I was listening to the Freakonomics “Is America Ready for a No-Lose Lottery?” podcast. It struck me how easy it is to draw an analogy between many small and medium-sized companies marketing efforts and the households that play the lottery.
The podcast threw out a number of statistics (quotes follow), but the comment that most stuck with me was that the reason people play the lottery is because they have an unlikely chance at a big pay out. The main topic of the podcast though was a prize-linked savings account. It is basically a no-interest savings account that allows contributors to participate in random drawings for a prize pool generated from earnings off contributions. So, participants would contribute to an account with a miniscule chance at a huge gain but keep what they contribute.
Now for the quotes and the analogy.
“This year Americans will buy about $60B worth of lottery tickets.”
“Half of US adults say they play the lottery.”
“Houses that play the lottery spend on average about $1,000 per year on tickets.”
How many companies chunk money at the prospect of an unlikely chance at a big pay out with sporadic marketing efforts. You can hear the owners say if I just run these radio ads, buy Television spots, run a series of holiday-themed newspaper ads, add a sales rep…I could really generate some serious buzz or much needed holiday sales… Frequently the copy is hastily generated and bad. The additional sales reps are poorly trained and not oriented to strategic goals. The ad placements are neither consistently run or consistent with the overall business strategy. And the end result is a lack of results. Sure there is a miniscule chance at big results from the effort but what is spent is spent. No balance of business is generated through the sporadic effort.
No-Loss marketing looks more like the prize-linked savings account. Steady contributions to a marketing plan supportive of strategic objectives doesn’t accumulate in a no interest savings account but it will generate a steady accumulation of business based on consistency. And there is still a possibility that one of your ads or marketing ideas will result in an unlikely but large pay out.