We live in an era of too much noise, too much clutter, too many choices, and too much spam. And as Seth Godin's 200,000-copy bestseller Purple Cow taught the business world, the old ways of marketing simply don't work anymore. The best way to sell anything these days is through word of mouth and the only real way to get word of mouth is to create something remarkable.
Free Prize Inside, the sequel to Purple Cow, explains how to do just that. It's jammed with practical ideas you can use right now to make your product or service remarkable, so that it will virtually sell itself.
Remember when cereal came with a free prize inside? Even if you already liked the cereal, it was the little plastic toy that made it irresistible. Godin explains how you can think of a bonus that will make your customers feel just as excited, no matter what business you're in. Consider these free prizes:
• The Tupperware party, which turned buying plastic bowls into a social event
• Flintstones vitamins, which turned a serious product into something fun
• The free change-counting machine at every Commerce Bank branch
• The little blue box from Tiffany, which makes people happy before they even open it
This book offers a way to create free prizes quickly, cheaply, and reliably and persuade others in your organization to help you bring them to life.
We live in an era of too much noise, too much clutter, too many choices, and too much spam. And as Seth Godin's 200,000-copy bestseller Purple Cow taught the business world, the old ways of marketing simply don't work anymore. The best way to sell anything these days is through word of mouth and the only real way to get word of mouth is to create something remarkable.
Free Prize Inside, the sequel to Purple Cow, explains how to do just that. It's jammed with practical ideas you can use right now to make your product or service remarkable, so that it will virtually sell itself.
Remember when cereal came with a free prize inside? Even if you already liked the cereal, it was the little plastic toy that made it irresistible. Godin explains how you can think of a bonus that will make your customers feel just as excited, no matter what business you're in. Consider these free prizes:
• The Tupperware party, which turned buying plastic bowls into a social event
• Flintstones vitamins, which turned a serious product into something fun
• The free change-counting machine at every Commerce Bank branch
• The little blue box from Tiffany, which makes people happy before they even open it
This book offers a way to create free prizes quickly, cheaply, and reliably and persuade others in your organization to help you bring them to life.
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Overview
We live in an era of too much noise, too much clutter, too many choices, and too much spam. And as Seth Godin's 200,000-copy bestseller Purple Cow taught the business world, the old ways of marketing simply don't work anymore. The best way to sell anything these days is through word of mouth and the only real way to get word of mouth is to create something remarkable.
Free Prize Inside, the sequel to Purple Cow, explains how to do just that. It's jammed with practical ideas you can use right now to make your product or service remarkable, so that it will virtually sell itself.
Remember when cereal came with a free prize inside? Even if you already liked the cereal, it was the little plastic toy that made it irresistible. Godin explains how you can think of a bonus that will make your customers feel just as excited, no matter what business you're in. Consider these free prizes:
• The Tupperware party, which turned buying plastic bowls into a social event
• Flintstones vitamins, which turned a serious product into something fun
• The free change-counting machine at every Commerce Bank branch
• The little blue box from Tiffany, which makes people happy before they even open it
This book offers a way to create free prizes quickly, cheaply, and reliably and persuade others in your organization to help you bring them to life.
Product Details
| ISBN-13: | 9781101218457 |
|---|---|
| Publisher: | Penguin Publishing Group |
| Publication date: | 05/11/2004 |
| Sold by: | Penguin Group |
| Format: | eBook |
| Pages: | 256 |
| File size: | 912 KB |
| Age Range: | 18 Years |
About the Author
Read an Excerpt
Section 1
Why You Need a Free Prize
Can I Get It, Mom?
If you were like me, you nagged your mom to buy the cereal with the free prize inside. You bought Cracker Jacks to get the goofy little prize, too. We may have known that the cereal without a prize was just as good, but of course, it wasn't just as good. It didn't have a prize.
In those days, cereal makers had it easy. They could offer a free prize and create amazing advertising as well. They could charge a significant premium over the generic brands if they had a talking tiger or a toucan or a Cap'n riding a boat through a sea of milk.
Today, of course, that's no longer true. Cereal isn't the cash machine it used to be, there are too many brands, not enough shelf space and a newly cost-sensitive consumer that isn't fooled by TV advertising.
All we've got left is the prize. The only way to stand out and command noncommodity pricing is to innovate. You can innovate with a licensed character or a cool shape or high- protein ingredients. You can innovate with packaging or pricing or even—yes, it's true— by putting a cool prize in the box.
It's not only cereal. More than a decade ago, when Lincoln-Mercury started putting Bose stereos in their high-end cars, they were astonished to discover that more than half the buyers opted to add the $8,000 stereo to their $12,000 cars. The amazing thing is that almost none of these people had a stereo even remotely that expensive in their living rooms at home. They thought they were going out to buy a car, but they were entranced by something else—the innovation, the free prize. They were buying a stereo with wheels.
Innovation Is Actually Cheaper Than Advertising It didn't used to be true, but in a world of Purple Cows, when the marketing is built into the product, creating products that are innovative is actually cheaper than advertising average products.
So, once your company realizes (and is sold on) that insight, then it will invest the money it would have spent on advertising to create cool products instead. That innovation is free. In fact, it's a profit center.
Big companies don't blink before spending $100 million on the marketing for a product launch. Small companies spend plenty on billboards or local advertising. But since that isn't working, they'd be better off spending half that amount and making something really special instead.
By the time you finish this book, you'll discover that the future belongs to companies, organizations and people who are remarkable, not boring.
Introducing the Godin Curve The right half of the curve demonstrates that as you invest in media, you need to have a higher and higher expected return to break even. That makes sense. If you run a ton of Super Bowl ads or spend a lot of time and money to get on Oprah, that's expensive. It's a risk. You need a big payoff to make it worth it.
I'm not making a controversial assertion here. The simple fact is that the more you spend, the more sales you need to justify that spending (and the risk and overhead that goes with it).
The left part of the curve shows that the same is true for technology. If you spend a fortune building a gizmo, you need to have a very high expected return in order to break even on your investment and have enough left over to have the risk of the investment be worth it.
When Iridium invested $3 billion to launch sixty-six satellites in permanent orbit around the Earth, they were making a very big bet. In order to make a bet like that pay off, the return has to be astronomical.
The Godin curve combines the two parts, then adds a dotted line. The dotted line shows how much revenue you can expect (historically) from big investments in media or technology. Yes, you generate more revenue when you get a big ad campaign right or when you launch a high-tech success. Surprisingly, though, the increase in revenue isn't commensurate with the increase in risk. You can spend more and more, but you can't earn more and more.
Big technology and media projects rarely generate the huge returns necessary to make them worth the effort. Sometimes they fail altogether. Iridium went bankrupt. So did Pets.com. Even when they do work, they often generate relatively little more revenue than cheaper campaigns or cheaper technology do.
The final version of the curve (named after Antoine Godin, the great explorer) subtracts the costs of development and media from the project's revenue and shows your likely profit (the dotted line). The spot between the two curves is the free-prize zone, the place where a different kind of innovation lives, the place where you can live and work and profit.
Let me make it really clear:
You can't afford difficult and risky technological innovation, because the return you'll receive is unlikely to justify the investment.
You can't afford to do huge media and PR buys because the return you'll receive is unlikely to justify the investment.
But you can profit all day long by leveraging insight and creativity to come up with cheap innovations that have a significant return. The center of the curve is all yours.
Huge returns go to organizations that create remarkable innovations, regardless of their cost or provenance.
How Can This Be?
This is counterintuitive. It implies that the things that “smart” (big) companies have been spending the most on is the stuff that doesn't really matter.
Exactly.
Each incremental dollar on big ad spending doesn't contribute appropriate incremental profit in return.
Each incremental dollar spent on big R&D and technology investment doesn't contribute appropriate incremental profit in return.
The two pillars have crumbled. Differentiating yourself with patents or ads is too hard. Something else is at work. There's a new way of winning, and it's happening because of a confluence of reinforcing events.
1. Consumers (at home or at work) have always wanted more than they say they want. We proclaim ourselves to be rational, cost-conscious, Consumer Reports—reading smart people. In fact, we are happy to pay extra for whitewall tires, beautiful leather nappiness on our shoes, a sophisticated showroom in which to shop and even stamps we don't have to lick. We don't insist on the biggest ads or the latest technology. We want cool stuff.
Design matters. Style matters. Extras matter. We want the free prize, sometimes more than we want the thing itself.
J. D. Power announced in 2003 that Land Rover was near the bottom of their customer service index ranking, right near Kia, Isuzu and Daewoo. This doesn't seem to have any effect on their sales, which are at record levels. Apparently, people are buying Land Rovers at a huge premium over most any other car, even though the main thing a car is supposed to do—run when you want it to run—isn't one of its strong points. It's the design and the look and the legend and brochure and the dealership, and the look in your neighbor's eye when you drive it home. Obviously, people are buying the car for some reason that does not have much to do with going from one place to another.
2. We now live in a world where the path from great idea to the consumer is shorter than ever. It used to take years to build a plant, set up distribution, do the advertising and get the product into the hands of the user. The rules have changed. Within four hours of Arnold Schwarzenegger's surprise announcement about his gubernatorial bid, someone was selling T-shirts with his image online. This means that there's less reason to build some giant campaign for the future—the competition is building something for right now.
3. The tools that are available to creators are so much better than they used to be. We can prototype machines on our desktop, mock up Web sites on our desktop, and even model behaviors on our desktop. The bar for truly revolutionary technical innovation keeps getting higher. Getting a world-beating patent isn't something you can do in your basement anymore. You need a lot of money and a lot of time.
Because we're less open to the big and the slow (and very responsive to the clever and the quick), the return on being big and slow isn't what it used to be.
The half-life of a successful product is shorter than ever, so ideas need to be cheaper to build and faster to market.
Living (and Thriving) in the Free Prize Zone
The obvious lesson from the Godin curve is that the place to spend your time, your money and your career is in the center of the curve. That creating the innovations that people pay for is actually a profitable venture—it's not a cost center, it's free.
There are challenges, of course. Most companies aren't organized to do this. Most individuals aren't trained to pursue it. And most people haven't been sold on why it's important.
This book addresses all three stumbling blocks. My goal is to cajole you into stepping into this zone and investing the energy it takes to revolutionize your products—and make them remarkable.
Soft Innovation Is Innovation Anyone Can Do Most writing on innovation is about paradigm shifts, big projects, huge R&D and technical changes. It's about nanotechnology and space farming.
Most successes, though, are actually the result of what I'll call soft innovation. Stuff like fast lube job shops, cell phone pricing plans and purple ketchup.
What really works? No surprise, it's the soft stuff. The commonsense, creative stuff that requires initiative and curiosity, not an advanced degree, to do.
The reason soft innovation works is that all breakthroughs (big and small) require quantum leaps. It's much easier, of course, to take a quantum leap with style or insight or guts (a nontechnical breakthrough) than it is by toying with the rules of physics or jumping Moore's curve.
Please don't misunderstand me. I'm eternally grateful to Edison for inventing the lightbulb and Salk for perfecting the polio vaccine. These were heavy-duty breakthroughs that involved equal parts of persistence and genius. If you're hot on the trail of a quantum breakthrough in your technical field, please proceed!
My message is aimed at everyone else. It's aimed at everyone who's been told that they're not qualified, authorized or entitled to pursue breakthroughs of any kind, that they must pursue the status quo while waiting for R&D to deliver the latest insight and marketing to come up with the next great ad campaign (Share the Love anyone?).
Quick Definitions: A soft innovation is what you, the marketer, see. If it catches on and becomes something the consumer wants, it is now a free prize.
A free prize is the essence of a Purple Cow. Generally, a free prize has two key characteristics. First, it's the thing about your service, your product or your organization that's worth remarking on, something worth seeking out and buying. (Alas, most soft innovations never become free prizes, because most soft innovations aren't remarkable.) Second, a free prize is not about what a person needs. Instead, it satisfies our wants. It is fashionable or fun or surprising or delightful or sad. It rarely delivers more of what we were buying in the first place. It delivers something extra.
A product or service that carries a free prize is a Purple Cow.
The Surgeon and the Nurse I had hernia surgery. It costs a lot, it hurts and the hospital makes a fortune.
The places it hurts might surprise you. The surgery gives you a very sore throat, because they clamp your mouth open while you're asleep. It also hurts a lot when you pee, because they use a catheter.
The surgeon doesn't care one bit about how much it hurts. He's a superhero, he cuts and sews and moves on. But the hospital cares. The hospital cares because they know that most patients have a choice when it comes to ambulatory surgery, and that choice is dictated in large measure by how positive the word of mouth from other patients is. The traditional way for a hospital to improve its services is with technological innovation. Buying million-dollar MRI machines or investing in a huge new facility. But that ignores free prize thinking.
As I lay in the recovery room for two hours, all I could think about was how much my throat hurt and how difficult it was to pee. The surgeon told me later that this happens to everyone. He told me that if I had gulped down some cranberry juice and sucked on a throat lozenge when I got home, I would have had a much easier time.
So here's the question: Why didn't someone offer me a throat lozenge and a glass of cranberry juice at the hospital? Some dietician had decided that apple juice and graham crackers were the right thing to offer to recovering patients, and that was that. The nurses, good at following instructions, were following these rules as well.
But what if one brave nurse had the guts to ask a surgeon if she could offer a Sucret and a glass of cranberry juice instead? How much would that innovation cost?
The return on investment is huge. Charging $5,000 a patient for half a day, all the hospital needs to do is get one or two new surgeries a year as a result of word of mouth to pay for a lifetime supply of Sucrets. It's really simple: The nurse could have created a soft innovation—something useful and magical and thoughtful—that might have become a free prize. Only when you find the free prize will your customers start to talk about you.
I Wish Highway 11 Were Beautiful, but It's Not Highway 11 is the road taken by thousands of people every day as they travel from Toronto to some of the most stunning country I've ever seen. Crystal-clear lakes, awe- inspiring moose and millions of trees.
But along the way, you've got to pass gas stations, junk shops, fireworks stores, more gas stations, doughnut shops, coffee shops and abandoned wild blueberry stands. In one three-kilometer stretch, it's possible to pass at least three vivid examples of each of these, all jammed together in one endless, mind-numbing strip.
Then, around the bend, next to a famous hamburger stand, you'll find Rita's. Her store doesn't even have a name. The sign out front says, candy shoppe.
Over the last four years, Rita's candy shop has been one of the fastest-growing stores in the entire country. Rita has recorded annual sales increases of close to 100 percent and had some months where sales go up 50 percent from the month before. She's done all this by building a Purple Cow.
Nearly everything about the store is remarkable. Rita sells candy that you can't get anywhere else in the country. She sells individually wrapped bags of penny candy so you don't have to worry about some kid's grimy hands. She sells flavors and brands that you remember from your childhood but thought were gone forever. She even sells spotted dick, the infamous British pudding in a can.
The average customer spends $30 to $100, depending on the season. $100 worth of candy!
It's pretty easy to look at this business and realize that nearly anyone could have started it. Rita is personable and hardworking and she loves her products, but she's not the only shopkeeper in Canada who could run this store. So, the question I want to answer is this: Why Rita?
Why is Rita the only one doing something so remarkable? Why is it so easy to get your friends, family, neighbors and even bankers to support your effort to open yet another doughnut shop, but so wonderfully rare to find someone running a shop as cool (and successful) as Rita's?
In the world of the Purple Cow, where the product is the marketing, the winners are the people able to champion remarkable ideas and make them happen. And the astonishing revelation is this: Innovation isn't just fun, it's free. It doesn't take rare skill or astonishing talent. It doesn't have to involve huge expenditures of time and money. And the innovations you create will have a far faster (and bigger) payback than the more ordinary stuff you're spending so much time and effort on.
TEN SOFT INNOVATIONS ANYONE COULD HAVE DONE Every one of these ten ideas is a free prize. Every one transformed an ordinary organization or product into a remarkable one, a Purple Cow worth talking about. And every one could have been conceived by someone like you.
Three Dog Bakery: purveyor of food for dogs that contains 100-percent natural, people- grade ingredients. “This store wasn't for the pets, of course. It was for the owners. It's theater,” says Ann Willoughby, who helped create the chain of more than twenty-five stores around the world.
Prehistoric pasta: Twenty years ago, Chef Boyardee introduced dinosaurs to the world of kids' food. They created a sensation, generating millions of dollars' worth of incremental sales of canned macaroni (in the shape of Tyrannosaurus Rex, in fact). One problem: The National Academy of Sciences criticized Chef Boyardee for getting the number of claws on the T. rex wrong. They fixed it.
Saving lives, saving money: Dr. Peter Pronovost realized that doctors kill more than 98,000 patients a year because they fail to follow simple steps. One Sunday night, he invented a simple checklist for doctors, and started using it the next day. In studies, his checklist has been shown to decrease the average stay in the intensive care ward by 50 percent.
PowerBar: Yes, they've been around since 1986. And anyone who saw that athletes wanted a food to eat before, during or after exercising could have invented this multibillion-dollar product category.
Portable shredding: bakery-truck-size rolling shredding machines. They drive up to a business, take its confidential documents, shred them and drive off.
Endless Pools: treadmills for swimmers. Tens of thousands are installed in gyms and homes around the world.
The 52 Deck Series: Lynn Gordon developed beautifully illustrated little gift books. Except they're not gift books. They're decks of cards with text and pictures offering fifty- two great ideas for what to do on a rainy day, or on a visit to New York City, or even if you can't sleep. Sales so far? More than five million decks.
The iPod: You can spend half as much on a competitor and get space to hold even more music. What you can't get is the beautiful industrial design and the effortless user interface. People aren't buying a hard disk in a box. They're buying the free prize that comes from the satisfaction you get from using it.
QBNet: fast barbershops in Japan. Get a cut in one-sixth the time and for one-quarter the price. They've grown from 57,000 cuts a year in 1996 to more than 3.5 million haircuts in 2002.
The Swatch: At the peak of this brand's frenzy, a Swatch sold at auction for more than $20,000. The idea behind this mammoth brand is simple: cheap Swiss watches with great fashion sense. Watches worth talking about, watches worth collecting. Before Swatch, only millionaires collected watches.
Innovation Envy Gets Us Sidetracked It glides and floats and spins and soars. Everyone who sees it wants to touch it and talk about it and take it for a ride. It's a remarkable innovation.
Dean Kamen, the inventor, is one in a million. He revolutionized the wheelchair, dialysis machines and the way African villages make clean water. Now he's trying to change the way we walk around. I think he's a genius and I'm glad to know him.
But the Segway represents everything that's wrong with the way we think about innovation. The Segway cost more than $80 million to develop. The project was a crapshoot the entire time—no one was ever sure if it was going to function as designed or not. The Segway was built by highly trained, brilliant engineers, the kind of rocket scientists we might be proud to know, but not people like us.
Worse, the Segway required that an entirely new company be formed to get it off the ground. It involved building a new marketing effort and a major hype and sales rollout in order to generate enough sales to make it worth the journey.
The Segway is the kind of bet-the-company, high-risk innovation we all dream about. It's the big fat audacious innovation that (when it works) becomes legendary. But the Segway was expensive and the Segway took years to develop.
That's not the kind of innovation I want to talk about. I love the Segway and I'm glad Dean built it, but I think there's another way. I think there are free innovations waiting for you to roll them out.
The Price of “Wow” Keeps on Rising That was the headline in The New York Times. And they're right. Using a technology breakthrough or a nationwide ad campaign to get people to say wow is not as easy as it used to be. When Hollywood turned the Terminator into molten metal, people said wow. The same level of wow in The Matrix cost five or ten times as much.
The first time we saw a blimp at a football game, we said wow. Now, we don't even notice it (was it Fuji or Goodrich? Goodyear?). Once you've been wowed, the same trick doesn't work anymore. Once we've seen a clever advertising joke or played with a cool new technology, they don't deliver the same wow the next time. Which is why using the expensive, heavy-hitter techniques is way too expensive.
CD Baby Is a Purple Cow Derek Sivers is a smart guy, but he's not a geek. He's a musician.
A few years ago, in the midst of the dot-com boom, Derek had an idea for an online company that would sell CDs from unsigned, self-published musicians. If he had gone to a venture capital firm, they would have insisted he hire high-priced technical minds to build a vast and proprietary system, a defensible technology. Then they would have piled on the marketing money, helping him build a brand footprint that would be impregnable for years to come, giving him time to pay off the costs of the technology. Then, of course, he would have gone bankrupt.
Instead, Derek taught himself how to use FileMaker. In a few months, he built a simple but elegant system that would let him run his business online. And then he spent the rest of his time building soft innovations that would attract artists, consumers and profits. This chart of increasing commissions to musicians demonstrates CD Baby's results:
While other dot-coms have come and gone, Derek is doing great. He's winning because of the design of the site, the musician-friendly policies, the funny e-mails and his management skills. He's winning because instead of spending time and money on R&D and media, he's spending insight and creativity on the free prize.
Getting Rid of a Problem Is As Good As Adding a Feature As you may know, Amtrak invested more than $800 million in building the high-speed Acela train. It runs from Boston to Washington, D.C., and it really is a wonder. It's faster and easier than the airplane, yet they're having a lot of trouble persuading people who take the short shuttle flight to Washington from New York to switch.
The company has taken two tacks to make the business work. The first is to run a ton of advertising, hoping to interrupt their way to success.
The second is to invest in hugely expensive trains and to install automated ticket machines at the stations to make it similar to taking a plane.
And today, because they don't understand the power of soft innovation, I almost missed my train.
It seems that the automated ticket machines haven't been programmed to allow a walk-on passenger to buy a ticket in the hour before a train leaves. Of course, that's precisely when you would expect that a walk-on passenger would want to buy a ticket. Instead, after you've pressed all the buttons, the machine says, “We are having problems processing your ticket, please see an agent.”
So, I went to see the agent. But the wait for the agent (there's only one working at a time—they alternate, apparently) lasts for more than half an hour. With four minutes left before the train departs and no sign of the front of the line, I panic. I pick up my cell phone and call Amtrak. The kind woman on the other end puts in my reservation, then I walk over to the machine and less than thirty seconds later, I have my ticket.
I went back to the line and announced to the other twenty nervous people about to miss their train how they can make a call and do a work-around on the machine. They all scurry off and make their train.
Of course, if we had all missed our train, how likely would we have been to choose Amtrak next time? Amtrak had spent a fortune building a Purple Cow, and a tiny technical glitch was powerful enough to undo all of it.
Obviously, the return on investment of fixing this problem is huge. But how to fix it without another huge investment in technology or staffing?
How about a simple handwritten sign on a three-by-five card, posted at the entrance to the interminable line. It could give the phone number of Amtrak along with instructions on how to make the machine dispense a ticket!
By getting rid of the problem that made Amtrak not like the airlines, one employee could have created a chance for the railroad to spread the word.
A free prize. Just waiting for someone to grab it.
Fix what's broken.
Are Supermodels a Gimmick—
or What People Really Want?
People have the same sort of sneering disdain for the word “gimmick” that they have for “used car salesman.” A gimmick is cheap, a trick, a ruse, something not worth the time or attention of a professional.
I think we need to take another look.
Were frequent-flier miles a gimmick? When they came out, most people treated them that way. After all, flying was about getting from place to place, not earning points and winning prizes. Today, American Airlines understands that their frequent-flier program is one of their great assets.
Is product design a gimmick? If we need a music player or a car or a teapot, shouldn't we focus on the way the thing works, not the way it makes us feel? Well, unless you're driving a used Yugo and listening to an old Aiwa cassette player, I think you've already voted with your dollars.
What about the comics in your local newspaper? I mean, you read it for news, right? If you had a choice between reading a newspaper without color photos (which, ostensibly, deliver the news in a more powerful way) or a newspaper without comics (a circulation gimmick, after all), which would you choose?
William Wrigley's company started out selling soap. As an extra incentive for merchants to carry their soap, they offered stores free baking powder with every purchase. When baking powder proved to be more popular than soap, they stopped making soap and started selling baking powder. Then Wrigley got the idea to offer merchants free chewing gum with each can of baking powder. A gimmick?
I think a gimmick needs to be defined as a feature that the consumer might be attracted to but doesn't really want. Something that doesn't help them solve a problem, even if the problem isn't the main reason they're buying the item in the first place. A gimmick is only a gimmick when it is noise, a distraction, something that takes away from the item itself.
We can't know if a gimmick is a gimmick forever (like the sock glue they sell in Japan to hold up the high socks the teenagers love) or a gimmick for a little while (like the prize in the Cracker Jack box). Once a gimmick becomes something that consumers want and something that consumers talk about—the prize in the Cracker Jack box—it stops being a gimmick. And the only way to find out is to try it. The marketplace decides, not you. The gimmick transformed, the soft innovation, that's what we're here for. We buy what we want, not what we need, and we want soft innovations.
If it satisfies consumers and gets them to tell other people what you want them to tell other people, it's not a gimmick. It's a soft innovation.
Prodigy Built Technology and AOL Built a Free Prize Prodigy was founded by Sears, IBM and CBS. They spent several billion dollars building the company. I once visited one of their underground, earthquake-proof server buildings (they were building them nationwide). They installed high-tech security devices (with photo badges) years before I saw them anywhere else except in spy movies. If it was hardware, they had it.
Steve Case built AOL using the cheapest computers he could find. It crashed a lot. There were busy signals. There were always growing pains at AOL, but never at Prodigy. Yet Jan Brandt, the marketing whiz who helped build AOL, understood that giving away free floppy disks (and then CDs) in every venue she could find was worth more than buying fancy computers. She discovered that the “gimmick” of free hours and easy installation was actually the very thing that people had been waiting for. Prodigy lost, because they believed in serious R&D. They sold the company for pennies on the dollar. AOL won with a soft innovation that anyone could have invented.
Do people want the fortune cookie or the fortune?
Soft Innovations Keep Showing Up Robert A. Moon was a regional executive at the Postal Service when he invented the zip code. An unbelievably simple idea—that has saved postal customers billions of dollars. Murray Pergament owned a hardware store on Long Island when he saw the huge growth of the suburbs—and realized that all those people in all those houses were going to need to buy a lot of stuff. In 1946, he began to build the profitable Pergament superstore chain, long before Home Depot popularized home improvement superstores.
In an hour, Lester Wunderman created hundreds of millions of dollars' worth of value for the Columbia House Music Club. Not by building a new distribution facility or buying a ton of TV ads. He did it by inventing the “little gold box” that they mentioned on their TV ads. This innovation, all by itself, enabled Columbia House to run twenty years of profitable direct-response TV ads.
The market for vitamins was small and stagnant until Flintstones vitamins came along. Chewing on Wilma and Dino isn't a gimmick as far as kids are concerned—it's the only reason to take one!
Sixty years ago, Robert de Graff invented the paperback book. A simple idea, yet one that was met with a huge amount of resistance—from the publishing industry, not consumers. The public loved the idea, and it led to literally billions of books being sold.
Lucille Roberts didn't have a lot of money or know much about building exercise machines. But she did understand that not just rich people wanted to work out. By stripping her gyms of all amenities and packing in machinery, she made a workout affordable for working women. When she died, she had dozens of clubs in operation.
Brownie Wise created a business bigger than one hundred Segways—she invented the Tupperware party. Of course, she started with a great product, but her ability to see beyond her job title and invent a whole new way of selling (the home party) was the company's single greatest innovation. Brownie figured out that the way kitchen storage products were sold was as important as the way they were made.
The Four Seasons restaurant in Manhattan made even jaded New Yorkers gasp when it opened in 1959. There, on the wall of the beautiful dining room, was a huge painting. An original Picasso. They don't just serve food at the Four Seasons. They guarantee an experience worth paying for.
Alan Webber and Bill Taylor started with the very same tools as every other magazine founder—two Macs, a telephone and access to a printer. Yet the magazine they started, Fast Company, was exceptional. It won the National Magazine Award.
It grew like a weed. It changed people's lives. The investors sold it for more than $400 million. They won because they were remarkable—not because of great advertising (they had none) or because of wonderful technology (it was an ordinary magazine).
G.I. Joe appears to be a doll for boys. But dolls for boys never sold well. The free prize is how well the joints on a G.I. Joe articulate. By turning a doll into a legitimate action figure, Hasbro figured out how to breathe life into plastic.
The Uline industrial supplies catalog offers hard hats for construction workers—the standard kind, which costs $7, as well as the official NFL-licensed football-team-logo models, at $29. It doesn't matter whether you're selling to business, to education, to government or to consumers—products that have a free prize thrive.
Soft Innovation Works—Everywhere The magic of the examples above is that ordinary people, using ordinary tools, were able to create products or services that generated both user satisfaction and profits. In any industry where people decide, style matters.
The opportunity here isn't subtle: Whatever you do, wherever you do it, you have the opportunity to create this sort of innovation. You have the power to find and develop a free prize.
Inflame the passionate.
A Free Prize Always Fades If Krispy Kreme didn't exist, I'd probably have to invent it! The remarkable story behind their doughnuts was a big part of my last book, Purple Cow. But in 2004, less than a year later, it's reported that the guest count (a key measure of retailer health) at one large group of their stores is down by almost 20 percent over the last year.
No free prize lasts forever, which is why it's so essential that we get better at making new ones.
This Isn't Just a Book About Making Money, Though It's my passionate belief that when teams of people get together and make something amazing, useful, helpful, productive, funny, inspiring or remarkable, we're at our full potential as humans.
That may sound sappy, but it's true. Monet was an artist, and so is the team that created the iPod. Building Purple Cows, and creating the soft innovations that turn into free prizes, isn't just a corporate priority—it's personal.
It's important. It's powerful and something you need to do. Satisfied businesspeople (and nonbusinesspeople, for that matter) are happy because they're actually doing something. They're building and creating and designing and leading and shaping and making something come to life.
I think the challenge (and the imperative) is to do something that matters. And more often than not, you'll find that the stuff that matters involves creating something new and remarkable.
Most of the work behind soft innovations is done in teams. A vibrant team can create an experience you'll remember forever.
1984 Wasn't Like 1984 ...
Two cool things happened to me in 1984. First, Apple introduced the Macintosh. Here was a technological tour de force that also made the user feel powerful, excited and filled with possibility. Second was my opportunity to lead the team that built a suite of computer games at Spinnaker Software.
While many of the people on the team were engineers, only a few were brilliant nerds, unable to survive in the outside world. The rest of us were focused on how to share our vision of what the next generation of computer games would be like. We worked twenty hours a day, shipping five products in five months—a project that should have taken two or three years.
Do you know that I still hear from many members of that team? Twenty years later, many of us consider it one of the high points of our careers. It was exciting and essential and vibrant. Filling out forms and editing advertising copy pales in comparison.
You owe it to yourself to create something remarkable one day.
Is Your Job Just a Job?
Your days can seem really long (and your life can seem really short) if you're spending your entire career wasting time merely to make some money.
Being engaged at work is seductive. It means that you're spending a big chunk of every day doing something you love, something that makes a difference. You get to motivate other people and create things that last. Unfortunately, this sort of opportunity is scarce and (apparently) getting even more scarce. The gift I can give you is this: Since your boss hired you to make something happen, you now have permission to build a free prize. You have the opportunity (on your boss's nickel) to build a project that will energize you and your co-workers.