In the 1950s, the Betty Crocker brand (General Mills) launched a line of cake mixes. They believed it was revolutionary because they converted all of the ingredients to dry, powdered form which when added with water resulted in perfect cake/brownies.
However, when they launched the product was a complete failure. The company could not understand it. Then, General Mills brought in a bunch of behavioral psychologists to understand why this was happening. They learned that Customers believed they didn’t do enough to earn the perfect cake/brownie.
General Mills did the unthinkable then – they pulled out the milk and eggs out of the powder, so that customers had to physically mix those items in. The product became a raging success.
Sometimes you just need to give the customer a little to do so that they feel fulfilled and involved in the process.
I remember reading or hearing something Warren Buffet did in a negotiation where he wrote to the company that he was buying, and asked ‘is this your best offer?’. This was a large equity transaction and his objective was to shave cents off of the share price. With that very simple statement, the company ended up reducing the share price by a few cents as Buffet predicted. They were scared that he is going to take his money elsewhere. His tactic worked.
I applied the same tactic to a negotiation I was conducting in China last year when I was a buyer for marketing agency services. After I spent time negotiating with three different agencies on fees/retainer, I wrote to each CEO and said that I was going to make a decision on Friday and if what they proposed was their best offer. I literally had multiple new proposals over the week, with one agency lowering their costs by almost 50%.
Remember, when you read these lessons from these great business and life figures, think about how to apply them in your life based on your own style of doing things. I like to jot down tactics that I read and then write down where in my life I can apply them. Once you apply the tactic 2 or 3 times, it becomes part of the way you do business.
I am a huge fan of Alyssa Milano and Funny or Die…and appreciate the creativity they used to discuss something a lot of people don’t know anything about.
This was probably not the right forum for Ashton to give this kind of advice (Teen Choice Awards), although this was the audience he needed to give it to. I am a fan of Ashton, he doesn’t care what people think, and constantly is re-inventing himself and ahead of the wheel (atleast from a business perspective). Anyways, I think this was really good advice that I hope the kids listening although it probably went in one ear and out of the other.
My wife sent me this article this afternoon from the manufacturing wreckage that has been happening in Bangladesh this past week. It is a horrific reminder that ‘cheap labor’ in developing countries are also people who have lives, who have love, who have dreams. I hope we can think about that the next time we wear our Nikes, A&F, and other brands that are really commodities that support indentured service. Ignorance is bliss. Life is not cheap.