From The Urbach Letter –
Secret of the Monkey's Paw
Have you ever seen a huge cruise ship or tanker tied up at the dock? They secure it to a massive pier with an enormous chain (weighing several hundred pounds per foot of length). Did you ever wonder how they got the chain over from the ship to the dock cleat? Monkey paw. A monkey paw is a tightly knotted rope ball that's attached to a long, thin line. As the ship approaches port, a deckhand will throw the monkey paw down to a dockworker. The thin line is attached to a heavier rope, which in turn is attached to a light chain. The chain is connected to a powerful winch. Finally, the winch can pull in the light chain and then the heavy dock chain.
Here's the business analogy: many companies sell a very high value product or service. It's a huge leap of faith for a new customer to part with big dollars for their initial purchase. For example, a new computer-controlled machine tool can cost $100,000 or more. This is not an impulse sale. Or, take my business as another example. I command a rather high consulting rate these days ($2,000 per day minimum). It's rare for somebody to hire me out of the blue. The relationship has to start at a different level first – hearing me speak at a seminar, through this letter, etc. I therefore highly recommend developing low-cost (or even free) things you can provide as an entry point to your sales cycle. We all want "heavy chains" (big sales) but the more monkey paws you toss out, the better your odds of that happening.
The goal is to keep the sales pipeline full. After you've been in business a while, you should have a pretty good idea of your closing ratio ("lookers to bookers"). For X number of presentations (or site visitors, or walk-ins), you can expect Y actual sales. For Y sales of entry-level products, you can expect Z step-up sales.
Closely related to this monkey paw discussion is the concept of "Good Better Best." This is a hugely powerful marketing strategy, first popularized by the original Sears catalog. They'd show the Good washing machine, which would do a basic job of getting your clothes clean, the Better machine with some desirable added features, and the Best machine with all the bells and whistles. The features and benefits were clearly presented, and the customer could decide for him or herself which washer fit their budget and needs.
There are other ways to present Good Better Best. For memberships, I like "Bronze Silver Gold." The alternate is "Silver Gold Platinum." You should know that the majority of customers/members will chose the middle option. Based on extensive marketing tests, I found more people choose the Silver in Silver-Gold-Platinum than the Bronze in Bronze-Silver-Gold. All other things being equal, silver is more desirable than bronze. However, I also found that more people choose the Gold in Bronze-Silver-Gold than the Platinum on Silver-Gold-Platinum. I don't have scientific proof of this, but I believe it's because there isn't universal recognition that platinum is more valuable than gold. I'm digressing a bit… but… this is one of those things about marketing I find so fascinating. Done right, marketing allows tremendous insight into the ways humans think and act. One thing you discover in your first year as a scientific marketer is that what people *say* they'll do, and what they *actually* do are two very different things. People in focus groups or surveys will say they'll buy a certain item at a certain price point, or that they prefer one product name over another, but reality of their purchasing behavior is quite the opposite.
If you decide to offer a "Good" version of your product or service at a relatively low price point, you have to look at the overall economics of your business. There is a danger of cannibalizing your bread and butter sales. You must monitor these things regardless. Amazingly, most small business owners don't pay close attention to the profitability of their operation, and that's a horrible mistake. Continuous monitoring (daily, weekly, or monthly – depending on the type of business) is much smarter, but an awful lot of small biz owners still fly by the seat of their pants.
Back to monkey paw. Rather than offering a low-price version of whatever it is you sell, you might consider a different kind of "entry point" for your customers. It does not even have to be a transaction – although if you don't collect money or obtain commitment, it's questionable whether you've really moved a prospect through the sales cycle. If you're giving something away, with a completely open hand, you're a nice person, but maybe not the world's greatest salesman…
Quantity Versus Quality
A pro marketer will put considerable effort into crafting an offer that'll achieve the proper balance between quality and quantity. For example, years ago, when I sold engineering software, I started with a trade magazine advertisement offering a free calculator along with a package of product information. The response was overwhelming and I generated thousands of leads. However, very few respondents took the next step (scheduled an onsite demonstration) and the campaign was an expensive flop. So I tightened the offer. No 800 number to call, and lots of presales questions to answer (current software used, timeframe to replace, purchasing authority, etc.). I could have tightened it even further by including a nominal "shipping and handling" charge but that would have introduced fulfillment and credit card merchant account hassles I didn't want. By the way, don't rely too much on the "demographic" information gathered this way. People lie. Especially about their purchasing authority. However, the tightened calculator promo offer was a success and I made a lot of money with it. (Even a decade later, to a non-technical audience, calculator promotions continue to do well.)
One of my current favorite monkey paw strategies is to use "information products" (white papers, industry surveys, buyer's guides, etc.) that relate directly to the product or service I'm promoting. These info products have a number of outstanding characteristics: they are relatively inexpensive to create, manufacture, and ship – yet can have extremely high perceived value… to the right audience. That last point is very important, so I'll elaborate on it a bit. If, for example, you're a facilities manager, you'll probably be very interested in receiving a report titled: "Twelve Proven Ways to Reduce Heating, Ventilating, and Air Conditioning Costs in Your Office Building or Factory," particularly if that report is "packaged" and "sold" the right way. However, if you're not a facilities manager, it's unlikely you're going to pick up the phone and request that report, no matter how attractively it's presented. Fine with me, especially if I'm selling expensive energy-saving capital equipment. I only want to talk to people with the need and authority to buy what I'm selling.
This is a strategy almost any businessperson or professional can profitably employ. My advice: think about creating your own monkey paw… and get ready for your ship to come in!