Thursday, April 15, 2010

Tax cuts are a bad sales pitch for Democrats

As a sales & marketing consultant, I have some advice for Democratic politicians: telling people how much you’ve cut their taxes is terrible salesmanship.

Sounds strange, right? The public hates taxes, and generally perceives Democrats as favoring higher taxes—so shouldn’t neutralizing that perception improve Democrats’ competitive position? Indeed, how could lowering taxes HURT a politician?

Simple: the key to effective selling is NOT explaining why you’re better than competitors at the thing the customer cares about—rather, effective selling means making the customer care about the thing you do better than the competition. For Democrats, as long as the public cares about lower taxes, hawking tax cuts plays to the other side’s competitive advantage. To win the tax issue, Democrats must reframe the debate to de-link “low taxes” from “good policy.”

Democratic officials, though, apparently don’t understand this basic marketing concept of differentiation. Instead, they are gleefully pushing an AP story which found that “Congress cut individuals' federal taxes for this year by about $173 billion shortly after President Barack Obama took office, dwarfing the $28.6 billion in increases by states”:

"The fact is in the past year we have had more tax cuts than almost anytime in our nation's history," said Rep. Steve Cohen, D-Tenn. "It's something that people don't realize because of the false rhetoric that is spread throughout this Congress.”

"From investing in small business to buying a home or making it energy efficient, to sending your children to college to buying a car, these tax cuts are helping families and businesses across the country," said Rep. Russ Carnahan, D-Mo.

Liberal bloggers like Steve Benen are picking up the theme as well. They wonder, Democrats are cutting taxes, so why isn’t the public giving them credit? To policy wonks, it’s an information: if Democrats can keep hitting the “we cut taxes too!” theme enough, the public will eventually pick up on it.

The problem is, this “me-too-manship” fails in politics as badly as in business. This is just like a B2B salesperson trying to compete on price. The sales rep does his best to understand what the customer is looking for, and designs a solution to meet that need. Unfortunately, competitors are asking the exact same questions and diagnosing the same needs. With every competitor designing its solution around the same set of needs, the final offerings all look alike. Price becomes the only perceptible difference, leaving salespeople to out-discount each other and destroy profits all around.

This is exactly the trap Democrats are falling into by promoting their tax cuts; the strategy can only result in a game of tax cut one upsmanship. Since Republicans are already perceived as the party of low taxes, a Republican can respond to any Democrat’s claims of tax cuts by saying, “I’ll do you one better.”

Instead of trying to outdo Republicans on their competitive advantage, Democrats need to reframe the debate—re-chalk the field, so to speak, around their competitive advantage. Since the public will never believe that Democrats will give them lower taxes than Republicans, Democrats should concede the point and sell the public on the value of the services their taxes are funding.

Here’s a sales pitch for Tax Day 2011:

Imagine a world without taxes. No roads and no bridges. No schools or teachers. No police, firefighters, or soldiers. This tax day, we want to thank all responsible Americans for their contributions that make life in society possible.

This pitch completely changes the goal posts of the tax debate. The winner isn’t the politician who can lower taxes the most, but rather who can provide the best services: Democrats’ competitive advantage. Taxes are no longer seen as an evil to be eliminated, but rather as the contribution responsible citizens make in return for the benefits of living in society. Indeed, lowering taxes TOO much would jeopardize society’s ability to function.

Is it risky? Sure. But that always beats a race to the bottom—whether you’re pitching products or policies.

1 comment:

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