Godin Offers Old-Schoolers New Growth Tips

May 1, 2006

BY MICHAEL KRAUSS

In this world of Google, Yahoo!, eBay and Amazon, I sometimes get confused. The Internet was supposed to be dead, but these sites are booming.

New so-called purpose-driven venues such as Craigslist.org--a noncommercial site started by San Franciscan Craig Newmark as a local bulletin board--now threatens classified ad revenue at the nation’s leading newspapers. Then there’s Ask.com, which aims to topple Google.

Don’t forget Steve Jobs and Apple. Remember when Apple stock was less than $10 and going out of business? That was before the second coming of Jobs and the arrival of music downloads and iPods.
Who would have expected it? What analyst would have predicted it? If you’re an old-fashioned marketer trying to make sense of it all, who are you going to call?

Seth Godin, of course.

Godin is the Buffalo, N.Y., native who went off to Tufts University to study computer science, applied mathematics and philosophy. A natural-born entrepreneur, as a junior he co-founded a student-led business conglomerate that grew to 400 employees and 18 divisions. “I started a new company every 10 days,” Godin says. “We had a snack bar, a ticket agency, a temporary employment agency. It was a really great environment.”

Godin headed west for graduate school. “I have an MBA from Stanford, which I got by the skin of my teeth,” he says. “At Stanford, they had two introductory marketing classes. There was the academic marketing class, which required lots of analysis. And there was this intuitive marketing class taught by a guest lecturer. It was all about understanding how to establish a spot in the customer’s mind. I really lucked out. I got into the second class.”

Entrepreneurship and intuition combined with a touch of irreverence and a willingness to take risks and try new approaches. That’s what Seth Godin preaches in his books, on the lecture circuit and on his blog, www.sethgodin.typepad.com. It also explains the success of Google, Yahoo!, eBay, Amazon and Apple. The ethos of Seth Godin is commonplace among the Internet’s leaders.

Godin is the author of six best-selling marketing tomes including: Permission Marketing: Turning Strangers Into Friends And Friends Into Customers, All Marketers are Liars: The Power of Telling Authentic Stories in a Low-Trust World, Purple Cow: Transform Your Business By Being Remarkable, The Big Moo: Stop Trying to Be Perfect and Start Being Remarkable, The Big Red Fez: How To Make Any Web Site Better, and Unleashing the Ideavirus. His next book Small is the New Big will be published this summer.

“The change that I am trying to make is about three things,” Godin says. “It is about realizing the consumer has power, which means you have to treat the consumer with respect. It is about realizing that attention is scarce--which means you can’t get all you want, and realizing remarkable ideas spread.”

Godin first came to prominence in October 1998 when his direct and permission marketing company, Yoyodyne Entertainment, was bought by Yahoo! in a stock swap valued at $29 million. Godin’s humble about the Yahoo! deal and his contribution to the growth of the portal.

“I am not responsible for Yahoo! working, and I have never said I was,” says Godin, who lauds founders David Filo and Jerry Yang for building a great product and sticking with it through good times and bad.

“They didn’t do it for the money,” Godin adds. “They are passionate about solving problems for the people who use the service. The only thing they cared about was making a better tool for people.”

Though Godin claims his contribution to Yahoo! was small, Yoyodine brought the search engine company important expertise. In the early days of Internet marketing, Yoyodine understood how to measure ROI. “We came in and taught Yahoo! how to measure. Why to measure. And, what mattered in terms of interaction,” Godin says. “That laid the groundwork for a lot of the things that Yahoo! ended up doing, but the momentum was already there.”

Godin’s ideas led to a migration from the pay-per-impression banner ad models of the early Internet to the pay-per-click approaches that are common today.

What can traditional marketers learn from Godin? Most offline marketers today are struggling for growth.

“I would ask a traditional marketer, are all the tools you are using working? Are you getting the ROI and growth you are expecting,” Godin asks. “If the answer is ‘Yes,’ you don’t need my help.”

“The fact is, there’s a crisis. You can’t buy attention the way you used to. P&G spent more than $2 billion trying to interrupt people with messages they didn’t want to get. It’s not working anymore,” Godin claims.

Godin’s smart and understands people. He knows that change isn’t easy to make. He advocates gradual action.
“The president of Eddie Bauer was bragging that every person on his marketing staff had worked in an Eddie Bauer store selling on the floor,” Godin says. “I said, ‘OK, how many of your marketing people have actually sold something by e-mail?’ One person out of 50 raised their hands.”

Godin had them contact 2,500 people who had written to Eddie Bauer and given the company permission to contact them. They divided the 2,500 among the 50 employees and instructed them: E-mail these people. Sell them a pair of corduroys. Interact with them enough so they trust you enough so that they will buy something from you.

“That was fairly painless,” Godin adds. “It took no new technology. Just 50 people sending 50 e-mails to customers. They all learned in an afternoon what it took to get that person to purchase online.”

Godin isn’t a consultant, but he offers advice and asks questions. “You have to figure out how to fail and how to fail often,” he says. “One of the things I say to people is, ‘I want a list of all your failures. If you don’t have any failures, you are fired.’ ” Godin points to Nike and to the Home Shopping network as examples.

“At Nike, they put out a new model of sneaker every 12 hours. Almost all of them fail. In the control room at the Home Shopping Network they are constantly monitoring how fast things are selling. After 6 minutes if you are not making it, you are off the screen. If you are making it, the time goes to 12 minutes and then 18 minutes. When they book tomorrow’s show, they use what happened today to figure out who should go on.”

It reminds Godin of his Stanford classmates who took the analytical marketing course instead of the intuitive class. “All of the people in the first class have dead-end jobs. They are stuck because they think they can analyze their way out of a situation. And you can’t. There is no indication whatsoever in a non-P&G world (that) you can analyze your way to success.”

“Marketers are scared,” Godin says. “Analyzing is always easier than failing. I believe that the people who are succeeding are the ones who are failing fast.”

What’s next for Godin? He’s excited about his new book.

“The theme of Small is the New Big is that acting small--answering your own mail, treating people like people, making your products something people really want--all those things are how you get big,” Godin says.

“All the advantages of being big--having tonnage, having shelf space, that you get to bully people around--are now disadvantages, not advantages,” he claims.

Godin’s been an entrepreneur since he was 16. He’s having a ball living on the Internet as a thought leader and change agent. Thanks to Internet technology, Godin takes few risks and is a model of how new organizations can prosper.

“I spend very little money promoting things,” Godin says. “I have a resilience built in. I can do this for a really long time, as opposed to an organization that spends $10 million or $20 million dollars a year to make it all work. It leads to a much more relaxed way to make a living. It’s really satisfying to me.”

It may also explain why traditional marketers are struggling while the new Internet marketers at Google, Yahoo!, eBay, Amazon and Apple are celebrating.

Michael Krauss is a partner with Marion Consulting Partners based in Highland Park, Ill., and can be reached at Michael.Krauss@Marionpartners.com or news@ama.org.