410.235.7070 Join Our E-Letter
businessGPS Taking You From Where You Are to Where You Want to Go.

$6 Million Mistake and 3 Takeaways

$6 Million Mistake and 3 Takeaways

July 15, 2012

Every now and then my friends have a windfall. Usually, we can't learn much from them. But this time there are real takeaways for you and me.

A client of Dial 800 made $6 million from one mistake because of 3 things:
1. Arrogance
2. Chunking
3. Learning curve

It's an incredible cautionary tale for anyone in business and I can't wait to share it with you'

The $6 million mistake you should never forget ' ever!

The 800 number on the right increased response 25% for a popular acne product. Can you guess why it did so well? Read on for the answer...

Scott is CEO of Dial 800 ' a company that specializes in creating RapidRecall or 'vanity numbers' that can dramatically improve response rates (up to 67%!) simply because people remember the numbers quickly. In fact, his company has a bank of memorable 800-prefix toll-free numbers. But what if you use an 877 number or 866 number? Are they just as effective? Will people remember them? The answer may surprise you'

One company (that we'll just call Acme Corporation) heavily advertised its new business using an 8-7-7 version of a vanity number that mirrored RapidRecall's 800 version resulting in about 50,000 misdials per month. Many people are accustomed to dialing 800 for a toll-free number, not 877. Dial's client offered to route the calls to Acme so they could take advantage of the leads.

The overture was summarily rebuffed. The company was convinced that consumers would simply redial the correct number to the extent that their management deemed the 800 number was worthless. In fact, they declared that they didn't care if Dial's client competed with them.

Given the expense in carrying the misdialing phone traffic, Dial had no choice but to divert the calls to a competitor. When consumers called, they were told they had not reached Acme, but if they were interested they could learn about a competitive offer. Fifteen months later, more than 80,000 new accounts had been opened. The power of an 800-prefix number finally resonated with Acme when it agreed to write a check for $6 million to buy the business!

Remember I said there were 3 takeaways for us?

First, how arrogant were the executives at the company with the 877 number? Because they were so much bigger, they didn't recognize the fact that a much smaller company could compete with them! Never underestimate your competition. There is always somebody ready to take your clients.

Second, the secret to get your prospects to remember your phone number, your marketing or even what you stand for is to present it in 'chunks.' Let me explain'

The 'Magical Number 7'

Can't remember what you need from your grocery list? Don't worry. "Chunk" your list into 3 categories and you're more likely to remember. Your prospects have the same problems remembering things too so use the Power of Three to help them recall your message.

In one of the most famous studies of its kind, cognitive psychologist Dr. George A. Miller of Princeton University found that most people can remember up to 7 objects, plus or minus 2. It became known as Miller's Law and many people refer to it today as the 'magical number 7.'

Whether we can remember 4, 5 or 9 things depends on whether we 'chunk' the information into categories. For example, if I gave you the following list of items to pick up at the grocery store you may have a tough time remembering them:

  • Orange juice
  • Lettuce
  • Pasta noodles
  • Eggs
  • Rolls
  • Carrots
  • Butter
  • Cereal
  • Tomato sauce
  • Onions

The secret to rapid recall: 'The Power of Threes'

Studies show we're more likely to remember things in threes -- just like our ABCs, 123s, Dewey, Cheatum and Howe and of course ... Larry, Moe and Curly.

But if you chunked them into categories that you can easily recognize you're much more likely to remember it. In a follow-up to Miller's study, Dr. Nelson Cowan on the University of Missouri found that adults are able to recall 3-4 items and kids are able to remember 2-3.

So that same grocery list may look like:

  • Breakfast: Orange juice, eggs, cereal
  • Dinner: pasta noodles, tomato sauce, rolls and butter
  • Salad: lettuce, carrots and onions

The more easily we can “chunk” information the more likely we’ll remember it! As my friend Scott explained it to me, everyone can remember 800 because we associate that with a toll-free number. That’s one chunk. But if we’re asked to remember 8-7-7, that’s three chunks.

It’s the “Power of Threes.” We recall information better in groups of threes such as our ABC’s … 123’s … Dewy, Cheatum & Howe … Larry, Curly and Moe and so on. If we’re asked to remember 7 more digits we’re far more likely to forget.

 

We can’t forget the story of Clay Aiken

American Idol star Clay Aiken could have won the popular TV contest if more people dialed the correct phone number making it the most controversial loss in the show's history. Voters incorrectly dialed an 800 prefix instead of 8-6-6 despite Ryan Seacrest's repeated attempts to make sure people didn't misdial.

Remember the story of Clay Aiken who came in second onAmerican Idol? Ryan Seacrest carefully told a national TV audience when phoning in their votes to call 8-6-6 … But more than 250,000 people misdialed calling an 800 number instead! Aiken lost by just 134,000 votes making it the most controversial loss in the show’s history.

But this isn’t an article about why you should use an 800 number instead of 866 or 877. Nor is it about how to create the best vanity number for your business. It’s about appealing to your prospect’s short term memory so they can remember your offer or your business.

 

The secret to "chunking:" Try my 3 E's

To help you, follow what I call my 3-E’s. To appeal to your prospect’s rapid recall make it: 
1. Easy. 
2. Entertaining. 
3. Educational.

Most businesses are very good at educating their prospects. I was talking to a landscaper just the other day who is an expert in caring for plants and soil. But it’s B-O-R-I-N-G. No one will remember it. So we’re working with him to make it Entertaining and Easy for prospects to remember.

 

The insurance company, Geico, does a masterful job at this. They leave the educating up to their agents and focus on entertaining ads with the Gecio Gecko or Geico Cavemen, which are now considered among America’s favorite icons. And their message is Easy – 15 minutes can save you 15% or more. Notice the chunking in the message: 15 minutes … save … 15%. It’s brilliant!

In fact, all of the principles at Brand Launcher are presented using the Power of Threes...

  • Our business with clients focuses on 3 primary areas: sales and marketing; freedom teams and systems; personal development. 
  • Our marketing strategy is expressed in our 3 M’s: Market, Medium, Message. 
  • Our sales strategy: Lead generation; Lead Development; Lead Conversion. 
  • Our business systems strategy: Simplify; codify; Multiply. 
  • Our action planning system with clients: Green Light (what should you start doing?); Yellow Light (what should you continue doing?); Red Light (what should you stop doing?)

See how easy it is? Try chunking your messaging using the Power of Threes and your prospects are more likely to remember it.
 

Pick your battles

Remember Clear Cola Crystal Pepsi? It didn't last long. Why? Because people are used to seeing their Pepsi and Cola drinks in a dark brown color -- not clear! It's tough to change perceptions even if you have millions to spend on advertising.

But don’t fight it! That’s the third takeaway from the $6 million mistake I want to leave you with today. In other words, if there’s a learning curve that your prospects have to overcome, don’t try to change their behavior. It’s expensive to try to get people to change and unless you have deep pockets, it’s not worth fighting it. We already saw how one company spent tens of millions of dollars trying to get people to use a toll-free number other than an 800 number and it cost them another $6 million.

Remember Clear Cola Crystal Pepsi? People didn’t buy it because they’re used to Pepsi as a brown drink – not clear! How many times have you typed .com when it should have been .net or .biz or .us? Getting people to change behavior is tough!

 

One of our clients is a premium cigar seller. There are some studies that suggest that smoking premium cigars may actually be beneficial to your health. I’m not advocating smoking cigars and most people wouldn’t believe us if we talked about the “health benefits” of smoking cigars. The world isn’t ready to accept it. So we didn’t even bother trying to spend a lot of time and money fighting that battle in a new marketing campaign. Instead, the marketing will talk about relaxing with a premium cigar.

If people are accustomed to doing something a certain use that momentum like you would in Judo. Redirect the energy to create a counter-move.

For instance, people get accustomed to taking their clothes to the same dry cleaner. To get a prospect to change their habit, a competing dry cleaner must create irresistible bait such as a 2-for-1 deal or $1 shirt offer to get them to change. Once they do, the dry cleaner must work hard to get them to come back a second time with another discount offer and great customer service. They redirect the energy to create a new momentum.

Let’s review. If you want someone to remember your message, don’t try to fight the learning curve. Chunk your message using the “Power of Threes.” And try my 3 E’s to make your message more memorable for your prospects.

Always taking you from where you are to where you want to go,

Jon

Jon Goldman 
Brand Launcher 
Lumpy Mail