Only If I Knew These 5 Factors In My 20s
A very wise person once told me there’s no such thing as competition. Every business person knows your competition is the future. And if you cannot foresee the future you’re toast.
To find the right customers, you need to match the product and the price to fit the customer’s needs, wants, and ego. In many cases, the customer’s ego is far more important than wants and needs. So the saying I’ve had for years is “demography is destiny.” What is going on in the demographics of a country or a city depends on the future. That’s why I positioned my best-selling book, Rich Dad Poor Dad, with the positioning statement, “What the rich teach our kids about money that the poor and middle class do not.” This was the perfect demographic to go after because nobody else was talking about it.
20-Year Lesson for Today
When Kim and I were first developing the CASHFLOW Board Game, it was obvious that our game was not meant for the public market. We knew the game was not for everyone. We knew the game was intended for anyone who thought his or her financial education was important.
The problem was to find that customer in the sea of people.
The game was also hard to categorize by demographics. For example, if we had written a book for children, placing the book would be easy. We could place it anywhere parents shopped for kids. But this game could be played by anyone, from kids to adults, male or female. It was also for people whether they were rich or poor, just as long as they valued their financial education.
And we knew our customers would want to be financially proactive. After teaching entrepreneurship and investing for years, I knew that most people wanted more money, but very few people would actually take the time to learn about how to make more money. The challenge was to find the customer who would want the educational game and the information locked within it.
At a marketing seminar, I learned a guideline known as the five “Ps.” These are the five things a marketer must know when selling a product. I believe they were identified by E. Jerome McCarthy. They are:
A marketer must know what the product is, the person who wants the product, what price they are willing to pay, where the product will be placed so the customer can find it, and how to position it in the marketplace—that is, the biggest, the smallest, the first, the last, and so on.
Entrepreneurs should enjoy solving business problems and normally I do, but this problem had me stumped.
All I had were the first two P’s.
One day a friend called to say he was coming to Phoenix to go to a special seminar on marketing and wanted to know if I wanted to go along. I jumped at the chance. The room was filled with approximately 300 people, and by the look of them, most seemed to be entrepreneurs. Not too many had the corporate look. The instructor was a wild man who talked about how advertising agencies just waste your money on expensive, good-looking ads or TV spots that sell nothing, a point of view I agreed with.
He said, “The purpose of marketing is to get the phone to ring. With these ad agencies, the only phone that rings is them calling to ask you for more money to buy more advertising, so they can collect more fees. Ask them if they can guarantee your sales or measure your sales. In most cases, they cannot or will not guarantee their work. All they want to do is win awards for creative advertising for their agency—with your advertising dollars.”
Sales = Income
Some of the other points I learned during the seminar were:
- The entrepreneur must be the best salesperson in his or her business.
- The entrepreneur must be the best marketer in his or her business.
- The marketing efforts must produce sales, not just good-looking ads or slick commercials.
As obvious as these points are, you would be surprised how many entrepreneurs delegate those important roles to ad agencies. Ad agencies are generally for big corporations or established businesses. In a small start-up business, the entrepreneur needs to be the best they can be at sales and marketing. With limited resources, every dollar spent must result in sales—because sales equal income.
Rich dad drummed into my head: “Sales = Income.” He would also say, the reason so many people have low incomes is that they are poor at selling. If he had been at this sales seminar, he would have loved it.
The instructor was adamant about using marketing that leads to sales that can be proven and measured.
The Book Sells the Game
That evening, I went home and talked with Kim. The first thing I said was, “We should sell the board game for $200. We will position it as the most expensive game in the world. It’s not just a game. It’s a seminar in a box.”
Kim agreed. She did not flinch at the idea of selling a board game for that much money, even if our focus group said it should sell for $39.95.
I continued, “Our problem is that we have been asking the opinion of people who will probably never be our customers. We have been asking for the opinion of people who shop in the bargain basement, not in the boardroom. We need to find customers who value education and are willing to pay for it.”
“We’ll need a way to find them,” Kim added.
“The book takes priority. Instead of focusing on marketing the game, we will begin to focus on marketing the book. The book will help us find our customers. The book will become our company brochure.”
“So we need to weave the game into the book,” Kim said. “And we go back on the road doing investment seminars, working with the same type of customer we have been working with for years.”
“That’s the idea. We finish the book, and we get back on the road doing seminars for people who pay for financial education.
We’ve been doing it for years.
It’s a low-risk idea.
We know the business and we know how to reach those customers.
“In other words, the tactic remains the same. The sole tactic of the business is to get people to play the CASHFLOW® game. We now focus on the strategies. If the strategies work, people will play the game.”
Kim and I were in agreement. We were a team with a unified plan. “So why $200?” asked Kim.
“How did you come up with that number?”
“It took a while,” I said. “But when the instructor said, ‘A higher price can be perceived as more valuable,’ the lights in my head went on. I realized I was cheap and looking at my own product through cheap eyes, rather than looking at the value hidden in the game.
“Well, it certainly gives us a large margin. That will help us grow the business,” said Kim. “So we market the book through traditional distribution channels. That handles the place category of the five P’s—where we place our product in front of potential customers.
We have now sold hundreds of thousands of games, and there are CASHFLOW clubs all over the world who meet regularly to play the game. We found the right customers for the game.
Editor, Rich Dad Poor Dad Daily