September 27, 2010

Marketing Made Simple

Just like the ads themselves, the study of advertising has a lot of noise. There are a ton of models and much unneeded complexity. While working in new business, I developed a model to explain the marketing process to small business owners in language they could understand.

Thus was born the 3 Tier Model of Marketing. It's pretty simple: you make a space, bring people in, and then keep them in.

Imagine a big crowd - like at a rock concert. Before you can set up shop, you need to create room by pushing enough people away. Once you have that space, whatever is going on there has to be appealing to people (it could be a mosh pit, folks dancing around, anything you like). As more people get interested in your space, it grows.

If you are observant, you'll notice three things:
1) The purpose of your space constantly evolves.
The people inside it decide what it's about just as much as you do.
2) People must constantly join in.
Otherwise your space is doomed to collapse on itself like a black hole.
3) Friends pull friends into spaces.
Existing members are the best way to get new people in the space.

That big crowd at a rock concert is literally the marketplace, and if you want your space to thrive, you need to pay attention to these three tiers. Every potential customer is on one of them - your job is to gradually move them closer and closer to the first tier. Keep the Pareto rule in mind: your tier 1 customers account for about 80% of sales.

Any firm, whatever its size or budget, should be addressing all three levels simultaneously - and startups should start thinking about their firm at tier 3, and then hone down to tier 1. What are you doing on each level? How do you create gravity to pull customers into tier 1? Do you let your space adapt or are you holding it hostage?