Monthly Archives: January 2012

Participation versus differentiation

Right now, across the world, hundreds of different people are opening an office, a restaurant, a social media company … They’ve sunk everything they have into it. They’ve thrown their life at it. It’s what they’ve always wanted to do, and every one of them and the people who has supported them hopes and believes they’ll succeed. Most won’t.

Right now, somewhere in the world, someone is planning a business that will one day be bigger than every other brand in their sector. The next shipping magnate woke up somewhere in the world today, without a ship to their name. The property magnate of the future is eating lunch in a schoolyard somewhere. Tomorrow’s Madonna has a clothesbrush, a mirror and perhaps an i-Pod …

The contrast couldn’t be greater, and yet curiously, the two groups are interdependent. Because in order for someone to stand out in a market, the vast majority must fail to do so.

If every café that opened stayed open, the hospitality sector would collapse because no-one could succeed, no-one could expand. Same with fashion, hairdressing or education. Unless you’re working in a market that just continues to enjoy extraordinary organic growth, attrition is hard-wired into the functionalism of the capitalist system. People have to run out of money in order for the money to be made elsewhere. People have to stop booking one airline in order to consistently fly on another. Someone choosing your hotel didn’t choose another hotel. Most of the time, the dynamic is zero-gain. In many sectors, it’s shrinking.

It’s your business against every other business in the market.

What never fails to amaze me is how so many businesses believe they have what it takes to beat the odds. Their formula for success? Participation. They’ll open the doors and chance it against the stupidity or inefficiency of their competitors. That’s it. They’re utterly dependent on passion, hope, hard work and perhaps the advertising budget to outshine the hundreds, perhaps thousands, of others who will open their doors on the very same morning at the same time to tout for the same pool of business – the veterans, the emergents, the strugglers, the other newbies. And on every other morning from then on.

It’s a dynamic that every business faces, no matter how long they’ve been in business. If you’re new, you’re needing to make your mark often against very established players. If you’ve been in business for a while, statistically the odds are tilting against you even though, ironically, you may be feeling secure in the knowledge of your history.

The sad reality for many brands, if they have looked to face up to the brutal reality of competition, is that they’ve probably done it by confronting the wrong question.

This is the wrong question: “What will we do if we fail?”. It assumes participation.

This is the right question: “Why won’t we fail when so many others must?” It requires differentiation.

If you can’t answer the right question, you’re a casualty. The only question left is one of timing. If you stop asking the right question, you’re also going – no matter how long you may have been in the game.

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For your information: why so many brands are not listened to

The insurance company wrote to me again. That can only mean it’s a bill or a change in policy. Either way it’s more expensive – literally, because I’m paying more, or metaphorically because I’m getting less for the money I do pay.

I’ve lost count of the number of meetings I’ve been to where marketing managers in the financial sector and in utilities have told me that they are keen to build closer relationships with their customers. They want more loyalty, they want customers to engage with them. Everyone nods.

But then their customer service teams keep sending out the same bills and policy changes, and they wonder why they don’t have more likeable brands. It’s not rocket science. In fact it requires something much more daunting. A change of heart.

In order to relate to customers as people, insurance companies need to start thinking of those customers as more than named policies, phone companies need to see them as more than accounts, electricity companies need to see the people who pay their bills as more than bill payers.

If brands in these sectors want people to associate them with more than just money, then they need to have conversations with them that extend beyond money. And for many organisations in these sectors that’s very, very difficult – they have nothing else to talk about, because their culture is honed to think about nothing less. It’s not that they are usually particularly greedy or even obsessive. It’s just how they have always talked to customers – as customers, rather than as people.

But the relationships between customers, services and experiences have shifted massively with the maturation of social media, and will continue to do so. Not long ago, people were sold services, and experiences were a value-add. Increasingly, people buy into the philosophies of likeable brands and then expect validation of that worldview when they purchase products. That validation comes through the experiences they receive when they buy and the ways that the brand itself looks to engage with its customers.The things it talks about socially. The causes it supports. The subjects it is interested in. The areas it engages with in the media.

In a pre-Google world, where it was so much harder to access data, brands provided information and people saw that as a cornerstone of the experience. We judged brands by their ads or their correspondence for example – because it was so much harder to judge them any other way. In an online-centric world, brands need to prove they are likeable and offer experiences that people are interested in across a wide range of fronts before anyone pays much attention to the information that brands want to send them.

And without that buy-in, the information itself is considered worthless. It’s something people ‘have no time for’. They’re too busy – read, they’re too busy to give whatever it is their time.

Here’s a great presentation by Steve Dimakis, the Senior Media Planner at MEC Wellington using research done by Argyle Social on just how much brands need to be thinking about as they engage with consumers, particularly in the emerging social channels.

How to do Social Media

But engaging like this, in ways that encompass but also extend beyond the business relationship, are a massive disruption for conservative institutions. Imagine a general insurance company having to think about and talk about motorbikes for example instead of just focusing on motorbike policies. A specialist insurer might do that, but for a general deliverer, that seems too hard. Which is why these companies revert to what they do feel comfortable talking about and why customers revert to believing that’s all they want to talk about.

An explanation in writing, however nicely phrased, of why customers need to pay more for their policies is not a conversation. It’s not even interesting to the consumer. It’s just more correspondence. It’s paperwork. It’s another brand talking about itself on its terms. And that, consumers find, increasingly socially unacceptable, in the broadest interpretation of that idea.

What likeable brands recognise that other brands do not is that they need to earn the right to talk with people. They don’t automatically have that right. Or rather they may have it technically, but they must keep earning it emotionally.

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Likeable brands: Debating the true value of Likes.

If brand owners are buying Likes on Facebook, what are they actually worth?, asks Alexis Dormandy in this recent article in The Telegraph. “Can we really value a ‘Like’ or a ‘Follow’ when so many of them are bought rather than earned?”

Dormandy’s question goes to the heart of the marketing community’s ongoing fixation with volume and to the business world’s fascination with social metrics. With marketing managers under huge pressure to build and participate in scaled brand communities, perhaps it’s inevitable that fast-track approaches to ramp up fan bases have become more popular.

There’s good, bad and ironical news in this.

Let’s start with the good. Slowly a real value case for using social media seems to be emerging. In a recent post on the RICG blog, comScore’s Linda Abraham and Buddy Media’s Mike Lazerow reference research showing that a “share” on Facebook can lead to $2.10 in incremental sales, and drive up the average conversion rate to 10.2 percent per share.

A key reason Abraham and Lazerow give to factor social media into digital marketing programmes is that “social media is the No. 1 online activity today,” accounting for almost 20 percent of the time consumers spend online.

They go on to say that there are three steps in social media marketing:
1. Cut-through, or the brand messages that fans receive in their news feed;
2. Engagement, or what fans say about a brand or product’s news feed content; and
3. Amplification, where fans share the content they like with others in their network.

However, they also point out that “most brands skip over those “intermediary steps,” and instead think the process only involves getting fans and then seeing a marketing ROI”.

And when getting fans involves buying their loyalty through incentives, that’s when Dormandy seems to believe the illusions of success start. Yes incentives and giveaways work, but as his article points out, generating Likes and Follows through mechanisms like contests rather than through unprompted affinity must beg the question: how much do consumers truly see these marques as likeable brands and to what extent are they more interested in the likeable giveaways?

That in itself raises a wider concern. The bad news.

With the introduction of marketing moves like Sponsored Stories and the use of incentives to gain community memberships, reviews and WOM, there’s a very real danger that authentic endorsement – the sort members of the online community truly value and want to share – is under threat. As Dormandy puts it so well: “for products, services and brands, the Facebook Like provides little indication of what your friends want or would recommend. In the quest to be endorsed on Facebook, brands have devalued those very endorsements. Buying a Like doesn’t mean you’re liked.”

So Like could no longer mean ‘like’ in its defined sense. And Follow could easily mean Follow for Now, or until the competition ends. There’s a transience to that commitment that is disquieting because by extension endorsement no longer means endorsement either. It simply means participation.

If that’s the case, what are marketers buying beyond a momentary measure? What can they bank on?

And is the very fact that they continue to seek out Likes and Follows making Liked brands less reliable and Followed brands less charismatic?

Leading perhaps to this irony: the more consumers Like your brand online in the minute (because of the incentives you offer), the greater the risk that they might not actually value it over the longer term.

Not dissimilar in many ways to how consumers behave in sales – it isn’t the brand they are buying, it’s the discount. Only in this case, it’s not about the discount but rather the incentive.

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The future of brands: 7 takes from Jim Stengel

Recently, Jim Stengel, the former global marketing officer at P&G, opened up on his blog on what he perceives as the future of marketing. I very much liked what he had to say. My takes and comments.

1. Brands are becoming more important not just as identifiers in crowded markets but also as valuation mechanisms. As Stengel points out, 30 years ago, “almost none of the market capitalization of the S&P 500 could be attributed to brand equity; today it is above 30%.” Stengel sees that as a sign that marketing has become more important. I agree – certainly in the sense that brand can now be visibly seen to add value on the bottom line. I wonder though whether marketing itself has gotten more important or whether it has become increasingly important for marketers (with their heritage involvement in communications) to evolve their understanding of the value, performance and application of brands.

2. Marketing will be more and more about the behavior of the people behind the brand, not what the brand says. Absolutely. Last week’s post about “human marketing” centred entirely on this point. Increasingly brands are judged not just by what they deliver, but how they deliver it – and people are the key component in delivery. If your human marketing doesn’t cut it, nothing else will compensate.

3. Marketing will integrate and synthesize with other disciplines. And vice versa in my view. The globalisation of markets is being clearly mirrored by the globalization, convergence and integration of functions. Delivering “on brand” now involves not just everyone – human marketing again – but almost every aspect of the organisation’s intellectual and operational arsenal.

4. Competitiveness will increasingly be right-brained in its orientation. Stengel’s own words: “Empathy and artistry will get more important. Empathy is at the heart of marketing because it is the ability to see and feel through someone else’s perspective. Artistry is the intuition and creativity to invent something that offers something new and important for a customer” Yes. Yes. A thousand times yes.

5. We’ll all know more, so we better make sure that, as brands, we understand more. Hadn’t really seen the full implications of this one I have to say, but Mr Stengel’s absolutely right. “Big data and advanced analytics will profoundly impact how well we understand our business.” We tend to hear so much about the privacy concerns of big data, but this marketer’s point that it will also yield big insights is very true. The key seems to lie in what brands do with all the information that will flood their way. Those who percept and act will swim and win. Those who try to filter and wait will drown or be swept away.

6. Great brands will continue to “[upend] the business model”, questioning and reframing the frameworks, zones and channels within which they do their business. And they will do so, not for innovation’s sake, but because the changes they make to the ways they are organised will bring them closer to consumers. Great point, well made.

7. Finally, marketers will need to become more nimble and adaptive in how they present their brands and associated messages to communities of consumers who are no longer at their desktop. Instead those people will, in time, be moving rapidly, impatiently and individually, through areas of a city or town that they are highly familiar with. Getting their attention, remaining part of their conversation and attracting them to engage will require new approaches and new ways of thinking about media. Stengel quotes Eric Schmidt in saying that the future for brands will be “social, local and mobile”.

Plenty for all of us to think about here as we power into 2012.

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Human marketing

This highly informative post from James D. Roumeliotis on Customer Devotion introduces to me the expression “human marketing” which I am much taken with. Not only does it speak to the necessity for everyone within the organisation to think and act like a marketer, it’s also a reminder that, ultimately, people deliver some of our most powerful and memorable consumer experiences – and insights.

People have an instinct for people that simply cannot be duplicated any other way.

In the rush to mechanise and socialise, it’s easy to overlook the need for brands to continue to humanise their offering – to make it easier, more enjoyable, more fun etc for people to interact with.

Powerful brands feel human. There is a real sense of people behind what’s on offer. And that I think is Roumeliotis’ key point: you can’t build and run a great brand if you don’t have a culture that loves people – as staff, as suppliers and as customers.

In that regard, while much is made of the need to monitor and track online interactions, the most powerful listening posts most brands have in the market are their people. The critical point here though is that while most people can listen, it requires people who love people to understand what to truly listen for, and what questions to ask in response.

If a client rings and asks about whether you offer online shopping and they’ve never shopped that way with you before, the traditional marketing response would be to offer them information on how to make a purchase through the internet. The ‘human marketing’ response might be to enquire as to why they are interested in shifting to online shopping at this point.

And that’s the thing isn’t it. Metrics don’t talk to motivations. They only show the results of what the motivations have generated – which is why most marketers spend too much time trying to second guess what often appear to be random shifts in buying patterns.

Human marketing is driven by curiosity not just processes. It is about the search for customer happiness via the application of the Feynman principle to every aspect of customer interaction: question everything, especially those things you think you know, including those things you feel you are not being told.

It takes humanity to do that. But just as importantly, Roumeliotis reminds us, it takes everyone to do that, not just the marketing department.

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Gazing into the tea leaves

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Image via Wikipedia

Happy New Year to you all. Over at Corporate Eye, Susan Gunelius references two JWT Intelligence reports just out that are predicting these five key trends for 2012. Here’s how I see what JWT are seeing.

1. Price Opportunities: Brands will introduce low-cost entry-point products into markets for price-sensitive consumers with “stripped down offerings” and smaller sizes.

My view: Agree. The combination of depressed consumer spending and the rise of house brands will see brands looking to diversify their price points. In many sectors, I think this will be accompanied by diversity in the service experience as well – with online increasingly offering lower prices and help-yourself service levels, and full-price, full-service reserved for physical outlets.

2. Shared Value: Companies will shift from simply donating money to charitable causes to integrating social causes into brand strategies.

My view: Inevitable, and in many ways mandated by both social media and the politicised consumer. Customers will want to see companies doing more than just talking about their social concerns or throwing dollars blindly at a problem in exchange for the feelgood and the publicity. They now want to see CSR applied in meaningful ways that affect real change. Management won’t disagree because this will make CSR initiatives themselves more measurable.

3. Interactivity: With a growing trend toward making screens interactive, brands will focus on finding new ways to engage consumers through touch screens and experiences.

My view: Inevitable. Interactivity may be a experience premium in places at the moment, but its effect is rapidly commoditising as consumers expect more and more engagement. Soon those companies that aren’t catering for highly mobile and tech-savvy consumers will literally be out of touch.

4. Redefining Age: “Old age” is changing with the term focusing on an older audience than ever and a more active older audience. Brands will find ways to better communicate with and target the aging audience.

My view: Yes, but this is just part of the equation. Western populations are not just aging, they are becoming increasingly dominated economically by women. That demographic shift will need to be addressed simultaneously if brands are to make competitive headway. The implications of ‘femonomics’ in particular are far-reaching in terms of even marketing basics like sales models, experience planning and product ranging.

5. Tangible Add-ons: As more content and products become digital, brands will look for ways to add a tangible, tactile experience to those digital products and services and vice versa.

My view: yes and no. As per 1, I think that online will become the DIY access point for a range of products and services particularly in sectors where margins-per-serve are tight. At the same time, it’s easy to see that some digital and physical brands could mirror the developments that are currently occurring in manu-services and look to introduce tangible experiences and services across a range of platforms that add value to what they deliver and at the same time diversify their income bases.

OK, your turn. Drink up please and share – what do you see ahead?

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