How to Crush Human Biases & Make Your Marketing Great (Again)

The Biggest Growth Killer: Human Biases

John James: Very nice to be here. Thanks very much.

Louis: So one thing you believe in is the fact that the largest thing that prevents businesses to grow are people. Humans, right?

John James: Yeah. It’s kind of ironic. Humans buy products and create the revenue, but also, in my experience, anyway, the thing that prevents growth is the humans that operate these companies and some of the human biases that go part and parcel with running a company. That’s the thing that I come into trouble with and that’s the thing that I try and solve.

Louis: So tell me more about this. What are the like we’re going to talk about biases. Are we going to talk about biases from an internal perspective, folks? Inside businesses? Are we going to talk about biases from outside like consumers and whatnot, or both?

John James: I’m actually going to go mostly on internal perspective. So As a marketer or aspiring marketer, I think it’s quite relevant. And also if you’re working in other departments within a business, how to view marketers in the right way and maybe why they’re acting in certain ways, I think it’s. It’s good for, no matter what position you’re in in your working life to. To know about some of these biases.

Louis: All right, so let’s go. Yeah, what’s the first one?

John James: Look, let’s just like, set the context of it here, because I specialize in marketing. That’s related to revenue generation, right. So I think sometimes marketers get a bad rap because that is one of the hardest things that they can do is, is tie their actions back to revenue. So I need to go really deep into some areas and cover a lot of different disciplines within marketing. So when you talk to me about what I should talk to you on the show, that’s what I want to talk about. Because I think biases really play into this, this problem that we have. So I suppose let’s define a couple of things. First, the question I get asked the most is like, you know, what’s the secret to growth? I’m sure you might get that as well in your life. So what’s the secret to marketing? What’s the secret to growth? And I always answer in the same way. You know, first of all, define what growth is, stop believing in reductionism, and, you know, take a constraints perspective instead. So let’s look at the things that are preventing growth, and that’s where these biases really play into it. So look, let’s just go straight into it. Probably the biggest thing that I see is the stigma around marketing. So I think, you know, non marketers view marketers as a bit shady, like you say. So I think this really affects, you know, the confidence that some marketers have in themselves and the way they’re treated by other departments really sort of plays into that. So again, I think we need to talk about that stigma first. And this creates the first major bias in the industry.

Louis: Okay, so before we go into that, let me just interrupt you and go back to one thing that you said earlier, which is, so instead of thinking about how can you grow more, it’s more in terms of thinking in terms of system like, system thinking, which is what is the biggest thing preventing you to grow more. Right. If you consider your business to be a system and you talked about reductionism, I’ve never heard of that before. What does that mean?

John James: Oh, so reductionism is like when you Take something that’s really complex of which, you know, marketing is, especially if you’re trying to tie it back to revenue. There’s, there’s heaps of variables out there. It’s a really complex wheel that you need to, to be over. And reductionism is when you’re trying to take lots of different things and then simplify them into like a little model. And academics do this all the time in university. They’re trying to take this really complex beast and they go, okay, well, that’s because of, you know, X, Y, Z. They create a little model around that, the seven steps to this, the four Ps, or whatever, and they simplify it so everyone can understand it. But what’s lost in that process is some of the complexity. And those are little bits that are often the juicy bits that you really need to be over and will give the difference in your career in terms of being really effective at marketing.

Louis: So I think it’s important here to talk about the difference between complex and complicated. Right. If I’m not mistaken, I’m going to butcher this. But something can be, can something be simple and complex or that can’t be happening.

John James: Yeah, I mean, I think complex is like the number of variables that you’re going to look at. Right. Correct. That will complain. Yeah. But then you can have simplicity within that, and that is like maybe the way you approach that complexity is quite simple. So. Yeah, look, I don’t want to get tied up in semantics here, but I think you can. Yeah. So, you know, it’s probably best to use a couple of examples. And this is, this is probably one of the things I want to talk about, which is disproportionality bias, which is where small little things can make a huge difference, especially when it comes to revenue. So you might have all the wheels of your marketing machine turning really well. And this is one little thing that’s preventing everything from working really well. And I see it all the time. Maybe if, if your experience was like lead funnels and things like that, there could be this little technical glitch that’s, that’s, you know, causing 50% of your yield to, like, dissipate. So I suppose, you know, if you’re not over all those little things in detail, then these little things can go missing and nobody notices them.

Louis: Right. And I’ve heard about it in a different, slightly different way, but different name, but different, same thing, which is. Yet there’s always one big thing that prevents you from going where you want to go or to growing faster and you can do whatever you want on the other thing. As long as you don’t remove this thing, it’s not going to happen. It’s like retargeting for ads, for example. Most people, the major mistakes they make the big mistake. Yeah, that’s the way, that’s the way I’ve heard about it. Which is what is the biggest mistake you’re making right now that prevents you from growing further in marketing. To get to just a quick example, retargeting is usually where we see in paid marketing one of the biggest mistakes, which is retargeting everyone and anyone visiting the website.

John James: Yeah, don’t show any intent over and over.

Louis: Right, exactly. So you’re basically using so much money on like 90, 95% of people don’t give a shit. And instead you should focus, you should stop doing this mistake and focusing all of the money on those 5% to show some intent on your website. Make them come back. So that’s one example. So you mentioned two already. So let’s maybe go back to the first one you mentioned and tackle this one in depth.

Marketing Stigma Creates a Self-Fulfilling Loop

John James: In terms of stigma, I think especially like I do a lot of work in the tech field. I know you work for a tech company as well. So I think, you know, we to address that one, which is the elephant in the room, which is, you know, Peter Thiel and the PayPal crew back in the day were very dismissive of marketing as a discipline. The irony is he talks about the power of distribution. Right. Which last time I learned marketing was one of the four P’s. So I find that a touch ironic. But that sort of started this tech versus traditional versus digital sort of debate in the industry. Right. And in tech companies, you’ll probably notice it’s quite prevalent. The engineers and the product people sort of view marketing with a bit of uncomfortable disdain. Right. And I find that very interesting. And I think, you know, as tech grows, that’s sort of becoming quite ingrained in the culture. And that whole Steve Jobs Apple story as well is really fascinating. So Steve Jobs sent a lot of misinformation around the tech community in Silicon Valley, around the amount of marketing that they were doing, especially research. And a lot of those stories came out in that court case. I know this is mentioned a couple of times before, but I think that that general sort of culture has of misinformation has really changed the narrative of around marketing, create the stigma and then that creates sort of the bias of people viewing marketing and marketing’s worth. So, you know, that creates a self Fulfilling loop within marketing, they attract worse employees. The expectations are really high. No one wants to work for these tech companies even if they are good at marketing. So you know, they attract worse and worse talent. So then it’s this like sort of loop that goes down and down, down.

Louis: Just to go back to the example of Apple versus Samsung which I think was the. Yes, Samsung through whatever they were suing Apple for, won the case and they got access to the highest amount of market research anyone could have fucking fathomed.

John James: I think any company in the history of time has spent on market research

Louis: and the bias, I mean the bullshit there was that Steve Jobs was very good at making. Everyone believed that. No, they don’t do market research, they just fucking wing it. And they just are so innovative and so intuitively connected with their people that just come up with stuff which is far from being the truth. Like they did more market research than anyone else on the planet. And yet this, this kind of bias against marketing thinking that it comes after the product and now we have a good product, now how the fuck do we get customer is kind of one of the reason why like one of the, the origin story is because of that bias. Right? Like what Apple, what people think thought of Apple was doing. And you mentioned this loop, so that’s interesting. So people consider marketing to be an afterthought or not that interesting, not that important. Therefore less and less people are interested in joining.

John James: Well who would join a company if like the management view marketing as like some sort of afterthought, you know what I mean? Like you don’t really feel valued as an employee or if you’re not respected or your discipline is respected. So then their expectations are really high. Then you know, why are the expectations

Louis: are high if they don’t give a shit about marketing?

John James: Oh, they have high expectations about marketing. So like they don’t want to get a shit marketer because obviously you know, they’re looking for marketing to fill a hole of, of the department. And yeah, look, that’s, that’s sort of. They look at marketing as filling the gap of demand gen basically. You know, we’ve got a revenue problem. Whatever problem we have, marketing is going to solve that. So you know, this is a political thing as well and it happens in all departments. I’m not saying marketing’s the only one, but I see it quite a lot as the scapegoat for misperformance and I think some people over rely on it. And there’s a lot of areas that you could work on as well, okay,

Louis: so that’s an interesting one, right? This loop, this self fulfilling prophecy in a sense of marketing being shitty because you make it shitty in a sense. I know firsthand about this story that, that tech companies talk about a lot, which is, you know, once, once you build a good product, once you have an innovating product, then things tend to take care of themselves. And marketing is kind of just a way to put ads in front of people and they don’t understand that marketing has, when done right, marketing has a seat on the table from the very start. The ability to really understand people and their problem and the jobs they are hiring stuff to do so that you can design the right product for them in conjunction with design ux, product engineers and whatnot. Right, so how do you fight this bias? How do you convince people? Because you probably have work with and already are working with clients who somewhat believe that. How do you fight that?

John James: Yeah, look, I mean, if it’s in a tech context, generally you’re dealing with sort of engineers or head of product or you know, technical people like that. And one of the things that I use, it’s quite important, is there’s this fallacy that, you know, technically good products sell themselves. And we know in marketing there’s heaps of failures. You know, the tech companies themselves wash these failures under the rug where they’re constantly iterating products. It’s just part of the process. Products fail all the time. But there is this sort of fallacy that technically good products sell themselves. I would argue that it’s more about products that are in congruence with the market’s need that sell themselves to a certain extent. And even then you still need to give them a leg up and get people to find out about them. Right. So I think one of the things that I use is that I ask the engineer. Okay, well if you think that’s true about the product that we’re talking about, okay, tell me about what your shirt’s made out of. What, what fiber is it? What’s the dye made out of? You know, what is the stitch or the weave on, on the shirt that you’re wearing? What is the brand? When was it started? And I ask all these questions and they can’t answer any of them. And then I get them to admit to themselves that, well, they probably bought this brand because they saw, you know, Jeff Bezos, you know, wear it on the weekend on a blog or something and that’s why they bought their Patagonia, you know.

Louis: You know, I knew you would mention Patagonia.

John James: Yeah.

Louis: That’s the obvious example, right? I mean, yeah. And it’s to go on top of what you said. An interesting thing to think about is that most products that people buy are out of wants, not needs, not primal needs. And so anything makes zero sense once you deconstruct them a bit. Why do you need to buy a $600 handbag? I mean, not me or you, but you know, my wife, for example. It’s, it’s not about functionality or anything. It’s not even waterproof or anything like that. Like it, it’s not functional. It doesn’t really make you, you know, it’s all about status and it’s all about feeling good about yourself and projecting this image that you can afford it and you won’t follow trends. And once you deconstruct it this way, nothing makes sense. Why do. Am I wearing a fucking T shirt with birds on? You know, why are we, why am I, why am I. Why did I just buy this microphone, which is very high quality sound, but the previous one I had was pretty good. Nothing to do with functionality. It’s all about status and seeing Joe Rogan fucking having this one and feeling I need to have this one.

John James: You know what? I know it looked familiar. I knew it was Joe Rogan’s one.

Louis: Yeah. It’s not because I bought it, it’s not because of him. It’s because of the tone of the voice that this microphone gives you, which, you know, all of the ones I had before were too high pitch, even though I don’t have a necessarily high pitched voice. And I was looking to find a radio voice microphone like something that gives you some sort of a. Anyway, you see, that’s all about nothing to do with functionality or human needs. It’s really a want. Anyway, sorry to cut you, but that’s interesting. So you make them deconstruct features of a thing that they bought and make them realize that it’s nothing to do with the features.

Deconstructing Product Value Beyond Features

John James: Yeah, I mean we could delve straight into product and value strategy here if you really want to. Where I sort of, I say that products consist of layers, right. And there’s emotional benefits, there’s, you know, functional benefits, which is what everyone obsesses over and self expressive benefits. And then you’ve got costs on the other side as well. Everyone talks about costs as being. Price is the main one. But there’s also other costs like emotional costs as well, time costs that have to be factored in. So once I like deconstruct the product Layers and show that all of these things contribute to the value perception, then they sort of understand it quite well and then they really value where marketing comes from. But that’s, that’s going really deep into strategy.

Louis: So. But that’s what we do here. So to go back to the Patagonia T shirt, let’s say, let’s say one of the engineer has a Patagonia T shirt and you deconstruct it. Let’s deconstruct it a bit with the layers because to me it proves that you need to be a good product person, like a good product manager to understand those. But you don’t necessarily need to be a marketer to design it that way or to think of time cost or opportunity cost or emotional cost or the benefit on the other side. Right, so let’s talk about Patagonia. Like let’s say I’m wearing Patagonia T shirt. How do you deconstruct it a bit?

John James: Yeah, sure. So let’s just take the example of a technical person or maybe a founder or an engineer comes from a product to engineering background that buys the shirt. Unless they’re really into textiles, which I know a lot of guys aren’t. I’ve had to learn it because I’ve had clients that are in that industry. So the stuff that I know is, is pretty crazy. But let’s just say that they’re not aware of the functional weave or the fibre even. They just know it’s polyester or it’s, it’s cotton. Right. And then they know something about the brand because they have seen other people wear it in the tech space. So they feel that there’s an emotional benefit in terms of connecting with the Bay Area sort of community as a whole. So they identify themselves as wanting to be one of those persons. So we call that like a self expressive benefit if you want to get technical. And then there’s the emotional benefits on top of that. Maybe when they wear it, they feel more confident during the day. Maybe the brand themselves. Patagonia, obviously a very sustain, sustainable sort of brand and they give back. They’re about slow fashion so repairing things. So maybe that makes them feel good in terms of, you know, protecting their environment because that aligns with their values. Maybe, you know, they like the retro sort of colors and you know, they’re into 80s kind of colors. I don’t know. Yeah. And look, the functionality benefits are there as well. You know, it’s warm, it doesn’t rip, very easy. There’s quality factors around the make of the shirt. So we’re talking about sort of functional benefits there and then, you know, when it comes down to costs as well, you know, maybe it’s pretty hard to talk about that, but, you know, they’re pretty expensive if you’ve ever bought one. So, you know, that is a value perception within itself, is that it’s high price. And we know in marketing that’s a pretty high correlation between value perceptions and price, regardless of the quality of the product or the actual quality of the product. So that all plays into creating this perception in that person’s mind that, hey, Patagonia is a good shirt and I should buy it.

Louis: So. So that makes sense. But to me, to, to play devil’s advocate a bit, it still sounds like a product person who designed the T shirts or whatever can, can think of a lot of those. How do you make the connection with marketing and reaching out to people and whatnot? How do you convince them that marketing has to be involved then and that they didn’t buy it just for the product itself?

John James: Yeah, look, that’s where sort of product placement comes in. So, you know, there’s no surprise that all the tech people in Silicon Valley wear Patagonia and a photograph wearing Patagonia and those photographs, like, find themselves into the blog posts and media insertions and things like that. Like that is no accident. And brands sponsor influencers in that space to be ambassadors. And then other friends or influential friends see that person wearing it, they’ll buy it as well. So, you know, that’s, that’s all crafted by a marketer. And, you know, if we just talk about high fashion here as well, that, that is one of the core things that they do. It’s all about connecting with, with other people who sort of embody that brand. And then other people notice that and they’ll buy it as well. So, you know that those things don’t happen by accident. You know, we can talk about distribution and things like that as well, but if we’re talking about fashion, that’s one of the main things that, that you use to grow a brand.

Louis: Yeah, so. So people notice bad marketing pretty well, bad ads, and, you know, they’re able to identify other shitty marketing, but they’re very poor at identifying good marketing because it’s invisible. Right. It’s like, it just works. People talk about it, your friends wear it, and you think it’s just word

John James: of mouth, but no, it’s something that Tom Fishburne quote. Is that what you’re referring to where you know, the best marketing doesn’t feel like marketing, probably.

Louis: Like I’m, I’m copying everyone here. I’m not coming up with anything nice.

John James: Yeah, no, I love that quote. And, and you’re right. Like the best marketing, you won’t even notice. It’s like. And I think is a good example of that, you know, the. When people explain to you, oh, why do, why do they buy an iPhone or why do they use Mac and not Android or some of the other competitors, they can’t really explain it very well to you. They’ll. They’ll start off, you know, it feels good or, I don’t know, it just works. And, and it’s all these like little emotional triggers. You know, if you want to deconstruct that, we could be here all day. But, you know, I just find it really interesting. They don’t talk about functional benefits or, you know, it has three cameras. That’s why I bought it. You know, they’ll talk about other things. And I think they do.

Louis: I think they do to challenge you. I think they do because they rationalize an irrational decision. They have to fill the gap. They say, oh, it’s better than Windows, lasts longer, the OS is better, when in fact they only bought it to signal to others that they also have a Mac and they can afford it and they seek classiness and they’re not just like a gamer and blah blah. So just to go back to the bias and sorry to cut you, I keep cutting you, but it’s, it’s very interesting. So I feel I need to contribute a bit. Do you have any other ways to fight this first bias of everyone thinking that marketing is shady and shitty and ineffective?

John James: Yeah, look, I think it comes through people listening to this where I go through some of these biases and if we all become better marketers because of it and we read up and we can explain the value that we provide really succinctly and clearly and tie some of actions back to business fundamentals, which is contributing to the bottom line or reducing costs for examp, then I think you’ll get a lot more respect within the board level. So I think it really starts at being better at what we do and better at articulating the value that we provide.

Louis: And you said something at the start, I didn’t want to challenge you on it too much, but we’ve been like 20 minutes talking and I think I can. Now, you said you actually specialize in a branch of marketing, which is like revenue generating. And it makes me think, what else then if you’re not contributing the revenue. What else are you supposed to do as a marketer?

John James: Yeah, well, look, it’s. It’s pretty interesting. I mean, there’s a lot of marketing activity that goes on that isn’t about generating revenue, so is dubiously connected to creating revenue. So there’s some things that. And this is, this is a good bias. Let’s. Let’s talk about this, actually. I mean, this is one of the things I want to bring up, which is, you know, when you’re planning your marketing budget, how do you spend it? And you’d probably know this, this company called Gong IO, the sort of sales automation software. Yeah. So really interesting study that they did a little while ago, and I hear this when I was learning marketing, that a good salesperson speaks less and listens more in proportion to, you know, what most people think salespeople do, which is just talk and yabber and the gift of the gab. You know, some people say 70, 30, some people say 50. 50. But the point is, you should be probably listing more than you are talking yet when it comes to everyone’s marketing campaign, they spend the vast proportion of their budget on marketing, communications, really expensive ads, you know, what I call talk. And they spend a very residual amount, if anything, on research. And half the time that research expenditure comes out of the agency’s fees anyway. And that research that they do is just sort of confirmation bias, Right. Trying to prove the decisions that are already been made by their strategists. So I find that very interesting. If we really want to sell things, why are we spending so much on talking?

Research vs. Talk: The Listening Bias Problem

Louis: Yeah, why? It’s funny, there’s a lot of biases against research, right? There is a lot of. Like, the one that I hear the most that pisses me off the most is the fact that it’s this Henry Ford quote. You know, if. If we were asking people what they wanted, they would have asked for faster horses. And that drives me nuts because point of research is never to ask, what do you think we should be doing? What solutions should we build? Because people will always ask more. You know, they would ask for better, faster, cheaper. The key of research is to understand their pain. The jobs they’re hiring, the product to do, the alternatives they’re using, what did they do recently? And that’s it. Your job as a marketer is to do the emotional labor of, you know, joining the dots between what they’re saying and what you can offer. Right. Do you agree with me or. I mean, that’s very biased.

Response Bias and Why Customers Lie

John James: I mean, I think, you know, in a Lot of these sort of famous quotes. There’s an element of truth in that. And that is, and I was reading this really interesting book by Adam Ferrier about this. Like he says, stop listening to the customer, like hear them instead. And I think, you know, customers. And this is where one of the biases come in really, which is called response bias in market research, where sometimes the responses people give you aren’t really the things that you should listen to. So people, you know, classic examples, like a restaurant, you sat down, you’ve had a terrible meal, right? You’re with your significant other. And out of just cultural politeness, when the restaurateur or owner comes up to the table and goes, oh, how was the meal? You go, oh yeah, it was great. You know, with this kind of weak smile, you don’t say, oh, it was fucking terrible. I’m never coming back here again. You just, you know, pay your money and walk away. So, you know, that’s a really explicit form of response bias. But this creeps into a lot of market research where, you know, and we could go on examples about this all day. Like New Coke is, is another example. Sometimes they’re asking the wrong question and you need to use a different sources of market research because they all have their strengths and weaknesses to find out what’s really going on with the customer sometimes. So, you know, it’s not just ask them what they want. Sometimes you should ask them, okay, well if we gave that to you, would you buy it or would you switch brands for it? You know, that’s a better question to ask. So yeah, that just comes down to market research.

Louis: Well, one other thing that I found interesting is looking at behavior and then trying to do the emotional labor of understanding why this behavior happens, right? So online you can see how people behave anonymously nowadays, but you can also do that in real life. I mean, mystery shopping and poor man’s ethnography, as Mark Ritson would call it, is super effective. Like just going, if your client is a retailer, then go inside the fucking shop and look at how people actually behave. And you’ll understand that people don’t read the label from start to finish and look at every, and compare every single fucking thing. No out of habits most of the time, just pick one and go. Like I’m trying to understand, trying to link this behavior, this actual behavior with, with, with what you described a few minutes ago about the benefits, functional emotional, the self expressive benefit, the cost and all of that. It’s kind of the work we have to do as marketer to be more effective.

John James: Yeah, look, it’s not an easy job. And I think, you know, this comes down to this sort of reductionism thing that I mentioned before. Like, you know, it’s a really complex environment. If customers told you the trut about what they wanted and you know, how much they’re willing to pay and that kind of thing, it would make it so much easier just to, you know, just go out and ask your customer. But they tell you lies all the time. So, you know, that’s why I was. I think it’s a good point. You know, the tech community as well, and people get obsessed with like being data driven. And I always ask them, you know, what kind of data, and these people can’t really understand or explain to you what kind of data. They just go, well, you know, data from our programs online. And I’m like, well, what about all the other types of data, like secondary data marketing journals that have already been written and published observational data. Like you just mentioned going to a shop. It’s. That’s observational research. You know, you need to use all the different data points to get a really good comprehensive view of what’s actually going on. And I think sometimes, you know, we get into this sort of measurement bias, which is we measure the things that are the most easy to measure and we ignore the things that are hardest to measure. And sometimes in my experience as well, when it comes to revenue, those are the things you should be spending more time trying to measure. You know, I’m not saying that they’re easy. And I think this is where sort of brand gets lost in this, this tech industry as well. And it’s coming back full circle. I was just talking to Robin Daniels the other day, Ex, we work cmo. He’s seeing that and I asked him this question and he’s like, yeah, look, in the tech community it’s all been focused on demand gen and sales activation and it’s really coming back, back into brand. You know, what’s the story? And I think that’s synonymous with just when industries become more competitive, you know, you need to go move more away from just transactional and functional benefits with your product and you just wrap a story around it and all these other layers and emotional benefits on top that I was just talking about before with the case of, you know, that Patagonia brand. So that’s definitely happening in the tech community and I think, you know, maybe the tide is turning a bit as the industry becomes more competitive. So maybe we will see some more respect come into into the marketing discipline.

Disproportionality Bias and Heavy vs Light Buyers

Louis: And so give me an example of, of something that is important to measure yet how to measure. So most people miss it, like in the marketing sector.

John James: Yeah, sure. Look, there’s, there’ there’s a guy in Silicon Valley actually called Chris Walker. He does a lot of demand gen work and he’s been talking about this a lot. And I really like the way he phrases this, but I’ve noticed the exact same thing. So let’s just take the concept of we’re working for a tech company, we’re trying to get more leads and close them, right. And I think one of the mistakes people made is that they view sales like a funnel. And we all do this because we hear about sales funnels and we learn it at school. And what goes into the top filters down and each layer we sort of get down to the bottom where we close the sal. You know, that’s the revenue. And so the mistake people make is they go, okay, look, well, we just need to put more into the top. So they go, okay, more leads, more leads, more leads. And that will increase their ratio at the bottom. What they miss sometimes in that is that there’s a disproportionate amount of leads that contribute to the bulk of your revenue down the bottom. So it’s not the same. So, and often that’s because there’s a certain segment of the target audience that you, that you’re targeting that is more receptive to your brand. And maybe you’ve got other clients that are in similar industries and can show sort of social proof and case studies that, you know, your product really does a good job in those industries. And you know, that segment is converting at this like crazy high rate and contributing to like 80% of revenue. So if you don’t go full funnel and look at all the way down to the bottom, you’re going to miss that. And I think that’s a mistake a lot of companies make at all levels. So, you know, just coming back to, let’s go back to B2C, which is, you know, Byron Sharp does a lot of work in this space and he talks about light and heavy buyers and the same sort of proportionality comes into, into that argument as well. So you should really look at that research as well, because he says that, you know, you get most your market share from the people who buy the least from you and the least often. And so if you want to grow a really big brand, you need to focus on those light buyers rather than what they teach you sometimes at marketing school, which is get a segment and that’s going to be this 80, 20 rule. 20% of your customers will give you 80% of the profit. And Byron Schub actually proved that wrong. So it’s just very interesting disproportionality problem that sort of affects metrics and measurement in marketing.

Louis: So let’s take a moment to tell you, listening to this episode right now, to pause it and buy the two books called How Brands Grow and How Brands Grow Part two, which are basically a summary of Byron Sharp and his colleagues on marketing as a science. And exactly as you said, it’s phenomenal book because it’s proving a lot of like things that we’ve been taught in school. And for those who didn’t follow proper traditional marketing training that you’ve probably have heard around, exactly as you said, there’s no Pareto law when it comes to profit and customer. The max that they’ve seen across industries, companies, countries and whatnot is 20% of the buyer responsible for 60% of the, of the revenue or the profit. I don’t remember which one. Exactly. And that the light buyers who are the ones that don’t buy that often are in responsible for a huge portion of your, of your, of your traffic, of your revenue. And he’s making the point therefore that you shouldn’t only focus on your heavy buyers because those people would buy anyway like that you’re, you can’t really squeeze more out of them and instead you should focus on market penetration and trying to reach as many people who are category buyers as possible. Even though they’ve probably bought just once or twice in the last five years, right?

John James: Yeah, big time. I think it’s really important. I mean one of the things I do, and coming back to your initial question, like how do we improve this stigma? Right? And I think it comes down to using sources like that of scientific peer reviewed articles that if you argue against that, you’re basically like proving yourself wrong. And the problem with that, and I’ve done this before, is that some of the, I don’t want to be ageist here, but let’s just say some more experienced marketers who have been in the career for a lot longer, these findings are quite confronting to their belief systems and they’ll be very antagonistic if you present this new theory because they’ve learned the old way and those two things don’t mix. So you need to be really careful how you present this. So I just go, look, this is the way it used to be done and this is some new studies that were done and it shows that just, you know, X, Y, Z. If we want to do this, then I think we should at least read this study and, and heed some of the, the outcomes from the study. So that’s the way that I present it. But that doesn’t always wash. Sometimes there’s just people that are just too set in their ways and then they just don’t want to hear it. You know, they’re 10 years or five years away from their, their 401k or their annuity pension to, to mature and they just want the lowest risk thing and just ride the tide out until, until they go. So, you know, growth isn’t, isn’t an option for a lot of companies. If I see that at the top, I just walk away.

Louis: Which is why most companies fail to innovate and stand out and to differentiate because they can’t take risks. They can’t afford to take risks. To go back to one thing you mentioned briefly, what you mentioned about, it’s actually almost impossible to convince people with belief that are so anchored into their identity otherwise. And so this is also why it’s been argued in marketing that you shouldn’t really waste your money. Richard Choton, one of the behavioral scientists talking about marketing a lot, recently makes this point. You shouldn’t really focus too much on those people who don’t necessarily believe in what you believe in because they’ll be hard bent into their own way. The only way to convince people who are completely against you, he argues, is to use subtle cues so you don’t go head to head. He’s mentioning this airline, I think Southwest Airlines or maybe another one, maybe not Southwest. They were perceived to be very cheap and cheaty and poor service. And instead of going at it heads on saying, hey, we’re better service, we are good. They use in their commercial classical music that are associated with quality and refinement and whatever. And over years of doing that, perception started to change. So it takes years as well. So I’m not surprised that you couldn’t convince them. It’s almost impossible, right?

John James: And look to get a bit geeky on you. Behavioral science again. And this comes into sales and marketing quite a lot and especially affects B2B. I had this conversation just today with someone who wanted me to set up some demand gen, you know, operational system for them. And I was like, okay, well who do you want to target? And he’s like, oh look, you know, we can’t go with the people who have already chosen a competitor because of the sunk cost that’s gone into that and everyone’s bought into it and they’re not going to switch. When it comes to software, he’s like, we find we get the most customers from the people who are switching from like a non cloud system to a cloud system which you know, this product was. And he’s like, we’ll close those like you know, 50% of the time versus the other guys, just maybe 1%. So you know, the whole strategy shifts to those people. And you know, coming back to what you said about the belief systems, it’s because there’s this sunk cost of mental energy, time reinforcement over a long period of time that has reinforced this belief. It’s like, you know, behavioral conditioning and you know, they’re not going to let go because this is such this big cost and we use this actually to our advantage. I can’t name the companies, but there’s a very big CRM or automation company out there that starts with an HR and they use this in the sales process. So they purposely waste the prospect’s time over a long period of, you know, multiple onboarding calls, you know, over a period of weeks. And you know, they can implement this thing within like an hour, but they drag it out as long as they can because they know that if I’ve invested all my time up to that point, I’m not going to like chicken out the last minute. I’m going to go through with the deal no matter how expensive it is. So I think the same thing plays here with, with our belief systems that this, this sunk cost fallacy they call it, and it’s really powerful if you use it in sales, especially in a B2B context. There’s another very big company starts with O that uses this in their enterprise sales as well. So you know, sometimes intentionally causing friction in the sales process actually contributes to more revenue and more sales, which is very contrary. If you, if you’ve ever talked to a product team, they’re always about like getting rid of customer friction, you know. No, no, no. We want to be as painless as possible and that’s just often not the case.

Louis: Yeah, and that’s a fantastic example to prove that adding friction, as you said, can add value very much like having a huge queue in front of a discotheque would make you believe that it’s more valuable inside as well. So there’s social proof, but there’s also the commitment of time which builds value. Right. Which is the more time I’m spending, the more engaged I am, the less likely I am to Leave the queue. Very much like when you’re in a shitty relationship and the last two years have been hell, but you’ve been together for 25 years, very, very way less likely to quit because the sunk cost fallacy is there, but it doesn’t matter actually, that you’ve invested all of this time, this time is gone. So you should think about the time right now, not the time.

John James: Yeah, look, and I learned this actually playing poker and meeting other entrepreneurs. And entrepreneurs are really ruthless when it comes to this sunk cost because they know people use it against them. So they may have dropped 100k, 200k or millions into a company, and they will have that discipline to just drop it and walk away and go, no, this isn’t working. Rather than, okay, let’s think more money into this. What’s the problem here? Let’s get some more marketing dollars. And the same thing happens with poker hands. I play Texas hold’. Em, right? If you start bluffing and you get to that point where you can’t carry on with the bluff, sometimes the best option is just to fold and walk away with your loss. So that’s where I learned that anecdotally, anyway.

Louis: Poker is actually a very good school of life in general. I listened to this webinar recently of. I’m going to not remember the name as always, but she talked, she made a point about poker being a really good school of life. And I’m going to have to pick up the note here. Bear with me one sec, because that was super interesting.

John James: Well, I think poker and just what you’re finding that poker, to me is a game of perception. They always say, don’t play your hand. Play the other person’s hand. And it is true. It’s all about sales and bluffing somebody else and convincing them that you have a better hand, and then they should back away and vice versa. So, you know, that’s where marketing perceptions are so, so valuable.

Louis: So she’s making the point. It’s the book called Is the Biggest Bluff. She’s making the point. It’s not directly corrected, but made me think of it. She says the only person that actually knows the card is you. No one else can see them and they only know what you’re projecting, which is the same in marketing. The only person, the only that knows that has a card is your company. Unless you externalize them, you know they want, people won’t know. And she also made a very interesting point. The only people who don’t lie to themselves and to others are the ones who are clinically depressed and she’s making the point that everyone else makes like lies all the time, little white lies and goes back to your research. Yeah, it’s fantastic allegory altogether. I need to read the book, but I found that interesting anyway.

Ivory Tower Syndrome and Customer Detachment

John James: Yeah, and I think you raise a good point there about. I do a lot of work in ivory tower syndrome. So when you work with a lot of big brands in Ivory tower syndrome is when you’re so in jamboard and in your own institution that you sort of lose perspective about maybe how other people view you in reality. So you know, you’re at the top of your tower and you’re looking down at your little customers down below and you’re working as a senior brand manager. And you know, I find the best companies to prevent this like problem with perception and getting too caught up in your own little bubble is that they force senior executives to work, you know, a week at the, at the bottom floor of the shop. So you know, there’s a supermarket here in Australia that does that. So every single employee from, of CEO, executives, GMs, they have to do a week, you know, beeping people’s shopping through the till and saying hello. So you know, at any one time you could be getting served by like the CEO of, of this, you know, multi billion dollar supermarket chain. I think, you know, other companies do the same kind of thing to prevent this, this ivory tower bias. And this especially affects marketing teams where they, once they, I think the further away they are from the customer, they become detached and they make a really bad decision because they get on their high horse and they’re talking about your brand purpose and all this kind of thing. And that’s where a lot of this marketing BS comes from. It comes from this detachment from the roots, the nitty gritty frontline things that every marketer should be doing. And look, even in tech this happens. You know, you hide behind your digital analytics program and oh, look at my little users tracking between here and here. You’re like, dude, just get the phone and call one of them and go, hey, you know, how was your experience? And do that like every day. And if you do that, you’ll become way better at your job because there’s a lot of stuff that you won’t see without asking the question.

Louis: A good, a very good question, simple question to understand how good a marketer is or how much they are willing to challenge themselves is when was the last time you talked to a customer? And usually that question, I like to ask that in conferences, on events, I don’t go to them anymore, obviously with the situation right now, but even before, because I couldn’t handle it. But it’s very telling. And another part of this is statistical numbing, right? Very much like in a charity setting when you ask for donation, it’s much easier to focus on one person telling their story and their suffering and pain and to make people donate instead of saying 10,000 people died from hunger every day. Because numbers don’t mean shit for people. And so it’s the same for Google Analytics. You know, when people look at numbers all day in Excel and Google Analytics and Adobe analytics and Tableau and whatever, they completely, I would argue they don’t think my users, they completely forget those are real people behind the screen, Right? They do to a point where, you know, they’re gone.

John James: Yeah, I mean, you know, they use the term users. I mean, I’d be, I’d be saying humans, you know, or customers. Customers to the website. I wouldn’t use the word users. And then they start, you know, talking to the customer as a user. I’m like, it’s very, it’s very galling. It’s like, you know, talking to you and me calling you human, for example, you’d be like, that’s, that’s really strange. Yeah, look, I think that comes from maybe people who are a bit afraid of talking to customers. And I think because, you know, I’ve worked in sales and obviously maybe you have as well, and you’ve talked to people and had small talk, maybe you’ve done a retail job or worked at a bar or whatever, you don’t have that problem talking to complete strangers. But I think, you know, if you’re stuck behind a computer screen all day and you’ve never done that before, I think you will immediately have your own bias of like not wanting to cross that threshold because you’re afraid of a customer. And look, I was, I at university, one of my first jobs was I was working for a market research firm, right? And I had to call up at maybe 5 to 7pm so we had this like 2 to 3 hour window where everyone would be home and we’d call their landline phone. And this is back in the day where people actually had landlines and they had already opted into the market research database to be called about studies. Right? But of course half them would forget. So I call them going, look, it’s John here from XYZ Company, we’re calling it because you’re on our database to give questions for market research purposes. And half of them would swear at my face, right? Or hang up straight away. And the first I did, I was like, what the F. These people have opted in, you know, what’s wrong with them? But they just don’t remember. So, you know, I think that really made me a better person. And then doing outbound sales, I think is, is one of the most character building things you’ll ever do as a marketer. And, and you know, I know you might ask me some questions at the end of this, this podcast on that vein. I’m going to answer like, sales is one of the best things any marketer can do. You know, whether it’s a retail assistant clerk or, you know, outbound sales, telesales, whatever, you got to do that. Because I think as marketers we can get detached from the end result, from all our activity, which is fucking a commercial outcome. You need to get someone to buy and there’s no point building a brand if that brand doesn’t lead to a purchase. There’s absolutely zero commercial value. And I think coming back to some of the stigmas that we need to get rid of, I mean, that’s why it’s so important to. Maybe you don’t measure it exactly, but you have a hypothesis and you’ve got some metrics around it and you can take that business case to someone up the chain and go, hey, you know, look, it’s not perfect, but these investments in this podcast, for example, they’ve been mentioned five times by customers when they’ve inquired with us. You know, I think it has, you know, XYZ value. And, and look, you know, a manager is going to go, okay, that’s actually pretty good. You know, we should continue doing that versus the opposite conversation where you come and go, oh, well, it’s the brand, you know, well, of course you should invest in the brand. You know, haven’t you read some advertising book by Olga V. Or, you know, whoever? So that’s a much weaker argument to have. So I suppose a lot of the job that I do is tying this measure back to revenue.

Louis: So to go back to research. And you’re afraid of talking to customers. There’s two things to think about. One is you’re actually helping them out. It’s like a mindset shift. You’re not annoying them if you’re not selling them anything. Actually you’re making their life better because they have someone to talk to for the next 20 minutes. People pay 150 an hour to talk to a psychiatrist or psychologist. Genuinely, if you ask them the right question. That’s how it feels like, you know,

John James: they feel even if they’re angry. I mean, on retention calls, you know, if you call them. And this happened, this GM of this big bank in Australia called unhappy customers. And then all the other GM started doing it as well, like one per day, every day. And they ended up creating advocates out of these people who are really pissed off and like going to sue them. And they turned them all the way around into like an advocate of the bank’s brand. So, like, you can take a shitty situation and make it better really easily as well.

Louis: And the, and I’m going to forget the second, the second recommendation to actually talk to customers, but I think what you said about SET is better. I’m not going to remember it now. I’m sure I remember in the next few minutes. Okay, so you talked about linking, making a business case for the, let’s say a podcast. Okay, we don’t know for sure how many clients it brought, but we know for sure it brought five. For example, making a business case for that. Is that the approach you use to prove or to try to prove hypothesis when you’re doing things that are not directly related to revenue that you can’t directly try track back? Or do you have another method?

John James: Look, I go pretty deep on this. Like I mix sales activation with brand, so the two sort of separate metrics or bags of metrics, and we need to be tracking both and investing in both at all levels. And I think there’s a bit of a fallacy that when you’re a small business, you should invest in brand, but you will vicariously do that because you know you are the brand, you are the reputation of the business early on. So you are already investing in brand. And I think as the company gets bigger, the concept of brand changes. So I don’t buy into Peter Thiel’s don’t invest until you’ve got 50 million recurring revenue a year. Don’t invest in brand at all. I think that’s completely false. So, look, without getting into the nitty gritty, there are very complex mathematical models that are used to do these calculations. Some things are very much easier to prove than others, but I think even accountants at a very high level will understand the value of brand and the need for it. They just don’t know how to measure it properly. So I don’t think you get much pushback on that. But if you’re investing a lot like the bulky money in that and not in other activities which are easy to prove, then you’re going to get in trouble. And I think this comes back to one of the biases that I see a lot as well, which is investing in outcomes investors and other marketing departments getting really tied up with outputs. And I think, you know, I focus on the outcome and I don’t really care how you get there. A lot of other departments are focused on, you know, getting another blog post out, getting another ad made this sort of output churn this, this machine and they don’t really stop to think sometimes like, well, what is it actually doing? Is that affecting the commercial outcomes of the business or not? And that’s why I work more of an outcome approach and work back up the chain to some of the activities that we could be doing.

Louis: I’m a bit annoyed because you mentioned something very interesting and I know that we won’t have time to go into in depth. You talked about complex mathematical models and that makes me interested straight away. You mentioned two things. So the difference between sales activation and brand building, which are the two activities, like sales activation is more short term. You can directly link what you’re doing or quite easily link what you’re doing with revenue. Like typical stuff would be paid advertising, like AdWords, stuff like that, Facebook retargeting, social media ads, stuff like that. Right. Well, brand building would be much more or you know, be on podcasts or CEO being on podcasts or just genuinely thinking of the touch points of your journey, making sure that every single thing contact with your customer is fucking awesome. That is much more difficult to measure. But there are ways to do so without you going too much in depth and talking to me about your secret black box. If you had to simplify that in the next three minutes on roughly I’ve

Measuring Brand Impact with Baseline Testing

John James: got a happened last week we were doing okay, a tech company again. But that’s not all the clients that I have. It’s very service industry focused. We were mostly investing at this stage in this company on, you know, search and social as like lead generation for this SaaS company. Right. And that was going really well, getting lots of demand. So I had my baseline measurements and hadn’t changed things in a month. And then I’m like, look, we really need to probably invest in some brand here. Like so the soft sell approach, we need to support those actions we with other touch points along the journey just to, you know, because the theory is that, you know, a person doesn’t get sold just on one interaction normally. It sort of takes a period of time and multiple interactions with different people, departments, ads, whatever. So we’re like, okay, let’s. Let’s do some YouTube ads on, you know, this sector that they operate in and just see no call to action, no link, nothing. And of course, I’m already tracking all the brand searches to the website, right? So, you know, in this case, the company’s called xyz, let’s just say. And I was already tracking that on a line graph every single day. As soon as we started the YouTube campaign, the metric baseline went up like 20% on all the other channels, like, so that’s a really clear way. And that was that exact date. And then I shut it off and it stopped again and it went back down slowly back down to the level. So, you know, that’s called exclusion testing. And I use that a lot when we’re trying to figure out, okay, is that channel investment actually doing anything or not? So I’ll turn it on and off for, you know, significant amount of time and check how it affects the other things. So if you want to sort of know what that’s about. It’s a branch mathematics, but probably shouldn’t go into that detail right now, but that’s interesting.

Louis: And the keyword here, I believe, is baseline, right? So to measure brand, you need a baseline of how many inquiries you have roughly per week or per month or whatever. A good way to do it as well that’s been mentioned on the podcast before is, for example, if you do TV ads, you do TV ads on specific states in the US and you don’t do any in the other, like roughly same population or whatever. And then you compare brand search, like number of people searching for you in those states and see whether there is a difference. Right. That’s another way to test it. But that’s super interesting because that really starts to give you some. You can actually model out the channel independently of the other and say, well, roughly, TV will bring X number more. Have you done that before as well? Comparing to markets where you don’t expose one to the other to ads, I

John James: mean, that’s just like another form of that sort of testing or a B testing. So, yeah, and that’s coming back to biases, like, you know, like maybe. I think, I know, I come from a TV background and I know that TV is powerful, but I’ve never actually measured it before. And once you start doing that, it really changes the conversation. So, yeah, look, some of the big brands can do this, but I think at a small level, it’s really hard to do some of that because you don’t have the budget, you don’t have the expertise. You can’t turn things on and off. You don’t have that luxury. So I’m not saying that this is an easy thing to do, but you can do small little tests, have a hypothesis, this, prove it, and then go, okay, we should do a bigger test and go from there. I think that’s a really smart way of doing that if you’re having that exact issue at your workplace.

Louis: There are ways like Twitter ads at the minute, just we’re recording this episode in 2020, maybe next year, it’s not going to be whatever. But Twitter ads, for example, are quite cheap at the minute. And there’s ways to test brands this way by exposing your message to so many people and looking just at Google Search Console or the ways to know how many people actually search for your brand name. And so it’s not, you don’t need millions to test it sometimes in $500 and you can actually start seeing a difference.

John James: Yeah, I mean Google Search Console is actually, look, it’s not the most robust form, but if you’ve got a big enough sample, it’s pretty accurate. I know I have a mate in finance who works for a big investment bank and he uses that as a predictor for one of the companies that he covers in terms of their valuation when they go into new markets. So they use that metric and it pretty much exactly correlates with, with their revenue figures in that country. So I’ve talked to him at length about his model there and I talked to other people about these things and yeah, you don’t need an expensive brand listing tool for like thousands of dollars a month. It’s a free tool.

Louis: John, you’ve been a pleasure. Thanks for deconstructing all of those biases. I have a few questions for you before you go, but yeah, it’s been pretty in depth. I didn’t see the hour go, which is a good sign. So what do you think marketers should learn today that will help them in the next five, 10, 20, 50 years? And you already talked about it, but maybe you have a different answer.

John James: Yeah, look, I think, you know, sales and copywriting is a big thing because you know how to articulate yourself and sell something. But let’s just talk, contextualize it around maybe, you know, some technology that’s happening now that will get bigger in the next little while. And I think I’m working with a client that does 3D modeling in the world of AR. And I know Apple’s bringing out augmented reality glasses very soon. It’s probably the Worst kept secret. So that’s going to be the next big device. The world is going AR with a lot of advertising technology and the way we interact with brands and products and to run AR you need to have 3D models of a product. So I think if you get any skills around virtualizing products in high detail, even using gaming engines and things like that, and you can combine that with AR and that will be the new breed of marketing channels that’s going to be out there. So I would definitely get onto to that sort of bandwagon if you can, because we’re really crossing that threshold of hardware and the capabilities of the hardware to do that properly in a valuable way for customers.

Louis: Interesting. Makes me think a lot about what we’re going to do. It’s going to be interesting for years. What are the top three resources you’d recommend listeners today?

John James: Yeah, look, I suppose I got onto Brian Balfour. He really changed my perspective and galvanized some of the things that I thought were true. And he’s got a free blog online, so I think it’s Brian Balfour.com and he runs this education course called Reforge. I’ve never done any of the courses, I’ve never actually met Brian, but I really gel with the way he looks at things. You know, he has some shortcomings as well, which I won’t go into, but really good resource. I didn’t mention Byron Sharp. I think he’s one of the better academics out there. But there’s another one called I’m going to mispronounce his name but Cohen Pools or something. I think he has a website, he just changed the domain so I’ll tell you what it is, but I think it’s like marketingscience.com or something like that. And he is another academic that does some really good stuff that isn’t paid by certain interests in or lobby groups in the industry. So some of his research is really interesting around this exact thing we’re talking about, about exclusion testing and tying it back to revenue. He’s done some really good work there. So that would be my three that maybe other people have mentioned.

Louis: Great. Yeah, I had the pleasure to talk to Brian. He does have shortcomings. He’s a very smart guy. But I think he’s too obsessed with product. Not enough about marketing itself, but that’s another.

John James: And no brand either, so there’s no mention of brand. Which is a bit weird, isn’t it?

Louis: You mentioned it a bit as a growth loop but it’s kind of drowning in all of the other growth groups, which I don’t think they’re all equal. Brand as a growth group is phenomenally. It’s phenomenal against all of the other purely because it resists anything. Like Volkswagen resisted the worst crisis in their fucking history thanks to their brand. Like, it just, it just works. Anyway, John, you’ve been a pleasure. Thank you so much for spending time and talking about all of those stuff that most people don’t.

John James: And, and I’m gonna think about my microphone now. So you’ve convinced me. I’m gonna go on the brand bag wagon again and succumb to my own biases and buy a better microphone because I think you’ve outdone me.

Louis: Awesome. All right, John, talk to you soon.

John James: Cheers. Thanks very much.

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