Last Autumn I taught a course on Online Marketing & Analytics at the University of Washington MBA program. As part of the class I assigned three books. While there was some complaining about the amount of reading (“Do we have to read the ENTIRE BOOK?” I was asked more than once), overall the books were very well received. At the end of class a few students asked if I had other book recommendations.
This post will be the first in a series on some of my favorite data-driven books. Most are not specifically marketing books, but I learned a lot from all of them.
To start with the three books I required for the course:
How Brand Grow, Byron Sharp
I reviewed this book last year and I recommend reading that earlier (more thorough) summary. The basic point of the book is that most of marketing ‘best practice’ is wrong, but by looking at the data you can find some things that actually work. It is a summary of what we actually KNOW with respect to marketing vs opinions.
Some of the things we KNOW:
- Brands get big by growing penetration, but by increasing share of wallet
- Niche brands exist, but brands you consider niche, aren’t
- Within a category every brad shares the same customers (Mountain Dew and Diet Coke are drunk by the same type of people)
- Differentiation of product is generally not a good idea. But you need to differentiate your brand (i.e., unique name, color, tag line, jingle, etc.) so that you are memorable and recallable
- Loyalty programs are generally a bad idea
- Customer acquisition is far more important than customer retention
That’s just the start. As I told my class: Read the entire book.
Everything is Obvious (Once you know the Answer), Duncan Watts
By now, if you read non-fiction at all you will have read the Tipping Point. Now you need to read Duncan Watts. Duncan Watts is the science side of the Tipping Point (vs. Malcolm the storyteller). The difference is that Malcolm tells a great story (the best) and Duncan tells you the truth. Watt’s earlier books were interesting, but nowhere near as entertaining at Gladwell’s. This book though is fantastic. It’s a fast, entertaining read and it will put the record straight on the whole idea of mavens and connectors.
Watts is both an academic expert on network theory, and an actual practitioner (he worked for both Yahoo and Google). The title of the book refers to the fact that when we look back at the past we are very good at explaining everything that happened as stories. That causes two problems:
- It gives us confidence that we can do the same into the future. And evidence suggests we can’t
- It makes us think that when we see two things one after the other we can assume that A causes B. It often doesn’t
In the world of experiments you can prove this (I’ve long lost count of the number of times I’ve been surprised by the result of an A/B test). In the real world you can’t. So instead we use the characteristics of successful things and use those characteristics as explanations for why that thing was successful.
- Harry Potter was successful because it had a young protagonist who lived in a world that was similar to our own, but more exiting. He was an outsider with a destiny. He was up against impossible odds. But he had a core group of friends that any kid could relate to. It mixed high adventure with the challenges of coming of age. In other words: Harry Potter was successful because it was like Harry Potter
- Michael Jackson was successful because he started young with a lot of support. He understood the music business from the inside with his entire family. But he was an outsider who needed to breakout on his own. He came along at a time when we were ready for a King of Pop. In other words, Michael Jackson was successful because he shared the characteristics of Michael Jackson
Watts drives home this point with two very compelling stories. The first is about the Mona Lisa which is we are told is the most famous painting because it has the characteristics of Mona Lisa – but there is a twist. It turns out the Mona Lisa was not famous for a long long time. It wasn’t until about 100 years ago that the Mona Lisa was stolen and its fame blew up. It was the theft that made it famous. Now that we have forgotten the origin of its fame, we attribute its prestige the same way we do everything else: by describing it and defining success as that description.
The second story is a music experiment.
Watts used an early-days social network and divided into separate test groups. Each group was given access to the same alternative music. In every group except one there was a real top-10 list of the music that was listened to the most. If you believe that the music at the top of the charts is there because of intrinsic characteristics, then each Top-10 list should be pretty similar.
Every list had a different #1 hit. If a song was a #1 hit in one world, it tended not to be at the bottom of the chart in the other worlds, so there was some correlation, but that correlation was very small. Basically if we were to rewind the world to 1975 and run it forward again it is unlikely Michael Jackson and Madonna would be superstars a second time.
(Which is a very hard thing to get your head around).
Read the entire book.
Zero to One, Peter Thiel
This is the most recent and most popular book on the list. A lot has been written about Zero to One in the past six months. I don’t think it is a valuable use of my time to re-tread over this ground. But I will share a one of my take-aways that I haven’t seen mentioned very often.
Thiel talks about ideal price points for new products. He says there are four:
$1 products can spread virally. Your marketing plan is PR, SEO and social
$100 products can be marketed with paid online marketing. They work too.
$10,000 products are sold by professional sales people. You need to actually talk to someone at this price, and at $10,000 you can afford the commission of a good sales person.
$1M products are sold by the founder and CEO.
There are two big gaps:
$10 products will not spread virally, and you don’t have enough margin to do paid marketing. They tend to fail.
$1000 products don’t sell without a salesperson (like $10,000 products), but they don’t have enough margin to afford a good salesperson, so they tend to fail.
He talks a fair amount in the book about $1000 products and how they often involve selling to small businesses (and failing). He spends less time on the $10 product, but it is an equally awkward price point.
I wish I had read his book before starting my start-up.
We created a product that connected consumers to restaurants. We filled restaurant seats when they would otherwise be empty at a deep discount for the customers. It was a great product with better benefits for both sides of the arrangement than any other product on the market (much better than Groupon, Restautant.com, Coupon Books, Yelp ads, etc).
We charged the consumer $10 to get 30-50% off their meal.
We had to hire salespeople to signed up single-location restaurants.
Effectively we went after the $10 and the $1000 price point at the same time…
More book recommendations next week (or when I’m next inspired…). If you have favorite books you can recommend please list them in the comments.