes and fix the problem or just move on if it was the completely wrong decision.

As you grow and learn from these experiences, your intuition will be much more “educated”.

Problem #9: Self-Interested Thinking (What Would Sara Lee Do?)

In a company there are often competing interests. Company management, employees, company financial and legal advisors, board of directors, and even shareholders.  Everyone has an idea about what a company should be doing.

The authors of the Fortune article argue that it is impossible to navigate these many competing and even conflicting ideas and interests.

But they do have one suggestion: “Imagine, for the moment, that the company is a person. If Sara Lee were an actual woman, that is, or General Electric a retired Army officer, what decisions would they make for themselves?”

By imagining the company as a person you can think about things like how to grow as a person, what type of relationships do I want to create, how would I fulfill a personal mission, what do I need to do to secure my future?

The answers to these questions can be used to get some clarity on the directions your Big Ticket Marketing business should go;  even if there are a lot of different opinions about that.

As an entrepreneur, you probably have many ideas yourself about the directions your business could take.  But treating your business as a person and asking what that person would do is a tool to help you focus on the important aspects like who you would like to joint venture with or is the which direction do I need to move to fulfill the mission for the company.  Or even, how do I have fun while I’m building my business :-)


Michael and Jerry Useems’ Fortune article made me think a lot about how I make decisions in my own business.  I hope that some of the suggestions and information here are just as helpful to you in your own business!

Copyright (C) 2005 Chuck Daniel, Like Magic Marketing, LLC -- All Rights Reserved.

-Chuck

Chuck is a former Microsoft software designer and program manager who spent more than a decade happily working on Email and CRM. Admittedly a seminar, workshop and information addict, Chuck left Microsoft to pursue his interests in personal development, internet, direct and information marketing and to promote and work for charitable causes.

Chuck Daniel
Would You Like to Make BIG Bucks
With BIG Ticket Items Online?

http://www.bigtickethomestudy.com
http://www.bigticketblog.com


This article may be reprinted in its entirety in your E-zine or on your Site as long as the content is not modified, all links are left in place and you include the resource box as listed above. If you do use this material, please send us a copy of the publication. Thanks.