Tag Archives: Marketing

Communication in the Information Age

Note: the plate says - "The quick brown f...

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Johannes Gutenberg’s invention of the printing press in 1440 heralded the start of mass communication – for the first time, text could be reproduced quickly and inexpensively for a large audience. Of course, very few people could read in those days and many authorities were against it, fearing the impact of mass uncontrolled communication on their rule, so it took a few hundred years for this to spread.

The introduction of broadcast radio from 1920 started to spread information even more quickly and widely, marking a significant jump in the speed of communication.

But it was the Information Age which has really accelerated global communication.  Widely accepted to have started in the 1970s with the advent of the microprocessor, it took the introduction of the Internet Browser in the early 1990s for the Information Age to really become as integral to life as it is today.

And yet, it seems, the Information Age is just a quicker way to spread the same sort of information as before. Certainly our main sources of news seemed to have missed the point – news bulletins rely on “sound bites” or their video equivalents to relay information with the result that this is often inaccurate or, at best, unbalanced. Newspapers, too, have not really worked out how to embrace the digital age fully – you either get print (almost as in 1440, albeit more quickly), or the same articles available online, missing the opportunity to have summaries of stories and the ability to drill down for more information.

This is the key – we’re bombarded with information from multiple channels but have not developed the tools to effectively sift it. Long messages are often ignored as we don’t have time for them, while short messages are frequently taken out of context missing the real point that was being made. What’s needed is the ability to capture the essence of a point in a short burst and then enable people to get more information as they require it – almost an inside-out onion, with successive layers giving more and more detail.

Twitter is a great example of the modern communication paradigm – 140 characters to get the basic message across, including a link to more detail, which you can access if you wish. That more detailed message, in turn, could have links to other sources for even more information, and so on…

Nowhere, perhaps, is this communication problem more evident than in politics. There’s no argument with the fact that the UK, like many other countries globally, has woefully overspent and has to completely revisit its bloated public sector spending (how can a majority of the workforce be civil servants – effectively paid for by the minority?).  And yet it, like so many others, is facing widespread revolt at the prospect – look at the pension reform issue, for example…

Why?

Primarily because the government is incapable of effective communication. White papers, government statements and debates are far too long and not suitable for the news media or the viewing/listening/reading public, so people simply don’t understand the issues. I absolutely believe that the vast majority of people are decent, willing to work hard to get ahead and happy to help those less fortunate (but NOT those that are not prepared to help themselves).

But, for as long as governments cannot get the message out in a way that the media can carry without distortion and people can understand in just seconds, they will be unable to implement the changes that are needed, worsening the financial state of their countries, prolonging the agony and the economic downturn.

It’s time to turn traditional communication on its head and embrace “the 140 character world.”

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Who Controls Your Brand?

social media compain
Image by Laurel Papworth laurelpapworth.com and Gary Hayespersonalizemedia.com

The old order is being turned on its head; companies used to being in control of their customers and their brand are now finding customers are wresting control from them and that they need to adapt or face obscurity.

The enabler behind this is, of course, social media. Customers are now able and willing to discuss their experiences with friends and followers around the world, and companies ignore them at their peril. And yet, it seems to be more common for companies to ignore what is being said on Twitter, on Facebook, on LinkedIn, on YouTube, and on all the other social platforms around the world.

Even though some two thirds of Fortune 500 companies have a Twitter account, and more than half have Facebook and YouTube accounts, they’re just not listening – reports indicate that 43% of all companies have never responded to a single Tweet, while only a quarter of companies respond to a comment posted on their Facebook page.

All this does is reinforce the view that companies are not interested in their customers. Better to have no presence at all than a presence where you don’t respond (the same goes for “customer-service” telephone lines and email addresses!).

However, the fact of the matter is that nowadays you HAVE to listen to what your customers are saying and you MUST respond. That’s the best way to turn customers into brand advocates – and isn’t that what every business wants? What’s more, it’s worth remembering that your products and services are only as good as your customers think they are and that they’re prepared to pay for; it’s much better to know they’re unhappy sooner than later, so you can fix the problem.

Word of mouth has always been the strongest way for businesses to grow – or shrink – and all that social media is doing is enabling this process to operate more quickly, and a lot more widely.

Companies that have embraced this – think Zappos and Starbucks (or Threadless, the T-shirt company that went from startup in 2000 to $30M in revenue last year) – are rewriting the rules for customer service, marketing and the way they’re perceived. Ask Comcast, who went from ignoring social media to an advocate and transformed the company’s image.

While the positive impact is clear and quick to see, the negative impact on companies that do it wrong will take longer to be really apparent – they suffer a slow, steady decline in brand image with all that follows from this – so the good news is there’s still time to adapt, but they shouldn’t wait too much longer.

As Jeff Bezos said, “Your brand is what people say about you when you’re not in the room.” If you’re not in the social media room, you’ll never know – and what you don’t know, you can’t fix.

By embracing social media, having conversations with your customers and other stakeholders, you will greatly strengthen your brand and your company.

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Living Your Brand – do companies really care about their Brand?

Goldman Sachs Tower in Jersey City
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2010 certainly seems to be going down as the year when the proverbial corporate skeletons are coming out of the cupboard:

  • Toyota – which had built its brand on reliable, safe vehicles – recalls many millions of cars all around the world in an apparently ongoing saga, with new recalls being announced almost monthly;
  • Goldman Sachs – viewed by many as the pre-eminent merchant bank – being sued for fraud by the SEC and now under investigation by the UK regulators, too;
  • Many airlines – especially those using words like “Favourite” and “5 Star” in their advertising – simply refusing to abide by their legal obligations, in terms of Regulation 261/2004, to provide accommodation and refreshments for their stranded passengers during the volcanic eruption in Iceland.

And this is just a sample of the more recent headline-grabbing issues.

Are they really “Too big to fail” – or just too big to care?

I suspect they believe the latter, not recognising the truth in the old adage that “Pride comes before a fall.” Remember, almost none of the largest and then most successful companies in, say, 1900, are still in any position of strength today – in fact most have disappeared altogether.

These corporates need to get back to basics, to remember that it is their customers that pay their salaries and to start treating their customers as the company’s most precious resource, rather than as a necessary irritant. Simply repeating a marketing mantra branding themselves as the pre-eminent company in their field doesn’t make it true…

The fact is that branding is a lot more than just a logo with a catchy by-line – a company’s brand is everything to do with that company, and the logo is just something to recognise it by as we’re visual creatures. Branding is about customer service, branding is about the way customers interact with the company in all ways, branding’s about staff training, branding includes corporate governance and social responsibility, branding is about all the materials that company produces – from marketing through packaging to the products themselves – in fact, branding is about everything to do with a company.

And this is where so many companies are falling down: they’ve lost sight of everything but the short-term pursuit of the bottom line. And I use “short-term” advisedly – as without attention to all aspects of their corporate brand, those companies will lose customers and start to fail.

Just look at the consumer backlash against many banks that they perceive to have been complicit in the economic downturn. Imagine how consumers who have been poorly treated will feel about giving more of their hard-earned money to those airlines that left them high and dry. Will former Toyota buyers be as happy to buy another Toyota?

Companies need to start refocusing on their entire brand, they need to recognise the power of instant communication for their customers and embrace it to make a positive difference, and they need to once again really put their customers first instead of just saying they do.

What do you think – do companies no longer care about their brand in pursuit of profits? Have you joined the growing ranks of disgruntled consumers and, if so, which are the brands you love to hate?

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Customer Loyalty – is there a Right Kind?

Your Customer's Emotional Experience
Image by 33 Interactions via Flickr

We talk a good deal about customer loyalty nowadays, but do we really understand it and know how to gain it?

The “1 to 1” gurus, Peppers & Rogers, define three sorts of Customer Loyalty:

  • Emotional Loyalty – this is about how customers feel about your brand;
  • Behavioural Loyalty – the way customers respond, and whether they actively seek to do business with you;
  • Profitable Loyalty – those customers that help you to make money.

Emotional Loyalty was the first level of understanding of the concept of customer loyalty, with early marketing designed to appeal to the emotions and build a bond with customers in this way. However, it became apparent that while customers might feel emotionally close to your brand, that didn’t necessarily mean they would buy from you, or do so on a regular basis.

This led to the concept of Behavioural Loyalty where marketers sought to find ways of bringing the customer to them to do business, and do so regularly. Of course, in many cases Emotional Loyalty was ignored as the focus was on getting the customer to purchase from you.

More recently, with the advent of tools to analyse customer purchases and overall costs more accurately, companies are discovering that on average only around 20% of customers are profitable for a business, with 60% being around break-even and a further 20% losing the company money, so they then focused on trying to find ways to increase the percentage of profitable customers and either remove the unprofitable ones or make them profitable.

However, isn’t the key really to do the first two well and use this to leverage the third? It really is not about focusing on just one aspect of loyalty, but rather about understanding how all three interact and driving your business accordingly.

On the emotional level, you need to be clear about what your brand stands for and ensure that you deliver what you say you will do – never over-promise and under-deliver as that is the quickest way to kill your brand’s emotional loyalty.

To keep your customers coming back – and we all know that repeat customers are best – your marketing must understand their buying behaviour and ensure that you continue to interact with them to capture the maximum share of their wallets. The Lifetime Value concept is key here.

But, of course, you must ensure you do so profitably – and this is not just about margin, but about the total costs of doing business with each customer. A high margin customer can still result in a loss for you if, for example, they are consistently returning items for credit, needing expensive support resources, paying late, and so on, while a low-margin customer who pays cash and never needs support can be nicely profitable. Be clear about where the costs are for each customer.

A great example of a company that does all three well is Amazon: just look at the brand recognition, the fact that you know they it’s a reliable supplier of books, DVDs, etc., at good prices, with a no-quibble replacement policy, and then see how it constantly offers you new items based on your buying behaviour. Amazon’s systems are not only providing its marketing engine with ongoing offers tailored to your likes, but make purchasing easy, so its internal costs are low as there is minimal need for support.

But, after all, if you really think about it, isn’t this what business is all about anyway: getting customers who feel good about doing business with you as you provide a consistently great customer experience, coming back over and over again to make purchases that are profitable for you?

So, to answer the question as to whether there is a Right Kind of Customer Loyalty, the answer is clearly, “No.” To be successful you need to ensure you are focusing your business on all three – Emotional, Behavioural and Profitable. And, in the famous words of a song first made popular in the mid 60s, “Do What You Do, Do Well.”

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Keep it Simple, Stupid

What is it about the human race that while we all apparently prefer ‘a simple life’ we delight in adding layers of complexity to everything?

Much to nobody’s surprise, I imagine, a recent McKinsey article, “Consumer Electronics Gets Back to Basics” showed that something like 2/3rds of consumers valued simplicity and price over a more comprehensive set of features. And yet, product after product is designed to have more features than its predecessor – generally at an incrementally higher price or, at best, the same price.

Just look at today’s ‘bloatware’ as an example. Remember the days when Bill Gates declared that “640KB ought to be enough for anybody” referring to the, then, new PC’s maximum memory capacity? Nowadays, you’re lucky to get away with less than three thousand times that much (2GB)! And yet, how many of us use more than 10% of the features available in today’s ‘productivity suites?’ I don’t, and many consider me a ‘power user.’

Oh, and don’t believe that the complexity is simply as a result of more capacity – people have been calling for simpler PCs for decades. In a Newsweek interview back in 1995, Oracle Chairman Larry Ellison said that the PC was too complicated and difficult to use then, predicting the PC would soon be replaced by simpler desktop devices – the ‘network computer,’ a no-frills computer/terminal that performs basic chores easily and simply and sells for less than $500. Perhaps Oracle’s recent purchase of Sun Microsystems will enable him to move us all in that direction some 15 years later: Sun already sells this type of device – they call it a Sun Ray.

The big surprise for many vendors last year was the Netbook. Initiated by Asus, this basic notebook PC really set the proverbial cat among the pigeons. The form factor was first tried in the mid 90s with a notable lack of success (it was called the sub-notebook in those days), so there was a healthy dose of scepticism when it was announced last year. Acer, as the first major multinational vendor to see the opportunity, quickly produced its own line of netbooks and gained enormous market-share as a result: seeing a significant increase in unit sales last year, just as the downturn was biting most companies. Here was a classic case of people wanting simplicity – what a pity, then, that the software was not also available in ‘Lite’ versions, meaning that many early adopters of netbooks ended up returning to the larger, more powerful machines that could handle the software workload.

But it’s not just in PCs that simplicity is the watchword. A couple of years ago a start-up company, Pure Digital Technologies, introduced a simple, one-button solid state video camera that runs on a couple of AA batteries. This device, the Flip, quickly grabbed 14% of the US video camera market surpassing all but the long-time market leader in sales. It’s a wonderful little camera and perfect for recording those ‘moments’ of life – I know, I got one soon after launch and swear by it. Interesting, then, that Cisco acquired the company a few months ago – is simplicity to be Cisco’s driver now?

This desire for simplicity is evident in many other areas of life, too – look at how people are embracing simpler airline and hotel offerings: companies offering easy-to-use services that do what’s needed at a reasonable price. The same goes for other products, like the success of Tide Basic laundry detergent.
And here’s the key – to succeed, products and services must be well-made, practical, offer the set of basic features that people need (read: market research is critical) and be seen as offering great value. Properly done, this can be achieved at increased margins to the over-featured products we’ve become used to, so increasing shareholder satisfaction along with customer satisfaction.

As the saying goes, “Keep it Simple, Stupid.”

Isn’t this what we all want?

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Is there value in a Repeat Customer?

Why is it that although every marketing book / article I’ve ever read tells me with authority that it costs 5 (or more!) times as much to get a new customer as to sell to an existing one, so few companies understand this?

Do their executives and marketing people not read?

I know you’ll have many examples of such wasted opportunity, and I’d love to hear those that stand out in your mind, so to get the ball rolling, let me give you a couple of – to me – amazing ones…

Newsweek is top of mind at the moment as I have just received my annual renewal notice. This ongoing piece of optimism on their part really baffles me as the renewal fee is almost exactly TWICE what I would pay to take out a new gift subscription, and that excludes the (admittedly dubious) value of the little extras they send with gift subscriptions.

When I queried this with the “Customer Service” people at Newsweek a couple of years ago, all I got was a rather terse note saying that the renewal price is the best available offer for my country. This in spite of me providing them URLs to prove otherwise in my original query… So, each year for the past several years I’ve allowed a subscription to lapse and taken out a new gift one, saving myself a tidy sum in the process.

This is, of course, a lot more expensive for Newsweek: apart from the trinkets, they always allow a lapsing subscription to run on for a few issues while they send out several reminder letters.

Why not just give subscribers the same deal (without the trinkets) and save on the letters, too?

Another great example is that of Consumer Electronics stores – full disclosure: I love gadgets and electronics stores. The opportunities they miss to get steady repeat business are legion! Let’s face it: they have my information as I invariably pay by credit card and they could easily ask me to sign up for a “loyalty card” or just permission marketing.

But they don’t.

Each time I visit, I’m treated as a brand new customer (not a great experience in most cases to be honest). They miss opportunities to sell me upgrades or add-ons for products I’ve previously purchased (unless that’s the purpose of my visit). They don’t keep records of what sort of things attract me so I can be carefully guided by the marketing people to buy more. In fact, they have no idea who I am at all – and yet the company executives that I’ve come to know from some of these stores are searching for extra sales, especially in these tough economic times…

When are companies going to wake up to the real, lifetime value of their customers?

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