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Chick-fil-A Closed Sundays

Withholding: Why You Should Give Your Customers Less of What They Want

Withholding is a useful differentiation strategy for some organizations. Stan Phelps, IBM Futurist and Forbes contributor writes:

Most brands are trying to be strong, and they want to get stronger. They want to be powerful. This seems to make sense. Be the best. Do more. Expand. Grow. Benchmark your competition and then offer more features, more products, more services, and more locations.

Why do less? Why withhold?

Because withholding is zigging when everyone else is zagging.

Chick-fil-A, the chicken-centric fast food chain, is infamous for being closed on Sundays (amongst other things). And while withholding wasn’t an intentional tactic when the company was founded over 70 years ago, it has been an effective one. (Chick-fil-A chooses to remain closed on Sundays in order to give employees and customers a dedicated day to spend with their families and their communities.)

Withholding is doing less of what makes you strong, less of what customers love about you. It’s about limiting customer choices, limiting decision fatigue, and creating some scarcity – whether it’s false scarcity or not.

Withholding gives you or your business a chance to build anticipation.

Withholding involves offering fewer options, fewer locations, fewer features, fewer products, fewer services, fewer hours, fewer perks, and fewer discounts. This is about deliberately and relentlessly shrinking the things that everyone else is expanding.

Oddly enough, withholding is part of a differentiation strategy: Do less of something you’re good at in order to stand out even more. When executed properly, doing less can drive even more demand.

Growing up in Texas I’ve seen this first-hand a hundred times. Someone has the brilliant idea to grab some Chick-fil-A and you race over to the location down the street, your mouth watering. Before you even turn off the road you know something is wrong. The parking lot is empty. It’s Sunday.

While Sonic took our Sunday dollars, Monday was always Chick-fil-A.

Drive-thru Takeaway: How can you withhold to bring about more demand? To differentiate? How can you integrate doing less into your positioning and strategy?

I’ll leave you with a Chick-fil-A love song:

(Image Source)

Niche Positioning Lessons From A Sad Clown Who Doesn’t Talk But Sings His Ass Off

Niche Positioning with Puddles Pity Party. Hit play.

 

That is Puddles Pity Party – a one man cover band. Puddles has nearly 400,000 followers on YouTube, many 20+ million view videos, 140,000 monthly listeners on Spotify, and he performs all around the world. Just last week he sold out the Palace of Fine Art Theatre, a 962 seat venue in San Francisco. Puddles was also an America’s Got Talent quarterfinalist in 2017.

How on earth did this happen? And how can you replicate Puddles’ odd but tremendous success?

This post will dissect how Puddles has positioned himself over time and identify lessons that might be applicable to your endeavors.

Be Remarkable

I love you – You’re unique, you’re interesting, you’re different, and people are going to remember [you]. – Howie Mandel

Puddles is remarkable – literally.

And that’s why during Puddles’ America’s Got Talent audition the judges had such high praise for his performance. Heidi Klum commented, “very unexpected, very original, very different, and I want to see more.” Even Simon Cowell had nice things to say.

Some call Puddles’ performance a gimmick. And yes, the juxtaposition is remarkable: a sad, mute clown who sings so beautifully that you can’t help but smile. But what may have started as a gimmick has turned into millions of people (and maybe you) falling in love with a fantastic performer and supporting his art.

Puddles differentiated himself so that he could stand out. Ironically, in order to be heard Puddles chooses to not speak, making his singing voice come off that much louder by further exaggerating the juxtaposition.

Hit play below and keep reading. This song should take you to the end of this article – just another 4 minutes.

 

Niche Down

Puddles wasn’t born Puddles.

Puddles Pity Party is Mike Geier – the 54 year old 6’ 8” baritone. He’s obviously a talented vocalist but that’s not enough to succeed these days.

Here’s Geier in 1994 performing Disney’s I Wan’na Be like You (The Jungle Book) with one of his previous bands, The Useless Playboys.

While entertaining, Geier’s performance isn’t unique. Geier hadn’t found his niche yet. So he kept experimenting – searching for what clicked with audiences.

Geier experimented with a lot of personas. He was Big Mike, Kingsized, Greasepaint, part of the Swing Noir band called the Useless Playboys, and a part of many other acts and groups along the way.

Puddles Pity Party Ancestor - 2009

From what I can tell, Puddles was a minor character in Geier’s repertoire for a long time before taking center stage. YouTube videos from 2009 and 2010 feature Puddles, but not our 2018 Puddles. Those videos feature a “missing link” Puddles, bridging a gap between Geier and the Puddles we know today.

Puddles’ evolution seemed to accelerate when Geier was performing at a cabaret in Seattle called Teatro ZinZanni. Geier could experiment in front of an audience every night and continuously make small improvements.

Feedback Loops

Tight and frequent feedback loops are undervalued. When done properly, tight and frequent feedback loops force you to 1) put your work out there, 2) listen to your audience’s response, and 3) to try new things in order to improve.

The problem, of course, with tight and frequent feedback loops is that you have to put your work out there, listen, and try new things – which requires a lot of motivation, time, energy, and persistance.

Iterate

When you’re just beginning, it’s important to start narrow – to do one thing well. You’ll get increasingly better at whatever it is you’re doing. But you also have to experiment and try new things.

To find the right niche, you may have to search and search and search. Hard work and persistence may pay off: You might discover your niche, your product-market fit, and become a ten-year “overnight” success like Puddles.

One obvious challenge here is balancing focus with experimentation. I think the best remedy is to be intentional – maybe even scientific – with your experiments. A “pivot” is holding most variables constant while changing others. Plant one foot while you find a better position for the other.

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The Anatomically Modern Puddles

A 2012 interview with Geier hints at a nearly modern Puddles. All of the Pagliacci hallmarks were there – white face paint with red accents and the baggy clown suit. But we also see Puddles’ trademark “P” crown and his operatic singing style.

Puddles Pity Party Artifacts - 2012Source

And by late 2012, there’s no doubt that Geier has found product-market fit for Puddles.

So we have some understanding of Puddles ancestry, but what makes a good niche?

Seek a Niche that’s Worthwhile

People want to be entertained. Puddles delivers because Geier understands entertainment. He understands fans, culture, originality, comedy, presence, and performance. And he studied and emulated one of the greats – Elvis – for years.

But your niche can’t just be worthwhile to your future customers. In order to compete long term, your niche has to be worthwhile to you too – financially and artistically.

Puddles’ niche may be focused but it’s not small.

Puddles has enormous appeal. His covers of pop songs cut cross both time and genre – attracting fans of David Bowie, Lorde, Elvis, R.E.M., Sia, Queen, Tears for Fears, Radiohead, Johnny Cash, Twenty One Pilots, Coldplay, and even a mashup of STYX + Disney’s Frozen.

Seek a Niche that’s Under-served

Niching down sends a signal to your customers that you’re dedicated to a specific thing that they care deeply about.

Go after a market that’s under-served. Your market will be thrilled that someone is finally paying attention to them and reward you with their time, attention, and money.

Going after an under-served market lets you deliver disproportionate value immediately. When you over-deliver, your fans will be evangelical, bringing others into the fold and reducing your customer acquisition costs.

Seek a Niche that’s Defensible

There’s no lack of great singers out there – in fact it’s a competitive, cut-throat market for up-start singers. Supply is much greater than demand for talented vocalists. That’s the core reason why Geier didn’t have Puddles-level success as Big Mike, Kingsized, Greasepaint, or the Useless Playboys.

But as Puddles, Geier is in a category of his own – a great position to defend from competition.

I dare you to copy Puddles. You will fail. You’ll fail because blatantly copying his ideas will make you look ridiculous. You can never be an exact clone of Puddles anyway because he’ll always be the original and you’ll always be the copy.

When considering a niche, think about defensibility. There are many ways to defend your position in a competitive landscape. Ideally, one feature of your position would be an element of self-defensibility.

Summary

When you’re starting something new, seek out a niche – a niche that’s remarkable, worthwhile, under-served, and defensible. Experiment and iterate, holding on to what works and leaving behind what doesn’t. Once you find a valuable position in your competitive landscape, ruthlessly exploit it, cautiously grow it, and begin to invest in your next move. Land and expand.

I agree with Simon Cowell. I think Puddles is “fantastically brilliant” and I think his strategy for finding and owning a niche has been a success that will continue to pay off for Geier, his team, and his fans.

PS: If you have another 4 minutes, I’ll leave you with one final video from 2014 (Dancing Queen by ABBA). I want you to note how many people are recording him in this tiny coffee shop in 2014. Puddles is safe, fun, and worthwhile – the formula for sharability – a concept I lifted straight from Ryan Holiday’s Perennial Seller.

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The Relationship Between Secrecy & Competition

In What Is Strategy?, I define a strategy as “a well-aligned set of activities that results in a valuable position within a competitive landscape.”

Surprise is an incredibly useful tool during competition since telling our competitors what we’re going to do before we do it gives them a chance to devise a better course of action than they would have made otherwise. And since there’s always a competitive element to strategy, it seems like we would always want to keep our strategies a secret until we execute on them.

For example, it would be foolish for Apple to tell the world that it’s entering the content creation space 12 months before they’re ready. Netflix, Amazon, and the entire Hollywood machine would have time to adapt and make it harder for Apple to successfully enter the space. Having early access to this information would give competitors the chance to form alliances with one another, sign exclusive deals with producers, writers, actors…etc, and even lobby legislative bodies to make it harder for Apple to enter the space.

Secrecy is a requirement for the success of many strategies.

Just Between You and Me

However, there are scenarios when making our strategies well known is actually better than keeping them a secret – particularly when the competition isn’t fierce.

Since fierce competition destroys profits, it’s often wise to try to avoid it anyway. Signaling our high-level strategy is a good way to let nearby competitors know which battlegrounds are important to us and which are not.

Tesla’s Strategy

Tesla’s original master plan, written in 2006, clearly states: “The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.”

Musk continues:

So, in short, the master plan is:

– Build sports car
– Use that money to build an affordable car
– Use that money to build an even more affordable car
– While doing above, also provide zero emission electric power generation options

In announcing this, Elon Musk put his cards on the table. None of the existing car manufacturers or any of the new upstarts made a serious effort to copy this strategy. And it took years for anyone to try to compete directly with Tesla in the high end market – which Tesla temporarily vacated as they began to move down market.

Even now, 12 years after Musk publicly announced Tesla’s master plan and strategy, no all-electric car has copied Tesla’s models and started a fiercely competitive war.

In fact, Tesla has succeeded and the company has entered a new strategic phase which Musk described in another blog post.

Musk knew that no other car company would copy his strategy and that Tesla would benefit more from announcing their plans than from keeping them secret.

The Competition

While Tesla didn’t broadcast every strategic move they were planning, Musk was very explicit about the company’s overarching strategy. It makes me wonder how the rest of the auto industry thought about Tesla and all-electric cars at the time.

Maybe some direct competition – real or even just announced – would have forced Tesla to play their cards a little differently and given one competitor an edge? Maybe not.

The Raisin Cartel

In 1937 the US Department of Agriculture picked a group of raisin farmers and handlers and gave them the power to constrict the amount of raisins that all farmers could produce in a given year. This cartel, called the Raisin Administrative Committee, made it a federal crime to attempt to sell more raisins than they determined.

Fun facts: The United States Department of Agriculture, created in 1862, is part of the administrative branch but basically has the power to create laws – a role that’s traditionally reserved for the legislative branch. In 2017 the USDA employed over 105,000 people and had a budget of $151 billion, nearly 8 times NASA’s budget.

Even though cartels, collusion, price-fixing, and other monopolistic practices are clearly violations of US antitrust law, in 1937 a few lucky raisin farmers and handlers became part of a government-protected cartel. The stated purpose of the cartel was to “stabilize” the price of raisins.

Specifically, the Raisin Administrative Committee “a requirement that growers set aside a certain percentage of their crop” to give to the Government, “free of charge.” These raisins are then destroyed, donated, or sold in “noncompetitive” markets, which artificially increases the price of raisins for consumers like you and me (but not my mom – she hates raisins).

In the 2003-2004 growing season, raisin growers were required to set aside 30% of their crop. But that was a relief from the season before when growers were forced to set aside a whopping 47% of their crop.

But like it or not, the rules were the rules. Until they weren’t.

In 2002, when the Raisin Administrative Committee told Marvin and Laura Horne that they could only sell 53% of their raisin crop, they choose to disobey. “The Government sent trucks to the Hornes’ facility at eight o’clock one morning to pick up the raisins,” the Supreme Court opinion reads, “but the Hornes refused entry.”

They were fined $480,000 for the market value of the raisins – even though they would not be compensated that amount when forced to give them to the government – and an additional $200,000 for disobeying orders. Over the next 12 years, the case bounced around various courts until it finally reached the Supreme Court in Horne v. Department of Agriculture.

The court’s opinion was that “Raisins…are private property – the fruit of the growers’ labor – not public things subject to the absolute control of the state.”

Another raisin grower, Dan King, thought that Marvin Horne had acted unfairly: “I think that there’s a set of rules that everybody was playing by during the time that he was not. You know, it’s like everybody stops at the stop sign but not everybody. [If] somebody doesn’t, it causes a problem. And we needed to have the whole industry following the rules or nobody following the rules.”

This is exactly how cartels normally collapse – some members want more for themselves and begin to “cheat.” They produce more than their quota and soon enough everyone is cheating. Except in this case, “cheating” meant competing to supply the right product to the right customer at the right price. While the Supreme Court’s opinion may mean that the cartel members can no longer constrain supply and therefore inflate prices, it also means that consumers pay a lower price on the free market – a clear win for consumers.

WTF is going on in Raisin-town?
Notes: 1) Apparently Dan King is a member of the Raisin Administrative Committee. 2) By the way, the ‘S’ to the far left of his name stands for “Sun-Maid Member Representative,” which collectively controls over 20% of the committee at present. Interesting that a private company has any say in a government agency, let alone a 20% say. 3) Also of note was that the Chooljian Family represents 3 members (and 1 alternate), the Kazarian family has 2 members, and the Sahatdjian family (related to the Sahatjian family) also represent 3 members. Together, these three families control an additional 17% of the member votes. 4) Finally, it turns out that “Sahatjian” v “Sahatdjian” is not a typo but that the two families are related. In fact, there was a real “Sahatjian” v “Sahatdjian” in 2014 – a huge (>$3.25m) lawsuit between the two related families that seems to suggest that things get ripe in the raisin racket frequently – even within families. (Screenshot: Dec 14, 2017)

While I’m glad that things worked out okay for the Hornes and for US raisin consumers, it does make me think about all the other places where consumers are paying artificially high prices because of cartels and how many of those cartels are being protected by those in power.

And while this is an amazing case of a farmer breaking bad rules in order to change them for the better, there was clearly a large element of “right time, right place” involved in the Horne case. Which makes me wonder: How do you know when to be the raisin rebel or when to surrender to the rules?

Credits & Sources:
I originally heard about the Hornes through the NPR Money podcast – one of my all-time favorite podcasts.  And here’s the Supreme Court’s 42 page opinion.