Under the Influence with Terry O'Reilly - S5E02 - Promise Less, Profit More

Episode Date: January 15, 2016

Most products offer customers as many features and benefits as possible in order to lure shoppers toward a purchase. But then there are some companies that offer you less, and profit more. We’ll look at a book company that eliminated their books and made millions, an electronics company that broke all the rules by eliminating the recording function from a tape machine and made history, and how two companies looked at a shoe and made millions by throwing away the laces.  Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please, do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan, you just have to love storytelling. Subscribe now and don't miss a single beat. We'll see you next time. new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. From the Under the Influence digital box set, this episode is from Season 5, 2016. Waiter, that's no, no, no!

You're not you when you're hungry. You're a good hand with all things. You're under the influence with Terry O'Reilly. Back in 2004, a newspaper reporter named Charles Duig was sent to Baghdad to cover the war in Iraq. While there, he heard about a U.S. Army major who had figured out a very interesting way to quell street riots. Historically, the local police had never found a way to stop riots from escalating. So the Army major asked to see dozens of videotapes of recent street riots so he could analyze them.

As he watched tape after tape, he began to notice a pattern. All riots seemed to build the same way. First, a crowd would gather in a plaza or other open space. Then, over the course of several hours, the crowd would grow in size. Spectators would join the rioters and food vendors would show up.

Eventually, the crowd would start chanting angry slogans, then someone would throw a rock or a bottle, and all hell would break loose. Knowing that, the army major had a hunch. He asked to meet with the mayor of the town and made an odd request. Could the food vendors be kept out of the plazas? The mayor looked at him and said, sure, that was easy. A few weeks later, a small crowd gathered in a town plaza.

Throughout the afternoon, it grew in size. Then it started to gather spectators. Soon the crowd was big and started to chant angry slogans. At dusk, the crowd started getting restless and hungry. People started looking around for the food vendors that normally filled the plaza. But there were none to be found. By 8 p.m., everyone had gone home. It was a remarkable insight.

The major had figured out a way to stop street rioting by eliminating one small feature. Food vendors. In the world of marketing, eliminating features happens very rarely. Most brands love to offer consumers a long list of features. But occasionally, a product doesn't become a success until it eliminates features. It's a perfectly counterintuitive thought to promise you less and profit more.

It takes insight, guts, and instinct. But when done right, eliminating features doesn't disperse a crowd. It attracts one. You're under the influence. In the world of marketing, most products come loaded with features. Commercials list those features in breathless detail. Parade of kitchen miracles. Item one, amazing curlicue cutter that makes eye-appealing rosettes for garnishing salads. Number two, mini juice extractor. Squeeze, juice pours out like magic.

Item three, polyethylene grapefruit preparer. Leaves no metallic taste. But some products succeed because they eliminated features. Maybe the most famous of all time is the iPhone. Steve Jobs eliminated the dozens of keys found on traditional cell phones and reduced it all down to one single button. During the development of the iPhone, before the arrival of apps, Apple engineers wanted to add lots of features like an AM FM radio, but Jobs

kept turning them down. He insisted on a simple design. That vision would eventually propel the iPhone from simple cell phone to iconic status. As Jobs later said, innovation is saying no to a thousand things. Back in 1886, David H. McConnell was a door-to-door book salesman. He would travel from town to town in a horse and buggy and knock on doors. Good morning, madam. Might I interest you in an exciting new book?

No, thank you. He quickly realized he needed a door opener, a small, free gift to entice customers to hear his pitch. Most of those customers were housewives,

so McConnell began offering them small vials of rose-scented perfume, which he blended at home at night. How lovely! It didn't take McConnell long to realize that women were much more interested in his perfume than his books.

So he made a big decision. He eliminated the books and concentrated on the perfume. He created the California Perfume Company. His book-selling experience showed him the door-to-door approach was ideal for a cosmetics company, especially in rural towns where women had little access to cosmetic stores. McConnell soon recruited some of his best customers as salespeople.

He noticed many women were isolated at home while their husbands went to work. They liked the opportunity to earn extra income, were passionate about the products, and because women knew the other women in their towns, they had an ability to network. By 1887, McConnell had 12 female representatives. Thirteen years later, there were over 5,000. McConnell died in 1937, but his son took over the company. Two years later, he changed the company name to Avon, in honor of the beautiful countryside surrounding Stratford-upon-Avon in England, a place his father loved so much.

By 1954, sales at Avon had jumped to $55 million, and the company introduced its first television campaign with the famous mnemonic. Avon calling. Today, Avon has $10 billion in annual revenue and over 6 million Avon representatives. A worldwide corporation that began when a door-to-door book salesman decided to eliminate his books. Simplifying and eliminating unnecessary elements in anything is always a difficult process. Even NASA struggles with the concept. When the Space Agency contracted the building of the Apollo capsule to the Grumman Company,

NASA was worried about excess weight in space. So they offered Grumman $50,000 for every pound it eliminated in the design. Grumman managed to shave 250 pounds off the capsule, pocketing a cool 12 million bucks. Closer to home, the ability to eliminate elements has led to some of the biggest corporations in the world. Take this burger joint. You deserve a break today.

We're close by, right on your way at McDonald's. Back in the late 1930s, brothers Richard and Morris McDonald noticed that the only food seller making any money during the Depression in their small Southern California town was a hot dog vendor. So they decided to open a drive-in restaurant and named it McDonald's Barbecue. It had about 25 items on the menu, and business was okay. Then, in 1940, the brothers decided to move to the larger town of San Bernardino, California. Once re-established, they expanded their barbecue menu by adding burgers and steaks. They hired female carhops to serve the food. As time went by, the brothers noticed they were making most of their profit from hamburgers. So, in 1948, they closed down for three months to analyze their business.

Then, they made a momentous decision. They were going to eliminate features in order to grow. First, they eliminated the car hops and began serving food from a window. Then, they eliminated tipping. Next, they eliminated most of their menu items, except for three things. Hamburgers, french fries, and apple pie. They eliminated porcelain dishes and glasses, replacing them with paper cups, plates, and bags. They eliminated custom orders.

Burgers now came with ketchup, onions, pickles, and mustard. Period. And they eliminated cigarette machines and jukeboxes so teenage boys wouldn't hang around and scare off the highly lucrative family business. The brothers also eliminated the walls surrounding the kitchen so customers could see the food being prepared. They knew mothers wanted to see the cleanliness of the kitchen

and dads liked to see the meat sizzle. When finished with the overhaul, the brothers placed a huge 25-foot-high yellow M outside their restaurant, which they referred to as the Golden Arches. And they renamed their restaurant, calling it simply McDonald's. Almost immediately, they had lineups of over 200 people, and within just a few years, they could add million served to their sign. The brothers decided to franchise their concept in the 1950s.

One day, a milkshake equipment salesman named Ray Kroc wondered why this small client was beginning to order so many milkshake machines. He visits, falls in love with the concept, buys a franchise in Chicago, and would go on to purchase the entire chain from the McDonald Brothers in 1961.

Eventually, Kroc would expand it to become the empire it is today, with over 35,000 restaurants and revenues of over $35 billion. A worldwide corporation that began when the McDonald brothers decided to eliminate most of their features and concentrate on just three menu items, creating not only a thriving company, but a little something called the fast food industry. And we'll be right back. New year, new me. And we'll be right back. hormones, metabolism. Felix gets it. They connect you with licensed healthcare practitioners online who'll create a personalized treatment plan that pairs your healthy lifestyle with a little help and a little extra support. Start your visit today at felix.ca. That's F-E-L-I-X.ca. If you're enjoying this episode, why not dip into our archives,

available wherever you download your pods. Go to terryoreilly.ca for a master episode list. Put your hand up if you're listening to this on your smartphone or tablet. The portability of sound, particularly music, is something we all take for granted. But that is a fairly recent phenomenon. The chairman of Sony, Masaru Ibuka, loved to listen to recorded music when he traveled. Sony, at the time, had a cassette machine, but Ibuka found it too heavy for everyday use. So in 1978, he instructed his engineers to create a smaller, lighter version for his personal use.

Sony also had a product called the Pressman, which was an expensive tape recorder made for reporters. Ibuka told the engineers to modify the Pressman and make it smaller by removing the recording function. He wanted a playback-only unit with small headphones and stereophonic sound. When the engineers came back with the modified player, Ibuka loved it. He immediately showed it to Sony co-founder Akio Morita, who saw the sales potential instantly. Manufacturing the new product became Sony's top priority. When the portable Sony player was ready for market, Morita decided to call it the Walkman, playing off the Pressman and the fact Superman was the most popular movie of the year.

The word Walk also told people this product was about mobile sound. When he showed the Walkman to the Sony sales department, they said a tape machine without a record function would never sell. When Sony took it to retailers, they turned their noses up at it. No record function, no sales. But the Sony founders were convinced that eliminating the record function was the key to keeping the Walkman small and truly portable. When Sony invited journalists to see the Walkman for the first time, they were skeptical. No speakers, no record function, no radio capability.

But when they put the Walkman on, they couldn't believe how good it sounded and gave it five-star reviews. In no time, the sales department who had complained about the lack of a recording function couldn't keep up with the orders. And retailers who didn't want to stock a playback-only unit were now begging for shipments. You are witnessing the ultimate miniaturization of the cassette player. The creation of microcircuitry, the smallest

motor of its kind. The reinvention of the wheel. You are witnessing the birth of the super walkman from Sony. Never has so much genius been coaxed into so little space. The day Akio Morita handed a Walkman to Steve Jobs, he immediately took it apart to see how it worked. And we know what that inspired.

The Walkman became one of Sony's most successful brands of all time, selling over 400 million units born of one critical decision. To eliminate the record function. Speaking of walking, one of the great shoe innovations was the result of eliminating an age-old feature. More than a century ago, Norwegian dairy farmers wore leather shoes with a strap across the front. They were easy to slip on and off for one specific reason. They had no laces.

The shoes were manufactured by a Norwegian company called Orland Shoes. Around 1930, some journalists from America were visiting Norway, saw the laceless shoes, and wrote a story about them. That caught the eye of the Spalding Footwear Company, who began to manufacture an American version. They called them loafers, named after the cows that loafed around the milking areas of the Norwegian dairy farms. Not long after, G.H. Bass and Company began

manufacturing their own version and called them Weegins, which came, of course, from the word Norwegian. In no time at all, Weegans and penny loafers became a sensation, worn by everyone from college kids to John F. Kennedy. Today, Bass Weegans and loafers are still big sellers,

all due to one important design element, the elimination of shoelaces. When Allie Webb was a little girl, she had crazy, wavy, frizzy hair. She would beg her mother to blow-dry it straight. But no matter how much her mother tried,

the frizzies remained. Years later, Allie enrolled in beauty school, then went on to work for some of the top hairstylists in the U.S. When she married and became a stay-at-home mom, she still had the urge to work. So she started a mobile

blow-drying business. She charged $40, drove to women's homes packing a blow-dryer, and styled their hair. Soon, Word of Alley's talent spread among local moms. In no time at all,

she was flooded with requests. But between gas and babysitters, she was barely breaking even. She needed more stylists. That made her wonder if she could create an actual business that just offered blow-drying. She approached her wonder if she could create an actual business that just offered blow-drying.

She approached her brother with the idea, who was skeptical. Then again, he was bald. Allie convinced him to jump on board, and she and her husband invested their life savings. The idea was to have a funky hair salon with one big difference. No cuts, no color, just blowouts.

They called it Dry Bar. When they were almost ready, Allie and company sent out an email blast announcing their new salon. Next thing they knew, they got six weeks worth of bookings in just eight hours before they had even opened their doors. Drybar was off to the races. Unlike regular salons, women

sit in drybar chairs with their backs to the mirrors. Only when the blowout is done is the chair spun around to reveal the result. As Ali Webb says, the spin is the thing. Today, there are over 50 dry bars in the U.S. and Canada. 3,000 stylists do over 100,000 blowouts a month. Revenues will hit $70 million this year. A unique idea, born of a little girl who was obsessed with her hair, who grew up and started a hair salon that eliminated two age-old services, haircutting and coloring. If you're looking for flexible workouts, Peloton's got you covered. Summer runs or

playoff season meditations, whatever your vibe, Peloton has thousands of classes built to push you. We know how life goes. New father, new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca.

Panty lines. I hate them. But what is a boy to do? Well, panty lines led to one of the great product innovations in women's fashion. Back in the year 2000, Sarah Blakely was selling fax machines door to door. One night, she wanted to wear a pair of expensive cream-colored pants she had bought, but when she put them on, she had big panty lines. She pulled out a pair of control top pantyhose and put them on, but the seam on her toes

didn't look good with her open-toed shoes. So she took out a pair of scissors and cut the feet off the pantyhose and put them back on. She looked great in the new pants, she had no panty lines, and she looked slimmer. She went to a party that night,

but the pantyhose legs kept rolling up on her. Convinced it was still a good idea, Blakely started the process of developing a footless pantyhose product. First, she knocked on the doors of all the top hosiery companies to find a manufacturing partner. She got nothing but rejections. Then one night, a hosiery plant owner called her back and said he wanted to help her with her, quote, crazy idea. When asked why he changed his mind, he said his two daughters convinced him it was a great idea. Next, Blakely designed colorful red packaging

that stood out in the sea of beige and white hosiery sections of retail stores. Lastly, she had to come up with a name. She remembered that two of the most recognized brand names in the world were Coca-Cola and Kodak. Both had a K sound in them. She knew words with a K sound were memorable, and that words with K sounds made people laugh. One day, while driving, it came to her. Spanx. Her product was all about the butt, and the name made her laugh.

To protect the trademark, she changed the KS to an X. And with that, Spanx was born. The first store she took Spanx to was retailer Neiman Marcus. When she showed Spanx to the buyer there, she didn't seem interested. So Blakely took the buyer into the washroom, changed into Spanx, and showed her the benefits in person. The buyer took one look and said, I'm putting them in seven stores.

A few months later, Oprah named Spanx one of her favorite things. And the rest is Spanx history. Sarah Blakely is now a billionaire. And it was all because she simply took pantyhose and eliminated the feet. The Feat. While some inventors eliminated a feature to create a brand new product, our next inventors had to eliminate their original goal. The product was Silly String. Back in 1972, inventor Leonard Fish and chemist Robert Cox wanted to invent a way to spray an instant cast onto a broken arm or leg. So they created an aerosol can that sprayed a sticky resin.

When they were designing the can, they experimented with over 40 different nozzles. When they tried the smallest one, it shot a string of resin about 30 feet across the room, which made the inventors laugh. Then, it hit them. We should turn this

into a novelty toy. So right there on the spot, they made the decision to eliminate the goal of spray-on casts and focus instead on the toy market. To make it more fun, they made the formula less sticky and added colors. But they didn't know how to market a toy, so they made an appointment with toy manufacturer Wham-O in California.

What happened next is one of the best marketing stories of all time. When Leonard Fish was shown into the office of the Wham-O executive, he walked right up to him and sprayed him in the face with Silly String. Then Fish sprayed the entire office. The Wham-O executive was so furious, he had Fish escorted from the building. Hilarious. But the next day, Fish received a telegram asking for 24 cans of silly string. It was signed by the very Wham-O executive

who had thrown him out. When Fish called to ask why the change of heart, the executive explained that when he finished cleaning up his office, the two owners of Wham-O stopped by, and one of them noticed an overlooked piece of orange string hanging on a lampshade. He asked what it was,

the executive explained it was a crazy product called Silly String, and the owners quickly asked for 24 cans to put into a test market. Two weeks later, the inventor signed a contract with Wham-O, and the rest is history. But just when you thought Silly String was the most useless product ever invented, you should know this. Armies now use Silly String

to detect thin, nearly invisible tripwires in buildings that may be rigged with explosives. They shoot a stream of Silly String across a room before entering, and if a piece of it hangs in the air, it has fallen on a tripwire. It's light enough not to set the bomb off, but colorful enough to be visible. Who knew? Silly String saves lives. All thanks to the fact the inventors completely abandoned their initial goal of spray-on casts.

The world of marketing is an endless curiosity to me. In the constant push to offer more, more, more, there are sometimes lucrative reasons to offer less. In a few of the stories today, marketers simply chose to eliminate a single feature from an existing product to create a runaway success. Like removing the feet from pantyhose or the laces from shoes. Then there are the marketers who were brave enough to eliminate features in a product they were creating.

Like the McDonald brothers, who eliminated their entire menu, reducing it to only three items. Or the inventors of Silly String, who eliminated their goal of spray-on casts when their invention made them laugh.

The real genius in ruthlessly eliminating features is that it becomes a single-minded product. And the great benefit becomes a single-minded product. And the great benefit of a single-minded product is that people will always know what it stands for. There's no confusion, no misinterpretation, no foggy branding. Spanx, Walkman, Avon, Silly String, McDonald's, and even Penny Loafers. Each one an utterly unique brand you can instantly define in your mind.

In the end, that's the secret to powerful marketing. It's about saying no to a thousand things so that customers will say yes when you're under the influence. I'm Terry O'Reilly. This episode brought to you by Spanx.

Don't leave home without them. Under the Influence was produced at Pirate Toronto. Series producer, Debbie O'Reilly. Sound engineer, Keith Oman. Theme music by Ari Posner and Ian Lefevre. Research, Tanya Moore-Yusuf. Um, do you wear clothes when you listen to our show? If so, have we got a t-shirt for you. Go to

terryoreilly.ca slash shop. See you next week.