When it Pays to Salt the Earth in Your Industry
Recently, I was watching reruns of AMC’s incredible drama “Mad Men,” which for those of you who do not know, is about 1960′s Madison Avenue advertising executives. In this particular episode, protagonist Don Draper’s firm has suffered a $7M falling-out with Lucky Strike cigarettes, which causes many of their clients to flee in fear of collapse. True to his motto (“If you don’t like what people are saying, change the conversation”), Draper writes a scathing letter to the New York Times, explaining why he is done with tobacco, and how his firm will no longer accept any related business (for a full summary of the situation and a transcription of the letter, visit Gods of Advertising).
This is a daring move, and it might have shocked and appalled some viewers. But it’s a move I’ve routinely pulled. I like to call it “Salting the Earth,” using the earth as a metaphor for a market or market niche. If I’ve lost you again, and you aren’t sure what that means, it is an ancient ritual, dating back to biblical times, where warriors literally pour salt on the earth of a conquered land. This ensures that nobody – not even their their own people – can every grow anything there. It’s seriously destructive. So why would you ever do such a thing in business?
Lots of reasons. True, when you “salt the earth,” you are making sure that nobody can prosper from it. If you are in the losing position, however, this can often be a tactical advantage. And while the cleanup and restoration process you’ll have to undergo to make the land (or market) yield again will be expensive, sometimes it is well worth it. Sometimes you just want to make sure that nobody can harvest until you are ready to compete.
Let me give you an example that I learned early in my career. At the time, we were selling a very niche product for BMW’s, one that was high profile, high profit, and consequently, every one of my competitors wanted in. Fortunately for my suppliers and I, the product we marketed and carried was the industry leader. Unfortunately, someone else in our market was happy to teach me how to salt the earth. While our product was successful and approaching market saturation, it had not yet reached critical mass to the point of brand loyalty. While we were speeding towards total dominance of this market niche, this competitor came along and made a few announcements. The technology was changing, he said. Prices were coming down, the product quality was improving in these specific ways. The problems many customers were having were a thing of the past, and soon everyone who had our product would want to upgrade. Here’s the best part – he sold the product too, making his claims completely credible. Why in the world would he cut of his nose to spite his face? Sales plummeted for both of us. He had salted the earth. Nobody was buying this product, or anything like it. They were waiting for him to come in, purify the soil, and announce (with a pervasive and expensive marketing campaign) that it was finally safe to buy widget X again.
Is it ethically questionable? Maybe just a little…But… if keeping the customer safe from buyer’s remorse can benefit you and your company, well, you’re going to have a lot of very thankful customers.
You better believe that I got the message. And you better believe that I used it whenever necessary from that day forward. You see, chaos in a marketplace hurts everyone, to some degree. But it also helps. It can help you gain the edge on a competitor who has an early lead. It can help the customer get the best product at the best price. And if you think that this borders on the unethical, I submit to you that it beats the hell out of collusion – which is both the opposite of this strategy and illegal.
So how can you use this in your business? Here are some ideas.
1. Before announcing a new model that replaces a commoditized product that you and your competitors carry, “salt the earth” on that commoditized product. I’ve made videos before (see below) where I plainly state: “We carried this product because at the time, it was the best. But we were never really happy with it. We’ve been working hard to advance the quality, and so we’re dropping it until a better version comes out. If you were planning on buying in the next month or two, we apologize for the inconvenience.” Do you think anyone will buy that product thereafter, if even those who stand to gain from selling it are badmouthing it? Do you think your competitors will be able to sell it? More importantly, think about how much more your customers will trust you. You have become the unbiased, honest source of information. You are the ethical vendor who said “enough is enough, we aren’t going to take your money until we have a product that meets our quality standards.” Ethical caveat here: If you do this, you must make sure that the manufacturer of said commoditized product is not a close relationship. Don’t cut off the hand that feeds you. If they’ve been unresponsive to your complaints, well, this is a great way to send them packing. Also, don’t lie. If the product is good quality, don’t badmouth it. People can sense dishonesty and constructed diatribe, and it won’t win you any fans. One more thing – never, ever badmouth your competitors. Bashing a product is one thing. Bashing other people or companies is childish and makes you completely untrustworthy.
2.Even if the product to be replaced is your own, you can “salt the earth.” If you’re going to announce a new product, say so up front, ESPECIALLY if the features of the new product are a well kept secret. Here’s an example. When Apple announces a month in advance that they’re holding an event where the iPhone will be the focus, do you think anyone in-the-know buys an Android phone during that month? Sure, they may end up choosing against the iPhone later on, but the world waits to see what the new product will have, and everyone else’s sales suffer. You can use this to your advantage, and if you’re lucky, you can push your competitors into a frantic reactionary behavior, where they will look desperate. Don’t believe me? A week or two ago it “leaked” that iPad 3 may come as soon as October. ‘Come See What 2011 Will Be The Year Of’ – i.e. ‘Don’t Buy Anything Till After Our Event’Retailers are now giving away HP Touchpads and Samsung Galaxy Tabs with large purchases – or selling them for $99. This reactionary behavior calls the product into question and further underscores the fact that “you should just wait to see what Apple offers.” Love it.
3. In the worst-case scenario, maybe you don’t have a new product coming out. Maybe the product you have sucks. You can still pull a Don Draper. Sever ties, even if it sounds a little bit like “He didn’t break up with me, I broke up with him!” What you’re doing is being honest – the product isn’t good, and you know it. Be the more ethical company. Expose the fact that the product sucks, using your extensive knowledge and experience to illustrate. Encourage your customers to alert you if they find a better product on the market. Tell them that until that happens, you’re not going to take their money for something you don’t believe in. Do it loudly and proudly. Finally, give them a list of your competitors who will be happy to help them if they still want to purchase, with a genuine note that “they have great service, I’m told.” Ostensibly, you are helping the customer find what they want. But realistically, you are placing yourself on the moral high ground. Don Draper did it, I do it.. There’s something to this.