Marketing Lessons from a Yoga Studio

About two years ago, I started doing yoga at Yoga Inc, a small studio within walking distance of my apartment. Their facilities are basic, their locations are not central and their prices are not necessarily competitive. However in only three years, they managed to gain a loyal following and expanded into three new branches, not a small feat in such a saturated industry. I attribute their success to basic principles of good marketing.

Find your niche

Most studios are in Singapore are in the central business district, targeting overworked white collars. My studio seems to deliberately set up shop in residential neighbourhoods, enabling them to pay lower rent and reach an under-served audience (stay-at-home moms, working people who don’t like carrying gym bags around) at lower cost. This is a good niche to start expanding from.

Finding a niche is important both for startups trying to disrupt existing incumbents and established businesses trying to expand into new market segments. Having a clearly defined, under-served audience makes it easier to build a strong brand,  foster loyalty and generate word-of-mouth. Targeting “everyone” is essentially the same as not targeting.

How well do you know your audience? Do you know where they live, what they like, how they like to spend their time? Does your product address this audience’s needs better than competitors?

Get a foot in the door

The basic tactic employed by most gyms and yoga studios is to lure new customers in with free classes and hard-sell expensive packages. At my studio, there’s no such thing as a free class. As a first-timer, you can either pay $30 for a single class or get an introductory 5 class package at $70. This is interesting for two reasons:

Relativity – It would be wiser to spend only $30 to evaluate a studio instead of $70. However, the existence of a perceived “better” deal makes the $30 look inferior. So you reach for the bigger package.

Commitment & Consistency – Now that you have made the smarter choice and bought the 5-class package, you have skin in the game. You end up attending 5 classes instead of 1. Now you are familiarizing yourself with the studio and instructors. You start picturing yourself as a health-conscious, mindful, flexible yogi like the ones you see on Instagram. As Robert Cialdini explains so brilliantly in his classic book Influence: The Psychology of Persuasion, we have an inherent desire to appear consistent with our previous commitments, which is why they are so powerful in influencing our decisions.

How do you encourage first time customers to try your services? Do you rely on “free” and “discounts” or do you have a sustainable strategy in place? Which brings me to my next point:

Use promotions sparingly

The studio’s prices fixed at the beginning of the year and there are no discounts for 12 months (except for their birthday week, more on that later). Although this seems counter-intuitive, it makes a lot of business sense – it subtly encourages taking action now!

Promotions are usually the first tool in the arsenal of incompetent managers. They can be effective when used sparingly to get new customers or introduce your product to a new audience segment. However, they can also be fatal when overused since they either attract cheapskates or teach your existing customers to wait for the next discount later rather than buy your product today. I’ve even seen is savvy online-shoppers deliberately abandoning their shopping carts at the payment step, with hopes of receiving a promo code later!

How do you use promotions today? Is it a strategic tool that helps you grow your business or test new ideas, or the marketing equivalent of a fire-extinguisher that you find yourself reaching for a bit too often?

Ride the waves

The only time they have a promotion is in the first week of January, during their “birthday” week. It also conveniently happens to be the time of the year when most of us are guilt-ridden from excessive eating and drinking in December and have resolved to be “fitter and healthier”, only to fail miserably in February. Combined with the principles of commitment, you can see why the timing and positioning is brilliant.

Another example of good timing is using trends on social media effectively. When a Singaporean minister famously declared that “You need a very small space to have sex“, they jumped at the opportunity to encourage their members to post on Instagram with the hashtag #yogainsmallspace. They consistently engage their community by hosting challenges (14 day yoga challenge), organizing events (Halloween special) or featuring their members on social media.

Taking advantage of social events is a great way to keep relevant when it’s smart, timely and authentic. The opposite can also be true, as history is full of failed brands trying to get in on the conversation.

Are you keeping up with trends relevant to your industry? Is your team nimble enough to take advantage of opportunities to delight your audience?

Bring it all together

Lessons on getting smarter about marketing are simple but easy to overlook: Start with clearly defining your audience, figure out how to position and price your products and services to resonate with them, and keep your audience actively engaged by being timely, relevant and authentic. Loyalty will follow.

Tinder and The Sharing Economy

Platforms like Uber and Airbnb have been tremendously successful, precisely because they are extremely effective at connecting supply and demand. So good that they make us question the lifestyles we’ve taken for granted: Do we really need to own a car when we can Uber anywhere or buy a house where we can Airbnb our way around the world?

Tinder is suprisingly similar to Uber and Airbnb in the sharing economy: it’s a novel approach to catering to our fundamental need for human connection, physical or emotional. It invites us to question the expectation that relationships should be long term and monogamous.

The idea of romantic marriage is relatively new. We now turn to one person, asking them to give us what an entire village used to provide not so long ago. No wonder we are so bad at it.

Do we really need to be in a committed relationship if we can have intellectual stimulation with one partner, mind-blowing sex with another, and emotional fulfillment with a third?

Are we returning to communal societies weaved together by smartphones and fuelled by smart platforms, where the tribe takes care our needs, whether transportation, accommodation, sex or companionship?

Leaving the judgement on how to live our lives “the right way” aside, is this transformation is happening so fast that we are failing to notice?

The Big Business Marketing Conondrum

Big corporations are usually oblivious to modern marketing. They typically lack not just the technology to capture, analyse and understand consumer data, but also the mindset and strategic framework. In isolation and indifference, they continue to run campaigns and bask in the glory of irrelevant “success” metrics, simply because they can: they are too big to fail. However, it’s not exactly fair to blame them, let’s blame the industrial revolution instead.

A brief history of marketing

A few centuries ago, marketing was simpler. If you were a baker, you had no choice but to bake consistently good bread, every single day. Your customers knew your name and remembered your face. Bad product or service meant you’d not only lose one customer but the entire village. You had nowhere to run or hide: word of mouth marketing at its best.

The industrial revolution brought a significant change: production on a scale. Companies grew bigger. With the invention of mass-manufacturing technologies, supply surpassed demand for the first time in history, giving birth to the door-to-door salesman. As competition got more fierce, mass-communication, differentiation and branding started to gain importance.

By the 60s, markets were becoming saturated. With so many brands and products to choose from, consumers became increasingly picky about how they spent their hard earned cash. The mere act of manufacturing was not sufficient to sell anymore — companies needed to deliver a compelling reason for consumers to prefer their products as opposed to competitors. Those realizing the need for this shift started paying attention to their consumers’ needs and tweaking their story to better communicate with their audience.

The invention and widespread adoption of internet was naturally the next step in the evolution of modern marketing. Compared to previous channels, the ability to constantly stay connected to consumers, almost real-time feedback, and understanding what made them tick was priceless. With the proliferation of social networks by 21st century, the circle was complete: Consumers were empowered to rely on their network of connections for purchasing decisions in an increasingly noisy world polluted with ads and commercials. Word of mouth was in full-force again.

So what’s the problem?

In an economy built around scarcity, ability to design unique products, manufacture them on a mass scale and access to logistics to distribute them on time were huge competitive advantages. Most of today’s big companies were founded in early 20th century, and their first-mover advantage combined with the momentum enabled by unprecedented growth propelled these companies to become the behemoths they are today.

As these companies grew, they started getting bloated. Slowly, bureaucracy took over the workplace. Then there were TPS reports, office politics, legal approval processes and of course, meetings about meetings. The industrial revolution introduced the concept of working hours, in an attempt to introduce efficiency and basically turn employees into replaceable parts. These employees did not have to look their customers in the eye anymore, they could hide behind the giant billboard ads their employers bought. Speak of lack of authenticity.

The changing fabric of the workplace was still somewhat compatible with a world of big ideas, 5-year marketing plans and multi-million dollar ad campaigns of the 60s. However, the “build it and they will come” mindset and the mass-production mentality of these companies fueled by their success at the beginning of the century — combined with their bad habit of attempting to solve problems by throwing more money at them — did not change as quickly as the changing marketing landscape. This is why big companies increasingly see their marketing expenditure growing, their return on investment shrinking and their consumer loyalty dwindling today.

Is there hope?

Modern marketing requires a willingness to listen to consumers, truly understand the rational/emotional driving forces behind their purchasing decisions, consistently delivering high quality products and services, and having authentic, relevant and personal interactions with consumers. The only valid strategy to thrive in a world where marketing opportunities, platforms and mediums are evolving faster than you can spell “marketing” is to learn to adapt.

Adaptation requires agility and a eagerness to experiment, take risks, test and learn. The big businesses, on the contrary are too big and slow, hate risks and love the status quo. The bright, ambitious marketers working in these big companies who are capable of driving change and possess adaptive traits either become docile through politics and bureaucracy and start saving up for retirement, or leave the corporate world to open the proverbial cafe and restaurant.

Change for these big business must start with empowering the bright ones to take initiative. A particularly interesting approach to do so is holacracy, gaining popularity thanks to companies like Valve, Github, Treehouse and very recently Zappos. Of course, getting rid of managers will not change a company’s culture and mindset overnight, yet it may very well be the first step in giving autonomy back to those who are self-driven and capable. And in a world of without managers, everyone is a producer. A small group of doers with complete autonomy can show everyone else that it is possible to be smart, agile and adaptive.

And one day, these big companies will find out that it makes a lot of business sense to listen to their consumers and build their businesses around what consumers want, instead of what they can produce or what they think they can sell. Then and only then, marketing will evolve from interruption into utility — meeting genuine consumer needs with truly useful products and services.

Personalize or Die

Attention is a scarce resource. Everyday, brands are fighting a decreasing portion of the attention pie, with significantly increasing costs. Although this one-upmanship is great for ad networks, it’s destructive for your bottom line.

Repeating your message over and over — hoping that if you do it for long enough, somebody will eventually pay attention — is useless and expensive.

Smart brands realize that collecting, analyzing and making use of customer data is great for building brand equity and loyalty. Breadcrumbs of valuable customer interaction at every touch point allows these brands to provide more relevant and timely product and services.

For example, Amazon has consistently improved their product recommendations over the past decade. Netflix granted $1M in 2009 to a team that were able to improve the accuracy of their recommendations by 10.06%. Target is able to identify pregnant women in their third trimester.

One of the most exciting updates is from Facebook: They recently made it much easier for themselves to analyze the data of their 800M+ users by introducing verbs in status updates with Timeline feature. Research suggests that when customers go through major life events, their habits become flexible. And naturally, Facebook is positioning itself to sell this window of opportunity at a premium to its advertisers.

Arguably, one of the main reasons why smaller companies do not invest time and money into providing a fine-tuned level of personalization is the complexity of the task, and the perceived (lack of) value it will bring. However, it’s never too early to start.

Tools like KISSMetrics for customer analysis, Custora for CLV calculation have made it affordable and easier for you start understanding your customers. Tech startups such as Platfora promise a brighter future for marketers. For a technical introduction to your home-baked solution, Programming Collective Intelligence is a good start to understand recommendation algorithms.

Personalized marketing is the future, and it’s here. Start looking for patterns. Figure out what makes your customers tick. Use your findings to tweak and improve your products and services. Repeat.