Everyone’s probably raised the following questions to themselves at some point in their lives.
Why do they give out free gifts at new studio apartment ad booths?
Why does Unicef have random sticker boards that ask people to choose between A,B, or C?
Why do mobile carrier retail stores display free gift roulettes outside their storefronts?
Why do people hand out so many flyers at subway stations?
We think to ourselves, what’s the point of all this? Does it even work?
I think these events capture the essence of marketing.
Marketing, as I see it, can largely be viewed from a branding perspective and a statistical perspective. I’m going to ignore the branding aspect of things here and focus on the statistical perspective.
Let’s suppose that you’re selling smartphones to pedestrians passing by.
What are the odds that you’ll successfully sell a brand new cell phone to some random stranger passing by?
For all one knows, maybe you’re a sales wiz and can bedazzle people with your words. But that’s highly unlikely.
You have no prior knowledge on whether or not this person actually needs a new phone, or if they prefer buying phones directly from the smartphone retailer as opposed to mobile carriers.
Selling becomes impossibly difficult because you have zero knowledge on the other person. Let’s presume that you made over a thousand sales pitches and finally succeeded in selling a single phone. It’s almost a miracle in itself that you were able to sell a phone, but it’s also an equally difficult task to research the factors that lead to more sales. And you couldn’t possibly allocate this already pre-assigned task to another person short of being called deranged. It’s essential to differentiate between the steps needed in the sales process to achieve a successful sale. Below, I’ve simplified the cell phone sales funnel.
[Solicit] *Cell phone accessory gift lottery* – Spinning the roulette
[Consultation] Assess the customer’s data, explain the cell phone plan.
[Purchase] Transaction complete.
The psychological effort required to overcome each barrier becomes enormously reduced.
What are the advantages of separating the funnels?
Let’s theorize that 10,000 people that pass by the store each day. Among those people, 1,000 spin the wheel, which in turn leads to 100 people that agree to a consultation. This ultimately comes out to 3 people actually purchasing a new phone.
[1] Each step can be quantified, analyzed, and improved.
Unlike focusing efforts on selling each individual phone, compartmentalizing each step of the overall process allows for a streamlined improvement process.
What gifts should be given out in the roulette to attract more spins? What age group is most likely to spin the roulette? Which demographic should you solicit for a better odds? Is there a method that leads to a successful transaction more naturally? Should we offer payment plans?
[2] Establishing trust, step by step
Spinning the roulette and going through the consulatation process are all steps where trust is gradually established between the customer and the salesperson/mobile carrier.
It’s highly unlikely that I’d buy a phone from some random stranger. But it’d be a totally different scenario if that stranger turned into a friendly individual that I spent time playing the roulette with, shared jokes, and casually talked to about my mobile needs.
[3] Lowering the Level of Difficulty
Lowering the funnel in turn brings down the level of difficulty in completing the task. It suddenly becomes a job that anyone can do.
Thus, the task is systematically changed to where it’s no longer reliant on a single genius salesperson, but has become a relatively simple task that even a simpleton can do. “Now, look here.. Offer a chance to spin the roulette to women around 20 to 30 years of age.” This simplification transforms the task into a sustainable business.
And consequently, numerous mobile carrier retail stores persist on the streets.
Using this mobile carrier example as a model, it’s possible to calculate every step along the way, from soliciting to making the sale. It’s possible to estimate the probability that an individual of a certain demographic will purchase a new phone per number of pedestrians passing by. And in turn, the profit yielded per person. Ultimately, these retail stores still come out on top with a profit even when we consider the cost of the free gifts, cost of labor, rent, etc.
Visualize how often the funnel soliciting customers is pointed in your direction as you walk the streets today. Conceptualize the marketing.
