Build Loyalty That Drives Growth | Marketing Success in 17 Minutes

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Well, I mean, I also think fun should come into marketing. There was an occasion where British Airways decided to sponsor a giant wheel opposite the House of Commons in London, England, and this giant wheel was lying flat on the ground. and they got all the press together one morning where they were going to lift the wheel up. And I got a call at about 7 in the morning saying that BA had technical problems and they couldn't get the wheel up, and all the press, the world's press, were there waiting. We had an airship company, so I rang up the airship company and we scrambled an airship. and the airship went right over the wheel, and it had a massive big banner across it which simply said, BA can't get it up. And, anyway, we got more coverage around the world for that than I think any other one single thing we've done. On marketing generally, I mean, again, I think that the cheapest form of marketing is not full-page adverts in the press, it's It's free advertising. So if you're up against a big corporation, you do need to use yourself to try to get free advertising. And try to do it in fun ways like that so you stand out from the crowd. Try to make sure you end up doing something that hits the front page of the newspapers rather than the back page. But, you know, obviously we've gone— to extreme lengths to try to put Virgin on the map, whether it's trying to be the first across the Atlantic in a hot air balloon or the Pacific in a hot air balloon. But it did help, I think, create the Virgin brand, make it a fun brand, and a brand that people could identify with.

Take time to study good direct response ads. Take time to, for instance, maybe develop a swipe file. So one of the things that I did for years is anytime Every time I bought something, I would identify the ad, the phone call, the print ad, the offer, whatever it was that made me decide to buy it, and I would either cut it out or record it, put it into Evernote, whatever it might be, and save it. So I had a record of everything that I bought and why I bought it. And then I could go back and review it, and I'd be like, oh, looks like I fell for this, this, and this. Not in a bad way. It looks like this tipped me from, eh, or not interested to, yeah, I'll spend $5, $50, $500, $5,000 on that. I save all that. Everything that works in sales has been done already. You do not need to reinvent the wheel. So just keep track of the crap that you buy, or the awesome stuff that you buy, and decide, you know, what was the trigger? What pushed me over the edge? And then just sell to people like you. That's what I do. It's really easy. People are like, who's your market? I'm like, well, You know, I'm a 30-something, SF-based, tech-savvy male. So why don't I just sell to those people? That makes it a lot easier than trying to guess.

So let me tell you about my introduction to network marketing because I had a very closed mind to it. Since I can build my own businesses, I said, why do I need a network marketing business? But about 15 years ago, I have a good friend. His name is Bill. And this guy is the best real estate investor I know. He has tons of assets in here. So I said, "Bill, why did you start a network marketing business?" And his simple— his answer was very simple. He says, "It's my way of helping people." But more importantly, he says, "The reason most people can't invest in real estate is because they don't have a business. They don't make enough money simply because taxes, debt, inflation, and retirement savings are killing them. They cannot even invest." So my friend Bill, who was a professional real estate entrepreneur, he says, "I started a network marketing business so the people that worked with me could start their own business and then invest money with him. So with that, I realized then that network marketing wasn't about making money, but it was about helping people to help other people make money so they become financially free. So the beauty of network marketing, I said, like, it's very low entry point, doesn't take much money, you can do it part-time. And where you profit is, in most big corporations, is they spend millions, sometimes billions of dollars in advertising. So rather than give that money to advertisers, network marketing depends on building a network. It's called word of mouth, like you recommend a movie to a best friend. So really, the reason I support network marketing, because it's not about selling. It's about people helping people build assets in the asset columns, becoming business owners, and then becoming investors.

But I believe very strongly that we could build a different kind of company. I never believed, never, I think it would have been arrogant to believe that we could have 1,000, 2,000, or 7,500 stores in the US and around the world. But something really magical started happening. And it started happening as a result of not advertising or conventional consumer classical marketing. The fact is that Starbucks spends very little on traditional advertising. It started happening because we demonstrated to ourselves, and now the world, that to build an enduring, sustainable, long-term business and consumer brand, it's not about fancy marketing. It's about establishing a very powerful and unusual emotional relationship with the customer.

So our whole philosophy is, let's take most of the money that we would have spent on paid advertising or paid marketing, and rather than than buy our exposure. Instead, let's invest it into customer service and the customer experience. And let our customers do the marketing for us through word of mouth. On any given day, about 75% of our orders are from repeat customers. And we basically grew from no sales in 1999 to, in 2008 was the first year where we hit $1 billion in gross merchandise sales. And actually, even despite the bad economy, we've actually continued to grow over the last 2 years. In fact, our net sales for Q1 this year were up almost 50% year over year. And people ask us, what did we do differently over this last 24 months? And we actually didn't do anything differently. And it's not because of anything we did over the past 2 years. It's because of all the investment we made prior to that that we continue to grow because of the loyalty of our customers. And the number one driver of all that growth is through repeat customers and word of mouth.

And PayPal is really a case of where the whole viral marketing. It's really a perfect case example of viral marketing, like Hotmail was, where one customer would essentially act as a salesperson for you for bringing in other customers. So they would send money to a friend and essentially recruit that friend into the network. And so you had this exponential growth. The more customers you had, the faster it grew. So you had— it was like bacteria in a petri dish. You know, it just goes like— there's this S-curve. And in fact, I ran PayPal for about the first 2 years of its existence. And we launched after year 1, and by the end of year 2, we had 1 million customers. So it gives you an exac— you know, it just gives you a sense for how fast things grow in that scenario. And we didn't have a sales force. We actually didn't have a VP of Sales. We didn't have a VP of Marketing. And we didn't spend any money on advertising.

Most people think marketing is a task, neither a science nor an art. It's a task where someone gives you an average product for average people, and your job is to hype it and spin it and promote it and advertise it so that the masses will buy it. And I'm not buying that. I think that marketing is the art of making something that people want to talk about, of producing something that people want to engage in. So marketers have to move upstream now. We have to stop being the last step in the process and start being the first step.

For starters, we know we have a darn good product, but if we take the time with ourselves and our staff to go in there and tell them all the ways to use it and reassure them not as only a good product, but here's how you use it to create a good salon experience, or the consumer when you take it home to keep your hair the same in-between visits, you fill a need in the marketplace. One, there's a need, of course, to buy a product or another product. But the next one is you must constantly remind them how to use it properly, which makes you a little different. Now granted, maybe there's another one used the same way, but nobody told them. We're amazed at times when people are using some of our finest products and didn't know there's other ways to use it also. It's through education. You must constantly reinforce the education and why it's so good.

That's the thing, right? Like you said, you know, a lot of artists just have MySpace and just have, you know, a couple songs and don't have a website, don't have marketing, don't have anything. And then they get disappointed when they only sell like 70 records, you know? And it's like, you gotta understand that this is about marketing. Like, this whole thing is about marketing. It's about your image. It's about your story. You got to be appealing to people. And if you're going to release a record in Canada, You have to do something that nobody else has done or else there is no point. That is how I see it.

To me, marketing is about values. This is a very complicated world. It is a very noisy world. We are not going to get a chance to get people to remember much about us. No company is. So we have to be really clear on what we want them to know about us. Now, Apple, fortunately, is one of the half a dozen best brands in the whole world, right up there with Nike, Disney, Coke, Sony. It is one of the greats of the greats, not just in this country but all around the globe. But even a great brand needs investments. And caring if it's going to retain its relevance and vitality. And the Apple brand has clearly suffered from neglect in this area in the last few years, and we need to bring it back. The way to do that is not to talk about speeds and feeds. It's not to talk about MIPS and megahertz. It's not to talk about why we're better than Windows. The dairy industry tried for 20 years to convince you that milk was good for you. It's a lie, but they tried anyway. And the sales were going like this. And then they tried Got Milk, and the sales have gone like this. Got Milk doesn't even talk about the product. As a matter of fact, it focuses on the absence of the product. But the best example of all, and one of the greatest jobs of of marketing the universe has ever seen is Nike. Remember, Nike sells a commodity. They sell shoes. And yet, when you think of Nike, you feel something different than a shoe company. In their ads, as you know, they don't ever talk about the product. They don't ever tell you about their air soles and why they're better than Reebok's air soles. What does Nike do in their advertising? They honor great athletes and they honor great athletics. That's who they are. That's what they are about. Apple spends a fortune on advertising.

You'd never know it.

You'd never know it. So when I got here, Apple just fired their agency. They were doing a competition with 23 agencies that, you know, 4 years from now would pick one. And we blew that up. We hired Chiat/Day, the ad agency that I was fortunate enough to work with years ago. We created some award-winning work, including the commercial voted the best ad ever made in 1984 by Advertising Professionals. We started working about 8 weeks ago. The question we asked was, our customers want to know who is Apple and what is it that we stand for? Where do we fit in this world? What we're about isn't making boxes for people to get their jobs done, although we do that well. We do that better than almost anybody in some cases. But Apple is about something more than that. Apple, at the core, its core value is that we believe that people with passion can change the world for the better. That's what we believe. And we've had the opportunity to work with people like that. We've had an opportunity to work with people like you, with software developers, with customers who have done it in some big and some small ways. And we believe that in this world, people can change it for the better. And that those people that are crazy enough to think they can change the world are the ones that actually do. And so what we're going to do in our first brand marketing campaign in several years is to get back to that core value. A lot of things have changed. The market's a totally different place than it was a decade ago. And Apple's totally different. And Apple's place in it is totally different. And believe me, the products and the distribution strategy and the manufacturing are totally different. And we understand that. But values and core values, those things shouldn't change. The things that Apple believed in at its core are the same things that Apple really stands for today. And so we wanted to find a way to communicate this, and what we have is something that I am very moved by. It honors those people who have changed the world. Some of them are living, some of them are not. But the ones that aren't, as you'll see, you know that if they ever used a computer, it would have been a Mac. And the theme of the campaign is, is Think Different. It's the people honoring the people who think different and who move this world forward. It is what we are about. It touches the soul of this company. I'm going to go ahead and roll it, and I hope that you feel the same way about it I do.

Here's to the crazy ones, the misfits, The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules, and they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world are the ones who do.

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Continue to believe, and we'll see you soon.