But Were Afraid You'd Have to Pay For

Good PR doesn't work the way you think. It's simpler. It's more powerful. And you're the only one who can do it

Public relations remains a mystery to most small-company CEOs, an esoteric field often involving expensive agency retainers, massive press mailings, and the queasy feeling of money wasted.

It doesn't have to be that way. Effective public relations can drive your company's marketing plans. But you have to start at the beginning. Forget agencies. Forget press releases. Smart PR starts with a careful thought process inside your company.

-- C.H. and L.B.

* * *

A moment of sympathy, if you will, for Stephen Tepper. He'd been so optimistic when he launched his first public-relations push in the winter of 1987 -- and so frustrated when he called Inc. last spring.

After 17 years in retail clothing Tepper and his brother, Leslie, had developed a "fashions under $10" idea. Cleared to franchise in 32 states, with the first store open and a second in the works, all he needed was franchisees.

He'd tried advertising, running ads three Sundays in a row in the franchise opportunities section of the Chicago papers. But he'd had only a handful of inquiries, and none that he could close. So Tepper turned to public relations instead. "Consumers just don't believe ads much," he reasoned -- he tuned them out himself. But a good story in the paper made people take notice. And PR seemed cheap, too, just a few thousand dollars in envelopes, printing, and postage.

Out went the press packets, with copies of Tepper's franchise brochure, to 12 different editors, along with a personal letter to each of them. "I told them everything I could think of to make us sound interesting -- that we were a local company, that we could put people in a business of their own for around $65,000, that we were great guys." But all 12 ignored him. So he tried an agency, "one with media connections." All he found there were vague promises, a boilerplate proposal, and a demand for a $3,000 minimum monthly retainer. A year and a half later he was right back where he started: confused and looking for customers.

What could I tell him? He'd been looking for short-term selling when he should have been thinking about long-term marketing. He'd started talking before he knew what he wanted to say. He'd asked what the media could do for him, not what he could do for the media.

But Tepper's biggest mistake was more fundamental, and much more easily corrected. He'd confused public relations with press relations.

It's a common misperception among small companies. A PR seminar at last year's Inc. 500 conference filled up quickly with chief executive officers eager to learn the mysteries of writing a press release for The Wall Street Journal -- and emptied quicker still when the speaker started talking about "what you can expect for your $3,000 to $8,000 monthly retainer.'

"We're only a $25-million company. We can't afford that luxury," Denny Boyd, CEO of Royal Waterbeds Inc., insists. "There's just no cost advantage for a company our size.'

Boyd is right, if you define public relations as sending out press releases or hiring an agency. But when Royal Waterbeds rolls out giant spotlights and hosts a local radio station's live remote broadcast to launch a new store, Boyd is sending a public-relations message, although he calls it sales promotion. When he donates waterbeds to a program for terminally ill children, he calls it civic responsibility. What has kept Royal Waterbeds on the Inc. 500 for five years is that all those messages fit into an integrated marketing strategy that reflects a corporate mission continually refined since Boyd opened the first of his 18 stores 11 years ago.

Every action your company takes sends a message to someone -- usually many messages to all kinds of people. If you change your logo, clean up your loading dock, press the flesh with suppliers at a trade show, start an employee newsletter, or take a banker to lunch you're practicing public relations. Many good CEOs seem to know this intuitively. The best try to manage it, to concentrate on reaching the right people with the right message at the right time.

For small companies, "the right people" usually means customers, current and potential. Presumably you could give them a reason to buy your product or service if you could meet them face-to-face; if you can't you'd better rethink your business. But with personal sales calls running some $375 a shot, you have to convince someone else to carry your message for you.

Forget the general or business press. They are the hardest messengers to convince, as well as the least effective or cost efficient. You'll get far more leverage by targeting the key players, the movers and shakers your customers look to naturally: trade journalists and leading-edge customers, key suppliers, analysts, or bankers.

Consider the buying process. Are your potential customers more likely to be swayed if they read about you in the Daily Bugle or if they hear your product praised at a chamber of commerce small-business breakfast? Will they be more impressed by an article about you in People or an article by you in Plant Engineering News?

Don't misunderstand me. After 15 years as a journalist I've seen what can happen when a small company hits the media jackpot. But that's a crapshoot at best. Better to take advantage of your size, aiming to develop a one-to-one relationship with the people at the pressure points. They are closer to your customers than the general press, and consequently easier to reach, with opinions that carry more weight.

Smart PR means thinking about marketing, not just the media. It's a process with results you can measure statistically, in sales -- not emotionally, in column inches.

There's one more benefit. If you decide in the end that you just have to have those column inches, then smart PR will give you your best chance of getting them.

I took some heat last spring when I wrote that it's possible for CEOs of small companies to do their own PR ("Behind the Scenes," April). Letters flooded my desk, mostly from professional practioners, generally of the "Dear Sir, you cur" variety.

Let me correct myself. It's not just possible for CEOs to do their own public relations. It's imperative. If your company is going to push the right levers, you'll need a strong platform, a market message that reflects a corporate mission. That's got to be set at the top before it can be communicated to anyone.

Start by telling yourself the truth. What does your company stand for? What does it do best? If you don't know what you want to say, you can't say anything well.

Consider your customers, real and potential. What, if anything, are they hearing about you? What do they need to hear? If you can't carry the message yourself, who would be the most effective messenger? How can you enlist that person in your cause?

Often, the most effective messenger is not the most obvious one. You may have visions of a popular media campaign when, for instance, your company's interests might be better served by appearances in the trade press -- in articles, not ads. What could be more reassuring to potential customers than to see your name among those of the experts?

There is no mystery in reaching the trade press, according to Peggy Nordeen, president of Starmark Inc., an Inc. 500-listed business-to-business marketing company. "Trade-press editors are looking for solutions to problems," she says. "They'll give you an ear because they need the kind of information you can provide.'

They're like your customers that way: impressed by significant applications clearly communicated. Nordeen suggests sending your first application example as soon as you sign your first customer, particularly if you're selling to a business market. Target the heavyweight trade periodicals first, then use reprints for sales support, direct-mail material, or as a background for capability brochures.

Make it as easy on them as you can. Be sure to get written customer approval before you send in a story, and include a photo. Submit to one editor at a time, not to four competitors at once. Call the publisher's office to get an advance copy of the magazine's editorial calendar, then target your story to its special themes. Better still, talk to an editor one-on-one at a trade show.

Jim Bernstein's byline is a familiar one to the health-care trade press. But Bernstein credits General Health Inc.'s growth, and its eventual placement on the Inc. 500, more to his choice of another, more powerful, pressure point.

In insurance, as in most markets, not all customers are created equal. There are always a few that lead -- the biggest, most innovative, or most thoughtful, the few that everyone else watches. Bernstein targeted them individually, inviting a handful to a series of luncheons.

The meetings were low-key affairs, a chance for Bernstein's guests to get to know their fellow senior executives over a discussion of health-care cost containment. Bernstein didn't worry about selling his risk-assessment services. In discussion he was just one expert among equals, although he was very much the host at table. But he could see the payoff as the conversation circled after the meal, while his customers vied for the chance to endorse his products to the group.

With acceptances for his luncheons running at more than 70%, Bernstein expanded his PR program, adding a national conference as well and inviting some 30 guests for two days of "discussion and socializing" in Washington, D.C. Besides converting many of those leading-edge health-insurance executives, Bernstein established himself as a leader in the eyes of the rest of their market.

Bernstein had tried the traditional PR approach first, with less-fortunate results. For six months he had paid a $5,000 agency retainer, hoping in vain for a mention in Forbes. "We spent a lot of time educating a recent college graduate in what our business was like, but after six months we'd only gotten one small article in a local magazine," he remembers. "Then I figured out that PR was merely a form of marketing, a means to establish credibility, and that the best way to do that is meeting people face-to-face.

"You consider an agency because you're innocent. You imagine that PR is something mysterious -- you can't do it yourself, so you go out and get it. But it's not magical; it's just hard work and common sense. It's spurious to think a PR company can do it better than you can. They don't have your sense of urgency. They don't know your clients. They don't know your business.'

Bernstein overstates the case, but only by degree. The passion of a CEO/founder is clearly the key to PR success, your personal presence the most effective tool you've got, whether you aim at the trade press or influential customers, bankers, or suppliers. But the wider you cast your nets, the less likely you'll have the time or interest to handle everything; even Bernstein relies on a marketing vice-president to bounce ideas off and an in-house staffer to execute the details. The question is not whether you'll need help, but when and from whom. Does someone on your team have the skills necessary to write an applications article in plain English? Is it cost effective to delegate a task in-house or hire a free-lancer? If you hire an agency you'll be turning over at least part of your reputation to an outsider. A good agency can add extraordinary creativity and experience to your marketing; it should be able to produce measurable results as well, if you give it the tools (see "So You Really Want to Hire an Agency?," page 5). A bad one can kill your company.

Anthony Lemme knew what he had when he started Source Intermarketing Corp. As the exclusive U.S. licensee for the Vacu-Vin, a $20 pump resealer for wine bottles, he had a product priced at one-fourth to one-fifth the competition's. But he had worries, too: limited resources and experience, plus the memory of one failed start-up immediately behind him. So he turned to an agency even before he'd signed his license agreement, hiring B. L. Ochman Associates to handle the marketing while he concentrated on production, shipping, and the search for finance.

Ochman helped Lemme shape the company, introducing him to the people who designed his packaging and manufactured his product. She helped him to expand his market to such stores as Zabar's and Bloomingdale's as well as conventional wine and spirits distributors. Then she convinced him to gamble the company.

The conventional way to publicize the Vacu-Vin would have been to send samples and a press release throughout the media, then follow up with a phone call. But Ochman didn't even put a press kit together. Instead, she targeted a much more specific group, organizing a luncheon and wine tasting for New York City's top 20 sommeliers and wine writers, sampling vintage wines first uncorked, then resealed with the Vacu-Vin.

If they hadn't liked the product, Lemme would have had a second failure on his hands. But they loved it. Wine drinkers are a trendy lot: word of mouth in New York's best cellars combined with the enthusiastic endorsement of the most influential of the trade press pushed sales to $5 million over the first year. Within six months, Lemme had the number-one gift item in Bloomingdale's, and he'd added 25 manufacturers' reps and 150 distributors to help meet the demand. Suddenly the press was clamoring to find out about his product; stories in The Wine Spectator and Wine & Spirits were followed by write-ups in Good Housekeeping, Playboy, and USA Today.

Lemme, not surprisingly, calls himself "an advocate of PR from the word go." But what impressed him as much as the effect of that one wine-tasting session is how Ochman targeted other small audiences with subsequent PR projects to help him begin to transform an interesting marketing coup into a real company.

Ochman started with a customer newsletter, Vacu-Vine, sent to all 175 distributors. Ochman ghosted a column for Lemme in each issue, then filled the pages with tips for success, honors for top performers, and a welcome to new members of the fold. "It ties them into my company," Lemme says. "There's something more than just the standard supplier/distributor relationship now; there's a pride factor.'

Then Ochman turned her attention to helping Lemme find the answers to his management fears. She arranged for him to be named keynote speaker at a small-business conference in Cincinnati, then helped him write what would be his first speech. Besides the catharsis of telling the story of how his earlier failure turned to the Vacu-Vin success, his moment in the spotlight introduced him to a network of fellow small-company executives he could talk to about planning, financing, and his dreams of an eventual IPO. The network expanded further still after Ochman placed the story of the rags-to-riches speech in the New Haven Register and The Hartford Courant business sections, prompting one local banker to call Lemme with personal congratulations.

"All of a sudden I'm a celebrity," Lemme marvels. "It's amazing -- I've got banks calling me. Believe me, banks don't usually call asking for your business.'

What do a new pig, a perpetual light bulb, and the Watergate paper shredder have in common?

* New Pig Corp.'s transformation from a regional service company with 150 customers to an international export company with some 30,000 customers can be traced in local business journals and scores of newspapers, in national magazines like Inc., Fortune, and Forbes, and on TV broadcasts coast to coast, "thanks," Don Beaver says, "to a strange name and an odd product that was good for the press.'

* Kevin Keating told the story of the DioLight bulb to more than 300 radio interviewers, The New York Times, Cable News Network, and on UPI -- and got $150,000 from a would-be investor the day after his story appeared in the Times.

* Michael Falco's Watergate, Piranha, and Brute paper shredders have been a media fixture for much of the past decade; received favorable play in The New York Times and Newsday; labeled a status symbol for the '80s in The Wall Street Journal; paired with Richard Nixon in People -- while sales have climbed from less than $200,000 to $5 million.

If you guessed all three men were lucky, you'd be only partly right. All three stepped into the media spotlight, then stayed there far longer than their allotted time. And all three saw sales soar. But what's important is how they did it. For all of them the press was the last messenger targeted, approached only after they had built a network and reputation inside their industry. They used not press releases, but the same one-on-one strategy they'd practiced all along. Nothing else would have worked so well, or probably even worked at all.

Small companies that pitch their stories to a reporter any other way are likely to get the brush-off, or be relegated to the oddball filler slot. If some Gyro Gearloose from Michigan had called CNN with a tale of perpetual light he wouldn't have been able to get past the network switchboard. But Keating had backup for his DioLight bulb -- journal articles and applications stories.

The media are like any customer that way. They'd rather buy from a credible source. They're impressed by experts. And they follow the pack, turning for advice to the same people to whom your customers turn. If The New York Times or The Wall Street Journal wants to write a story on shredders it'll call one of a half-dozen security trade journals -- and probably be referred to Michael Falco.

That's no accident. Falco has worked nearly two decades building his reputation with the trade editors. The mass-media relations came last in his plan, after he had developed the Shredex Inc. dealer and customer bases and courted the security and business-to-business marketing magazines. So by the time he started talking to reporters he knew exactly what he wanted to say and how to say it well.

Like Lee Iacocca, who perfected the role, Falco, Beaver, and Keating all head and speak for their companies. But lacking the Chrysler Corp. chairman's TV and bookstore visibility and marketing budget, they have to take advantage of their size. So they handle the press personally, the same way they've practiced serving other key audiences, the way they'd serve their customers, if they could. Beaver circulates comfortably among the journalists at business conventions, talking with a reporter from USA Today or a New York City book editor. Falco stays in touch by letter. "When I see someone do a story on security or shredding, I'll write and offer my two cents' worth -- maybe they'll do a follow-up." Other times he'll generate his own hook, creating a collector's item like the Dragons Teeth, shipped to China to be hand-painted then shipped back home -- "that only sold 75 units a year, but it gave me tremendous exposure.'

The key is making sure the message is right. Whether Keating is talking about solar street lamps or the dedication of the first lamp plant built in the United States in 35 years, he's always telling customers that DioLight is the lighting of the future. Beaver's core message is simpler still, developed when he was still cleaning factories for a handful of customers in the southern Pennsylvania area. "Measure me by my service," Beaver says, whether he's modeling his company's sow-snoot hats for a newspaper photographer or discussing contemporary distribution innovations with key buyers from the Fortune 500. "This business is where my mission is; if I can't do it here I can't do it.'

Much has been written about how hard it is to grab the attention of the perpetually fickle newspaper, magazine, and TV reporters. But for all the sound and fury, the basic rules are fairly simple to understand, although quite difficult to execute. Treat the media like a customer: figure out what it needs and give it to them.

But all that misses the point, unfortunately. Serving a reporter's needs and serving the needs of your company are not necessarily the same. What matters is the message that gets through to your customer.

I remember one former Inc. 500 CEO who invited me down to his offices to see what he described as his unprecedented service and innovative management. But I wrote about a business splitting at the seams, with squabbling principals, empty desks, and a cash-flow crisis -- not the story he wanted his shrinking client list to read.

No amount of press coverage can make you what you aren't. The stodgy can't become innovative or the authoritarian enlightened merely by journalistic fiat. That's the one PR rule to remember. A good agency can help you polish your story; it can package it perfectly and may have great connections in the press. But you're wasting your time and retainer unless your company has something good to say. Effective PR is the truth, effectively communicated to the company's many publics, not just an illusion foisted on the press.

So what, besides celebrity, do a new pig, a perpetual light bulb, and the Watergate paper-shredder have in common?

All three show what small companies can achieve, if they realize that PR is a process, not a press release. All three CEOs are media mavens, but their success with the media is only a final step, one more reflection of the values and aims that lie at the souls of their companies.

"Unless you go in with the attitude that you're here to serve the press, you've got the wrong perspective," Beaver says. "If it serves them well there's always something wonderful in it for New Pig, as long as we aren't bimbos.

"I feel that same way about all my relationships. The press, my customers, my suppliers, the manufacturers, the engineering community, the maintenence community: the better you serve them, they more likely they are to come to you.

"My role," Beaver continues, "is to be a servant to all of those groups. They're all in one boat. My one PR message is my ultimate accountability.'

What's the payoff for that message? "It translates beautifully. It's the warp and woof of everything we do. The more you tell people what you believe in, the more the hold you to it.'

That's not just smart PR. That's leadership.


If you must, here's help

Michael Fox is lucky. Over the past three years he's gotten results from his public-relations adviser -- and a new understanding of marketing.

During a dozen years in the wholesale travel business, Fox had worked with quite a few agencies: the good, the bad, and the ugly. So when he decided in 1985 to start a company to package African safaris he knew just what, and just who, he wanted. Dick Griffith of Richard C. Griffith & Associates Inc., hired before Fox was out of his apartment, became Fox's colleague and sounding board. Together they coined the company name, Classic Tours International, then Griffith wrote most of the brochure.

"But Dick wouldn't just send out press releases," Fox says. "He's really educated me." Rather than try to make a newsworthy announcement, Griffith and Fox set out to develop legitimately newsworthy products -- fishing safaris, singles safaris, a travel insurance program. Then, just as Griffith promised, meeting the market's needs in innovative ways paid off in industry attention, in stories in the trade and general press, and in a steadily growing stream of customers. After three years of growth, the two men still talk on the phone "five or six times a week," Fox says. "Virtually every decision I make is related to what the public-relations response will be.'

Not many chief executive officers are as lucky as Fox. Lacking his personal connection, they venture timidly into the world of professional PR and almost invariably come out soured on the process. Few know how to search for or select the right kind of help. Fewer still know how to make the adviser/client relationship work once they've made the choice. "Never again," they vow, complaining of money wasted on vague promises that never turned into measurable results.

It doesn't have to be that way, if you'll begin at the beginning. Hiring an agency can bring dramatic -- and measurable -- impact; the best will add extraordinary creativity and professionalism to your entire marketing plan.

You can learn the lessons that Fox learned, if you don't confuse PR with getting in the papers, or expect an agency to work a miracle.

If you can't be lucky, be smart.

1. The Search
Smart PR starts at home.

No wonder you're confused. There are more than 142,000 practitioners out there competing for America's PR dollars, more than 2,000 different firms from which to choose. Do you need a part-timer with a Macintosh or the head honcho from Hill & Knowlton Inc., last year's $114.5-million net fee industry leader? An M.B.A. "communications consultant" brandishing 12 volumes of computer printout or an old-style flack with a cigar and a spiel?

Start by taking a hard look at yourself. What do you need and what can you spend? Does your cause require $500 for a solo practitioner to do your logo, business cards, and brochure, or $350,000 for a lobbying firm to press the flesh on Capitol Hill?

Larger agencies generally offer the broadest capabilities, as well as the highest overhead and fees. Smaller agencies mean more personal attention from a principal, although with the smallest you run the risk of being charged their hourly rate for the filing and photocopying performed by a bigger shop's clerical staff.

Big or small, you'll almost always be paying for time, with fees that range from $35 to $150 an hour up to whatever the market will bear. The larger the firm, the more likely it is to demand a hefty retainer, while a hungry boutique might be willing to take a gamble on a sliver of equity or the hope of piggybacking to market share on your expected growth, à la Regis McKenna Inc. and Apple Computer.

Start your short list of candidates close to home: poll your friends, colleagues, and business acquaintances for recommendations first. Then call the trade-press editors in your industry. Even the most jaundiced veterans will have a handful of PR people that they trust and work with regularly; ask for the names of three or four of the most accurate and professional. If your public-relations program is a smart one, you'll work the trades regularly; calling now gives you a head start, and name recognition when you send in a new application or product item.

Don't expect details from an initial agency interview; too many agencies have seen their ideas listened to, then passed on to the low-ball bidder. PR people won't get specific about implementation unless you're willing to pay for the extra time involved. What you should expect to get from the beginning is a strong concept -- an angle on your product or problem that is both true and fresh.

Be patient making your rounds. You're looking for creativity, and that can take time to find. Ron Bownds had to sit through a half-dozen presentations before he heard the angle that would give his Utopia bottled water a market position strong enough to earn space on the supermarket shelves. Agency after agency had suggested the predictable mix of supermarket sampling and a flurry of press releases to tout product quality, but Ellen Sterner of McCarter & Associates had a better idea. She invited reporters to spend a day with Bownds in the Texas hill country hamlet of Utopia itself, to have a look at the spring on his family farm that actually produced the water, and to hear firsthand how one former petroleum geologist kept his gumption during lean times in the oil patch.

Trooping through six different agencies was worth the effort. "I can get a higher price for my water now," Bownds says. "I could have acomplished the same thing if I'd blistered the market with TV or billboards, but I didn't have the $3 million that would have taken.'

2. Selection
Buyer beware

Few experiences are more heady than "the treatment," the selling strategy practiced first, and still practiced best, in a handful of the high-rise corridors of Manhattan. The atmosphere intoxicates: paneled halls filled with sleek young men wearing slim gold watches, stunning women radiating self-confidence, a conference room perched over Central Park, carpeting piled higher than your wingtips. Two vice-presidents make the pitch, talking of lunches at The Plaza, dropping names like glittering pearls, dazzling you with a multimedia display of rock music, flashing slide carousels, and promised greatness.

Caveat emptor. If the initial program seems incredibly detailed, it is probably a warmed-over version of what worked for someone else last year. If it sounds too good to be true, it is probably a loss leader to grab your advertising dollars. If the vice-presidents promise they can have the press eating out of your hand after one lunch at The Plaza, ask them if that's really their idea of sanitary restaurant behavior.

Forget the two vice-presidents, anyway -- you'll never see them again if you sign on, unless there's a crisis. Forget the view of Central Park; that's reserved for shearing the sheep. Your work will be handled down the hall by the agency's newest junior account executive, Bennington College class of '88.

That's not necessarily a bad thing; that junior account exec could be a corker, with just the right friends at "Entertainment Tonight." The point to remember is that public relations is a one-on-one art. You may sign with an agency, large or small, but you're hiring individuals.

Talk to the people you'll actually work with on projects; look at the work of which they're most proud. Is the copywriting clear? Have they targeted the right audience with the right message? Ask how long they have kept their clients, then call those clients directly.

Chemistry, as crucial as it may be, is not enough. When you talk, do your reps understand your markets? Do they routinely track the most appropriate trade or general media editorial calendars? Can they understand the message you want to give your customers, then refine it into a message that will get the attention of your targets? Most will press for a retainer -- the longer the better -- "to guarantee continuity.'

A retainer should guarantee better service than if you were a single-project transient, but make sure your agency doesn't consider it the equivalent of dues, a fee you pay for walking on those thick carpets. Will you pay more for additional tasks such as help with a Rotary Club speech or an employee newsletter? Does the retainer include incidentals, or will you be billed again for out-of-pocket costs? Are you billed for just time, or time and overhead, 85% confusion with a 15% charge? For most small co