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Seth Godin has written 12 bestsellers that have been translated into 33 languages

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all.marketers.tell.stories

All Marketers Tell Stories

Seth's most important book about the art of marketing

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Free Prize Inside

The practical sequel to Purple Cow

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linchpin

Linchpin

An instant bestseller, the book that brings all of Seth's ideas together.

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meatball.sundae

Meatball Sundae

Why the internet works (and doesn't) for your business. And vice versa.

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permission.marketing

Permission Marketing

The classic Named "Best Business Book" by Fortune.

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poke.the.box

Poke The Box

The latest book, Poke The Box is a call to action about the initiative you're taking - in your job or in your life, and Seth once again breaks the traditional publishing model by releasing it through The Domino Project.

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purple.cow

Purple Cow

The worldwide bestseller. Essential reading about remarkable products and services.

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small.is.the.new.big

Small is the New Big

A long book filled with short pieces from Fast Company and the blog. Guaranteed to make you think.

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survival.is.not.enough

Survival is Not Enough

Seth's worst seller and personal favorite. Change. How it works (and doesn't).

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the.big.moo

The Big Moo

All for charity. Includes original work from Malcolm Gladwell, Tom Peters and Promise Phelon.

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the.big.red.fez

The Big Red Fez

Top 5 Amazon ebestseller for a year. All about web sites that work.

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the.dip

The Dip

A short book about quitting and being the best in the world. It's about life, not just marketing.

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the.icarus.deception

The Icarus Deception

Seth's most personal book, a look at the end of the industrial economy and what happens next.

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tribes

Tribes

"Book of the year," a perennial bestseller about leading, connecting and creating movements.

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unleashing.the.ideavirus

Unleashing the Ideavirus

More than 3,000,000 copies downloaded, perhaps the most important book to read about creating ideas that spread.

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v.is.for.vulnerable

V Is For Vulnerable

A short, illustrated, kids-like book that takes the last chapter of Icarus and turns it into something worth sharing.

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we.are.all.weird

We Are All Weird

The end of mass and how you can succeed by delighting a niche.

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whatcha.gonna.do.with.that.duck

Whatcha Gonna Do With That Duck?

The sequel to Small is the New Big. More than 600 pages of the best of Seth's blog.

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THE DIP BLOG by Seth Godin




All Marketers Are Liars Blog




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Member since 08/2003

What's it for?

and How will we know if it worked?

Answer these two questions first, please. If it's worth doing, it's worth knowing before you do it.

A hammer is for getting nails into wood, and it's pretty easy to tell if it does the job well. That's one reason why we have so many good hammers available to us--real clarity about what it's for, and whether it works or not.

Too often, we wait until we see what something does before we decide what we built it for.

[Examples: what's a receptionist for? Dog food? Life insurance?]

Understanding substitutes

This is a pretty long post, and I know that you could easily substitute another round of Angry Birds instead of reading it. I hope you’ll find it useful.

One of the key elements of pricing is realizing that people have choices, and that substitutes are available. This is more nuanced than it sounds, though, and I want to highlight key things to keep in mind when you think about how much to charge and how people might react.

Marketers make two mistakes over and over. They create average, commodity products and expect that people will pay extra for them. Or, in the other direction, they lose their nerve and don't charge a fair price for the extraordinary work they're doing, afraid that people will find a substitute.

"Why should I buy this from you, that guy over there sells something just like it?"

"Why should I buy anything from any of you guys? I'll just watch TV/eat in/skip it..."

The highlights:

  • There are two kinds of substitutes--between markets and between competitors
  • Commodity goods and services have easy substitutes between competitors
  • Some goods are difficult to understand before purchase and use, and most consumers undervalue them and treat them like commodities
  • Industry norms are an important signalling device, part of the way price tells a story, and a way that substitutes across categories often come into play. Norms make us think something is fair and safe
  • Network effects make substitution difficult and need to be amplified in many markets in order to create more value
  • In commodity markets, price often drops to marginal cost, and in digital markets, that’s often zero
  • Luxury goods, for many of the reasons stated above, have few substitutes for those that value them

Consider the market for a dozen eggs, sold at the supermarket.

There are commodity eggs, normal, regular, use-these-eggs-in-your-cake-or-your-omelet sort of eggs. When you have a choice of two brands of normal eggs, you buy the cheap ones, because, of course, all eggs are the same. One is a perfect substitute for the other.

Right next to those eggs, though, are eggs with a story. Eggs that are free range or organic or cruelty-free or high in this or low in that. And these eggs cost more. Some people happily buy these eggs, substituting them for normal eggs, because to them, they’re worth more.

If you want to charge extra for eggs, then, you need people to believe that they are worth more than the substitutes. This sounds obvious, but it is the key wisdom that gets us started. How much it costs you to make an egg is completely irrelevant to this discussion (or even how much it costs the chicken, but that's a whole different discussion). People will switch to a similar good any time you haven't given them a good reason to pay extra.

When the price of all eggs goes up, because of an egg truckers strike or because of increasing costs, very few people stop buying eggs and start buying cream cheese instead. That’s because if you want to make a cake, you need an egg. And because if you sell tamago, you need eggs. Eventually, if the price goes really high or the high price sticks around for a long time, some people will find a substitute in a different market, eating Cheerios instead of eggs for breakfast, for example. (This is called elasticity, and we could talk about it forever, but one thing that's worth noting is that elasticity varies wildly across and within categories).

This leads to opportunity and challenge of marketers who choose to sell something that we don't buy very often and that we can't tell if it's better (or if the story is true) until after we buy it. In situations like this, our instinct is to assume that the thing is generic, a commodity, not worth extra. 

Paradoxically, pricing itself also tells a story. If we're picking a surgeon or a restaurant or yes, even a dozen eggs, sometimes we intentionally don't buy the cheapest one. It has to do with the story we tell ourselves about money, certainly, but it's also based on an awareness of how markets work. When we don't want to make a mistake, we seek information, and expensive successful items in the market carry with them the information that other people like me have bought this more than once, that it's probably worth it.

Industry norms become critical when we try to understand substitutes. Take the seventy-year run that paperback books had as a dominant form of spreading a certain kind of idea. At the beginning, they were just a dime, a throwaway item featuring detective stories and romances. As established publishers started putting their books out in paperback, the industry set norms as to what price people should expect to pay for a book. It was a price that was considerably higher than the cost of making a book, but it was also seen as fair, particularly when compared to the price of a hardcover book (the only sensible substitute). 

Because the industry established a price range as a norm, the story of appropriate value was established—not the other way around.

Norms are especially important in markets where the marginal cost of delivering the good or service is really low. How much should image processing software cost? What about a movie ticket? In commodity markets with no marginal cost and many competitors, rational economics would predict that the price would go to zero. But of course, in many markets, it doesn't. That's because industry leaders set a standard and deliver goods that feel fairly priced, so people don't seek inferior substitutes in other markets.

If you're unknown and making a digital good, it makes a lot of sense to charge zero, because it's free marketing, a powerful way to spread your reputation. But the second digital good you make, presuming it's worth paying for, ought to have no substitute, and thus your pricing strategy is very different.

And every marketer must consider network effects. What really creates a lack of substitution is the fact that, due to connections made and stories told, there are no substitutes. If you want to send a fax to someone with a fax machine, you can't buy a typewriter. If you want to share files in Photoshop format, well, then, you're going to have to pay for Photoshop. Money well spent to create the value a network provides.

And for anyone who seeks to offer a good or a service that costs more than the good-enough commodity substitute, we have to understand and embrace the fact that we are in the business of making luxury goods.

Bottled water is an example. A luxury good doesn't have to be for the wealthy--in this case, it's a product with an historically available (and largely free) substitute, and yet many people buy it. And it's worth noting that in most places, a norm for the price of bottled water exists, a norm that's high enough for everyone in the chain to make a profit and to lead to ubiquitous distribution.

Consider the market for ebooks. David Streitfeld, writing in the Times, quotes George Orwell: 

“It is of course a great mistake to imagine that cheap books are good for the book trade,” he wrote. “Actually it is just the other way about … The cheaper books become, the less money is spent on books.”

“If our book consumption remains as low as it has been,” he wrote, “at least let us admit that it is because reading is a less exciting pastime than going to the dogs, the pictures or the pub, and not because books, whether bought or borrowed, are too expensive.”

It's surprising but true that now, books and ebooks are a luxury good, something that (if we're considering all the ways we have to spend time) has many substitutes, costs more than it should, is better than it needs to be and most of all, has a network effect that allows us to tell ourselves and other people a story about what kind of person we are.

Lowering the price of ebooks won't increase the number of people who read them much, as evidenced by how many free ebooks aren't read by everyone (a viral video might be seen by five hundred to a thousand times as many people as a viral ebook). Increasing the urgency, the network effect and the quality (and setting a new, higher norm that allows that) will serve the people who love books in the long run and the short urn.

Booksellers will only be able to do their best work (and enable their industry) when they acknowledge and embrace that this is a luxury good, not something for everyone (most people in the US buy one book a year) but something for people who realize that for the right book, there is no substitute. 

Email and web surfing are a free substitute for reading, even when it comes to reading books that are priced at zero. This blog and many others compete with books every day. There is no price at which everyone will start reading books. Instead, we have to set a norm, figure out a price that (having nothing to do with the cost of delivering one more unit) enables the creation of a powerful stream of goods worth talking about.

That norm elevates a platform for great work.

Tribes and their perceived threats

Intermarriage has always been a problem, all the way back to Romeo and Juliet (and West Side Story, of course). Intermarriage de-demonizes the ‘other’, and the insecure tribe member sees this as an existential threat, the beginning of the end of tribal cohesion.

Gangs in LA view high school as a threat. A kid who graduates from high school has options, can see a way up, which decreases the power of the gang and its leaders. Public school is seen as a threat by some tribes, a secular indoctrination and an exposure to other cultures and points of view that might destabilize what has been built over generations. And digital audio is a threat to those in the vinyl tribe, because at some point, some members may decide they’ve had enough of the old school.

Lately, two significant threats seen by some tribes are the scientific method and the power of a government (secular, or worse, representing a majority tribe). One fear is that once someone understands the power of inquiry, theory, testing and informed criticism, they will be unwilling to embrace traditional top-down mythology. The other is that increased government power will enforce standards and rituals that undermine the otherness that makes each tribe distinct. 

If a tribe requires its members to utter loyalty oaths to be welcomed [“the president is always right, carbon pollution is a myth, no ____ allowed (take your pick)”] they will bump into reality more and more often. I had a music teacher in elementary school who forbade students to listen to pop music, using a valiant but doomed-to-fail tactic of raising classical music lovers.

Tribes started as self-defending groups of wanderers. It didn't take long, though, for them to claim a special truth, for them to insulate themselves from an ever-changing world.

In a modern, connected era, successful tribes can’t thrive for long by cutting themselves off from the engines that drive our culture and economy. What they can do is engage with and attract members who aren’t there because the tribe is right and everyone else is wrong, but instead, the modern tribe quite simply says, “you are welcome here, we like you, people like us are part of a thing like this, we'll watch your back.” It turns out that this is enough.

A kick in the asterisk

What's the point of being open 24 hours a day, seven days a week, especially if you get zero calls between 3 am and 4 am?

Why take the risk of offering a no-questions-asked money-back guarantee when you know that a few people are going to show up with ridiculous requests for refunds?

Do you really want to offer an all-you-can-eat buffet? What about the trolls that eat too much? Shouldn't you have limits?

Simple. Because you've just eliminated a reason for people to wonder. They don't have to wonder about your rules or your hours or your fine print, because you took away the doubt.

"I don't get it"

"I don't like it"

"I don't understand it"

Those are the only responses your new idea can possibly generate from many around you if your new idea is actually a great idea, something ownable, something you can build work around.

The popular, obvious, guaranteed ideas have definitely been taken, or are so small that they're not really worth your blood and tears. 

That means if the new title of your book is instantly understood by all, it's generic or descriptive, not something that people will associate with you as a creator or as someone who brings us new insight.

That means if your app does something so predictable that everyone is sure it's going to work, you're not making a big enough leap.

And that means that if your political idea is so palatable that everyone is going to vote for it immediately, it's not going to change anything.

"I'll ask around the office," is shorthand for, "no. Make it more boring. Banal. And less likely to succeed, please."

Simple, guaranteed, easy and free

That's the perfect advice, and the advice that spreads, the advice we seek.

Of course, advice that's simple, guaranteed, easy and free isn't worth very much, because if it worked, we would have done it already.

No, the advice worth seeking out is really difficult to execute. It costs time or money (or both), and it just might not work.

Hey, if it's worth asking for advice, it's worth doing the hard stuff once we get it, right?

PS check out this new video with Michael and Al. Al's now-classic book on meetings is simple, but not easy. 

Analytics without action

Don't measure anything unless the data helps you make a better decision or change your actions.

If you're not prepared to change your diet or your workouts, don't get on the scale.

Experiencing something other than the prevailing system

Sandeep points us to 'Signs', a restaurant in Toronto where every waiter is deaf and the only way to order is with ASL.

This isn't a tourist attraction or merely a remarkable gimmick. What it does is reverse systemic bias by requiring paying customers to adapt to a system that isn't of their choosing. If you want to eat here, you need to play by a different set of rules.

The original reason for systemic biases is usually benign. "Most people" can't use this, or most people don't look like you or most people won't benefit. Over time, though, the bias in favor of most people becomes more ingrained, and often serves as a barrier to change, reinforcing the power of the dominant group.

I'm well aware that much of what I create is difficult to engage with for people with certain disabilities or cultural backgrounds. And the dynamics of the market often mean that this standard is maintained, usually longer than it needs to be. Signs is a beautiful reminder that we need to actively re-think some of the paradigms about race, gender and disability that we've assumed are normal.

It's extremely unlikely that many other restaurants will hire waiters capable of understanding sign language. For me, the breakthrough here is permitting us, even for a little while, to understand what people who aren't 'most people' or aren't like those in power, have to accept in order to engage with the systems that have been built. 

Is authenticity authentic?

Perhaps the only truly authentic version of you is just a few days old, lying in a crib, pooping in your pants.

Ever since then, there's been a cultural overlay, a series of choices, strategies from you and others about what it takes to succeed in this world (in your world).

And so it's all invented.

When you tell me that it would be authentic for you to do x, y or z, my first reaction is that nothing you do is truly authentic, it's all part of a long-term strategy for how you'll make an impact in the world.

I'll grant you that it's essential to be consistent, that people can tell when you shift your story and your work in response to whatever is happening around you, and particularly when you say whatever you need to say to get through the next cycle. But consistency is easier to talk about and measure than authenticity is.

The question, then, is what's the impact you seek to make, what are the changes you are working for? And how can you achieve that and still do work you're proud of?

Short term, long term

The best way to change long-term behavior is with short-term feedback.

The opposite is not true. We rarely change short-term behavior with long-term feedback.

That's why sanctions rarely work well in international politics, and why cigarette taxes are the best way to keep people from getting lung cancer.

Sure, intelligent adults should be smart enough to figure out the net present value of a lifetime of cigarette purchases, plus the long-term health costs. And some are. But not enough.

And students should be smart enough to realize that extra effort and expense in college might pay off in income or happiness in a few decades. And some are. But not enough.

If you want to reward (or punish) short-term behavior, don't do it down the road. Advances turn more heads than royalty streams do.