Customer Expectations
By Paul Herbig
Customer expectations have been rising over the past few decades. Graduates expect to find that perfect job and be managers and owners within a few years out of school; everyone is searching to find the ‘perfect’ spouse, often discarding those with one or two frailties; and our children should be perfect, beautiful, smart, athletic (picking those characteristics genetically is not as far off as one might think). As the number of choices increase in our life, many consumers believe they should never have to settle for that which is just “good enough” and instead shoot for perfection—given the plethora of options available, They know it is out there and theirs to be found. Those that do aim for only the best have been repeatedly found to be less happy, less optimistic, and more depressed . . . the making of a dissatisfied customer who cannot make up his/her mind (sounds familiar?).
Recently a "Husband Shopping Center" opened in Houston, where women could go to choose a husband from among many men. It was laid out in five floors, with the men increasing in positive attributes as you ascended up the floors The only rule was, once you opened the door to any floor, you must choose a man from that floor, and if you went up a floor, you couldn't go back down except to leave the place never to return.
A couple of friends went to the place to find their perfect mate. First floor, the door had a sign saying "These men have jobs and love kids." The women read the sign and said, "Well, that's better than not having jobs, or not loving kids, but I deserve better so I wonder what's further up?" So up they go. Second floor says "These men have high paying jobs, love kids, and are extremely good looking." Hmmm, say the girls, “Better but not the best. I deserve better. I wonder what's further up?” To the Third floor they go: "These men have high paying jobs, are extremely good looking, love kids and help with the housework." Wow! Say the women. Very tempting, BUT, Not quite good enough. There's more further up! And up they go. Fourth floor: "These men have high paying jobs, love kids, are extremely good looking, help with the housework, and have a strong romantic streak." Oh, mercy me. Sounds heavenly but not quite perfect. I only deserve the absolute best. Just think what must be awaiting us further on! So up to the fifth floor they go. The sign on that door said, "This floor is empty and exists only to prove that women are impossible to please."
This is funny. Take away the sexist implication (substitute men for women, substitute looking for perfect) and you have an excellent example of seeking perfection and never be satisfied with anything less. The result: constant dissatisfaction.
Customer expectations are often misaligned with company objectives. This could be due to the customer having unrealistically high expectations or the company having created levels of expectations it either cannot or will not fulfill.
Setting expectations. You must set the level of expectations you are able to meet and then sell to that point or just below it. Tell customers what you want them to want. Messages must be crafted to give the appropriate level of expectations. Hype might bring customers to your door but if your product and delivery cannot match the hype, you will not close the sale or keep the customer. What are you promising to the customer? Are you willing and able to meet the promises?
A study by the University of Illinois found customers willing to hang around even with lower actual satisfaction if their expectations were of higher actual future use. And conversely, those customers whose future value of products were minimal (not very useful to them in the future) tended not to hang around even with high ratings of customer satisfaction. In other words, if you provide a product valuable to them in the past, present and future, they will tend to stick with you regardless of the level of satisfaction (up to a point that is). You must 1) Effectively set expectations for customers; 2) Understand all the expectations of your customers. Not just those overtly expressed but just as well trying to understand those hidden; and 3) Deliver on their expectations or exceeding them Remember, Dissatisfaction is often derived from failed customer expectations
If your major benefit or sustainable competitive advantage is service and customer support, do not send messages of aggressive pricing. You will attract the wrong type of customer who will not be happy with the actual product offered. The expectation you create for your customers must match the message they hear.
Thursday, November 1, 2007
Wheredidtheygo
Where did they go?
By Paul Herbig
When Nielsen Media Research's fall sweeps ratings came out this past November, they clearly showed that men between the ages of 18 and 34 were watching less television, particularly fewer prime-time shows. For the time period during the autumn weeks, when many vaunted network shows hit the airwaves for the first time, Nielsen's data concluded that men 18-34 watched a hotly debated 7.7% less, or 270 fewer seconds, of prime-time TV programming a day than they did a year earlier. That may seem an insignificant drop, but Nielsen's research shows that younger men have been watching less television for the past 12 years and are no longer glued to the boob tube
This is not a trivial audience. For ad-supported network and cable TV channels, with more than $37 billion in annual revenue, 18- to 34-year-old men account for about $4.3 billion. So every minute that young males don't watch prime-time programming could carry a potential price tag of about $77 million across network, cable, national syndication, and national Hispanic TV channels
Where did the boys go? The Online Publishers Association (OPA) conducted a study
that addresses the where-the-boys-are problem TV networks are struggling with
(they appear to have found the girls, too). The coveted 18-34-year-old demographic
composes 24 percent of the U.S. population. Yet it accounts for a disproportionate
34.1 percent of the online population. This group takes access for granted, wherever,
whenever, and under their control. It is the first generation that grew up with the Internet. These young people are ditching their PCs in favor of laptops -- with wireless
broadband access.. It is not as if these people don't watch TV. They do. But "chaotic" schedules make concepts such as primetime all but meaningless. And when they do watch, it's often with laptop and cell phone at hand (they own lots of gadgets). When this demographic sees something in a brick-and-mortar store that catches their fancy, they'll often go home and buy it on the Web. "No lines,"
As TV loses its appeal among younger men, advertisers are using divining rods to follow the money. The PGA Tour, which tries to attract younger fans, sponsored EA Sports' golf video game, "Tiger Woods PGA Tour 2004." It even includes a section where the player can outfit his virtual persona with accessories from Nike, Tag Heuer, and Adidas. Says Kris Magel, senior vice president/group director of national broadcast at Optimedia, a New York advertising firm, "Partnerships with the developers of these games is a really interesting way to try to get in front of these guys." And while Volkswagen spent over $125 million on television advertising in 2003, the car company also paid Sony Computer Entertainment to have one of its vehicles featured in "Gran Turismo 3: A Spec." In the car racing game, the player can buy different car models from the Dodge Viper to Volkswagen's new Beetle
Research consistently shows men ages 18-34 watch less TV and go online
more. But research also says people who own DVRs watch more hours of TV.
Maybe people don't just watch more TV (since they can skip commercials),
but they watch it differently (because they control the schedule), at different
times (customized and managed to their availability and leisure), and only
the programs they want to watch. It resembles opt-in permission to exchange
personal information for tailored, relevant content.
TV media executives and advertisers should be glad they are not in the news print industry due to plummeting readership among younger consumers. I asked my son in college if he would like a subscription to The Wall Street Journal. His response: “If I want to read any articles I will check its web site.” This generation demands instant content on what matters to them and the newspapers must adapt their methods to customer’s behavior or die.
Behavioral targeting and DVR are ultimately about the consumer. Allowing
people to consume what they individually deem relevant will only increase
product affinity It is a war out there: the media and advertising versus the consumer. As you can’t win by fighting the customer, perhaps it is time to cooperate with him.
By Paul Herbig
When Nielsen Media Research's fall sweeps ratings came out this past November, they clearly showed that men between the ages of 18 and 34 were watching less television, particularly fewer prime-time shows. For the time period during the autumn weeks, when many vaunted network shows hit the airwaves for the first time, Nielsen's data concluded that men 18-34 watched a hotly debated 7.7% less, or 270 fewer seconds, of prime-time TV programming a day than they did a year earlier. That may seem an insignificant drop, but Nielsen's research shows that younger men have been watching less television for the past 12 years and are no longer glued to the boob tube
This is not a trivial audience. For ad-supported network and cable TV channels, with more than $37 billion in annual revenue, 18- to 34-year-old men account for about $4.3 billion. So every minute that young males don't watch prime-time programming could carry a potential price tag of about $77 million across network, cable, national syndication, and national Hispanic TV channels
Where did the boys go? The Online Publishers Association (OPA) conducted a study
that addresses the where-the-boys-are problem TV networks are struggling with
(they appear to have found the girls, too). The coveted 18-34-year-old demographic
composes 24 percent of the U.S. population. Yet it accounts for a disproportionate
34.1 percent of the online population. This group takes access for granted, wherever,
whenever, and under their control. It is the first generation that grew up with the Internet. These young people are ditching their PCs in favor of laptops -- with wireless
broadband access.. It is not as if these people don't watch TV. They do. But "chaotic" schedules make concepts such as primetime all but meaningless. And when they do watch, it's often with laptop and cell phone at hand (they own lots of gadgets). When this demographic sees something in a brick-and-mortar store that catches their fancy, they'll often go home and buy it on the Web. "No lines,"
As TV loses its appeal among younger men, advertisers are using divining rods to follow the money. The PGA Tour, which tries to attract younger fans, sponsored EA Sports' golf video game, "Tiger Woods PGA Tour 2004." It even includes a section where the player can outfit his virtual persona with accessories from Nike, Tag Heuer, and Adidas. Says Kris Magel, senior vice president/group director of national broadcast at Optimedia, a New York advertising firm, "Partnerships with the developers of these games is a really interesting way to try to get in front of these guys." And while Volkswagen spent over $125 million on television advertising in 2003, the car company also paid Sony Computer Entertainment to have one of its vehicles featured in "Gran Turismo 3: A Spec." In the car racing game, the player can buy different car models from the Dodge Viper to Volkswagen's new Beetle
Research consistently shows men ages 18-34 watch less TV and go online
more. But research also says people who own DVRs watch more hours of TV.
Maybe people don't just watch more TV (since they can skip commercials),
but they watch it differently (because they control the schedule), at different
times (customized and managed to their availability and leisure), and only
the programs they want to watch. It resembles opt-in permission to exchange
personal information for tailored, relevant content.
TV media executives and advertisers should be glad they are not in the news print industry due to plummeting readership among younger consumers. I asked my son in college if he would like a subscription to The Wall Street Journal. His response: “If I want to read any articles I will check its web site.” This generation demands instant content on what matters to them and the newspapers must adapt their methods to customer’s behavior or die.
Behavioral targeting and DVR are ultimately about the consumer. Allowing
people to consume what they individually deem relevant will only increase
product affinity It is a war out there: the media and advertising versus the consumer. As you can’t win by fighting the customer, perhaps it is time to cooperate with him.
XADS
X-Advertising
By Paul Herbig
Extreme Sports (X-games) are now the rage. It is the ultimate in obtaining the more-fickle-than-ever-before consumer’s attention. Just as X-games are getting the attention of the coveted younger crowd, a new set of X-advertising (Extreme Advertising) is being broadcasted to get the younger consumer’s attention.
TRAVEL advertising is “predictable, bland and boring”—unless you’re advertising UK youth package tour company Club 18-30, that is. Unsurprisingly, this is the view of Club 18-30 managing director Andy Tidy, whose controversial advertising created by Saatchi & Saatchi London won a Grand Prix at Cannes last year.
The entry featured a group of gorgeous young things in recreational situations, much in the manner of a Breughel painting, and incorporated a number of visual gags in each poster
Tidy was a speaker at the Cannes International Advertising Festival last week on the topic of ‘extreme advertising’—in which Club 18-30 indulges. The brand has been created around the consumer insight that for the majority of its customers, a Club 18-30 trip means sun, fun and, most of all, getting laid. Most of its marketing, including a variety of ambient and stunt campaigns, focuses on the latter point. For example, the brand ran a pseudo-demonstration outside the U.S. embassy in London recently, with people carrying placards and chanting “We want Bush”. On the back of the signs was a Club 18-30 logo.
“Within the travel industry, very few ‘brands’ exist,” Tidy told B&T. “The Club 18-30 logo adds meaning and completes the ad.”
Interestingly, however, a brand that is so strongly and controversially positioned contributes to a limited lifespan with its consumers. Tidy said there is a three-year window where Club 18-30 is the right travel brand for a person.He says the brand—which is owned by mainstream travel company Thomas Cook, but run by a separate management company at which Tidy is the only person aged older than 27—needs to expand its market to include slightly older travelers (who prefer ‘unpackaged tours’), and further generate word-of-mouth and loyalty .“Traditional loyalty programs are useless,” he said. “The real loyalty is when our customers tell other people what a great time they had and it gets passed on.”
As part of its efforts to generate word of mouth, the company spends time and effort on getting close to its market—and oddly, even their parents. For example, it runs local model competitions in local newspapers—something that is popular with its potential target market—and their parents—who might otherwise be expected to be rather anxious about sending their offspring on a Club 18-30 holiday.
“We have one rep to every 25 guests. A lot of the other companies only have one rep to every 200 guests,” Tidy says. “We’ve very successfully used this tactic for years..We also have an annual reunion—9000 people—it’s the biggest indoor event in Britain.” This is also where the ‘extreme’ advertising approach comes in. Club 18-30’s advertising must be “talked about”.
“It’s very, very important for the advertising to be award-winning,” Tidy says. “There’s no way I want to be a ‘me-too’ brand. It’s got to lead, not follow.We are so close to the target audience that we know if something is working. We know if we’re losing it. It’s anecdotal evidence—if we’re not being talked about.”
Tidy says for the longer-term, there’s little alternative but to launch new brands that target older travelers. For example, Cultura is set to launch at the end of August this year offering partly-packaged tours to Spanish and Italian cities and Prague.“It’s not a package holiday,” he says of the new brand. “You’re opting out, not in.
“We have a new reservation system. We’ll be able to work with partners like EasyJet. It will be very different from Club 18-30. But budgets will never be huge [so we need to] define another strong brand.”
Extreme Advertising—the future?
By Paul Herbig
Extreme Sports (X-games) are now the rage. It is the ultimate in obtaining the more-fickle-than-ever-before consumer’s attention. Just as X-games are getting the attention of the coveted younger crowd, a new set of X-advertising (Extreme Advertising) is being broadcasted to get the younger consumer’s attention.
TRAVEL advertising is “predictable, bland and boring”—unless you’re advertising UK youth package tour company Club 18-30, that is. Unsurprisingly, this is the view of Club 18-30 managing director Andy Tidy, whose controversial advertising created by Saatchi & Saatchi London won a Grand Prix at Cannes last year.
The entry featured a group of gorgeous young things in recreational situations, much in the manner of a Breughel painting, and incorporated a number of visual gags in each poster
Tidy was a speaker at the Cannes International Advertising Festival last week on the topic of ‘extreme advertising’—in which Club 18-30 indulges. The brand has been created around the consumer insight that for the majority of its customers, a Club 18-30 trip means sun, fun and, most of all, getting laid. Most of its marketing, including a variety of ambient and stunt campaigns, focuses on the latter point. For example, the brand ran a pseudo-demonstration outside the U.S. embassy in London recently, with people carrying placards and chanting “We want Bush”. On the back of the signs was a Club 18-30 logo.
“Within the travel industry, very few ‘brands’ exist,” Tidy told B&T. “The Club 18-30 logo adds meaning and completes the ad.”
Interestingly, however, a brand that is so strongly and controversially positioned contributes to a limited lifespan with its consumers. Tidy said there is a three-year window where Club 18-30 is the right travel brand for a person.He says the brand—which is owned by mainstream travel company Thomas Cook, but run by a separate management company at which Tidy is the only person aged older than 27—needs to expand its market to include slightly older travelers (who prefer ‘unpackaged tours’), and further generate word-of-mouth and loyalty .“Traditional loyalty programs are useless,” he said. “The real loyalty is when our customers tell other people what a great time they had and it gets passed on.”
As part of its efforts to generate word of mouth, the company spends time and effort on getting close to its market—and oddly, even their parents. For example, it runs local model competitions in local newspapers—something that is popular with its potential target market—and their parents—who might otherwise be expected to be rather anxious about sending their offspring on a Club 18-30 holiday.
“We have one rep to every 25 guests. A lot of the other companies only have one rep to every 200 guests,” Tidy says. “We’ve very successfully used this tactic for years..We also have an annual reunion—9000 people—it’s the biggest indoor event in Britain.” This is also where the ‘extreme’ advertising approach comes in. Club 18-30’s advertising must be “talked about”.
“It’s very, very important for the advertising to be award-winning,” Tidy says. “There’s no way I want to be a ‘me-too’ brand. It’s got to lead, not follow.We are so close to the target audience that we know if something is working. We know if we’re losing it. It’s anecdotal evidence—if we’re not being talked about.”
Tidy says for the longer-term, there’s little alternative but to launch new brands that target older travelers. For example, Cultura is set to launch at the end of August this year offering partly-packaged tours to Spanish and Italian cities and Prague.“It’s not a package holiday,” he says of the new brand. “You’re opting out, not in.
“We have a new reservation system. We’ll be able to work with partners like EasyJet. It will be very different from Club 18-30. But budgets will never be huge [so we need to] define another strong brand.”
Extreme Advertising—the future?
OlDGUYS
Don’t trust anyone over 30
By Paul Herbig
Advertisers want to be where the youth are. Advertisers are willing to pay a steep premium (sometimes two to three times as much) to have their products seen by young men and women in the ‘coveted’ 18 to 34 age group. Examine any primetime network show and you can almost see the intended audience mirrored by the show’s stars and culture. The networks cringe in horror if any show is targeted to “older” viewers (The dropping of Joan of Arcadia was because the viewership had turned old with many of the youth tuning out.). They fight one another over the average age of their viewers, dreading the ultimate insult of having the “oldest” average viewer, knowing the toll it will take on its advertising income.
Which brings us to the major question at hand: Why does Madison Avenue fight tooth and nail, court fiercely, and live and die for those youthful viewers? It can’t be for the money. Those “old folks” age 45 and over are the ones making the big bucks, have the largest disposable income, and who are buying most of the expensive products available today. The kids are either in school or just out of college, beset by huge amounts of college loans they must pay back, in an uncertain economy where any job is a good job, and living in modest digs if they haven’t already moved back with mom and dad. If the Advertisers wish to go where the money is, they have their priorities upside down.
Why then pursue the young and restless? Several reasons exist to rationalize the Advertiser’s odd behavior. The number one reason is the belief that marketers need to instill brand loyalty when the consumer is young and it will be maintained for the rest of their lives (Analogous to “Give me the child until he is 5 and he will be mine forever” School of thought). The only problem with this theory is that is it blatantly wrong. Young girls play with Barbies, that does not make them loyal to Mattel for life; as tweens (8-13) they loved the Backstreet Boys ; as teens they listened to Hip-Hop, in College young women have different tastes, and so on. Just because at one stage of their lives, they enjoy a product does not guarantee their loyalty for life; in fact, just the opposite is true, because they enjoyed a product as a high school student will almost guarantee they won’t like it as college student (because they associate it with their less mature high school life and they are now college students who must act and live like college students). This fallacy can be seen through the results of a recent survey:: males 18 to 21 are nearly four times as likely to favor apparel specialty shops than those 8 to 12 (38% to 10%) But guys lose interest in shopping at discount department stores as they get older (78% 8to 12 enjoy, compared to 57% of males 18 to 21). Perhaps as their spending patterns grows, their desire changes to more status brands.
The second reason is the “my customers are dying” syndrome whereas you fear the older average age of your product users could spell major problems in the future. Some truth may exist to this fear: the average age of Cadillac buyers have been edging up; however, Cadillac as a brand is under siege. In real life, some products are preferred by different age groups: Cruises tend to attract more seniors because they have the time and the money. To attempt to market to the young as a means of complementing your older users tends to alienate both groups: Remember “This is not your father’s Oldsmobile” commercials. They failed to attract the young and drove away their loyalty older customer. Oldsmobile has been retired from GM’s stable primarily due to this debacle.
The third and more probable reason is that the creative team at the Advertisers tend to be young and project what they like to see and what they think their peers would appreciate. It must be new, hip, faddish. Very few fifty-ish creative types exist at agencies anymore. It is a game for the young (who likewise tend to be selling to their youthful marketing peers at your company). If you do not want to lose your older users, you “senior” marketers must monitor and rein-in those runaway youth, less your product finds the black hole as did Oldsmobile.
Don’t forget the older or they will forget you.
By Paul Herbig
Advertisers want to be where the youth are. Advertisers are willing to pay a steep premium (sometimes two to three times as much) to have their products seen by young men and women in the ‘coveted’ 18 to 34 age group. Examine any primetime network show and you can almost see the intended audience mirrored by the show’s stars and culture. The networks cringe in horror if any show is targeted to “older” viewers (The dropping of Joan of Arcadia was because the viewership had turned old with many of the youth tuning out.). They fight one another over the average age of their viewers, dreading the ultimate insult of having the “oldest” average viewer, knowing the toll it will take on its advertising income.
Which brings us to the major question at hand: Why does Madison Avenue fight tooth and nail, court fiercely, and live and die for those youthful viewers? It can’t be for the money. Those “old folks” age 45 and over are the ones making the big bucks, have the largest disposable income, and who are buying most of the expensive products available today. The kids are either in school or just out of college, beset by huge amounts of college loans they must pay back, in an uncertain economy where any job is a good job, and living in modest digs if they haven’t already moved back with mom and dad. If the Advertisers wish to go where the money is, they have their priorities upside down.
Why then pursue the young and restless? Several reasons exist to rationalize the Advertiser’s odd behavior. The number one reason is the belief that marketers need to instill brand loyalty when the consumer is young and it will be maintained for the rest of their lives (Analogous to “Give me the child until he is 5 and he will be mine forever” School of thought). The only problem with this theory is that is it blatantly wrong. Young girls play with Barbies, that does not make them loyal to Mattel for life; as tweens (8-13) they loved the Backstreet Boys ; as teens they listened to Hip-Hop, in College young women have different tastes, and so on. Just because at one stage of their lives, they enjoy a product does not guarantee their loyalty for life; in fact, just the opposite is true, because they enjoyed a product as a high school student will almost guarantee they won’t like it as college student (because they associate it with their less mature high school life and they are now college students who must act and live like college students). This fallacy can be seen through the results of a recent survey:: males 18 to 21 are nearly four times as likely to favor apparel specialty shops than those 8 to 12 (38% to 10%) But guys lose interest in shopping at discount department stores as they get older (78% 8to 12 enjoy, compared to 57% of males 18 to 21). Perhaps as their spending patterns grows, their desire changes to more status brands.
The second reason is the “my customers are dying” syndrome whereas you fear the older average age of your product users could spell major problems in the future. Some truth may exist to this fear: the average age of Cadillac buyers have been edging up; however, Cadillac as a brand is under siege. In real life, some products are preferred by different age groups: Cruises tend to attract more seniors because they have the time and the money. To attempt to market to the young as a means of complementing your older users tends to alienate both groups: Remember “This is not your father’s Oldsmobile” commercials. They failed to attract the young and drove away their loyalty older customer. Oldsmobile has been retired from GM’s stable primarily due to this debacle.
The third and more probable reason is that the creative team at the Advertisers tend to be young and project what they like to see and what they think their peers would appreciate. It must be new, hip, faddish. Very few fifty-ish creative types exist at agencies anymore. It is a game for the young (who likewise tend to be selling to their youthful marketing peers at your company). If you do not want to lose your older users, you “senior” marketers must monitor and rein-in those runaway youth, less your product finds the black hole as did Oldsmobile.
Don’t forget the older or they will forget you.
ओनेतूने
You to me marketing
By Paul Herbig
One-to-one marketing it is called, a radical rethinking of the way marketers treat their customers. Companies can increase their profits by selling more things to fewer customers. It is wiser to focus more on increasing sales to a smaller percentage of your existing customers than it is to find new ones (estimates are it costs 5 to 10 times as much to get a new customer as it is to retain current ones).
Getting a new customer is expensive. It takes money to get his attention and it takes continuing effort to educate him (interruption marketing is expensive, and so is the
process of winning a customer's trust). It's also expensive for the customer, who has to spend time evaluating and learning about the features and benefits of a product. Instead of focusing on how to maximize the number of new customers, the focus should
be on keeping customers longer and getting far more money from each of them over time.
It's back to the old days, when merchants had a limited supply of customers and worked to get the maximum revenue from each one. Except now, with technology, companies can combine this old world thinking with the ability to dramatically grow their customer base at the same time.
If MCI spends hundreds of dollars to get a new long distance customer, and that customer pays just $20 per month for MCI’s services, then they have to be figuring out other ways to generate revenue through their interaction with that customer, not spending all their energy getting yet another new customer. By selling cellular phone services, home security services and an increasing array of other items, MCI can recoup the expense of obtaining these customers.
Levi's has built the single largest brand of women's jeans in the country. And they've done so without having any jeans in the store. Instead, women have their measurements taken by a trained specialist, who sends them to a computerized factory. There, a semi-custom pair of jeans is made to order. The shopper gets custom fit for a fraction of the cost. Levi's has a huge savings in inventory risk and advertising costs. And best of all, once a customer has given her measurements to Levi's, once she's endured the hassle of all that measurement-taking, once she's worn a pair of custom jeans that fit her to a ‘T” and makes her look like she always wanted, why would she even consider switching brands to save a few dollars?
A company should focus on four things when selling to customers:
1. Increase your "share of wallet." Figure out which needs you can satisfy, then use the knowledge you have, and the trust you've built, to make that additional sale.
2. Increase the durability of customer relationships. Invest money in customer retention, because it's a small fraction of the cost of customer acquisition.
3. Increase your product offerings to customers. By being customer-focused instead of retail-focused, or factory-focused, a manufacturer or merchant can widely increase its offerings, thus increasing its share of wallet.
4. Create an interactive relationship that leads to meeting more customer needs. It's a never-ending cycle. By constantly inducing the consumer to give more information, the marketer can offer more products.
This series of techniques isn't easy, nor is it free. If it were, everyone would do it. It requires a huge investment in scaleable technology, along with the focus and the commitment to do it right. It puts a lot more pressure on your organization, as well, because as each customer becomes worth more, the cost of losing one increases. But with the risks come the rewards.
By Paul Herbig
One-to-one marketing it is called, a radical rethinking of the way marketers treat their customers. Companies can increase their profits by selling more things to fewer customers. It is wiser to focus more on increasing sales to a smaller percentage of your existing customers than it is to find new ones (estimates are it costs 5 to 10 times as much to get a new customer as it is to retain current ones).
Getting a new customer is expensive. It takes money to get his attention and it takes continuing effort to educate him (interruption marketing is expensive, and so is the
process of winning a customer's trust). It's also expensive for the customer, who has to spend time evaluating and learning about the features and benefits of a product. Instead of focusing on how to maximize the number of new customers, the focus should
be on keeping customers longer and getting far more money from each of them over time.
It's back to the old days, when merchants had a limited supply of customers and worked to get the maximum revenue from each one. Except now, with technology, companies can combine this old world thinking with the ability to dramatically grow their customer base at the same time.
If MCI spends hundreds of dollars to get a new long distance customer, and that customer pays just $20 per month for MCI’s services, then they have to be figuring out other ways to generate revenue through their interaction with that customer, not spending all their energy getting yet another new customer. By selling cellular phone services, home security services and an increasing array of other items, MCI can recoup the expense of obtaining these customers.
Levi's has built the single largest brand of women's jeans in the country. And they've done so without having any jeans in the store. Instead, women have their measurements taken by a trained specialist, who sends them to a computerized factory. There, a semi-custom pair of jeans is made to order. The shopper gets custom fit for a fraction of the cost. Levi's has a huge savings in inventory risk and advertising costs. And best of all, once a customer has given her measurements to Levi's, once she's endured the hassle of all that measurement-taking, once she's worn a pair of custom jeans that fit her to a ‘T” and makes her look like she always wanted, why would she even consider switching brands to save a few dollars?
A company should focus on four things when selling to customers:
1. Increase your "share of wallet." Figure out which needs you can satisfy, then use the knowledge you have, and the trust you've built, to make that additional sale.
2. Increase the durability of customer relationships. Invest money in customer retention, because it's a small fraction of the cost of customer acquisition.
3. Increase your product offerings to customers. By being customer-focused instead of retail-focused, or factory-focused, a manufacturer or merchant can widely increase its offerings, thus increasing its share of wallet.
4. Create an interactive relationship that leads to meeting more customer needs. It's a never-ending cycle. By constantly inducing the consumer to give more information, the marketer can offer more products.
This series of techniques isn't easy, nor is it free. If it were, everyone would do it. It requires a huge investment in scaleable technology, along with the focus and the commitment to do it right. It puts a lot more pressure on your organization, as well, because as each customer becomes worth more, the cost of losing one increases. But with the risks come the rewards.
Celebrities
Celebrity Non-sweethearts
By Paul Herbig
Celebrities have gained deity perspective in many minds. More than ever before, Americans are celebrity smitten, if not obsessed. Some psychologists claim Americans need celebrities as much as food, water and shelter. “We need them to feel connected.” Some estimates are that one in three people are moderate to advanced celebrity worshippers. Whether the paparazzi follow celebrities because the public demands news of the stars or the celebrities and their pr machines broadcast news because they believe the public should be interested, the situation is not healthy.
It is the epitome of the infamous “Fifteen Minutes of Fame.” Celebrities are made every day. A man in California suspected of killing his wife; Smart after her kidnapping. A female American soldier captured in Iraq. (What happened to the hundreds of Americans killed in Iraq—why aren’t they celebrities; they gave the ultimate sacrifice, their life. Why was she chosen?) If they aren’t appearing, they are being invented (American Idol? Bachelor/Bachelorette, Survivor). Michael Jackson’s arrest lit the headlines for weeks, even to the point of downplaying Iran’s massive earthquake that killed tens of thousands or the Asian Tsunami. Kobe Bryant occupied the news for weeks during Summer 03 for a rape accusation (how many real rapes occur daily, what made him so special?) News networks placed this situation on par with the Iraqi war.
Oprah Winfrey tells America what books to read. Celebrities sponsor every product imaginable. What makes them an expert? Why should we buy a certain pair of shoes or apparel just because a celebrity says we should? Hugh Hefner eating a Carl’s Jr. hamburger is meant to bring throngs to the fast-food chain because Hugh supposedly eats there and says they should? Hollywood Celebrities make headlines by their political actions and comments: what makes them political experts? Why should Americans care what Jane Fonda has to say? The ultimate in hubris was when Ben Affleck made his “if Bush gets elected I am out of here.” Comment during the 2000 election. Did he really expect Americans to vote against Bush because they did not want to see him leave? He might be an excellent actor but as a knowledgeable political figure he is not credible. And finally there are those inane television shows whose very essence consists of celebrities and their status: Celebrity Poker, Donald Trump interviews, Made for TV movies about celebrities, Celebrity-Magazines fill the grocery next to check-out; Does Hollywood really believe the “little person” is so concerned about their stars they want to know every bit of gossip (affairs or rumored affairs, inside scoop on marriage difficulties, operations, etc) no matter how trivial? What is this society coming to?
Some experts say technology is to blame. Celebrities used to be larger than life and inaccessible—viewable only on the big screen or the little screen in the living room. No longer. Fans can now learn and view intimate details of celebrities practically on a minute-to-minute basis through 24 hour news channels, Entertainment cable channels, a host of available print vehicles, or online at any of the many celebrity or fan web sites. The end result is the feeling that the fan knows the celebrity, establish a relationship with them, and shares the celeb’s life. Or perhaps it is, as another expert indicates, because we, as a nation of consumers, are information hungry, about anything, including stars.
Another reason is due to economic uncertainty and recessions: during economic downturns, there is a tendency for people to want to know about the rich and famous more than other times. Others say the advanced economic status of the developed countries is to blame. As all the basic needs are taken care of, more leisure time is available. When this happens, Joyce Brothers says, “We have time to fritter away on less important things.”
Stars who believe their own press . . . Jack Quigman played Quncy, MD and then for years afterwards relied on his expert presence to rally troops around medical issues.
Parade magazine sells out constantly with only stories about stars and starlets. The same goes for People,..Sports , Media, Music and Hollywood. Celebs: America’s royalty? It certainly appears so.
The demagogy of the word hero is an excellent example. In past days, the term hero was reserved for one who sacrificed his/her life or whose actions put his/her life in jeopardy. Heroes were also those who put their career, reputation, honor on the line for that they believed in. It was not a term to be bandied around lightly. Today, the term is practically synonymous with celebrity. Michael Jordan is a hero to the youth; really? When did he ever put his life on the line?
From a marketing perspective, if celebrities sell, who are we to pass judgment on the situation. Nonetheless, use of celebrities as sponsors of products must be a cautious undertaking. O.J. Simpson was the star of Hertz commercials, jumping over airport lounge chairs, and running through airports, for decades. The public indelibly linked the two. It was a huge success for years--until the summer of 1994 with the murder of his wife and her male friend. Even though eventually acquitted, the negative press and the resulting doubts have made him persona non-grata for any sponsorship role; the impact upon Hertz has had to be negative. Another prime example is the Drink Milk campaigns with celebrity after celebrity with milk moustaches. Another great success. Except with Dennis Rodman, the NBA bad boy, went too far, kicked an courtside cameraman during a game; The Agency fired Dennis and withheld those ads with his appearances.
Celebrities sell but not celebrities are created equal and stay that way. Be careful whom you choose. .
By Paul Herbig
Celebrities have gained deity perspective in many minds. More than ever before, Americans are celebrity smitten, if not obsessed. Some psychologists claim Americans need celebrities as much as food, water and shelter. “We need them to feel connected.” Some estimates are that one in three people are moderate to advanced celebrity worshippers. Whether the paparazzi follow celebrities because the public demands news of the stars or the celebrities and their pr machines broadcast news because they believe the public should be interested, the situation is not healthy.
It is the epitome of the infamous “Fifteen Minutes of Fame.” Celebrities are made every day. A man in California suspected of killing his wife; Smart after her kidnapping. A female American soldier captured in Iraq. (What happened to the hundreds of Americans killed in Iraq—why aren’t they celebrities; they gave the ultimate sacrifice, their life. Why was she chosen?) If they aren’t appearing, they are being invented (American Idol? Bachelor/Bachelorette, Survivor). Michael Jackson’s arrest lit the headlines for weeks, even to the point of downplaying Iran’s massive earthquake that killed tens of thousands or the Asian Tsunami. Kobe Bryant occupied the news for weeks during Summer 03 for a rape accusation (how many real rapes occur daily, what made him so special?) News networks placed this situation on par with the Iraqi war.
Oprah Winfrey tells America what books to read. Celebrities sponsor every product imaginable. What makes them an expert? Why should we buy a certain pair of shoes or apparel just because a celebrity says we should? Hugh Hefner eating a Carl’s Jr. hamburger is meant to bring throngs to the fast-food chain because Hugh supposedly eats there and says they should? Hollywood Celebrities make headlines by their political actions and comments: what makes them political experts? Why should Americans care what Jane Fonda has to say? The ultimate in hubris was when Ben Affleck made his “if Bush gets elected I am out of here.” Comment during the 2000 election. Did he really expect Americans to vote against Bush because they did not want to see him leave? He might be an excellent actor but as a knowledgeable political figure he is not credible. And finally there are those inane television shows whose very essence consists of celebrities and their status: Celebrity Poker, Donald Trump interviews, Made for TV movies about celebrities, Celebrity-Magazines fill the grocery next to check-out; Does Hollywood really believe the “little person” is so concerned about their stars they want to know every bit of gossip (affairs or rumored affairs, inside scoop on marriage difficulties, operations, etc) no matter how trivial? What is this society coming to?
Some experts say technology is to blame. Celebrities used to be larger than life and inaccessible—viewable only on the big screen or the little screen in the living room. No longer. Fans can now learn and view intimate details of celebrities practically on a minute-to-minute basis through 24 hour news channels, Entertainment cable channels, a host of available print vehicles, or online at any of the many celebrity or fan web sites. The end result is the feeling that the fan knows the celebrity, establish a relationship with them, and shares the celeb’s life. Or perhaps it is, as another expert indicates, because we, as a nation of consumers, are information hungry, about anything, including stars.
Another reason is due to economic uncertainty and recessions: during economic downturns, there is a tendency for people to want to know about the rich and famous more than other times. Others say the advanced economic status of the developed countries is to blame. As all the basic needs are taken care of, more leisure time is available. When this happens, Joyce Brothers says, “We have time to fritter away on less important things.”
Stars who believe their own press . . . Jack Quigman played Quncy, MD and then for years afterwards relied on his expert presence to rally troops around medical issues.
Parade magazine sells out constantly with only stories about stars and starlets. The same goes for People,..Sports , Media, Music and Hollywood. Celebs: America’s royalty? It certainly appears so.
The demagogy of the word hero is an excellent example. In past days, the term hero was reserved for one who sacrificed his/her life or whose actions put his/her life in jeopardy. Heroes were also those who put their career, reputation, honor on the line for that they believed in. It was not a term to be bandied around lightly. Today, the term is practically synonymous with celebrity. Michael Jordan is a hero to the youth; really? When did he ever put his life on the line?
From a marketing perspective, if celebrities sell, who are we to pass judgment on the situation. Nonetheless, use of celebrities as sponsors of products must be a cautious undertaking. O.J. Simpson was the star of Hertz commercials, jumping over airport lounge chairs, and running through airports, for decades. The public indelibly linked the two. It was a huge success for years--until the summer of 1994 with the murder of his wife and her male friend. Even though eventually acquitted, the negative press and the resulting doubts have made him persona non-grata for any sponsorship role; the impact upon Hertz has had to be negative. Another prime example is the Drink Milk campaigns with celebrity after celebrity with milk moustaches. Another great success. Except with Dennis Rodman, the NBA bad boy, went too far, kicked an courtside cameraman during a game; The Agency fired Dennis and withheld those ads with his appearances.
Celebrities sell but not celebrities are created equal and stay that way. Be careful whom you choose. .
Tuesday, October 2, 2007
CRM
CRM
CRM Customer Relationship Management: A big fancy word for knowing your customer. Something most good businesspersons never stopped doing. It is only new in the sense that for most of the twentieth century, mass media advertising was the norm. In the nineteen century, before the rise of the large corporation, most of America’ (and indeed the world’s) commerce was performed by small sole proprietor shops. They HAD to know their customers. But as one-to-one marketing gave away to marketing to the masses, that knowledge of working with individual customers, knowing them intimately, and working to satisfy their unique needs, dissipated. CRM is an attempt to return to what worked well in the nineteenth century and what will work well in the twenty-first century as well.
A Term that must be understood, remembered, and utilized is Lifetime value of a customer This revolves around a company’s attitude towards customer If I spend 300 dollars a month on groceries for my family, am I worth $300 to that grocery chain? No, I am worth $72,000 ($300 per month times 12 months times 20 years). The company then had better think about treating me as if I were worth $72K. Loyal customers: buy more, more often, are less price sensitive, more loyal, and will purchase higher priced options, while the cost of servicing them is much less and the profitability of a retention customer much greater than a mere acquired one Customer wants: recognition, service, information, convenience, helpfulness
Today’s marketers are being required to provide ROI forecasts as well as to provide quantitative revenue contributions of marketing activities. Marketers must have the ability to track and measure precise return of all activities down to the individual customer level.
With availability of customer purchase information, marketers now have access to critical data that can be combined with demographic and historical information that a company has on its customers. Using that combination, marketers can then determine more precise market segments and customer characteristics and thus deliver more effective marketing.
The objective is to provide the information and marketing offers to the right people at the right time. When this is done, consumers see the effort as valuable to them and appreciate the responsiveness. It provides the company a significant competitive advantage.
Through a CRM system and the availability of customer data, marketers can finally see clearly who their customers are, what they are purchasing, when they are purchasing it, and where it is being purchased at. Marketers can then apply statistical analysis to predict future purchase behavior. CRM systems also calculate the lifetime value of customers which can then allow Marketers to categorize customers and pursue the high value segment. Through CRM systems, marketers can better understand and shape the customer experience in all phases of the relationship—from leads to prospect to customer to (worst case) former customer. Marketing and CRM work so well together because they basically have the same mission: to identify, acquire, foster, and retain loyal, profitable customers.
Through CRM, the company will know more about what the customer might be interested in and will send specific offers only to those with the highest possible interest and readiness to buy. CRM has had mixed successes. Less than 30 percent of CRM adopting companies report achieving the expected return from their CRM investments. The problem all too often is not the program but the company (29% failure from organizational change, 22% from company politics/inertia; lack of CRM understanding 20%)
Perhaps not CRM but CMR (Customer Management of Relationships).
CRM Customer Relationship Management: A big fancy word for knowing your customer. Something most good businesspersons never stopped doing. It is only new in the sense that for most of the twentieth century, mass media advertising was the norm. In the nineteen century, before the rise of the large corporation, most of America’ (and indeed the world’s) commerce was performed by small sole proprietor shops. They HAD to know their customers. But as one-to-one marketing gave away to marketing to the masses, that knowledge of working with individual customers, knowing them intimately, and working to satisfy their unique needs, dissipated. CRM is an attempt to return to what worked well in the nineteenth century and what will work well in the twenty-first century as well.
A Term that must be understood, remembered, and utilized is Lifetime value of a customer This revolves around a company’s attitude towards customer If I spend 300 dollars a month on groceries for my family, am I worth $300 to that grocery chain? No, I am worth $72,000 ($300 per month times 12 months times 20 years). The company then had better think about treating me as if I were worth $72K. Loyal customers: buy more, more often, are less price sensitive, more loyal, and will purchase higher priced options, while the cost of servicing them is much less and the profitability of a retention customer much greater than a mere acquired one Customer wants: recognition, service, information, convenience, helpfulness
Today’s marketers are being required to provide ROI forecasts as well as to provide quantitative revenue contributions of marketing activities. Marketers must have the ability to track and measure precise return of all activities down to the individual customer level.
With availability of customer purchase information, marketers now have access to critical data that can be combined with demographic and historical information that a company has on its customers. Using that combination, marketers can then determine more precise market segments and customer characteristics and thus deliver more effective marketing.
The objective is to provide the information and marketing offers to the right people at the right time. When this is done, consumers see the effort as valuable to them and appreciate the responsiveness. It provides the company a significant competitive advantage.
Through a CRM system and the availability of customer data, marketers can finally see clearly who their customers are, what they are purchasing, when they are purchasing it, and where it is being purchased at. Marketers can then apply statistical analysis to predict future purchase behavior. CRM systems also calculate the lifetime value of customers which can then allow Marketers to categorize customers and pursue the high value segment. Through CRM systems, marketers can better understand and shape the customer experience in all phases of the relationship—from leads to prospect to customer to (worst case) former customer. Marketing and CRM work so well together because they basically have the same mission: to identify, acquire, foster, and retain loyal, profitable customers.
Through CRM, the company will know more about what the customer might be interested in and will send specific offers only to those with the highest possible interest and readiness to buy. CRM has had mixed successes. Less than 30 percent of CRM adopting companies report achieving the expected return from their CRM investments. The problem all too often is not the program but the company (29% failure from organizational change, 22% from company politics/inertia; lack of CRM understanding 20%)
Perhaps not CRM but CMR (Customer Management of Relationships).
Saturday, September 22, 2007
RealityofBranding
The Reality of Branding
Reality shows are all the rage. Rumor has it next year the Survivor franchise, having run out of exotic places to televise from is going to run an experimental Survivor: South Central LA hour long show: Contestants will be parachuted into that part of LA and any that survive until the end of the show wins a chance to return the following week to try again. Of course, show business execs are complaining that an hour might be too long and difficult to fill with the rate of expected attrition. Nonetheless . . . one has to view these reality shows with a cynical outlook; after all, how “alone’ can you be with twenty camera crews and fifty overhead cameras recording your every move and thought?
Of all the reality shows, the Apprentice comes closest to real world value. It teaches concepts such as leadership, teamwork, competition and customer centric that this here prophet has always thought worthy of dissemination. However, one can also watch the show and pick up such non-desirable traits as finger-pointing, sabotage, autocratic behavior, bullying, and pure stupidity. But it is fun to watch and probably more of a learning experience than all the other Survivor series combined (ad infinitum).
Nevertheless, I must comment on some aspects of the series. The format typically has two teams competing against each other on a particular assignment. They have 24 hours (or less sometimes) to complete a business assignment. Of course it is “staged” but often fun to watch. Here’s my beef: in less than 24 hours the team are challenged to create a new brand or branding position for a particular product and present their findings to corporate head honchos.
Wrong. Wrong. Wrong. This is teaching America that all it takes is 24 hours and a Power-point presentation and you have established a brand that you can sell by the millions.. This is an entirely wrong notion of how to brand and what brands are. Brands are not created overnight and come into the world fully formed and ready for consumer consumption. Brands are an emotional shortcut between the product/company and the customer and provide valuable information to customers regarding quality to customers. Brands identify, differentiates, minimizes risk to the customer, reduces search cost to the customer, and provide meaning to the customer. It is basically a promise: ”You continue to buy from me and I will continue to provide the same high quality product to you.”
1) Branding is a multi-year phenomenon. Some experts indicate it could take as many as 5-7 years to firmly establish a brand in the mindset of your customers. It takes time and multiple purchases to gain credibility and trust among customers. You cannot merely tell them once and it is a done deal.
2) Consistency in the message is a necessity. All forms of marketing media must contain the same branding message and position. Otherwise, your customers will be confused about what you stand for . . . if anything.
3) Brand message and position must be reasonable and rationale with the product or service you are marketing and the company mission/reality. A Tiffany store in Walmart may not do well. In other words, you can’t make pearls from swine. You can always get them to buy once but it takes a good product to get repeat purchases.
4) Provide a simple, realistic, relevant message. All the branding advertising in the world is not going to make up for a poor product. The product must be a quality, usable, understandable and relevant.
So next time you watch The Apprentice, enjoy the show, watch the business banter but understand reality is much more subtle (and less forgiving than The Donald).
Reality shows are all the rage. Rumor has it next year the Survivor franchise, having run out of exotic places to televise from is going to run an experimental Survivor: South Central LA hour long show: Contestants will be parachuted into that part of LA and any that survive until the end of the show wins a chance to return the following week to try again. Of course, show business execs are complaining that an hour might be too long and difficult to fill with the rate of expected attrition. Nonetheless . . . one has to view these reality shows with a cynical outlook; after all, how “alone’ can you be with twenty camera crews and fifty overhead cameras recording your every move and thought?
Of all the reality shows, the Apprentice comes closest to real world value. It teaches concepts such as leadership, teamwork, competition and customer centric that this here prophet has always thought worthy of dissemination. However, one can also watch the show and pick up such non-desirable traits as finger-pointing, sabotage, autocratic behavior, bullying, and pure stupidity. But it is fun to watch and probably more of a learning experience than all the other Survivor series combined (ad infinitum).
Nevertheless, I must comment on some aspects of the series. The format typically has two teams competing against each other on a particular assignment. They have 24 hours (or less sometimes) to complete a business assignment. Of course it is “staged” but often fun to watch. Here’s my beef: in less than 24 hours the team are challenged to create a new brand or branding position for a particular product and present their findings to corporate head honchos.
Wrong. Wrong. Wrong. This is teaching America that all it takes is 24 hours and a Power-point presentation and you have established a brand that you can sell by the millions.. This is an entirely wrong notion of how to brand and what brands are. Brands are not created overnight and come into the world fully formed and ready for consumer consumption. Brands are an emotional shortcut between the product/company and the customer and provide valuable information to customers regarding quality to customers. Brands identify, differentiates, minimizes risk to the customer, reduces search cost to the customer, and provide meaning to the customer. It is basically a promise: ”You continue to buy from me and I will continue to provide the same high quality product to you.”
1) Branding is a multi-year phenomenon. Some experts indicate it could take as many as 5-7 years to firmly establish a brand in the mindset of your customers. It takes time and multiple purchases to gain credibility and trust among customers. You cannot merely tell them once and it is a done deal.
2) Consistency in the message is a necessity. All forms of marketing media must contain the same branding message and position. Otherwise, your customers will be confused about what you stand for . . . if anything.
3) Brand message and position must be reasonable and rationale with the product or service you are marketing and the company mission/reality. A Tiffany store in Walmart may not do well. In other words, you can’t make pearls from swine. You can always get them to buy once but it takes a good product to get repeat purchases.
4) Provide a simple, realistic, relevant message. All the branding advertising in the world is not going to make up for a poor product. The product must be a quality, usable, understandable and relevant.
So next time you watch The Apprentice, enjoy the show, watch the business banter but understand reality is much more subtle (and less forgiving than The Donald).
Wednesday, September 12, 2007
Hoorayforproblems
Problem, Problem, Who’s got a problem? We’ve got the problem.
The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005. Those surveyed were asked to discuss their most recent shopping experience. Half said they had at least one problem. On average, survey respondents reported experiencing three problems on the shopping trip, during which they spent an average of $163.
Parking was a major source of aggravation for shoppers with 40% of those surveyed reporting dissatisfaction in the parking lot. This is not good news for retailers as parking problems set the stage for customers to "arrive angry," which can make them more likely to have a troubled shopping experience. Retailers must realize the shopping experience is total and inclusive, from the time the shopper decides to leave their front door until they return home
In addition to parking problems, shoppers surveyed complained that it took a long time for them to be waited on (24%) or to pay (33%). Shoppers who had to wait for service complained about it to 2.1 other people, on average, and those who had to wait a long time to pay told an average of 1.4 people. Customers' time has become an important part of the retail value equation, along with price, merchandising and other traditional components of the industry.. Time is a rare and precious thing. Yet because the Internet allows shoppers to buy around the clock, there is more pressure on retailers to respect their customers' time.
Meanwhile, retailers continue to focus on merchandise, jamming stores with inventory that overwhelms customers and cuts into the time they have to shop. According to the survey, shoppers are likely to tell 2.5 people, on average, about their inability to find an item because the store was cluttered with merchandise. In the end, retailers will wind up reducing the price on merchandise to make up for the negative experience, eroding their profit margins.
The survey shows some slight differences in attitudes among shoppers who were reporting their experiences at a mass merchant versus a specialty store. People who are in a specialty store are more in the pleasure-seeking experience, while people going to a mass merchant are on a mission.
Retailers historically have paid a great deal of attention to how to satisfy the customer, but have not been too interested in finding out what makes them dissatisfied. Historically it has focused more on product and experience as a way to create satisfaction.
And despite the value in learning about consumer gripes, retailers have resisted asking their customers what they do wrong for fear of stirring up negative thoughts. Retailers need to find ways to get customers to share complaints with management, not friends and family. One way is for retailers to ask customers to check a box on their credit card slip indicating they had a problem at the store. Retailers could then attempt to follow up, or give the customer a phone number or web address to make their complaints directly. If nothing else, it would give the customer a chance to blow off steam.. Retailers that are responsive and friendly are more likely to smooth over issues than those that don't try to be as friendly as possible.
And now to the moral of the story: Why don't shoppers confront the retailer directly? Respondents indicated they rarely discussed their concerns with store personnel or management. The prevailing psychology was that most people presumed it would happen repeatedly (46% of those who had a problem expect they would definitely or probably experience the same problem in the future), was unavoidable, and resigned themselves to poor service. When any service has become a pleasant surprise instead of the expected, the time is ripe for a marketer to woo customers with (if not exceptional) then solid good sincere service. How much more effort would it take to do so? And by what America is telling us, the reward would be well worth it.
The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005. Those surveyed were asked to discuss their most recent shopping experience. Half said they had at least one problem. On average, survey respondents reported experiencing three problems on the shopping trip, during which they spent an average of $163.
Parking was a major source of aggravation for shoppers with 40% of those surveyed reporting dissatisfaction in the parking lot. This is not good news for retailers as parking problems set the stage for customers to "arrive angry," which can make them more likely to have a troubled shopping experience. Retailers must realize the shopping experience is total and inclusive, from the time the shopper decides to leave their front door until they return home
In addition to parking problems, shoppers surveyed complained that it took a long time for them to be waited on (24%) or to pay (33%). Shoppers who had to wait for service complained about it to 2.1 other people, on average, and those who had to wait a long time to pay told an average of 1.4 people. Customers' time has become an important part of the retail value equation, along with price, merchandising and other traditional components of the industry.. Time is a rare and precious thing. Yet because the Internet allows shoppers to buy around the clock, there is more pressure on retailers to respect their customers' time.
Meanwhile, retailers continue to focus on merchandise, jamming stores with inventory that overwhelms customers and cuts into the time they have to shop. According to the survey, shoppers are likely to tell 2.5 people, on average, about their inability to find an item because the store was cluttered with merchandise. In the end, retailers will wind up reducing the price on merchandise to make up for the negative experience, eroding their profit margins.
The survey shows some slight differences in attitudes among shoppers who were reporting their experiences at a mass merchant versus a specialty store. People who are in a specialty store are more in the pleasure-seeking experience, while people going to a mass merchant are on a mission.
Retailers historically have paid a great deal of attention to how to satisfy the customer, but have not been too interested in finding out what makes them dissatisfied. Historically it has focused more on product and experience as a way to create satisfaction.
And despite the value in learning about consumer gripes, retailers have resisted asking their customers what they do wrong for fear of stirring up negative thoughts. Retailers need to find ways to get customers to share complaints with management, not friends and family. One way is for retailers to ask customers to check a box on their credit card slip indicating they had a problem at the store. Retailers could then attempt to follow up, or give the customer a phone number or web address to make their complaints directly. If nothing else, it would give the customer a chance to blow off steam.. Retailers that are responsive and friendly are more likely to smooth over issues than those that don't try to be as friendly as possible.
And now to the moral of the story: Why don't shoppers confront the retailer directly? Respondents indicated they rarely discussed their concerns with store personnel or management. The prevailing psychology was that most people presumed it would happen repeatedly (46% of those who had a problem expect they would definitely or probably experience the same problem in the future), was unavoidable, and resigned themselves to poor service. When any service has become a pleasant surprise instead of the expected, the time is ripe for a marketer to woo customers with (if not exceptional) then solid good sincere service. How much more effort would it take to do so? And by what America is telling us, the reward would be well worth it.
कस्तोमेर्सोल्दंड़व
Something New, Something Old: Customers
Last week, I started counting the signs and marquees I saw in our little town alone:
“New Customers Half off first rental”
“Free XXX with first purchase”
“10% off First Year Fees”
“ First Time buyers—no payment until 2007”
At first glance, I thought, isn’t this terrific marketing. Then it hit me: I was not eligible for any of these because I was an already established customer. And then I did not feel quite so kind. What am I missing out on by being an old, reliable, non-threatening, buy and never complain type of customer? Are you taking me for granted—good old reliable Paul. Are you being complacent about me? Perhaps it is time for me to shake you up and change businesses. I (and I suspect most people as well) do not like being taken for granted and discriminated against (which is exactly what this is, discriminating for new customers/businesses at the expense of us older clients).
Is your business doing likewise? Working overtime to attract new customers and not paying attention or giving time to present, existing customers? This is a recipe for disaster. Do you think that once you bagged a new customer, s/he will be yours for ever and you can go hunting for new clients without regard for your previous catches? Think again.
Do you know what the numbers say? It takes five times as much time and money to get a new customer as it does to enhance an existing customer’s business. The typical business gains less than 5 to 10% of lifetime potential business from the initial sale to a customer. If you do not go back to your existing customers, you are missing out on up to 95% of potential revenues from that customer. You have already established a relationship with the customer, s/he knows your products, your company, your service capabilities and your employees. You have already established awareness and a reputation (hopefully a good one) with your existing customers. Think of the costs involved in gaining the levels of awareness and reputation that already exist in current customers to new customers who may have never heard of you. That is the benefit of your established base.
If you are already aware of these benefits and still chase after new customers, why? For many of us, the roots of the problem can be found in our evolutionary past: it is the thrill of the chase and the immense joy in the successful ‘kill.’. Or the pride achieved in a new ‘conquest.’ That as it may be, it is time to tame the primitive hunter and use the rational civilized mind to run a business, not a wild game chase on the Savanna.
I recently received a notice in the mail from a health plan I belong to. They indicate a rate increase is forthcoming. Then they indicated they could either raise the rate only on old customers thus “keeping our new customer rates lower to attract new business,” or raise rates on both old and new customers. They decided to do the latter. They have foregone the temptation to lure in new business while taking advantage of older customers. In the end, they will gain less new business but retain many more older customers. I cheer them on with their decision.
What can you do?
1) Many of the challenges can be traced directly to the incentive system provided to salespersons—more bang for new accounts than for managing older existing ones. Modify it so appropriate weights exist.
2) Do not actively discriminate between old and new customers. Your existing customers will play the game to get the ‘newie’ benefits: they will create new email addresses to confuse the system into thinking they are new customers. Don’t get into playing games. Stick to providing the best products and services you can offer. Everything else will follow.
3) Of course you should always be seeking new business. Remember that new business that comes because of deep initial discounts or freebies will more readily leave when the next vendor offers better deals. Seek those businesses/customers who will be long-term customers. Gain their attention with your product/service/reputation/quality not with a one-time deal.
Remember your old existing customers for it is they that will grow your business.
Last week, I started counting the signs and marquees I saw in our little town alone:
“New Customers Half off first rental”
“Free XXX with first purchase”
“10% off First Year Fees”
“ First Time buyers—no payment until 2007”
At first glance, I thought, isn’t this terrific marketing. Then it hit me: I was not eligible for any of these because I was an already established customer. And then I did not feel quite so kind. What am I missing out on by being an old, reliable, non-threatening, buy and never complain type of customer? Are you taking me for granted—good old reliable Paul. Are you being complacent about me? Perhaps it is time for me to shake you up and change businesses. I (and I suspect most people as well) do not like being taken for granted and discriminated against (which is exactly what this is, discriminating for new customers/businesses at the expense of us older clients).
Is your business doing likewise? Working overtime to attract new customers and not paying attention or giving time to present, existing customers? This is a recipe for disaster. Do you think that once you bagged a new customer, s/he will be yours for ever and you can go hunting for new clients without regard for your previous catches? Think again.
Do you know what the numbers say? It takes five times as much time and money to get a new customer as it does to enhance an existing customer’s business. The typical business gains less than 5 to 10% of lifetime potential business from the initial sale to a customer. If you do not go back to your existing customers, you are missing out on up to 95% of potential revenues from that customer. You have already established a relationship with the customer, s/he knows your products, your company, your service capabilities and your employees. You have already established awareness and a reputation (hopefully a good one) with your existing customers. Think of the costs involved in gaining the levels of awareness and reputation that already exist in current customers to new customers who may have never heard of you. That is the benefit of your established base.
If you are already aware of these benefits and still chase after new customers, why? For many of us, the roots of the problem can be found in our evolutionary past: it is the thrill of the chase and the immense joy in the successful ‘kill.’. Or the pride achieved in a new ‘conquest.’ That as it may be, it is time to tame the primitive hunter and use the rational civilized mind to run a business, not a wild game chase on the Savanna.
I recently received a notice in the mail from a health plan I belong to. They indicate a rate increase is forthcoming. Then they indicated they could either raise the rate only on old customers thus “keeping our new customer rates lower to attract new business,” or raise rates on both old and new customers. They decided to do the latter. They have foregone the temptation to lure in new business while taking advantage of older customers. In the end, they will gain less new business but retain many more older customers. I cheer them on with their decision.
What can you do?
1) Many of the challenges can be traced directly to the incentive system provided to salespersons—more bang for new accounts than for managing older existing ones. Modify it so appropriate weights exist.
2) Do not actively discriminate between old and new customers. Your existing customers will play the game to get the ‘newie’ benefits: they will create new email addresses to confuse the system into thinking they are new customers. Don’t get into playing games. Stick to providing the best products and services you can offer. Everything else will follow.
3) Of course you should always be seeking new business. Remember that new business that comes because of deep initial discounts or freebies will more readily leave when the next vendor offers better deals. Seek those businesses/customers who will be long-term customers. Gain their attention with your product/service/reputation/quality not with a one-time deal.
Remember your old existing customers for it is they that will grow your business.
Saturday, August 25, 2007
DynamicMktg
Dynamic Pricing: Here today, gone today.
By Paul Herbig
Pricing is one of nature’s hidden wonders. We all see it but few of us understand it. And perhaps it is rightly so. To paraphrase an ancient wise man, “ You do not want to see legislation, sausage or pricing being made. It is not necessarily an appetizing process and you will be a changed man forever more as a result.”
With the advent of the Internet and vast computational capabilities, a phenomenon called dynamic pricing has arisen, mighty in scope and tremendous in its capabilities to change habits of every American and business. Dynamic pricing. Like it or hate it, it is here and for the rest of time. Dynamic Pricing is the practice of charging different customers different prices for the same product or service . . . at the same time. It has been typical marketing practice to charge different prices (at different times) . . . the retail markdown, the seasonal sale, the inventory clear-out are all examples of this. What makes Dynamic Pricing different is that prices offered to different customers at the very same time could well be considerably different. Some examples include charging travelers different fares for the same flight or same hotel accommodations, setting prices for sporting events based on the quality of the opponents and charging borrowers different interest rates based on their credit history. From a company perspective it is full of promise and excitement, yet fraught with risk. Dynamic pricing gives marketers the flexibility to pursue margins and sales volumes simultaneously I(especially true in settings with high uncertainty regarding market condition), and that increases profits. Companies that experiment with dynamic pricing could lose a few customers but the gains from the many, many customers who don't care would far outweigh the losses.
It is both new and old. In some ways, Dynamic Pricing is as old as commerce. Think of the Arab bazaars where buyers haggle with merchants over the price of spices and rugs. One buyer could well get a price considerably different from another buyer of the exact same good within minutes or seconds of each other. What makes it different is with the advent of technology, Software programs using sophisticated statistical models and algorithms can crunch all the factors that go into determining something's price, including market trends, competitors' prices, the cost to produce and sell the item, and the customer's demographic information and past purchasing history. Companies can now disseminate an individual price instantly to the Web, to store, or to customers anywhere in the world at anytime of day. Overstock.com acknowledges the company watches how long you linger on the site and how much you spend which could determine whether you will see a notice of a liquidation sale or a new shipment of premium priced items
An urban myth had Coca-Cola developing the ultimate in a dynamic pricing vending machine. The machine could sense the outside temperature, the number of cans of each brand still left in the machine, the time of day and was programmed to factor in how many nearby vending or retailing outlets existed. Then it supposedly would change the price instantaneously accordingly. That is, if it were hot outside, the machine isolated and how few cokes were left, the machine would register a significantly higher price than if it were cold and stocked full.
You too can check out dynamic pricing on the web. If you already have an Amazon or other online retailer account, create a second email address, than order the same item from your regular account as you would from your new address. Preferably do it as close together as possible. Are the prices the same? If not, odds are that your new account was provided a lower price (as inducement to become a new customer ). Or even go to a site, check out the price and return moments later and you may well get a totally different price..
Yes it is here to stay. What can customers do? Compare often. Shop carefully and become more savvy with the technology race. Marketers beware. Dynamic Pricing offers higher margin but at a cost of consumer discontent. What is the value of a lost customer to you? And more to the point, how important is your reputation? Do you want to be perceived as the ever shifting (and shifty) company or one that is consistent and fair to all? The choice is yours.
One is to make customers who pay a higher price feel they're getting more for their money. For instance, travelers are willing to pay hundreds of dollars more on first-class plane tickets even though the ticket doesn't get them to their destination any faster than the folks flying economy. What it does get them are perks such as complimentary drinks and more comfortable seats. Dynamic pricing also lends itself to products that are purchased infrequently, such as cars or luxury goods, because consumers are less likely to remember how much they paid or to compare prices with friends. Finally, segment customers appropriately and don't charge higher prices to those who are price-sensitive. Otherwise, you'll definitely alienate customers.
By Paul Herbig
Pricing is one of nature’s hidden wonders. We all see it but few of us understand it. And perhaps it is rightly so. To paraphrase an ancient wise man, “ You do not want to see legislation, sausage or pricing being made. It is not necessarily an appetizing process and you will be a changed man forever more as a result.”
With the advent of the Internet and vast computational capabilities, a phenomenon called dynamic pricing has arisen, mighty in scope and tremendous in its capabilities to change habits of every American and business. Dynamic pricing. Like it or hate it, it is here and for the rest of time. Dynamic Pricing is the practice of charging different customers different prices for the same product or service . . . at the same time. It has been typical marketing practice to charge different prices (at different times) . . . the retail markdown, the seasonal sale, the inventory clear-out are all examples of this. What makes Dynamic Pricing different is that prices offered to different customers at the very same time could well be considerably different. Some examples include charging travelers different fares for the same flight or same hotel accommodations, setting prices for sporting events based on the quality of the opponents and charging borrowers different interest rates based on their credit history. From a company perspective it is full of promise and excitement, yet fraught with risk. Dynamic pricing gives marketers the flexibility to pursue margins and sales volumes simultaneously I(especially true in settings with high uncertainty regarding market condition), and that increases profits. Companies that experiment with dynamic pricing could lose a few customers but the gains from the many, many customers who don't care would far outweigh the losses.
It is both new and old. In some ways, Dynamic Pricing is as old as commerce. Think of the Arab bazaars where buyers haggle with merchants over the price of spices and rugs. One buyer could well get a price considerably different from another buyer of the exact same good within minutes or seconds of each other. What makes it different is with the advent of technology, Software programs using sophisticated statistical models and algorithms can crunch all the factors that go into determining something's price, including market trends, competitors' prices, the cost to produce and sell the item, and the customer's demographic information and past purchasing history. Companies can now disseminate an individual price instantly to the Web, to store, or to customers anywhere in the world at anytime of day. Overstock.com acknowledges the company watches how long you linger on the site and how much you spend which could determine whether you will see a notice of a liquidation sale or a new shipment of premium priced items
An urban myth had Coca-Cola developing the ultimate in a dynamic pricing vending machine. The machine could sense the outside temperature, the number of cans of each brand still left in the machine, the time of day and was programmed to factor in how many nearby vending or retailing outlets existed. Then it supposedly would change the price instantaneously accordingly. That is, if it were hot outside, the machine isolated and how few cokes were left, the machine would register a significantly higher price than if it were cold and stocked full.
You too can check out dynamic pricing on the web. If you already have an Amazon or other online retailer account, create a second email address, than order the same item from your regular account as you would from your new address. Preferably do it as close together as possible. Are the prices the same? If not, odds are that your new account was provided a lower price (as inducement to become a new customer ). Or even go to a site, check out the price and return moments later and you may well get a totally different price..
Yes it is here to stay. What can customers do? Compare often. Shop carefully and become more savvy with the technology race. Marketers beware. Dynamic Pricing offers higher margin but at a cost of consumer discontent. What is the value of a lost customer to you? And more to the point, how important is your reputation? Do you want to be perceived as the ever shifting (and shifty) company or one that is consistent and fair to all? The choice is yours.
One is to make customers who pay a higher price feel they're getting more for their money. For instance, travelers are willing to pay hundreds of dollars more on first-class plane tickets even though the ticket doesn't get them to their destination any faster than the folks flying economy. What it does get them are perks such as complimentary drinks and more comfortable seats. Dynamic pricing also lends itself to products that are purchased infrequently, such as cars or luxury goods, because consumers are less likely to remember how much they paid or to compare prices with friends. Finally, segment customers appropriately and don't charge higher prices to those who are price-sensitive. Otherwise, you'll definitely alienate customers.
Tuesday, August 21, 2007
Numbers
Numbers
Numbers is the award winning CBS science drama that shows on Friday nights. It has become quite a hit in the year plus it has been airing. Once or twice in each episode the young math progeny professor (who could multiply four digit numbers together before he could even speak complete sentences) describes how a mathematical concept (simple or otherwise) or mathematical law can be used to assist the good buys in finding or stopping the bad guys. Add some nifty graphics and visuals and it makes for good TV and some true learning about how that dismal mathematics we all learned in high school can be applied to real world problems. For nerds, it shows that you too can be cool. Of course, it is a drama show with the math angle as the device to provide hour -long drama. Nonetheless, it does provide some real-world education benefits, which is more than I can say for practically everything else on the tube.
So what does Numbers have to do with Marketing? Simply this, do you as a businessperson know your numbers? Do you even know what numbers we are talking about? Do you know what numbers are the important ones and which can be happily ignored? If so, go to the head of the class, you are dismissed from class and can go back to adding on to your net worth. IF not, come to the front of the room, pull up a chair and be prepared for some basics.
Here are the questions about numbers you should be asking yourself: How many leads do you get per day? Week? Year? More or less than last year at this time? What is your conversion rate (that is, converting leads into customers)? Is it rising or falling? How many customers do you have? Compared to last month or year? How many potential customers exist in your universe (your market area)? Is the number increasing or decreasing? What market share do you have? How many competitors do you have in your market area? How do you compare to your competitors? How many regular customers do you have versus transient one-of-a-kind customers? What is your average revenue per customer? What is your average revenue per regular customer? Do you know your profit margin for each product? For each customer or class of customer? Can you answer any of these questions?
Why is this important? How does this relate to you? Think of some products. No, not the type of products you sell but the type you get when you multiply two numbers. Your number of leads times your conversion rate provides you with the product that is the number of customers you have. Multiply this number by the revenue per customer and you have total sales. One more multiplication, this time revenues by the profit margin per customer should provide you with the total profit. Do you have these numbers? If not, what have you been using? Do you know how much better or worse you do from year to year? Do you have an idea as to why you are being better or worse? (for instance, if you improve your conversion rate slightly, this increases your revenue and profit stream if all else stays the same.) But if you do not measure it, you have no idea what happened within the black box called your business and hence cannot readily analyze what is the cause of business swings that regularly occur. But you might say I do not have time to spend to analyze my market and my numbers for I must work constantly to stay in business as it is . But I ask you, can you NOT afford to do so?
Take the time to find the numbers that matter, to analyze them, to understand the dynamics of your business, and then use them to make your business grow and become more profitable.
Numbers is the award winning CBS science drama that shows on Friday nights. It has become quite a hit in the year plus it has been airing. Once or twice in each episode the young math progeny professor (who could multiply four digit numbers together before he could even speak complete sentences) describes how a mathematical concept (simple or otherwise) or mathematical law can be used to assist the good buys in finding or stopping the bad guys. Add some nifty graphics and visuals and it makes for good TV and some true learning about how that dismal mathematics we all learned in high school can be applied to real world problems. For nerds, it shows that you too can be cool. Of course, it is a drama show with the math angle as the device to provide hour -long drama. Nonetheless, it does provide some real-world education benefits, which is more than I can say for practically everything else on the tube.
So what does Numbers have to do with Marketing? Simply this, do you as a businessperson know your numbers? Do you even know what numbers we are talking about? Do you know what numbers are the important ones and which can be happily ignored? If so, go to the head of the class, you are dismissed from class and can go back to adding on to your net worth. IF not, come to the front of the room, pull up a chair and be prepared for some basics.
Here are the questions about numbers you should be asking yourself: How many leads do you get per day? Week? Year? More or less than last year at this time? What is your conversion rate (that is, converting leads into customers)? Is it rising or falling? How many customers do you have? Compared to last month or year? How many potential customers exist in your universe (your market area)? Is the number increasing or decreasing? What market share do you have? How many competitors do you have in your market area? How do you compare to your competitors? How many regular customers do you have versus transient one-of-a-kind customers? What is your average revenue per customer? What is your average revenue per regular customer? Do you know your profit margin for each product? For each customer or class of customer? Can you answer any of these questions?
Why is this important? How does this relate to you? Think of some products. No, not the type of products you sell but the type you get when you multiply two numbers. Your number of leads times your conversion rate provides you with the product that is the number of customers you have. Multiply this number by the revenue per customer and you have total sales. One more multiplication, this time revenues by the profit margin per customer should provide you with the total profit. Do you have these numbers? If not, what have you been using? Do you know how much better or worse you do from year to year? Do you have an idea as to why you are being better or worse? (for instance, if you improve your conversion rate slightly, this increases your revenue and profit stream if all else stays the same.) But if you do not measure it, you have no idea what happened within the black box called your business and hence cannot readily analyze what is the cause of business swings that regularly occur. But you might say I do not have time to spend to analyze my market and my numbers for I must work constantly to stay in business as it is . But I ask you, can you NOT afford to do so?
Take the time to find the numbers that matter, to analyze them, to understand the dynamics of your business, and then use them to make your business grow and become more profitable.
Monday, August 13, 2007
Viral Marketing
Viruses are catchy: More on viral marketing
Viral marketing essentially takes advantage of the rapid multiplication effects of online social networks (through e-mail, chat rooms, IM, file-sharing networks, etc.) to help spread a commercial message on the cheap. Potential exists for exponential growth in message exposure that can far exceed what's achievable were similar budget spent on commercial media channels. Passed via peer to peer, "word of mouse" messages can help endorse a brand among like-minded consumers, thus spreading its influence. Because they're passed between individuals at a low distribution level they can bypass spam filters with relative ease.
Those seeking to attract and influence a young, Web-savvy, male-oriented audience should consider online viral tactics. Many of the most successful viral marketing campaigns have come from advertisers promoting consumer packaged goods and lifestyle brands to this demographic.
Here are six rules on how to succeed at v-marketing (as it is quickly becoming known as) .
Rule 1: Stealth is the essence of market entry
Most marketers know that getting into the consumer's mind is the toughest part of the challenge; the usual response is simply to turn up the volume. Viruses are smarter: They find a way into the host under the guise of another, unrelated activity.
PepsiCola is one company that has begun to experiment with v-marketing. Its Mountain Dew campaign offers kids the chance to send 10 proofs of purchase and $35 to qualify for a Motorola pager. Cool! The kids have to subscribe to the paging service themselves, and Mountain Dew reserves the right to beep their newly equipped customers with Dew-related messages on a weekly basis. So every time the pager goes off, it reminds the kids indirectly who's responsible for getting them that way-cool piece of social technology.
Rule 2 : What's up-front is free; payment comes later
Viruses are unusually patient little buggers. Many will lie dormant in their host for years before demanding payback; digital viruses often burrow into an unsuspecting hard drive and wait for their trigger date such as Michaelangelo's birthday before making their presence known. It's a corollary to stealth: no payment up-front.
Consider how Intuit's wildly popular Quickenrogram got its start. It all spread from a single campaign that contained a basic message: order the product and pay nothing. If you aren't productive within eight minutes of opening the box, tear up the invoice.
Of course, most users were not only balancing their checkbooks within eight minutes but also discovering that they couldn't live without this software. The result: 70% global market share in personal-financial-management software with minimal expenses for traditional marketing or selling. As an added bonus, Quicken gained an installed base to drive pricier sales of ancillary products such as checks and upgrades.
Rule 3: Let the behaviors of the target community carry the message
Viruses do not spread by chance. They let the high-frequency behaviors of their hosts -- social interaction, email, Websurfing -- carry them into new territories. The lesson for v-marketers: fashion your messages so that the target markets will transmit them as a part of their core interests.
This tactic works best when absolutely no one is masterminding the campaign. On America Online, for example, there are multitudes of chat rooms for investors; Motley Fool is only the most prominent. Not long ago, these communities got hold of a couple of high-tech stocks Iomega and Presstek that key members of the group "talked up" as hot investment opportunities. Both stocks enjoyed a skyrocketing hundred-fold increase, carried by the hospitable hype of the online hosts. When the mainstream press caught on, critics rushed in to pop the bubble. But compared to their starting points before AOL came along, Iomega and Presstek still trade at hugely inflated prices.
Rule 4: Look like a host, not a virus
Because they are able to masquerade as something they are not, viruses are able to avoid being rejected by human immune and computer operating systems. They enter human cells and mimic genetic material, or they enter software systems and mimic existing code. The message to v-marketers: be the host.
One consumer marketing company, albeit one with lots of money, has perfected the tactic. Consider Nike's "Just Do It" campaign. All it takes is megabucks to hire the world's most sought-after celebrity athletes, to buy television time at $40,000 a second during the Super Bowl, and to saturate the retail channel with product promotions and giveaways. But none of that worked as well as Nike's ubiquitous tag line, "Just Do It." The phrase is practically an entry in the Merriam-Webster Collegiate Dictionary under the listing: American culture. Everyone from cynical marketers in ad agencies to prison guards in B-movies is using the phrase without irony. Every time they use it, they're endorsing Nike products.
Rule 5: Exploit the strength of weak ties
Sociologists have long noted that individuals with many casual social connections have a larger influence on communities than do individuals with fewer strong connections. Viruses thrive on weak ties. The movement of viruses over the Web -- a practically infinite collection of weak ties in countless virtual communities -- is a prime example.
In business, such tactics are the instinctive practice of companies engaging in multilevel marketing: marketers such as Tupperware, Amway, and Mary Kay Cosmetics, for instance. In each of these businesses, the strategy is to find a collection of individuals who excel at developing a large number of weak ties -- and use those ties to sell products and services. Tupperware, for example, gets someone in a social community, such as a suburban neighborhood, to host a party featuring Tupperware. Everything about the party is ostensibly noncommercial: it's her house, her food, her friends. But the social interaction is funded by the sale of Tupperware products. What's social is indistinguishable from what's commercial a powerful business network built on weak social ties.
Law 6: Invest to reach the tipping point
Viruses do not become epidemics until they reach the tipping point. In other words, the virus must expand through the host population until it reaches a certain threshold of visibility and scale. Assume, for example, a virus doubles each year. In year one, it's only 1% of the host and scarcely detectable. In year two, it's still minute, only 2%. But in year five, it's 16% -- and suddenly it's an epidemic. V-marketers must understand that they're playing the same game because the impact of exploiting weak ties does not come overnight.
That's why Microsoft's true leverage with its DOS and Windows operating systems took a decade to pay off. Today Microsoft operating systems run on an estimated 85 million PCs the world over. That's why CNN was viewed as a joke by the mainstream press -- until suddenly everyone from Saddam Hussein to Bill Clinton was getting real-time news exclusively from the 24-hour network.
Though you can certainly derive a number of benefits from encouraging the viral spread of commercial content, be aware of the limitations. You cannot control the message and the channel thus making outcomes unpredictable and difficult to measure. The proportion of the online audience likely to participate is small. Jupiter Research's latest European consumer survey shows only 5 percent of the Internet population had forwarded an advertising message. Of respondents who said they had, 64 percent were under 34 years old and 56 percent were male.
If you want to use viruses, be smart and be patient.
Viral marketing essentially takes advantage of the rapid multiplication effects of online social networks (through e-mail, chat rooms, IM, file-sharing networks, etc.) to help spread a commercial message on the cheap. Potential exists for exponential growth in message exposure that can far exceed what's achievable were similar budget spent on commercial media channels. Passed via peer to peer, "word of mouse" messages can help endorse a brand among like-minded consumers, thus spreading its influence. Because they're passed between individuals at a low distribution level they can bypass spam filters with relative ease.
Those seeking to attract and influence a young, Web-savvy, male-oriented audience should consider online viral tactics. Many of the most successful viral marketing campaigns have come from advertisers promoting consumer packaged goods and lifestyle brands to this demographic.
Here are six rules on how to succeed at v-marketing (as it is quickly becoming known as) .
Rule 1: Stealth is the essence of market entry
Most marketers know that getting into the consumer's mind is the toughest part of the challenge; the usual response is simply to turn up the volume. Viruses are smarter: They find a way into the host under the guise of another, unrelated activity.
PepsiCola is one company that has begun to experiment with v-marketing. Its Mountain Dew campaign offers kids the chance to send 10 proofs of purchase and $35 to qualify for a Motorola pager. Cool! The kids have to subscribe to the paging service themselves, and Mountain Dew reserves the right to beep their newly equipped customers with Dew-related messages on a weekly basis. So every time the pager goes off, it reminds the kids indirectly who's responsible for getting them that way-cool piece of social technology.
Rule 2 : What's up-front is free; payment comes later
Viruses are unusually patient little buggers. Many will lie dormant in their host for years before demanding payback; digital viruses often burrow into an unsuspecting hard drive and wait for their trigger date such as Michaelangelo's birthday before making their presence known. It's a corollary to stealth: no payment up-front.
Consider how Intuit's wildly popular Quickenrogram got its start. It all spread from a single campaign that contained a basic message: order the product and pay nothing. If you aren't productive within eight minutes of opening the box, tear up the invoice.
Of course, most users were not only balancing their checkbooks within eight minutes but also discovering that they couldn't live without this software. The result: 70% global market share in personal-financial-management software with minimal expenses for traditional marketing or selling. As an added bonus, Quicken gained an installed base to drive pricier sales of ancillary products such as checks and upgrades.
Rule 3: Let the behaviors of the target community carry the message
Viruses do not spread by chance. They let the high-frequency behaviors of their hosts -- social interaction, email, Websurfing -- carry them into new territories. The lesson for v-marketers: fashion your messages so that the target markets will transmit them as a part of their core interests.
This tactic works best when absolutely no one is masterminding the campaign. On America Online, for example, there are multitudes of chat rooms for investors; Motley Fool is only the most prominent. Not long ago, these communities got hold of a couple of high-tech stocks Iomega and Presstek that key members of the group "talked up" as hot investment opportunities. Both stocks enjoyed a skyrocketing hundred-fold increase, carried by the hospitable hype of the online hosts. When the mainstream press caught on, critics rushed in to pop the bubble. But compared to their starting points before AOL came along, Iomega and Presstek still trade at hugely inflated prices.
Rule 4: Look like a host, not a virus
Because they are able to masquerade as something they are not, viruses are able to avoid being rejected by human immune and computer operating systems. They enter human cells and mimic genetic material, or they enter software systems and mimic existing code. The message to v-marketers: be the host.
One consumer marketing company, albeit one with lots of money, has perfected the tactic. Consider Nike's "Just Do It" campaign. All it takes is megabucks to hire the world's most sought-after celebrity athletes, to buy television time at $40,000 a second during the Super Bowl, and to saturate the retail channel with product promotions and giveaways. But none of that worked as well as Nike's ubiquitous tag line, "Just Do It." The phrase is practically an entry in the Merriam-Webster Collegiate Dictionary under the listing: American culture. Everyone from cynical marketers in ad agencies to prison guards in B-movies is using the phrase without irony. Every time they use it, they're endorsing Nike products.
Rule 5: Exploit the strength of weak ties
Sociologists have long noted that individuals with many casual social connections have a larger influence on communities than do individuals with fewer strong connections. Viruses thrive on weak ties. The movement of viruses over the Web -- a practically infinite collection of weak ties in countless virtual communities -- is a prime example.
In business, such tactics are the instinctive practice of companies engaging in multilevel marketing: marketers such as Tupperware, Amway, and Mary Kay Cosmetics, for instance. In each of these businesses, the strategy is to find a collection of individuals who excel at developing a large number of weak ties -- and use those ties to sell products and services. Tupperware, for example, gets someone in a social community, such as a suburban neighborhood, to host a party featuring Tupperware. Everything about the party is ostensibly noncommercial: it's her house, her food, her friends. But the social interaction is funded by the sale of Tupperware products. What's social is indistinguishable from what's commercial a powerful business network built on weak social ties.
Law 6: Invest to reach the tipping point
Viruses do not become epidemics until they reach the tipping point. In other words, the virus must expand through the host population until it reaches a certain threshold of visibility and scale. Assume, for example, a virus doubles each year. In year one, it's only 1% of the host and scarcely detectable. In year two, it's still minute, only 2%. But in year five, it's 16% -- and suddenly it's an epidemic. V-marketers must understand that they're playing the same game because the impact of exploiting weak ties does not come overnight.
That's why Microsoft's true leverage with its DOS and Windows operating systems took a decade to pay off. Today Microsoft operating systems run on an estimated 85 million PCs the world over. That's why CNN was viewed as a joke by the mainstream press -- until suddenly everyone from Saddam Hussein to Bill Clinton was getting real-time news exclusively from the 24-hour network.
Though you can certainly derive a number of benefits from encouraging the viral spread of commercial content, be aware of the limitations. You cannot control the message and the channel thus making outcomes unpredictable and difficult to measure. The proportion of the online audience likely to participate is small. Jupiter Research's latest European consumer survey shows only 5 percent of the Internet population had forwarded an advertising message. Of respondents who said they had, 64 percent were under 34 years old and 56 percent were male.
If you want to use viruses, be smart and be patient.
Thursday, August 9, 2007
इन्तेग्रतेद Marketing
As Benjamin Franklin said during the Revolutionary War, “Gentleman, we must hang together or we will hang separately.” Neither marketing nor sales can succeed on their own; but together, working in unison, they create a powerful, almost irresistible force. Marketing needs the feedback from sales to determine what is working and what isn’t. They must know what promotions work and those that don’t. Sales cannot be competitive without the tools that an enlightened marketing can provide.
Integrated Marketing or Collaborative Selling is where all aspects of the organization, marketing, sales, support, customer service, are found within one umbrella organization and all facets, data bases, personnel, etc are integrated to optimize previously discrete business departments. The objective is to link all the business processes among all these common elements into a smooth flowing cooperative endeavor. If successful, the end result will be the creation of a Customer-centric organizations.
We want to be one company, providing a single face, to the customer. Therefore, you must integrate all interactions to the customer to create the customer expectations and customer experience that is relevant and useful to that customer. Companies that integrate internally across those sales and marketing process see benefits exceeding 20 to 30 percent over those that do not integrate. The ultimate is thinking of sales and marketing as one and not two organizations linked together. Consistency is the key: to be viewed at all times through all angles by all customers the same way, providing the same message.
Integration continues to gain ground slowly and painfully. Necessity, not corporate vision, will continue to drive the process of improved marketing and sales integration. Silo-based management of sales and marketing resources promotes waste and thwarts results measurement. It also creates a procedural barrier to ensuring that organizational actions align with organizational goals related to sales and customer retention
Major barriers to integration remain. Don't bet on integrated marketing becoming a corporate fad. Unlike past fads, the process of integrating business development and retention faces some unique obstacles that actually might benefit the process in the long run. Perhaps the biggest obstacle is the lack of a clear champion, short of the chief executive. Integrated strategies span sales, marketing, human resources, and operations, and few people, aside from very senior executives, have responsibilities spanning this range.
Large companies such as IBM have created integrated marketing groups, but even these don't necessarily tie into the customer service and operational issues that go along with the need to fulfill marketing promises at the operational level. Large ad agencies for years have claimed to offer this service, but, with few exceptions, integration really means the offering of additional direct marketing, promotional, or other tactical services, and not high-level organizational consulting potentially needed to align organizational silos with organizational goals. (Coke recently announced that its next ad agency will have to come up with inventive new ways to promote the brand beyond creating new types of television ads.)
Companies with a results-oriented, integrated approach to business development and retention almost always run their businesses this way, because the bosses insist on it. In the meantime, more and more of the nation's business schools are turning out students with exposure in one way or another to the emerging area of integrated management,
which could eventually create a new group of leaders less wedded to a specific
tactic.
Integrated marketing is the wave of the future and the separator for companies that will succeed and those that will fail. Which will you be?
Integrated Marketing or Collaborative Selling is where all aspects of the organization, marketing, sales, support, customer service, are found within one umbrella organization and all facets, data bases, personnel, etc are integrated to optimize previously discrete business departments. The objective is to link all the business processes among all these common elements into a smooth flowing cooperative endeavor. If successful, the end result will be the creation of a Customer-centric organizations.
We want to be one company, providing a single face, to the customer. Therefore, you must integrate all interactions to the customer to create the customer expectations and customer experience that is relevant and useful to that customer. Companies that integrate internally across those sales and marketing process see benefits exceeding 20 to 30 percent over those that do not integrate. The ultimate is thinking of sales and marketing as one and not two organizations linked together. Consistency is the key: to be viewed at all times through all angles by all customers the same way, providing the same message.
Integration continues to gain ground slowly and painfully. Necessity, not corporate vision, will continue to drive the process of improved marketing and sales integration. Silo-based management of sales and marketing resources promotes waste and thwarts results measurement. It also creates a procedural barrier to ensuring that organizational actions align with organizational goals related to sales and customer retention
Major barriers to integration remain. Don't bet on integrated marketing becoming a corporate fad. Unlike past fads, the process of integrating business development and retention faces some unique obstacles that actually might benefit the process in the long run. Perhaps the biggest obstacle is the lack of a clear champion, short of the chief executive. Integrated strategies span sales, marketing, human resources, and operations, and few people, aside from very senior executives, have responsibilities spanning this range.
Large companies such as IBM have created integrated marketing groups, but even these don't necessarily tie into the customer service and operational issues that go along with the need to fulfill marketing promises at the operational level. Large ad agencies for years have claimed to offer this service, but, with few exceptions, integration really means the offering of additional direct marketing, promotional, or other tactical services, and not high-level organizational consulting potentially needed to align organizational silos with organizational goals. (Coke recently announced that its next ad agency will have to come up with inventive new ways to promote the brand beyond creating new types of television ads.)
Companies with a results-oriented, integrated approach to business development and retention almost always run their businesses this way, because the bosses insist on it. In the meantime, more and more of the nation's business schools are turning out students with exposure in one way or another to the emerging area of integrated management,
which could eventually create a new group of leaders less wedded to a specific
tactic.
Integrated marketing is the wave of the future and the separator for companies that will succeed and those that will fail. Which will you be?
Tuesday, August 7, 2007
When Perfect is No Longer enough
Nadia. The name itself implies a senior moment. Nadia Comianci, as you who remember here would know, was a Romanian waif, a delightfully charming china-doll, who won our hearts in the 1976 Olympics in Montreal by posting the first ever 10 in Olympic history in gymnastics, not just once but several times. Those who watched and wondered saw history in the making, but not for the reason you would think. That unique experience made front page headlines all across the world. Perfect as it was once defined was the unachievable, always just beyond the possible. Only my old roommate Freak could ever claim to be perfect telling me, “ I thought I made a mistake once but I was wrong.”
But how times have changed. Nowadays, gymnasts routinely get 10s, so much so it does not even make the news in the local sports page. And perfect has changed in other events as well. I remember the once lauded academic achievement of “Straight As” was an honor that almost guaranteed an IVY league full—paid ride. Not one person had ever received a “Perfect 4.0” at my high school in the 100 years of its being in existence. That is, no one had before me (and certainly not me as I scored numerous Bs in gym and typing), but sometime about the early eighties it changed. Since that time, that once unimaginable honor has been given not a few times but many and often numerous times within the same class. It is hard to believe that today’s kids are much smarter than those in my day. If this is not the case, what happened?
Grade inflation. Score inflation. Inflation in general. A recent honors ceremony I attended provided some clues. Academic honors were given out for achievement in several basic classes: Math, English, Social Studies. As the names were called and students went up to get their awards, I noticed that almost every child received one. The reason, as I found out later, was “it helps their self esteem to get an award,” and “we don’t want any students to be left out.” (similar to what is happening in organized sports when every participant now gets an award regardless of performance.) Then the top ten were announced. As the principal read off the names and the ten students came up, he indicated, “The tenth place academically required a GPA of 11.319, that is, more than a straight A average.” Then it hit me. What once was an extraordinary achievement, one so high that no one had in the history of a school reached that level, was now so commonplace that doing so does not even guarantee a top ten ranking (My son received a Straight A on his final report with the footnote that he was now ranked 19th in his class).
When everyone is perfect, perfect has no meaning. How then can you rank and identify the top achievers. Why by creating an A+ grade, of course. This too has its limits as the award ceremony showed. When too many students start getting A+s, then the definition of perfect must change again. What then will be created? A++? When C was once representative of an “Average” Grade, it now for all practical matters represents failure and B has become the baseline average. When judges are scoring everyone as 10s (to not to hurt their feelings and hinder their self esteem no doubt), how can they then differentiate the outstanding from the just average. Are we trying to be a Lake Wobegon suburb where everyone scores above average?
Perfect once meant something. Almost perfect showed excellence and capability. But in a world where everyone scores almost perfect and many score perfect, what then does perfect really mean?
Is it time to return to the old days when perfect stood for something?
But how times have changed. Nowadays, gymnasts routinely get 10s, so much so it does not even make the news in the local sports page. And perfect has changed in other events as well. I remember the once lauded academic achievement of “Straight As” was an honor that almost guaranteed an IVY league full—paid ride. Not one person had ever received a “Perfect 4.0” at my high school in the 100 years of its being in existence. That is, no one had before me (and certainly not me as I scored numerous Bs in gym and typing), but sometime about the early eighties it changed. Since that time, that once unimaginable honor has been given not a few times but many and often numerous times within the same class. It is hard to believe that today’s kids are much smarter than those in my day. If this is not the case, what happened?
Grade inflation. Score inflation. Inflation in general. A recent honors ceremony I attended provided some clues. Academic honors were given out for achievement in several basic classes: Math, English, Social Studies. As the names were called and students went up to get their awards, I noticed that almost every child received one. The reason, as I found out later, was “it helps their self esteem to get an award,” and “we don’t want any students to be left out.” (similar to what is happening in organized sports when every participant now gets an award regardless of performance.) Then the top ten were announced. As the principal read off the names and the ten students came up, he indicated, “The tenth place academically required a GPA of 11.319, that is, more than a straight A average.” Then it hit me. What once was an extraordinary achievement, one so high that no one had in the history of a school reached that level, was now so commonplace that doing so does not even guarantee a top ten ranking (My son received a Straight A on his final report with the footnote that he was now ranked 19th in his class).
When everyone is perfect, perfect has no meaning. How then can you rank and identify the top achievers. Why by creating an A+ grade, of course. This too has its limits as the award ceremony showed. When too many students start getting A+s, then the definition of perfect must change again. What then will be created? A++? When C was once representative of an “Average” Grade, it now for all practical matters represents failure and B has become the baseline average. When judges are scoring everyone as 10s (to not to hurt their feelings and hinder their self esteem no doubt), how can they then differentiate the outstanding from the just average. Are we trying to be a Lake Wobegon suburb where everyone scores above average?
Perfect once meant something. Almost perfect showed excellence and capability. But in a world where everyone scores almost perfect and many score perfect, what then does perfect really mean?
Is it time to return to the old days when perfect stood for something?
Brands are Forever
Brands are forever
“All our factories and facilities could burn down tomorrow but you’d hardly touch the value of the company; all that actually lies in the goodwill of our brand franchise and the collective knowledge in the company.” Roberto Gonzueta, the late CEO of Coca-Cola:
Brands still matter, but not as much. Only 32% of respondents to an America's Research survey said that brands are extremely important for choosing holiday gifts, versus 48% three years ago, according to a recent New York Times article. This correlates with a report in the Wall Street Journal indicating increased demand for monogrammed or otherwise personalized items, suggesting some people may be more interested in branding themselves than adopting and promoting commercial brands on their clothing and personal effects. They may be of less importance, but they still are important.
In the meantime, brands still do have value, as proven not only by the continued willingness of consumers to pay more for names like Gucci and Louis Vuitton, but also the potential willingness of the likes of Donald Trump to invest in a scheme to save the FAO Schwarz -the major toy retailer in bankruptcy. The company failed, because it embarked on risky expansions outside of the FAO Schwarz umbrella and undercut the unique shopping experience and product selection that let FAO Schwarz charge a little more. The brand, however, still has value, as it is synonymous with unique items at the high end of the toy market.
A recent survey by the Henley Center indicated that the public trusts brand names more than government, the police, and the legal system. This research highlights the importance of the relationship that still exists between consumers and trusted brands. Three trends support this belief: individualism encourages self-identification through consumption and the brands you buy/wear/eat; globalization allows brands to become a worldly phenomena for consumers; and symbolic experiences are increasingly in demand—consumers are buying experiences, whose contents are largely image driven, intangible, and symbolic, rather than commodities.
Branding creates attachments between customers and the product: the stronger, the attachment, the better the branding. The brand creates awareness of your product and above all, differentiates it from other products (if you cannot provide differentiation to your product, you do not have a brand!) Make your brand/product come alive. Give it history, perspective. Give it a life of its own. Provide your audience with details of the product, its history, its development, the people behind the story, designers, engineers, support staff. Put the human touch on it. Bring it to life. Make it personal. Remove the all too often assumption of it being a commodity, one of millions coming off the assembly belt every day. Attach the product to real people (not just celebrity endorsers), the real people behind the story and people will see it as real, not just a thing. Caveat, though. Avoid over-slickness. Consumers are smart and becoming smarter every day. As cynical as they are, they will easily see through such puffery and your brand and brand image will suffer as a result.
Branding is all encompassing. Even the smallest of details goes into the branding. It is also a 24/7 endeavor. Employees wearing the brand or brand logo even on their off-hours or engaging in activities whether representing the company/brand officially or not can impact the brand and its position. For example, a Disney employee still wearing his Disney attire can harm the brand by uttering un-family like vocabulary or engaging in public activities that would go against the spirit of that brand. If your brand is belly button rings or tongue piercings, perhaps those forms of expression would equate to the image you desire for your brand. But certainly not for Disney, as well as most other brands in the world.
And remember, the brand is only as good as the product: it requires constant vigilance on your part to maintain the quality and functionality of the product, any lessening provides the consumers with reasons to breech the contract between you, the brand/product, and themselves. A brand should be focused on the long-term relationship between it and the consumer; any short-term gain you may attempt could well hurt the long-term value of the brand.
Brands can be forever. Don’t dilute its brand equity just to make next quarter’s numbers.
“All our factories and facilities could burn down tomorrow but you’d hardly touch the value of the company; all that actually lies in the goodwill of our brand franchise and the collective knowledge in the company.” Roberto Gonzueta, the late CEO of Coca-Cola:
Brands still matter, but not as much. Only 32% of respondents to an America's Research survey said that brands are extremely important for choosing holiday gifts, versus 48% three years ago, according to a recent New York Times article. This correlates with a report in the Wall Street Journal indicating increased demand for monogrammed or otherwise personalized items, suggesting some people may be more interested in branding themselves than adopting and promoting commercial brands on their clothing and personal effects. They may be of less importance, but they still are important.
In the meantime, brands still do have value, as proven not only by the continued willingness of consumers to pay more for names like Gucci and Louis Vuitton, but also the potential willingness of the likes of Donald Trump to invest in a scheme to save the FAO Schwarz -the major toy retailer in bankruptcy. The company failed, because it embarked on risky expansions outside of the FAO Schwarz umbrella and undercut the unique shopping experience and product selection that let FAO Schwarz charge a little more. The brand, however, still has value, as it is synonymous with unique items at the high end of the toy market.
A recent survey by the Henley Center indicated that the public trusts brand names more than government, the police, and the legal system. This research highlights the importance of the relationship that still exists between consumers and trusted brands. Three trends support this belief: individualism encourages self-identification through consumption and the brands you buy/wear/eat; globalization allows brands to become a worldly phenomena for consumers; and symbolic experiences are increasingly in demand—consumers are buying experiences, whose contents are largely image driven, intangible, and symbolic, rather than commodities.
Branding creates attachments between customers and the product: the stronger, the attachment, the better the branding. The brand creates awareness of your product and above all, differentiates it from other products (if you cannot provide differentiation to your product, you do not have a brand!) Make your brand/product come alive. Give it history, perspective. Give it a life of its own. Provide your audience with details of the product, its history, its development, the people behind the story, designers, engineers, support staff. Put the human touch on it. Bring it to life. Make it personal. Remove the all too often assumption of it being a commodity, one of millions coming off the assembly belt every day. Attach the product to real people (not just celebrity endorsers), the real people behind the story and people will see it as real, not just a thing. Caveat, though. Avoid over-slickness. Consumers are smart and becoming smarter every day. As cynical as they are, they will easily see through such puffery and your brand and brand image will suffer as a result.
Branding is all encompassing. Even the smallest of details goes into the branding. It is also a 24/7 endeavor. Employees wearing the brand or brand logo even on their off-hours or engaging in activities whether representing the company/brand officially or not can impact the brand and its position. For example, a Disney employee still wearing his Disney attire can harm the brand by uttering un-family like vocabulary or engaging in public activities that would go against the spirit of that brand. If your brand is belly button rings or tongue piercings, perhaps those forms of expression would equate to the image you desire for your brand. But certainly not for Disney, as well as most other brands in the world.
And remember, the brand is only as good as the product: it requires constant vigilance on your part to maintain the quality and functionality of the product, any lessening provides the consumers with reasons to breech the contract between you, the brand/product, and themselves. A brand should be focused on the long-term relationship between it and the consumer; any short-term gain you may attempt could well hurt the long-term value of the brand.
Brands can be forever. Don’t dilute its brand equity just to make next quarter’s numbers.
Revenge of the Neglected Customer
Revenge of the neglected customer
“He who laughs last . . .” anonymous humorist-critic-spurned customer
In this column I have often harped upon the lack of customer service that exists in the world and the all-too-present and persistent notion that chopping a few cents off a product gives a provider the right to offer poor or non-existent service. Well, it is time to discuss this topic once again. And I will continue to wail until I am blue in the face. It appears, like most prophets, the truth I speak may be heard but it is not soaking in. New evidence both indicates the continued presence of poor service and its ominous repercussions if continued. All those businesspersons out there who wish to remain in business for the long-term, ignore at your own peril.
The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005 illustrates my point. When consumers have a bad shopping experience, they are likely to spread the word, not to the store manager or salesperson, but to friends, family and colleagues. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers. The biggest source of consumer dissatisfaction? Parking lots
The Results show that only 6% of shoppers who experienced a problem with a retailer contacted the company, but 31% went on to tell friends, family or colleagues what happened. Of those, 8% told one person, another 8% told two people, but 6% told six or more people (This result duplicates other studies where the average number of contacts for a dissatisfied customer is five or more, and respondents indicating they told up to twenty people were not unusual). "Even though these shoppers don't share their pain with the store, they do share their pain with other people, apparently quite a few other people," says the researcher. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers, according to the study.
The complaints have an even greater impact on shoppers who were not directly involved as the story spreads and is embellished, researchers found. Almost half those surveyed, 48%, reported they have avoided a store in the past because of someone else's negative experience. For those who had encountered a problem themselves, 33% said they would "definitely not" or "probably not" return. This storytelling has even more impact on the people the story is told to than the people who told the story. One reason tends to be that the tales of annoyance tend to increase with each telling (remember the game of telephone you used to play as a child and the considerable differences the message at the end turned out to be from that at the onset? Same principle applies here.) The unresponsive sales clerk by the end of the chain has become abusive and almost life-threatening. the exponential power of negative word-of-mouth lies in the nature of storytelling As people tell the story the negativity is embellished and grows Psychologists indicate that to make a story worth telling, some entertainment value must be present, a shock effect to keep the other party’s attention. Basically, this storytelling of bad encounters by customers entertainments their friends and families to the detriment of businesses.
Big Box retailers were rated particularly poor in the survey. Customers of Wal-mart and its ilk shared their negative experiences with an average of six people, double to triple the audience given those who shopped and had negative experiences at other retailers. The biggest gripe? Locating merchandise in the many acres of retailing fun that exists.
Moral of the story: cents off and miles of merchandise does not a happy shopper make. Cut the complaint off at the time it occurs and satisfactorily resolve the issue . . . then and there. Otherwise you are not faced with one unhappy customer but many.
“He who laughs last . . .” anonymous humorist-critic-spurned customer
In this column I have often harped upon the lack of customer service that exists in the world and the all-too-present and persistent notion that chopping a few cents off a product gives a provider the right to offer poor or non-existent service. Well, it is time to discuss this topic once again. And I will continue to wail until I am blue in the face. It appears, like most prophets, the truth I speak may be heard but it is not soaking in. New evidence both indicates the continued presence of poor service and its ominous repercussions if continued. All those businesspersons out there who wish to remain in business for the long-term, ignore at your own peril.
The Retail Customer Dissatisfaction Study 2006, conducted by The Jay H. Baker Retailing Initiative at Wharton and The Verde Group, a Toronto consulting firm, surveyed approximately 1200 U.S. shoppers in the weeks before and after Christmas 2005 illustrates my point. When consumers have a bad shopping experience, they are likely to spread the word, not to the store manager or salesperson, but to friends, family and colleagues. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers. The biggest source of consumer dissatisfaction? Parking lots
The Results show that only 6% of shoppers who experienced a problem with a retailer contacted the company, but 31% went on to tell friends, family or colleagues what happened. Of those, 8% told one person, another 8% told two people, but 6% told six or more people (This result duplicates other studies where the average number of contacts for a dissatisfied customer is five or more, and respondents indicating they told up to twenty people were not unusual). "Even though these shoppers don't share their pain with the store, they do share their pain with other people, apparently quite a few other people," says the researcher. Overall, if 100 people have a bad experience, a retailer stands to lose between 32 and 36 current or potential customers, according to the study.
The complaints have an even greater impact on shoppers who were not directly involved as the story spreads and is embellished, researchers found. Almost half those surveyed, 48%, reported they have avoided a store in the past because of someone else's negative experience. For those who had encountered a problem themselves, 33% said they would "definitely not" or "probably not" return. This storytelling has even more impact on the people the story is told to than the people who told the story. One reason tends to be that the tales of annoyance tend to increase with each telling (remember the game of telephone you used to play as a child and the considerable differences the message at the end turned out to be from that at the onset? Same principle applies here.) The unresponsive sales clerk by the end of the chain has become abusive and almost life-threatening. the exponential power of negative word-of-mouth lies in the nature of storytelling As people tell the story the negativity is embellished and grows Psychologists indicate that to make a story worth telling, some entertainment value must be present, a shock effect to keep the other party’s attention. Basically, this storytelling of bad encounters by customers entertainments their friends and families to the detriment of businesses.
Big Box retailers were rated particularly poor in the survey. Customers of Wal-mart and its ilk shared their negative experiences with an average of six people, double to triple the audience given those who shopped and had negative experiences at other retailers. The biggest gripe? Locating merchandise in the many acres of retailing fun that exists.
Moral of the story: cents off and miles of merchandise does not a happy shopper make. Cut the complaint off at the time it occurs and satisfactorily resolve the issue . . . then and there. Otherwise you are not faced with one unhappy customer but many.
Survey of Surveys
Mark Twain Presents: A Survey on Surveys
“There are lies, damn lies, and statistics”
Mark Twain’s famous quote is still as valid today as it was a century and a half ago. Probably even more so as most American citizens are inclined to trust and accept blindly the results of “surveys” no matter what they may be or how they were conducted. Having performed many in my career and mentored more performed by students, perhaps a basic course in surveys and their potential misdeeds is in order.
1. The results are only as good as the data and processes used. Computer Freaks have an acronym that describes this perfectly: GIGO: Garbage In, Garbage Out. Unless you are meticulous and conduct the research through systematic endeavor, the results will indeed be GIGO. For example, a Manhattan liberal conducts a survey of twenty of his friends. He determines one out of twenty voted for Bush, perhaps two attend church occasionally or regularly, and all twenty agree that America is the real enemy, not Iran. If he were write up the report and issue it as a survey result of the entire American population, it would be numerically correct but totally meaningless. In this case, the sample chosen was a convenience sample and was not appropriate for the population (the population here being the American citizenry). In any valid survey, the sample surveyed must approximate the population as a whole. This does not take millions of people. Unemployment labor statistics for entire states are valid based upon the sampling of a few thousand. The sample must approximate the demographics of the group and be random in nature to be appropriate.
2. You can basically determine the outcome of any survey very simply by manipulating the wording of the survey questions, that is On how the questions are phrased. The proverbial “Have you stopped beating your wife?” portrays it best. Wording matters. If a pollster asks, “Are you concerned that escalating and increasing surface temperatures brought on by man=made gasses are melting the icecaps at an ever increasing rate and could raise the sea level by hundreds of feet?” should we be surprised at a 95% Agreement. Of course the survey result is then echoed as “95% of Americans worried about global warming.” Which was not the question asked. Adding in strong terms, biased phrases, loaded language (as in the wife beating question above) will result in manipulating the result to what is desired. This might be good for your cause but it is lousy science and certainly not appropriate research.
3. The Encyclopedic survey: whereas everyone wants to add his own particular question and soon the survey becomes the size of a SAT test booklet. The more questions added, the less likelihood respondents will wish to take the test or respond honestly (and the higher the chances they will soon begin marking in the answers without regard to the questions or options much as a test taker does when they have two minutes and fifty questions left). I have seen a questionnaire with nearly a thousand questions that would take hours to respond properly to. I wonder to myself who has the time to commit to the survey, let alone answer it honestly. And those that do, are they representative of the population you wish to review? Surveys must be kept short, simple, understandable, and easily completed in five minutes or less. Otherwise, the short attention spans of today’s adults will begin to wonder and any results you get will probably be worthless.
4. Be careful of statistics. A probability of 5% means the likelihood of occurring by chance is 5 percent. If you have twenty such questions and use that measure, you have a good chance of finding something “significant” that is there simply because of chance.
In conclusion, the next time you see the results of a survey and they seem counter-intuitive to you or as if they had surveyed inhabitants of Mars, not Earth, you must ask yourself a) was the sample representative of the population, 2) what was the actual survey like and how were questions worded and ordered, and 3) were the statistics meaningful? And likewise when you as a businessperson is conducting any research or survey, be careful, since, if not done properly, it is a total waste of time and money and could very well guide you in the wrong direction than is actually the case.
“There are lies, damn lies, and statistics”
Mark Twain’s famous quote is still as valid today as it was a century and a half ago. Probably even more so as most American citizens are inclined to trust and accept blindly the results of “surveys” no matter what they may be or how they were conducted. Having performed many in my career and mentored more performed by students, perhaps a basic course in surveys and their potential misdeeds is in order.
1. The results are only as good as the data and processes used. Computer Freaks have an acronym that describes this perfectly: GIGO: Garbage In, Garbage Out. Unless you are meticulous and conduct the research through systematic endeavor, the results will indeed be GIGO. For example, a Manhattan liberal conducts a survey of twenty of his friends. He determines one out of twenty voted for Bush, perhaps two attend church occasionally or regularly, and all twenty agree that America is the real enemy, not Iran. If he were write up the report and issue it as a survey result of the entire American population, it would be numerically correct but totally meaningless. In this case, the sample chosen was a convenience sample and was not appropriate for the population (the population here being the American citizenry). In any valid survey, the sample surveyed must approximate the population as a whole. This does not take millions of people. Unemployment labor statistics for entire states are valid based upon the sampling of a few thousand. The sample must approximate the demographics of the group and be random in nature to be appropriate.
2. You can basically determine the outcome of any survey very simply by manipulating the wording of the survey questions, that is On how the questions are phrased. The proverbial “Have you stopped beating your wife?” portrays it best. Wording matters. If a pollster asks, “Are you concerned that escalating and increasing surface temperatures brought on by man=made gasses are melting the icecaps at an ever increasing rate and could raise the sea level by hundreds of feet?” should we be surprised at a 95% Agreement. Of course the survey result is then echoed as “95% of Americans worried about global warming.” Which was not the question asked. Adding in strong terms, biased phrases, loaded language (as in the wife beating question above) will result in manipulating the result to what is desired. This might be good for your cause but it is lousy science and certainly not appropriate research.
3. The Encyclopedic survey: whereas everyone wants to add his own particular question and soon the survey becomes the size of a SAT test booklet. The more questions added, the less likelihood respondents will wish to take the test or respond honestly (and the higher the chances they will soon begin marking in the answers without regard to the questions or options much as a test taker does when they have two minutes and fifty questions left). I have seen a questionnaire with nearly a thousand questions that would take hours to respond properly to. I wonder to myself who has the time to commit to the survey, let alone answer it honestly. And those that do, are they representative of the population you wish to review? Surveys must be kept short, simple, understandable, and easily completed in five minutes or less. Otherwise, the short attention spans of today’s adults will begin to wonder and any results you get will probably be worthless.
4. Be careful of statistics. A probability of 5% means the likelihood of occurring by chance is 5 percent. If you have twenty such questions and use that measure, you have a good chance of finding something “significant” that is there simply because of chance.
In conclusion, the next time you see the results of a survey and they seem counter-intuitive to you or as if they had surveyed inhabitants of Mars, not Earth, you must ask yourself a) was the sample representative of the population, 2) what was the actual survey like and how were questions worded and ordered, and 3) were the statistics meaningful? And likewise when you as a businessperson is conducting any research or survey, be careful, since, if not done properly, it is a total waste of time and money and could very well guide you in the wrong direction than is actually the case.
Monday, August 6, 2007
MovieAdvertising
That will be Seven Dollars for a Movie and Commercials
In the beginning was The Film. Hollywood made The Film and what it brought in at the box office was all there was. Then came foreign film rights. Then came TV. And first run rights for new feature films during prime time on the networks. Then came residuals for late night TV and all other hours for not-so-new films. Cable evolved and Pay for TV naturally followed. The VCR worried Hollywood but it soon learned to make more money from renting and selling cassettes (and later DVDs) than in many cases the feature film made at the box off itself. Licensing rights and product rights from fast food companies and toy manufacturers followed. Hollywood learned and learned well how to milk the movie for all its worth.
During the nineties, Hollywood discovered product placement, a form of advertising in which marketers pay to have a product shown during the film. If the story line says the character has to eat at a restaurant, sell the rights to a restaurant chain so their restaurant is the one prominently shown. And so on with everything from any food item imaginable to vehicles to even resorts. You can tell if it is a product placement if the camera focuses lovingly on the brand for any length of time.
Not satisfied with the revenues from all the sources above and having milked product placement for about everything possible (watch some modern films and at times they appear to be one long infomercial with a thin plot holding the commercials together), a new source of revenues has been making its debut slowly across the nation. This commercial endeavor does not even pretend to be art.
Theaters are beginning to show more and more commercials at the beginning of the show. Now everyone is accustomed to seeing the typical promos for Soft drinks and Popcorn from the refreshment stand, static ads for Joe’s Coffeeshop (Visit us after the show, show your receipt and get 10% off), and those entertaining and excitement filled movie trailers for six to ten upcoming (or being shown on other screens of the same complex) films. No, we’re used to that. It bothers us but that’s part of the experience. No these commercials are mainstream thirty second or sixty second spots that you normally would see on TV.
If this were Europe, such exposures would be expected and the audience would shrug it off and wait for the main feature. But this is the good old USA. We are paying six, eight, sometimes ten dollars per ticket during prime time to watch a first run feature film. And now the theater owners wants us to play captive audience while they show upwards of ten minutes of traditional commercials. Moviegoers expect paid advertising for TV, magazines, and newspapers, as they subsidize the costs of the media. But there is a major difference between free TV and a ten dollar movie ticket. These commercials have been increasing in time and number shown over the past few years. For those theaters subjecting their viewers to them, ten minutes is not unusual for pure unadulterated advertisement prior to the start of the feature film. If that were not enough, one chain has decided to mandate a whopping twenty minutes of commercials preceding the start time of the feature.
If the theater owners want us to watch twenty minutes of commercials prior to their films, many theater goers (myself included) would simply walk out and demand back their money. Now if they wish to open the theater for free to anyone who wants to see the feature film but first must watch twenty minutes of commercials, that is a different proposition. However, the theater owners and the movie moguls must remember that theirs is not the only show in town and that they are competing against all other entertainment options for the dollars of their viewers. Their customers may well decide they could stay home and save ten dollars while they watch twenty minutes of commercials.
Treating one’s customer with such disdain is not a healthy means to create a relationship with one’s customers, unless, of course, the relationship is deliberately meant to be hostile and the company has suicidal tendencies
In the beginning was The Film. Hollywood made The Film and what it brought in at the box office was all there was. Then came foreign film rights. Then came TV. And first run rights for new feature films during prime time on the networks. Then came residuals for late night TV and all other hours for not-so-new films. Cable evolved and Pay for TV naturally followed. The VCR worried Hollywood but it soon learned to make more money from renting and selling cassettes (and later DVDs) than in many cases the feature film made at the box off itself. Licensing rights and product rights from fast food companies and toy manufacturers followed. Hollywood learned and learned well how to milk the movie for all its worth.
During the nineties, Hollywood discovered product placement, a form of advertising in which marketers pay to have a product shown during the film. If the story line says the character has to eat at a restaurant, sell the rights to a restaurant chain so their restaurant is the one prominently shown. And so on with everything from any food item imaginable to vehicles to even resorts. You can tell if it is a product placement if the camera focuses lovingly on the brand for any length of time.
Not satisfied with the revenues from all the sources above and having milked product placement for about everything possible (watch some modern films and at times they appear to be one long infomercial with a thin plot holding the commercials together), a new source of revenues has been making its debut slowly across the nation. This commercial endeavor does not even pretend to be art.
Theaters are beginning to show more and more commercials at the beginning of the show. Now everyone is accustomed to seeing the typical promos for Soft drinks and Popcorn from the refreshment stand, static ads for Joe’s Coffeeshop (Visit us after the show, show your receipt and get 10% off), and those entertaining and excitement filled movie trailers for six to ten upcoming (or being shown on other screens of the same complex) films. No, we’re used to that. It bothers us but that’s part of the experience. No these commercials are mainstream thirty second or sixty second spots that you normally would see on TV.
If this were Europe, such exposures would be expected and the audience would shrug it off and wait for the main feature. But this is the good old USA. We are paying six, eight, sometimes ten dollars per ticket during prime time to watch a first run feature film. And now the theater owners wants us to play captive audience while they show upwards of ten minutes of traditional commercials. Moviegoers expect paid advertising for TV, magazines, and newspapers, as they subsidize the costs of the media. But there is a major difference between free TV and a ten dollar movie ticket. These commercials have been increasing in time and number shown over the past few years. For those theaters subjecting their viewers to them, ten minutes is not unusual for pure unadulterated advertisement prior to the start of the feature film. If that were not enough, one chain has decided to mandate a whopping twenty minutes of commercials preceding the start time of the feature.
If the theater owners want us to watch twenty minutes of commercials prior to their films, many theater goers (myself included) would simply walk out and demand back their money. Now if they wish to open the theater for free to anyone who wants to see the feature film but first must watch twenty minutes of commercials, that is a different proposition. However, the theater owners and the movie moguls must remember that theirs is not the only show in town and that they are competing against all other entertainment options for the dollars of their viewers. Their customers may well decide they could stay home and save ten dollars while they watch twenty minutes of commercials.
Treating one’s customer with such disdain is not a healthy means to create a relationship with one’s customers, unless, of course, the relationship is deliberately meant to be hostile and the company has suicidal tendencies
DareToBeDifferent
I do most of the grocery shopping at our household. It is not that I am being a super husband or purely altruistic in my pursuance of the household maintenance. I find shopping to be somewhat therapeutic in nature. In addition, it appeals to my marketing curiosity. Where else can you see a plethora of new products and marketing appeals all in one place at the same time.
As I steadily slog through the aisles, I am constantly amazed to see the multitudes of products that the average grocery store carries. Just how many different types of soaps must the average family possess? Take pain relievers for example. Yesterday, I was ordered by the boss to bring home some aspirin. So I obeyed and merrily ran off to the store. There I was besieged by an awesome amount of options available. I actually measured it as 8 paces (approximately 20 feet) across and eleven shelves (I double counted just to be certain) deep.
Aspirin. Aspirin-free. Brands such as Tylenol, Advil, Ibuprofen, Moltrin. Generic versions of all of the above. Extra strength. Children’s size. Private labels. Store brands. Tablets. Capsules. Chewables. Liquid. In small packages. In large packages. Giant sized containers. Flavored. . . grape, bubble-gum, cherry . . . I would not be surprised if someone has a “Flavor of the Month” version of a pain reliever. Perhaps not hundreds of different types but it seemed like it.
As a marketer, I stood there amazed for what appeared to me as hours (and probably likewise to the customers trying to get around me). I can image the typical consumer faced with the decision to buy a pain relieving medicine. The analogy came to my mind of a mule equidistant between two bales of hay starving to death due to his inability to make a decision.
This mega-choice opportunity of anything and everything may be great for the consumer but for the producer there is little long-term advantage in being of one hundreds in the same category. Being a “me too” product is no fun for the company and very little comfort for the stockholders.
Dare to be different. Stand out among the crowd. Seth Godin in his new book “Purple Cow” elaborates upon this dilemma faced by too many in today’s marketplace. On a cross-country trip, you point out the brown cows to the kids the first time you see them, the second time, and perhaps even the third time. By the tenth time the cows begin looking alike (like they are) and begin to blend into the environment. After a short while, only if one were to stop traffic or create a collision with your vehicle would you notice it. But a Purple Cow! Ahh. Now that you will remember and will talk about for the rest of the trip and then some. A purple cow stands out.
Producers need to take to heart the story of the Purple Cow. What would you rather be, one product among many in 100-200 square feet of shelf space or a brand that sands our crying “Try Me.” “Buy Me.” As a marketer you would like to be the latter. As the classic song in the famous musical “Gypsy” goes, “You’ve got to have a Gimmick.” You’ve got to stand out above the large (and getting larger each day) crowd.
How? “New and improved” won’t do it anymore; it has become a cliché. Our senses have been deadened by the infamous phrase ”Special.” “Free” has become a turn-off as we all look for the catch in any ‘free’ offer. So what works? An innovative package that is fun and functional. Different Color. Remarkable products. Creating new niches. You know you have it when people stop in the tracks and stare. Now you’ve got their attention.
Dare to be different. Stand out from the Crowd. It might be the only way you will be noticed.
As I steadily slog through the aisles, I am constantly amazed to see the multitudes of products that the average grocery store carries. Just how many different types of soaps must the average family possess? Take pain relievers for example. Yesterday, I was ordered by the boss to bring home some aspirin. So I obeyed and merrily ran off to the store. There I was besieged by an awesome amount of options available. I actually measured it as 8 paces (approximately 20 feet) across and eleven shelves (I double counted just to be certain) deep.
Aspirin. Aspirin-free. Brands such as Tylenol, Advil, Ibuprofen, Moltrin. Generic versions of all of the above. Extra strength. Children’s size. Private labels. Store brands. Tablets. Capsules. Chewables. Liquid. In small packages. In large packages. Giant sized containers. Flavored. . . grape, bubble-gum, cherry . . . I would not be surprised if someone has a “Flavor of the Month” version of a pain reliever. Perhaps not hundreds of different types but it seemed like it.
As a marketer, I stood there amazed for what appeared to me as hours (and probably likewise to the customers trying to get around me). I can image the typical consumer faced with the decision to buy a pain relieving medicine. The analogy came to my mind of a mule equidistant between two bales of hay starving to death due to his inability to make a decision.
This mega-choice opportunity of anything and everything may be great for the consumer but for the producer there is little long-term advantage in being of one hundreds in the same category. Being a “me too” product is no fun for the company and very little comfort for the stockholders.
Dare to be different. Stand out among the crowd. Seth Godin in his new book “Purple Cow” elaborates upon this dilemma faced by too many in today’s marketplace. On a cross-country trip, you point out the brown cows to the kids the first time you see them, the second time, and perhaps even the third time. By the tenth time the cows begin looking alike (like they are) and begin to blend into the environment. After a short while, only if one were to stop traffic or create a collision with your vehicle would you notice it. But a Purple Cow! Ahh. Now that you will remember and will talk about for the rest of the trip and then some. A purple cow stands out.
Producers need to take to heart the story of the Purple Cow. What would you rather be, one product among many in 100-200 square feet of shelf space or a brand that sands our crying “Try Me.” “Buy Me.” As a marketer you would like to be the latter. As the classic song in the famous musical “Gypsy” goes, “You’ve got to have a Gimmick.” You’ve got to stand out above the large (and getting larger each day) crowd.
How? “New and improved” won’t do it anymore; it has become a cliché. Our senses have been deadened by the infamous phrase ”Special.” “Free” has become a turn-off as we all look for the catch in any ‘free’ offer. So what works? An innovative package that is fun and functional. Different Color. Remarkable products. Creating new niches. You know you have it when people stop in the tracks and stare. Now you’ve got their attention.
Dare to be different. Stand out from the Crowd. It might be the only way you will be noticed.
Competition
We have a love-hate relationship with competition. On one hand, who hasn’t wished all one’s competition would simply vanish (as if all one’s troubles would vanish as well with one’s competitors gone). Then being the only one left in the industry, life would be easy street. Being a monopolist, one would be able to control one’s own destiny, setting prices at will and conducting business without regard of customer concern or worry about customer migration. Of course, the bad part is the government does not tend to take these things called monopolies lightly and would probably either regulate you or break up your company.
But competition does have its advantages—even companies with intense rivalries must acknowledge that one’s competition keeps one sharp, innovating, and constantly attuned to the marketplace, towards constantly improving quality and performance of products and the company’s ability to provide needed services. This is a positive as it allows your company to continue to survive and prosper, alas with not nearly the same profitability as if you were alone but still sufficient for the market’s purposes.
You can have both good and bad competitors. How can that be? Aren’t all competitors necessarily bad? (see above) Not all competitors are created equal. Some are more desirous than others. They are the good competitors. These companies realize you both are in the market to make money. They may fight you tooth and nail for companies but they price similar to you and they hate price wars as much as you do. They tend to be consistent and predictable in their habits and behavior, as does yourself. This is advantageous as you can predict with high accuracy what they are likely to do (as they are with you) and thus the future becomes much more tolerable.
They tend to be credible and reliable. If they are overstocked, they will announce they are having a sale or price reduction to lower their inventory. As a good competitor, you believe their notice and will not match prices, knowing that they will also do the same courtesy to you if you have a similar problem. You also presume that as soon as inventories are corrected, they will return to normalcy with regular prices. Good competitors are like good neighbors, well respected, keep their house and yard in excellent shape, keep their word and obligations, and are a positive contribution to the neighborhood (i.e., industry). They tend to feel responsible to a higher authority (the entire industry) and wish to maintain the integrity of the entire industry. One could indicate they are indeed a team player with the industry. Good competitors tend to be the larger players in the industry, those that have been in the industry a long time and oftentimes are the ones who pioneered their industry. They often feel a moral obligation to act as a role model for all others in the industry.
Bad competitors can ruin an industry. They tend to be unpredictable, random, and inconsistent. You never know what they are going to do or when. Their behavior and reactions to your actions are totally unknown and often bewildering. Like a bipolar mate, they can be up one day and down the next with no rhyme or reason to what they are doing or why they are doing it. You become totally paranoid and almost hate to make any moves or claims as it will probably entice a complete and different reaction from them then what you expected or wished. For any reason or no reason, they could very likely start a price war and end it on the same note of uncertainty. They tend to be a loner in the industry, an outcast, on the periphery of the industry. By their very presence, they tend to shake up the industry and keep it in a perpetual motion of uncertainty. Perhaps this is their strategy, to keep you, their probable larger competitors off balance. By not being predictable, they can control the tempo, the pace of the industry and gain a small but not insignificant advantage over all the other firms in the industry.
You must determine what type of competitor you wish to be. Do you want to be respected and liked or dreaded and feared? No one true answer exists. The correct choice must be made by yourself and what your intentions for the company are. Do you want to be a valued member of the industry or a rebel and outcast that follows its own pace and path? To thy own self be true.
But competition does have its advantages—even companies with intense rivalries must acknowledge that one’s competition keeps one sharp, innovating, and constantly attuned to the marketplace, towards constantly improving quality and performance of products and the company’s ability to provide needed services. This is a positive as it allows your company to continue to survive and prosper, alas with not nearly the same profitability as if you were alone but still sufficient for the market’s purposes.
You can have both good and bad competitors. How can that be? Aren’t all competitors necessarily bad? (see above) Not all competitors are created equal. Some are more desirous than others. They are the good competitors. These companies realize you both are in the market to make money. They may fight you tooth and nail for companies but they price similar to you and they hate price wars as much as you do. They tend to be consistent and predictable in their habits and behavior, as does yourself. This is advantageous as you can predict with high accuracy what they are likely to do (as they are with you) and thus the future becomes much more tolerable.
They tend to be credible and reliable. If they are overstocked, they will announce they are having a sale or price reduction to lower their inventory. As a good competitor, you believe their notice and will not match prices, knowing that they will also do the same courtesy to you if you have a similar problem. You also presume that as soon as inventories are corrected, they will return to normalcy with regular prices. Good competitors are like good neighbors, well respected, keep their house and yard in excellent shape, keep their word and obligations, and are a positive contribution to the neighborhood (i.e., industry). They tend to feel responsible to a higher authority (the entire industry) and wish to maintain the integrity of the entire industry. One could indicate they are indeed a team player with the industry. Good competitors tend to be the larger players in the industry, those that have been in the industry a long time and oftentimes are the ones who pioneered their industry. They often feel a moral obligation to act as a role model for all others in the industry.
Bad competitors can ruin an industry. They tend to be unpredictable, random, and inconsistent. You never know what they are going to do or when. Their behavior and reactions to your actions are totally unknown and often bewildering. Like a bipolar mate, they can be up one day and down the next with no rhyme or reason to what they are doing or why they are doing it. You become totally paranoid and almost hate to make any moves or claims as it will probably entice a complete and different reaction from them then what you expected or wished. For any reason or no reason, they could very likely start a price war and end it on the same note of uncertainty. They tend to be a loner in the industry, an outcast, on the periphery of the industry. By their very presence, they tend to shake up the industry and keep it in a perpetual motion of uncertainty. Perhaps this is their strategy, to keep you, their probable larger competitors off balance. By not being predictable, they can control the tempo, the pace of the industry and gain a small but not insignificant advantage over all the other firms in the industry.
You must determine what type of competitor you wish to be. Do you want to be respected and liked or dreaded and feared? No one true answer exists. The correct choice must be made by yourself and what your intentions for the company are. Do you want to be a valued member of the industry or a rebel and outcast that follows its own pace and path? To thy own self be true.
Coolness
What is cool? How does one define it? You really can’t define it (like the judicial definition of obscenity: I can’t describe it but I know it when I see it). Those with it know it when they see it. Still, Cool is king in America and American cultural values (right up there with youthful, fitness, popular, and sexy) Why does it matter?
Cool comes from a select few early adopters, market mavens, who are opinion leaders that others tend to follow. Often the first signs of a fad come from the urban ghetto and spreads to the ‘burbs. Another source is California, known as the bellweather state for coolness; more fads get started there than anywhere else in the nation. Wherever it comes from, whatever it is, whenever it shows its new faces, it bubbles up and the rest of the country’s fashion-sensitive youth (and these days the world’s as well) pay attention and attempt to emulate coolness by following suit.
Marketers known as “coolhunters” are paid big bucks to identify, specify, and market whatever is cool at the moment. They do this by interviewing the trendsetters, by observing what they are doing, wearing, where they are going, what they are listening to. Over the years the coolhunters have had to work hard to be trusted and accepted by those market mavens upon whose likes and dislikes the rest of the world awaits. These coolhunters work by intutition and base their guesses on their experience and gut. They can only stay coolhunters so long, they, like the rest of us, age, and kids, to whom cool is everything, tend to trust those their same age group ( a forty-something coolhunter is a rarity—a man-child? A Peter Pan who never grew up)
Marketers pay coolhunters to provide them with the earliest signs of fads and coolness so they can get on the bandwagon early. Too late and they might as well forget it as they would end up with tons of unsold merchandise. Too early and it is not yet cool and the same end result. In coolness, timing is everything.
Cool is transient. What is cool today is very uncool tomorrow. In fact, because it is cool today it is bound to be uncool tomorrow. The problem with cool is that it is cool when you and I are doing it but it no longer is cool when everyone else is doing it. That is, the very act of observing and making public cool items will eventually lead to its own self-destruction. Coolness is like fragile wetlands, overuse them and they are no longer. When the cool kids see everyone else doing it and trying to become cool by comparison, then it no longer becomes cool to them and they tend to switch to something else. They are leaders and cannot afford to be like everyone else (even if everyone else is trying to be like them!) Selling cool to the public makes it inevitably uncool. Abercrombie & Fitch discovered this the hard way in 2003. For years it has strived to be the sexy-preppy cool ‘in’ look. For years, it worked. As the law of coolness states, once something cool becomes mainstream, it is no longer cool. And so it went with A&F, cool today, out tomorrow—and as a result same-store sales were down by 13%.
It is a cycle and like all modern cycles has become time sensitive and increasingly faster as the coolhunters hunt relentlessly to find the next big thing while the fashion conscious are ever aware of changes and wish to get in on the cycle earlier and earlier and generating tendency for change among the masses who follow. Yet those who originate cool then must work just as fast to change so as to stay in the forefront of cool and not get caught up with the multitudes just behind them. Like a foray into Alice in Wonderland, one has to run ever faster just to stay in place.
So the hunt for this ever-fleeing, ever-so-fragile, ever elusive, increasingly difficult to define object continues. Yet the rewards for being there at the precise moment when it is cool, of having that product or service available and packaged correctly when it becomes cool, of having sufficient demand to meet the onslaught expected of a cool product is tremendous. Keeping America’s (And the world’s) youth cool can be quite a lucrative business. And a fleeting one. Enjoy the fruits of being at the right place at the right time while it is happening for it will surely disappear as quickly as it appeared.
Cool comes from a select few early adopters, market mavens, who are opinion leaders that others tend to follow. Often the first signs of a fad come from the urban ghetto and spreads to the ‘burbs. Another source is California, known as the bellweather state for coolness; more fads get started there than anywhere else in the nation. Wherever it comes from, whatever it is, whenever it shows its new faces, it bubbles up and the rest of the country’s fashion-sensitive youth (and these days the world’s as well) pay attention and attempt to emulate coolness by following suit.
Marketers known as “coolhunters” are paid big bucks to identify, specify, and market whatever is cool at the moment. They do this by interviewing the trendsetters, by observing what they are doing, wearing, where they are going, what they are listening to. Over the years the coolhunters have had to work hard to be trusted and accepted by those market mavens upon whose likes and dislikes the rest of the world awaits. These coolhunters work by intutition and base their guesses on their experience and gut. They can only stay coolhunters so long, they, like the rest of us, age, and kids, to whom cool is everything, tend to trust those their same age group ( a forty-something coolhunter is a rarity—a man-child? A Peter Pan who never grew up)
Marketers pay coolhunters to provide them with the earliest signs of fads and coolness so they can get on the bandwagon early. Too late and they might as well forget it as they would end up with tons of unsold merchandise. Too early and it is not yet cool and the same end result. In coolness, timing is everything.
Cool is transient. What is cool today is very uncool tomorrow. In fact, because it is cool today it is bound to be uncool tomorrow. The problem with cool is that it is cool when you and I are doing it but it no longer is cool when everyone else is doing it. That is, the very act of observing and making public cool items will eventually lead to its own self-destruction. Coolness is like fragile wetlands, overuse them and they are no longer. When the cool kids see everyone else doing it and trying to become cool by comparison, then it no longer becomes cool to them and they tend to switch to something else. They are leaders and cannot afford to be like everyone else (even if everyone else is trying to be like them!) Selling cool to the public makes it inevitably uncool. Abercrombie & Fitch discovered this the hard way in 2003. For years it has strived to be the sexy-preppy cool ‘in’ look. For years, it worked. As the law of coolness states, once something cool becomes mainstream, it is no longer cool. And so it went with A&F, cool today, out tomorrow—and as a result same-store sales were down by 13%.
It is a cycle and like all modern cycles has become time sensitive and increasingly faster as the coolhunters hunt relentlessly to find the next big thing while the fashion conscious are ever aware of changes and wish to get in on the cycle earlier and earlier and generating tendency for change among the masses who follow. Yet those who originate cool then must work just as fast to change so as to stay in the forefront of cool and not get caught up with the multitudes just behind them. Like a foray into Alice in Wonderland, one has to run ever faster just to stay in place.
So the hunt for this ever-fleeing, ever-so-fragile, ever elusive, increasingly difficult to define object continues. Yet the rewards for being there at the precise moment when it is cool, of having that product or service available and packaged correctly when it becomes cool, of having sufficient demand to meet the onslaught expected of a cool product is tremendous. Keeping America’s (And the world’s) youth cool can be quite a lucrative business. And a fleeting one. Enjoy the fruits of being at the right place at the right time while it is happening for it will surely disappear as quickly as it appeared.
Thursday, August 2, 2007
Ride the Bus
As part of my profession and my own love of reading and knowledge, I read several newspapers (including the Wall Street journal) daily as well as a multitude of business periodicals (averaging two or more daily). In between, I do find the occasional time to read a business book. Of the hundreds of such books I have read, I have just finished one that has really influenced my thoughts and one of whose main points I must share with you, my captive audience.
Selling to Eskimos, is a book by the former general manager of both the Portland Trailblazers and the New Jersey Nets. It could have very well been an autographical story of the great basketball stars and battles he had seen as a GM. But it is written as a handbook of great marketing principles. In it, he indicates during a typical game (of which he had to buy his own tickets), he did not sit in the luxury boxes nor in the first row with the team but in the “nosebleed” section, where the average fan sits. He stands in line for refreshments like any other fan. He does this so he can experience the game, the entire sporting event experience, from the perspective of the average fan, listen to their comments, see what they like and don’t like. When the Nets game became so crowded, they had to park fans in the distant lots, he arranged for vans to shuttle the fans to the stadium and back, and in his normal business habit, rode the bus himself to check out the conditions Although anecdotal and not as statistically significant as a true marketing research random survey, he learned quite a lot about the fans, what they wanted, what irked them, and what to do to streamline the process to make the entire experience more enjoyable for the average fan.
Ride the Bus. Check out your business from the typical customer’s point-of-view. Many larger stores have secret shoppers that perform that function. Sam Walton used to drive to many stores a day and observe both customers and employees. Multi-billionaire as he was, he could have stayed in the ivory tower and received carefully written market research reports discussing customer satisfaction and other marketing data. But he (and many other successful entrepreneurs) wanted and needed that first-hand customer interaction.
How do customers view your business? What kind of treatment are they getting from employees, from retail clerks, from support staff? What types of hurdles are you making them perform to receive the product or service you offer? You may not believe there is a problem and everything is functioning perfectly but what do the customers’ perceive? The old Indian saying, “You must walk a mile in another’s moccasin to fully understand that person.” Says it all. You must experience your business from the point of view of a customer to fully understand what they customer sees it.
Ride the bus. Audit the business from the customers’ point of view. Be a customer for a day. See how you like it. If you don’t , chances are many customers don’t either. If you can get some good feedback, great. If you can identify places to improve your service or business, excellent.
Ride the bus. Once you have viewed your business from the perspective of a customer, you will probably never be the same again.
Selling to Eskimos, is a book by the former general manager of both the Portland Trailblazers and the New Jersey Nets. It could have very well been an autographical story of the great basketball stars and battles he had seen as a GM. But it is written as a handbook of great marketing principles. In it, he indicates during a typical game (of which he had to buy his own tickets), he did not sit in the luxury boxes nor in the first row with the team but in the “nosebleed” section, where the average fan sits. He stands in line for refreshments like any other fan. He does this so he can experience the game, the entire sporting event experience, from the perspective of the average fan, listen to their comments, see what they like and don’t like. When the Nets game became so crowded, they had to park fans in the distant lots, he arranged for vans to shuttle the fans to the stadium and back, and in his normal business habit, rode the bus himself to check out the conditions Although anecdotal and not as statistically significant as a true marketing research random survey, he learned quite a lot about the fans, what they wanted, what irked them, and what to do to streamline the process to make the entire experience more enjoyable for the average fan.
Ride the Bus. Check out your business from the typical customer’s point-of-view. Many larger stores have secret shoppers that perform that function. Sam Walton used to drive to many stores a day and observe both customers and employees. Multi-billionaire as he was, he could have stayed in the ivory tower and received carefully written market research reports discussing customer satisfaction and other marketing data. But he (and many other successful entrepreneurs) wanted and needed that first-hand customer interaction.
How do customers view your business? What kind of treatment are they getting from employees, from retail clerks, from support staff? What types of hurdles are you making them perform to receive the product or service you offer? You may not believe there is a problem and everything is functioning perfectly but what do the customers’ perceive? The old Indian saying, “You must walk a mile in another’s moccasin to fully understand that person.” Says it all. You must experience your business from the point of view of a customer to fully understand what they customer sees it.
Ride the bus. Audit the business from the customers’ point of view. Be a customer for a day. See how you like it. If you don’t , chances are many customers don’t either. If you can get some good feedback, great. If you can identify places to improve your service or business, excellent.
Ride the bus. Once you have viewed your business from the perspective of a customer, you will probably never be the same again.
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