Thursday, May 27, 2010

The Role of Drawbacks in Sales

Selling is not hitting someone over the head with a hammer. Rather it is communicating a story, in the self-interest of the buyer that is credible, beneficial and reflects the seller as a trustworthy source of the expertise needed.

But according to Dr. Bob Cialdini, psychologist, W.P. Carey Distinguished Professor of Marketing and Regents’ Professor of Psychology at Arizona State, the seller is more persuasive and credible if, along with the positives presented, he or she also shows some drawbacks to the case being made. I share his point of view and find that a drawback or two humanizes the seller and the case.

For example, in public relations, in the media relations side of the service, we always point out to prospects that we cannot possibly be successful in accomplishing coverage with every editor to whom we present the story.

Dr. Cialdini also cites one of my favorite ad campaigns, and one of history’s most successful, whose theme was based on a drawback: the Avis Car Rental campaign, which stressed that “we are only #2, but we try harder.”

He also notes that Warren Buffett, the famous business leader, always cites in his annual report what didn’t go well before what did go well. And his stock is usually over $100,000.

Conclusion: Being believable to your prospect is being a little imperfect in a near-perfect scenario.

Technorati Tags: Bob Cialdini, Arizona State, Avis Car Rental, Warren Buffett, media relations, sales,communications, public relations, Makovsky

Monday, May 24, 2010

The Blumenthal Image Issue

On May 17, The New York Times revealed that Richard Blumenthal — the Connecticut Attorney General running as the Democratic candidate for the Senate — exaggerated his military service record, implying that he served in Vietnam when he did not. He unleashed a tempest when his statements raised the issue of trust. Will he be able to weather the storm?

What did he say? “In Vietnam, we had to endure taunts and insults, and no one said, ‘Welcome home’ [when we returned].”

A fierce advocate for veterans’ rights and a member of the Marine Reserves, Blumenthal has devoted his life to helping Vietnam vets, but he clearly carried his identification with his immediate audience a little too far, thereby confusing other listeners and leading them to believe that he was speaking about himself personally.

After Blumenthal’s remarks, he met with a group of veterans and admitted he “misspoke.” Yet the trust factor looms large. According to a recent Rasmussen poll, more than half (53%) of voters say “the issue of Blumenthal and his military service” will be at least somewhat important in terms of how they vote.

While human beings make mistakes, this survey represents a substantial number of Connecticut voters concerned about a “misstatement” that Blumenthal has ostensibly made on more than one occasion. In this era of transparency, should we be more tolerant or more scrupulous when it comes to the mistakes made by our leaders? Would you be more or less trusting of a leader who equivocates — or tells an outright lie — and then apologizes?

From a public relations perspective, it all boils down to issues of clarity and awareness of the audience categories one is addressing. Was Blumenthal speaking for himself or were his remarks behalf of the veterans he was addressing? These days, as a result of the internet, that speech you deliver to a handful of veterans in West Hartford will be heard around the world by many constituencies that may not the interests of the people in the room. Today, words for one, so to speak, are words for all. Blumenthal – and many others – need to be sensitive to that and keep it always top of mind.

Technorati Tags: Richard Blumenthal, Connecticut Attorney General, Vietnam, Return on Values, veteran, West Hartford

Thursday, May 20, 2010

FORMER MERRILL CHAIRMAN SPEAKS OUT: A Conversation with David H. Komansky

Dave Komansky’s 35-year career at Merrill Lynch included a stint as president and chief operating officer from 1995 to 1996, when he was named CEO. A year later, he became of chairman of the board, a position which he held through 2003. He has a unique insider’s perspective on the financial services industry during one of the most tumultuous periods in its history. At a Makovsky-sponsored breakfast on May 12 at the University Club in New York, Komansky fielded some tough questions about the current financial crisis from a small group of communications leaders from several of the top investment firms in the U.S.

Here are some highlights:

Self Regulation and Enforcement — “The industry is incapable of self-regulation, and therefore government regulation is inevitable. The question is: Do we need more regulation or do we need better enforcement of the regulations we already have? The government’s lax enforcement of what’s already in place is a driver of the problems we have now.”

Global Approach — “All regulations must be global; otherwise, the capital leakage will be instantaneous. Nevertheless, it will be extremely difficult to accomplish. It took near bankruptcy for Greece to be forced into reforms. The best hope is for a high-powered advisory structure that has the ability to guide but not enforce regulations. In the past, there has been talk about this but no action. We are at the edge of a precipice, so this time it may be different.”

Rebuilding the Industry’s Reputation —“In the past, no matter how much we killed each other for business, we would always unite in the face of a crisis. The problem now is that the industry’s leadership is going through a generational change and the great leaders have either retired or been disgraced. Right now there is no leadership within the industry, short of Jamie Dimon. Previously, the chairman of the NYSE used to be the spokesman for the industry, but its importance has waned and few can tell you who the current chairman is.”

On What Motivates Goldman— “What Goldman did was probably not illegal, but it might have been immoral. Goldman has always been known as a firm on both sides of a trade. The easiest way to address a public crisis is the hardest and most painful: deal with it up front and be open. In this respect, Goldman failed. But it is a closely held firm which maintains a partnership mentality, and its strategy reflected that.”

Glass-Steagall Observations — “Today I regret the repeal of the GSA, but it was understandable. Under the Act, foreign banks were able to operate as both securities firms and banks, but U.S.-based firms could not. And they lost business because of it. We wanted a level playing field, but did not anticipate the conflicts that arose once the fetters were removed (e.g., conflicts in proprietary trading, entry of players not prepared to handle it). What’s done is done. Once it’s out, you can’t put the genie back in the bottle. Perhaps some possible ways of accomplishing the same thing is by controlling leverage ratios and capital requirements, as well as setting up firewalls.”

Is Big Necessarily Bad?” — “I’d advise not to do stupid things, like limit growth under the principle that ‘bigness is badness.’ That’s ridiculous. Big banks do big things. But the government has to be the court of last resort with respect to the industry’s goliaths. The government must look at the different lines of business of these huge organizations and make sure they are properly managed and funded — and that they fully understand the products they are selling.”

Outlawing Derivatives — “Putting derivatives on exchanges is a ridiculous idea. Derivatives’ real value is that they solve specific problems for clients with complex needs. This requires a complex solution. Exotic derivatives can’t be traded, but if they were outlawed, London would be dancing in the street, because all the deals would go to the U.K.”

Technorati Tags: financial crisis, Dave Komansky, Merrill Lynch, regulations, The Glass-Steagall Act, Wall Street, public relations, business, Makovsky

Monday, May 17, 2010


While watching “Meet the Press” on NBC this Sunday, I caught Toyota’s latest TV ad. For all the company has been through, it’s still is not properly communicating.

Rightly, the ad’s focus is on safety. Toyota claims it is putting “a million dollars an hour” into improving the safety features on its new cars and other vehicles. Shortly thereafter it says that its new Star Safety System is now standard on every vehicle manufactured by Toyota. But it never defines what the features on the Star System are.

Even in a brief ad, this is the time to substitute facts for some of the unnecessary glossy film and smiling faces, particularly if the company is interested in rebuilding trust.

Technorati Tags: NBC, Toyota, Star Safety System, communications, public relations, Makovsky

Thursday, May 13, 2010

The Corporate Values Questions

In the wake of the financial crisis, I have given much thought to the value that is realized when corporate values are widely embraced by a firm’s employees. Do values change or influence behavior? Do they impact growth?

An interesting and relevant study on the topic was published in 2005 by the Aspen Institute and Booz Allen Hamilton. A global survey of 365 top executives — almost a third of whom were CEOs or board members — “Deriving Value from Corporate Values,” is definitely worth a closer look … despite the fact that it’s five years old. Among the top-line findings:

• Areas Affected — Most companies believe values influence two important strategic areas – relationships and reputations – but do not see the direct link to growth. A majority of respondents categorize employee recruitment and retention, in addition to corporate reputation, as important to business strategies and believe they are strongly affected by values.
• Most Common Values — Of the 89% of companies that have a written corporate values statement, 90% specify ethical conduct as a principle. Other values commonly set forth in value statements include commitment to customers (88%) and employees (78%).
• CEO Factor — Tone at the top really does matter. Eight-five percent of respondents state that their companies rely on explicit CEO support to reinforce values, and 77% say it is one of the most effective practices for reinforcing the company’s ability to act on its values.
• Ethics and Candor — Curiously, among corporate leaders — those public companies that outperform their industry averages by at least 10% — 98% include ethical/behavior issues in their values statements, compared to 88% of other public companies. Differences between companies defined as “leaders” and “others” are even more pronounced on other issues. More leading companies profess a commitment to employees (88% to 68%) and honesty and openness (85% to 47%) than other public companies. (It would be interesting to know the extent to which the recent financial crisis would alter those findings, if at all.)
• Return on Values — Most companies are not measuring their “ROV.”

We must come up with a way to measure ROV. For example, as values are more deeply inculcated, does employee effort, productivity, longevity and morale also change? Is there greater growth? Are there fewer crises?

Definitely food for thought.

Technorati Tags: financial crisis, Aspen Institute, Booz Allen Hamilton, Return on Values, Deriving Value from Corporate Values, communications, public relations, Makovsky

Monday, May 10, 2010

The Surprising Facts about Illiteracy

Have you ever met and spent time with people who are illiterate? Truthfully, I had not, until my recent trip to Morocco, where I learned that 45 percent of the population cannot read or write. So it was inevitable, I believed, that my wife and I would have some exchange with someone in this predicament, and, indeed, we did – a wonderful 23-year old guy who has spent his life in the Sahara Desert, and had never been to the nearby big cities of Fez or Marrakesh. Until I met Karin, I had never heard anyone say, “I have never gone to school.”

When I got home, I did a little research on illiteracy and was astonished by what I found. Nearly one out of two Moroccans may be illiterate — but so is nearly one out of every four Americans!

In fact, the U.S. ranks 19th worldwide in terms of its literacy rate — that’s behind countries like Georgia, Cuba, Estonia and Latvia, according to the United Nations Development Program. And research has found that about half of U.S. adults read so poorly that they’re stuck in subsistence jobs that keep them trapped in poverty.

Education is a cost-efficient strategy with a big payoff for everyone involved … whether they live in great global capitals or tiny villages in developing countries. Literate people can be trained less expensively than illiterate people. They generally earn more and enjoy better health and employment prospects.

It’s a powerful reason to fight illiteracy wherever in the world it occurs.

Technorati Tags: illiteracy, Education, public relations, Makovsky

Thursday, May 06, 2010

Makovsky Survey: Corporate America Favors Financial Reforms

Main Street and Corporate America concur when it comes to financial reform. A Makovsky survey of 300 Fortune 1000 senior executives has revealed that only 28%, on average, believe the proposed finance reform legislation will have a negative impact on the U.S. economy. This very closely tracks the results of a recent Washington Post-ABC News poll, which found that only 31% of a random sample of U.S. adults oppose stricter federal regulations on the ways banks and other financial institutions conduct their business.

The Makovsky survey, conducted online by Harris Interactive in April 2010, found that senior executives generally support 6 of the 8 core proposals for regulatory reform. More specifically:

• 72% support regulating credit rating agencies
• 69% agree with proposals to close regulatory loopholes for derivatives and other complex investment packages
• 68% support the creation of a consumer protection agency
• 66% back the formation of a new regulatory agency to assess risk at financial institutions
• 66% agree with strengthening bank supervision
• 56% support the Volcker Rule

The reform that registered the greatest opposition, with 43% of executives opposing, was the right of the government and shareholders to influence senior executive compensation. The reform that had the least support, at 50%, was the Resolution Fund, a government process for shutting down large troubled firms viewed as “too big to fail.”

The latter two reforms, executives said, would also have the greatest negative impact on the U.S. economy. With the exception of these two reforms and the Volcker Rule, slightly less than half believe the proposed reforms will have a positive effect on the economy and almost an average of 20% believe it will have no effect at all. The “executive pay” reform, corporate leaders felt also would have the greatest negative impact on their particular corporation (40%) as well as them personally (34%).
Although banks have largely been resistant to the reforms, the tide may be turning. According to the Chicago Tribune, after President Barack Obama called on leading bankers to get behind a Democratic-led financial regulatory overhaul, the chief executive of JPMorgan Chase & Co. said he's 80 percent on board. … It's obvious we need to reform our financial system.
Asked if the reforms would make executives vote differently in the upcoming elections if they were passed, the data reflected overall uncertainty. An average of 30% felt it would make a difference, an average of 43% said it would not, and nearly one-quarter were unsure.

Monday, May 03, 2010

The Cost of a Cart

luggage cartsIt’s a small thing. But it might make a big impression.

I am referring to arriving in airports around the world, going to the baggage area to get your suitcase and getting a luggage cart or wagon to conveniently wheel your suitcases out. In every country I have arrived in except the United States, particularly New York City, these carts are free; in NYC they are $5.

Darn, I think to myself! What kind of welcome is this? What kind of impression is this making on our foreign guests? It’s not even the amount of money — it’s charging when most others don’t. It is petty and greedy, and I can’t believe the money collected has greater benefit than the cost of our damaged image.

Technorati Tags: luggage cart, New York City