Your Innovation Podcast. This is the 34th episode of the Driving Eureka! Podcast. This is Part 1 of the Science of Innovation Success. How to grow sales, evaluate big ideas and a writing lesson from Hemingway.
Show Notes
[00:00:00]
The Driving Eureka! Podcast – How to Grow Sales and Pick Big Ideas, Plus a Writing Lesson from Hemingway
[00:01:48]
How to Grow Sales
[00:05:58]
How to Evaluate Big Ideas
[00:08:24]
Hemingway and Writing
Transcript
Tripp: [00:00:00] This is episode 34 of the Driving Eureka! podcast. This episode will cover how to grow sales. how to pick big ideas and a writing lesson from Ernest Hemingway.
Tripp: [00:00:14] Driving Eureka! podcast with Doug Hall and Tripp Babbitt is sponsored by Eureka! Ranch the ranch specializes in helping companies find filter and fast track big ideas.
Tripp: [00:00:28] A new series called The Science of Innovation Success over the next five episodes or so why don’t you share some of the thinking behind this particular series. Yeah
Doug: [00:00:46] Yeah. So my thought was as we get into the summer months to to give people some things to make them stop and think so. At the least what we’re gonna do is I’m gonna give you stuff to talk about when you have yourself a fine whisk(e)y cocktail when you’re sitting with friends on the beach or whatever. So we try to fill your brain with some stuff.
Doug: [00:01:10] So whether you’re on your treadmill in your car or wherever you’re listening to this I’m gonna give you some bite sized pieces and they’re all gonna be driven on the science of innovation success it’s going to be a five part series where each time we cover three programs that are based on data which is obviously the fundamentals to the whole Innovation Engineering curriculum and the movement is that it’s data driven and that it’s focused on data and so that’s we’re going to begin to three each week.
Tripp: [00:01:39] Okay. And these are the three this week are how to grow sales how to pick big ideas and writing lesson from Ernest Hemingway.
Doug: [00:01:48] Yeah. So the first one is about growing sales. Okay I’m gonna start off with a quiz for you. Here you go. Now know the smartest way to significantly grow sales is a build loyalty or b find new customers.
Tripp: [00:02:02] Okay. Well I mean my background basically tells me that you want to get your future customers from your existing customers.
Doug: [00:02:10] I’m going to say build loyalty and that’s what about 70 percent of people say. And that would be wrong. Okay. And it’s actually been well researched. Lots of research is called the double jeopardy effect and there’s a whole pile of studies to do it that that showed this. People think it’s gonna be easier to get another dollar from an existing customer rather than get new customers. Now I should put probably an asterisk with that. Okay. If you’re selling the same old stuff as everybody else calls it that’s a different issue. But if you’re meaningfully unique. If you want to grow your business you really need to get new customers. Because in the new customers you get you’re gonna get some highly loyal ones and some others are going to be a distribution. It’s not possible. I’m only going to get customers that are super loyal. I’m just gonna market for super loyal people. They become super loyal. You can’t market to create super look. And in fact the biggest study of this. We had nine thousand eight hundred four businesses and the ranch team did this. And we found that a number of customers was 2.8 times more important in driving the total sales than the amount bought per customer. Now that’s not to say that it’s not important to maintain loyalty as Ben Franklin said hey you know a leaky bucket never gets full. However the best way to build loyalty is with a meaningfully unique product or service and in order to be able to get new customers and in fact we did this study again with public radio stations I had data from of the fund raising from all the public radio stations and I looked at the number of donors they had and the amount given per donor.
Doug: [00:04:00] And sure enough in this case and this was really good data we had hundreds of stations and what we found we looked at it year after year after year and we found the same thing. And in this case it wasn’t just 2.8. It was actually nine and a half times more important. And so you’ve got to grow your base. You’ve got to get new customers. I mean you’re going to hit a max. I mean it’s the diffusion of innovations all over again. I mean there’s only a certain amount. And so you’ve got to be reaching out to new customers to grow the base and to do this you kind of have to something this mean cleaning.
Tripp: [00:04:35] Ok. Well that makes sense. I mean it just it kind of goes to my head. I mean there. There is so much money spent on industries like sales training and things of that sort where they’re trying to find new ways to sell kind of old products if you will. And and that’s one of the things that really attracted me about innovation engineering is new stuff.
Doug: [00:04:55] Well and the thing that happens is is they try to take the exact same stuff and push it into their current customers thinking that that’s going to be easier. But the reality is is yeah it is easier to get those customers after you drop the price. OK. And and in fact the profitability of existing customers is usually far less. The profit margin you make than our new customers because we’re desperate to hold onto them. So we give them deal after deal after deal. So it’s a whole slippery slope.
Doug: [00:05:27] But to see this takes a mindset of growth it requires a different mindset then most people come to business when they’re in a protection put walls around it rather than grow it.
Tripp: [00:05:42] Yeah it’s switching from sort of putting lipstick lipstick on a pig to maybe getting a new pig or something else to do something about something.
Tripp: [00:05:54] Okay. Very good. So that the second thing here.
Doug: [00:05:58] Three moves the second thing is the three most important questions to ask when you’re evaluating an innovation or new product business or whatever it might be. And we looked at over 10000 marketing message and what we found was that when evaluating these the important questions in customers minds are why should I care what’s in it for me and why should I believe you. And why should I care. Is basically the news the meaningful uniqueness the wow. What’s the thing that’s gonna make a difference in my life. In other words why should I even bother to think about you. I’m happy with what I’ve got now and what have you got that’s going to disrupt. Me in such a way that I feel like maybe I should change. So it starts with that meaningful uniqueness. Second is what’s in it for me. And this is really about the benefit promise. What is that promise. What is that overt blunt direct promise. I want what are you gonna do for me. I’m going to make you healthier faster smarter more comfortable live longer. What are you going to do. What’s the benefit you’re going to give me. And then the third is why should I believe you. Okay so you got my attention and you telling me what’s in it for me. Now I want to know is this too good to be true or not. And we got a world where lying is a bit epidemic especially on the Twitter and other Internet sources and consumers and customers are right not to believe. So you’re going to have to go overboard here and most importantly you’ve got to be as honest and real about the real reason you can promise what others can’t promise.
Tripp: [00:07:40] Ok so we talked about you talked about data driven and I remember from an earlier episode we talked about meaningful uniqueness we’re able to measure that. How are we measuring what’s in it for me and why should I believe you.
Doug: [00:07:53] So what we did is we did content analysis of 10000 marketing messages we could check the benefit promise numeric promise a lot of the things we talk about on podcasts. Did it provide credibility to to provide a reason to believe. Did it explain why they’re able to do this. And when we scored all of those things what we found was a significant relationship on all three. And when we did factor analysis it came down to these are the key drivers that make this work in fact there’s even a matrix that shows the permutations of these different things.
Tripp: [00:08:24] Ok cool. All right. And so how how did Hemingway’s conversation.
Doug: [00:08:32] Ok. So I’m kind of a fan. Ok. And his book The Old Man and the sea might well be the most powerful inspiration for great business writing.
Tripp: [00:08:46] Ok.
Doug: [00:08:47] Because it features small words short sentences. And what we found is we did research on the writing. We scored the writing gets called the Flesh Kincaid’s scale. It tells you what level of writing this is at third grade fifth grade seventh grade ninth grade 10th 12th twenty fifth grade or whatever. For nine hundred and one new products and we found that when the messages were simple and easy to understand there were 70 percent more likely to be successful and to be specific messages so that a eleven year old could understand realize the greatest success. Now it’s not that people don’t have can’t read although a quarter of the American population is basically functionally illiterate. But now it’s because they have no time to process as what we believe. And so that you’ve got to make it easy for them to get and you can do this. You can check this with your word processor and what this is not about is making it such that you’ve simplified it into saying nothing. It’s saying a lot like Hemingway says in the old man and the sea richness of tapestry and thinking and emotions and feelings but with short sentences simple words interesting.
Tripp: [00:10:09] And this is almost like writing copy then for four for a message. Is that kind of.
Doug: [00:10:17] No it’s for writing everything for writing everything OK. In an email if we want to get people to get it. Got to write it in a simple and clear way. I mean like I write. I’ve written a lot of books or in several books I’m amazed now. And you know sometimes when I write in the morning if I can write you know one really good paragraph. It’s a great day. You know that is where you’ve taken all the complexity and it takes great skill to take complexity and to make it very simple.
Tripp: [00:10:50] Ok. Well that makes sense. All right. Well there’s three things.
Doug: [00:10:56] That’s right. And if you want to get more you know the innovation enduring book Driving Eureka! it’s filled with these fun facts.
Tripp: [00:11:05] Ok well we’ll have everybody pick up a Driving Eureka! book then.
Doug: [00:11:10] There we go. OK. So next week.
Tripp: [00:11:14] Thanks Doug.
Tripp: [00:11:18] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the innovation Engineering Institute. Innovation engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere every day. resulting in increased speed and decreased risk. To learn more about on campus off campus live and online courses visit. innovation engineering dot org.