Category Archives: Consumer Psychology

The Persona is Dead, Long Live the Person

First, let me go on record as saying up to this point, I’ve been a fan of personas. In my past marketing and usability work, I used personas extensively as a tool. But I’m definitely aware that not everyone is equally enamored with personas. And I also understand why.

Personas, like any tool, can be used both correctly and incorrectly. When used correctly, they can help bridge the gap between the left brain and the right brain. They live in the middle ground between instinct and intellectualism. They provide a human face to raw data.

But it’s just this bridging quality that tends to lead to abuse. On the instinct side, personas are often used as a short cut to avoid quantitative rigor. Data driven people typically hate personas for this reason. Often, personas end up as fluffy documents and life sized cardboard cutouts with no real purpose. It seems like a sloppy way to run things.

On the intellectual side, because quant people distrust personas, they also leave themselves squarely on data side of the marketing divide. They can understand numbers – people not so much. This is where personas can shine. At their best, they give you a conceptual container with a human face to put data into. It provides a richer but less precise context that allows you to identify, understand and play out potential behaviors that data alone may not pinpoint.

As I said, because personas are intended as a bridging tool, they often remain stranded in no man’s land. To use them effectively, the practitioner should feel comfortable living in this gap between quant and qual. Too far one way or the other and it’s a pretty safe bet that personas will either be used incorrectly or be discarded entirely.

Because of this potential for abuse, maybe it’s time we threw personas in the trash bin. I suspect they may be doing more harm than good to the practice of marketing. Even at their best, personas were meant as a more empathetic tool to allow you to thing through interactions with a real live person in mind. But in order to make personas play nice with real data, you have to be very diligent about continually refining your personas based on that data. Personas were never intended to be placed on a shelf. But all too often, this is exactly what happens. Usually, personas are a poor and artificial proxy for real human behaviors. And this is why they typically do more harm than good.

The holy grail of marketing would be to somehow give real time data a human face. If we could find a way to bridge left brain logic and right brain empathy in real time to discover insights that were grounded in data but centered in the context of a real person’s behaviors, marketing would take a huge leap forward. The technology is getting tantalizingly close to this now. It’s certainly close enough that it’s preferable to the much abused persona. If – and this is a huge if – personas were used absolutely correctly they can still add value. But I suspect that too much effort is spent on personas that end up as documents on a shelf and pretty graphics. Perhaps that effort would be better spent trying to find the sweet spot between data and human insights.

Some Second Thoughts on Mindless Media

When I read Tom Goodwin’s Online Spin last week, I immediately jumped on his bandwagon. How could I not? He played the evolutionary psychology card and then trumped that by applying it to the consumption of media. This was right up my ideological alley.

addict_f1pjr6Here’s a quick recap: Humans evolved to crave high calorie foods because these were historically scarce. In the last century, however, processed food manufacturing has ensured that high calorie foods are abundantly available. The result? We got fat. Really fat. Tom worries that the same thing is happening to our consumption of media. As traditional publishing channels break down, will we become a society of information snackers?

“We’re rewarding pieces that are most-clickable or most easily digested, and our news diet shifts from good-for-us to snackable.”

Goodwin also mourns the death of serendipitous discovery – which was traditionally brought to us by our loyalty to a channel and the editorial control exercised by that channel. If we were loyal to the New York Times, then we were introduced to content they thought we should see. But in the age of “filter bubbles” our content becomes increasingly homogenized based on algorithms, which are drawing an ever-narrowing circle bounded by our explicit requests and our implicit behavior patterns. We become further insulated from quality by mindless social media sharing – which tends to favor content pandering to the lowest common denominator.

But the more I thought about it, the more I wondered if this wasn’t a little paradoxical? Tom’s very thoughtful column, which hardly qualifies as intellectual fast-food, didn’t come to us through traditional journalism. Tom, like myself, is not a professional journalist. And while MediaPost does provide some editorial curation, it’s purpose it to provide a fairly transparent connection between industry experts like Tom and other experts like you. Tom’s piece came to us through a much more transparent information marketplace – the very same marketplace that Tom worries is turning us into an audience of mindless media junkies. And I should add that Tom’s piece was shared through social circles over 200 times.

So where is the disconnect here? The problem is that when it comes to human behaviors, there are no universal truths. How we act in almost any given situation will eventually distribute itself across a bell curve. Let’s take obesity, for instance. If we talk trends, Tom is absolutely correct. The introduction of fast food in North America coincided with an explosion of obesity, which as a percentage of the US population rose from about 10% in the 1950’s to almost 35% in 2013. But if we accept the premise that we all mindlessly crave calories, we should all be obese. Obesity rates should also continue to be going up until they reach 100% of the population. But those two things are just not true. Obesity rates have plateaued in the last few years and there are indications that they are starting to decline amongst children. Also, although fast food is now available around the world – obesity rates vary greatly. Japan has one of the highest concentrations of McDonald’s outlets per capita (25 per million) in the world but has an obesity rate of 3.2%, the lowest in all OECD countries. The US has a higher concentration McDonald’s (45 per million) but has an obesity rate 10 times that of Japan. And my own country, Canada, almost matches the US McDonald for McDonald (41 per million) but has an obesity rate half that of the US (14.3%).

My point is not to debate whether we’re getting fatter. We are. But there’s more to it than just the prevalence of fast food. And these factors apply to our consumption of media as well. For example, there is a strong negative correlation between obesity levels and education. There is also a strong negative correlation between obesity and income. Cultural norms have a huge impact on the prevalence of obesity. There are no universal truths here. There are just a lot of nebulous factors at play. So, if we want to be honest when we draw behavioral comparisons, we have to be accepting of those factors.

Much as I believe evolution drives many of our behaviors, I also believe that more open markets are better than more restrictive ones. As the mentality of abundance takes hold, our behaviors take time to adjust. Yes, we do snack on crap. But we also have access to high quality choices we could have never dreamed of before. And the ratio of consumption between those two extremes will be different for all of us. Consider the explosion of TV programming that has happened over the last 3 decades. Yes, there is an over-abundance of mindless dreck, but there is also more quality programming than ever to choose from. The same is true of music and pretty much any other category where markets have opened up through technology.

The way to increase the quality of what we consume, whether it be food, information or entertainment, is not to limit the production and distribution of those consumables through more restrictive markets, but to improve education, access and create a culture of considered consumption. Some of us will choose crap. But some of us will choose the cream that rises to the top. The choice will be ours. The answer is not to take those choices away, but rather to create a culture that encourages wiser choices.

The Secret of Successful Marketing Lies in Split Seconds

affordanceThe other day, I was having lunch in a deli. I was also watching the front door, which you had to push to get in. Almost everyone who came to the door pulled, even though there was a fairly big sign over the handle which said “Push.” The problem? The door had the wrong kind of handle. It was a pull handle, not a push. The door had been mounted backwards. In usability terms, the door handle presented a misleading affordance.

I suspect the door had been there for many years. I was at the deli for about 30 minutes. In that time, about 70% of the people (probably close to 50) pulled rather than pushed. Extrapolating this to the whole, that means over the years, thousands and thousands of people have had to try twice to enter this particular place of business. Yet, the only acknowledgement of this instance of customer pain was the sign that had been taped to the door – “Push” – and I suspect there was an implied “(You Idiot)” following that.

I suspect most marketing falls in the same category as that sign. It’s an attempt to fight the intuitive actions that customers take – those split-second actions that happen before our brain has a chance to kick in. And we have to counteract those split-second decisions because the path we have created for our customers was built without an understanding of those intuitive actions. After we realize that our path runs counter to our customer’s natural behaviors do we rebuild the path? Does the deli owner pay a contractor to remount the door? No, we post a sign asking customers to push rather than pull. After all, all they have to do is think for a moment. It seems like a reasonable request.

But here’s the problem with that. You don’t want your customers to think. You want them to act. And you want them to act as quickly and naturally as possible. The battles of marketing are won in those split seconds before the brain kicks in.

Let me give you one example. A few years ago I did a study with Simon Fraser University in Canada. We wanted to know how the brain responded in those same split seconds to brands we like versus brands we have no particular affinity to. What we found was fascinating. In about 150 milliseconds (roughly a sixth of a second) our brain responds to a well-loved brand the same way we respond to a smiling face. This all happens before any rational part of the brain can kick in. This positive reaction sets the stage for a much different subsequent mental processing of the brand (which starts at about 450 milliseconds, or half a second). And the power of this alignment can be startling. As Dr. Read Montague discovered, it can literally alter your perception of the world.

If you can rebuild your path to purchase to align with your customer’s intuitive behaviors, you don’t need to put up “push” signs when they stray off course. You don’t have to make your customers think. Here’s why that is important. As long as we operate at the intuitive level, humans are a fairly predictable lot. Evolution has wired in a number of behaviors that are universal across the population. You would not be risking your vacation fund if you placed a bet that the majority of people would try to pull a door with a door handle that suggested your should pull it, even if there was a sign that said “push.” As long as we operate on auto-pilot, we can plot a predicted behavioral course with a fair degree of confidence (assuming, of course, we’ve taken the time to understand those behaviors).

But the minute we start to think, all bets are off. The miracle of the human brain is that it has two loops of activity – one fast and one slow. The fast loop relies on instinct and evolved behavioral habits. It’s incredibly efficient but stubbornly rigid. The slow loop brings the full power of human rationality to bear on the problem. It’s what happens when we think. And once the prefrontal cortex kicks it, we are amazingly flexible but we pay the price in efficiency. It takes time to think. It also brings a massive amount of variability into the equation. If we start thinking, behaviors become much more difficult to predict.

The longer you can keep your customers on the fast path, the closer you’ll be to a successful outcome. Plan that path carefully and remove any signs telling them to “push.”

The Messy Part of Marketing

messymarketingMarketing is hard. It’s hard because marketing reflects real life. And real life is hard. But here’s the thing – it’s just going to get harder. It’s messy and squishy and filled with nasty little organic things like emotions and human beings.

For the past several weeks, I’ve been filing things away as possible topics for this column. For instance, I’ve got a pretty big file of contradicting research on what works in B2B marketing. Videos work. They don’t work. Referrals are the bomb. No, it’s content. Okay, maybe it’s both. Hmmm..pretty sure it’s not Facebook though.

The integration of marketing technology was another promising avenue. Companies are struggling with data. They’re drowning in data. They have no idea what to do with all the data that’s pouring in from smart watches and smart phones and smart bracelets and smart bangles and smart suppositories and – okay, maybe not suppositories, but that’s just because no one thought of it till I just mentioned it.

Then there’s the new Google tool that predicts the path to purchase. That sounds pretty cool. Marketers love things that predict things. That would make life easier. But life isn’t easy. So marketing isn’t easy. Marketing is all about trying to decipher the mangled mess of living just long enough to shoehorn in a message that maybe, just maybe that will catch the right person at the right time. And that mangled mess is just getting messier.

Personally, the thing that attracted me to marketing was its messiness. I love organic, gritty problems with no clear-cut solutions. Scientists call these ill-defined problems. And that’s why marketing is hard. It’s an ill-defined problem. It defies programmatic solutions. You can’t write an algorithm that will spit out perfect marketing. You can attack little slivers of marketing that lend themselves to clearer solutions, which is why you have the current explosion of ad-tech tools. But the challenge is trying to bring all these solutions together into some type of cohesive package that actually helps you relate to a living, breathing human.

One of the things that has always amazed me is how blissfully ignorant most marketers are about concepts that I think should be fundamental to understanding customer behaviors: things like bounded rationality, cognitive biases, decision theory and sense-making. Mention any of these things in a conference room full of marketers and watch eyes glaze over as fingers nervously thumb through the conference program, looking for any session that has “Top Ten” or “Surefire” in it’s title.

Take Information Foraging Theory, for instance. Anytime I speak about a topic that touches on how humans find information (which is almost always), I ask my audience of marketers if they’ve ever heard of I.F.T. Generally, not one hand goes up. Sometimes I think Jakob Nielsen and I are the only two people in the world that recognize I.F.T. for what it is: “the most important concept to emerge from Human-Computer Interaction research since 1993.” (Jakob’s words). If you take the time to understand this one concept I promise it will fundamentally and forever change how you look at web design, search marketing, creative and ad placement. Web marketers should be building a shrine to Peter Pirolli and Stuart Card. Their names should be on the tips of every marketer’s tongue. But I venture to guess that most of you reading this column never heard of them until today.

None of these fundamental concepts about human behavior are easy to grasp. Like all great ideas, they are simple to state but difficult to understand. They cover a lot of territory – much of it ill defined. I’ve spent most of my professional life trying to spread awareness of things like Information Foraging Theory. Can I always predict human behavior? Not by a long shot. But I hope that by taking the time to learn more about the classic theories of how we humans tick, I have also learned a little more about marketing. It’s not easy. It’s not perfect. It’s a lot like being human. But I’ve always believed that to be an effective marketer, you first need to understand humans.

How Activation Works in an Absolute Value Market

As I covered last week, if I mention a brand to you – like Nike, for instance – your brain immediately pulls back your own interpretation of the brand. What has happened, in a split second, is that the activation of that one node – let’s call it the Nike node – triggers the activation of several related nodes in your brain, which is quickly assembled into a representation of the brand Nike. This is called Spreading Activation.

This activation is all internal. It’s where most of the efforts of advertising have been focused over the past several decades. Advertising’s job has been to build a positive network of associations so when that prime happens, you have a positive feeling towards the brand. Advertising has been focused on winning territory in this mental landscape.

Up to now, we have been restricted to this internal landscape when making consumer decisions by the boundaries of our own rationality. Access to reliable and objective information about possible purchases was limited. It required more effort on our part than we were willing to expend. So, for the vast majority of purchases, these internal representations were enough for us. They acted as a proxy for information that lay beyond our grasp.

But the world has changed. For almost any purchase category you can think of, there exists reliable, objective information that is easy to access and filter. We no longer are restricted to internal brand activations (relative values based on our own past experiences and beliefs). Now, with a few quick searches, we can access objective information, often based on the experiences of others. In their book of the same name, Itimar Simonson and Emanuel Rosen call these sources “Absolute Value.” For more and more purchases, we turn to external sources because we can. The effort invested is more than compensated for the value returned. In the process, the value of traditional branding is being eroded. This is truer for some product categories than others. The higher the risk or the level of interest, the more the prospect will engage in an external activation. But across all product categories, there has been a significant shift from the internal to the external.

What this means for advertising is that we have to shift our focus from internal spreading activations to external spreading activations. Now, when we retrieve an internal representation of a product or brand, it typically acts as a starting point, not the end point. That starting point is then to be modified or discarded completely depending on the external information we access. The first activated node is our own initial concept of the product, but the subsequent nodes are spread throughout the digitized information landscape.

In an internal spreading activation, the nodes activated and the connections between those nodes are all conducted at a subconscious level. It’s beyond our control. But an external spreading activation is a different beast. It’s a deliberate information search conducted by the prospect. That means that the nodes accessed and the connections between those nodes becomes of critical importance. Advertisers have to understand what those external activation maps look like. They have to be intimately aware of the information nodes accessed and the connections used to get to those nodes. They also have to be familiar with the prospect’s information consumption preferences. At first glance, this seems to be an impossibly complex landscape to navigate. But in practice, we all tend to follow remarkable similar paths when establishing our external activation networks. Search is often the first connector we use. The nodes accessed and the information within those nodes follow predictable patterns for most product categories.

For the advertiser, it comes down to a question of where to most profitably invest your efforts. Traditional advertising was built on the foundation of controlling the internal activation. This was the psychology behind classic treatises such as Ries and Trout’s “Positioning, The Battle for Your Mind.” And, in most cases, that battle was won by whomever could assemble the best collection of smoke and mirrors. Advertising messaging had very little to do with facts and everything to do with persuasion.

But as Simonsen and Rosen point out, the relative position of a brand in a prospect’s mind is becoming less and less relevant to the eventual purchase decision. Many purchases are now determined by what happens in the external activation. Factual, reliable information and easy access to that information becomes critical. Smoke and mirrors are relegated to advertising “noise” in this scenario. The marketer with a deep understanding of how the prospect searches for and determines what the “truth” is about a potential product will be the one who wins. And traditional marketing is becoming less and less important to that prospect.

 

The Spreading Activation Model of Marketing

“Beatle.”

I have just primed you. Before you even finished reading the word above, you had things popping into your mind. Perhaps it was a mental image of an individual Beatle – either John, Paul, George or Ringo. Perhaps it was a snippet of song. Perhaps it was grainy black and white footage of the Ed Sullivan show appearance. But as the concept “Beatle” entered your working memory, your brain was hard at work retrieving what you believed were relevant concepts from your long-term memory. (By the way, if your reaction was “What’s a Beatle?” – substitute “Imagine Dragons.”)

1-brain-neural-network-pasiekaThat’s a working example of spreading activation. The activation of your working memory pulls associated concepts from your long-term memory to create a mental construct that creates your internal definition of whatever that first label was.

Now, an important second step may or may not happen. First, you have to decide how long you’re going to let the “Beatle” prime occupy your working memory. If it’s of fleeting interest, you’ve probably already wiped the slate clear, ready for the next thing that catches your interest. But if that prime is strong enough to establish a firm grip on your attention, then you have a choice to make. Is your internal representation complete, or do you require more information? If you require more information then you have to turn to external sources for that information.

Believe it or not, this column is not intended as a 101 primer in Cognitive Psych. But the mental gymnastics I describe are important when we think about marketing, as we go through exactly the same process when we think about potential purchases. If we can understand that process better, we gain some valuable hints about how to more effectively market in an exceedingly fluid technological environment.

Much of advertising is built on the first half of the process – building associative brand concepts and triggering the prime that retrieves those concepts into working memory. Most of what isn’t working about advertising lies on this side of the cognitive map. We’ve been overly focused on the internal activation, at the expense of the external. But thanks to an explosion of available (and objective) information we’re less reliant on using our internal knowledge when making purchase decisions. Itamar Simonson and Emanuel Rosen explain in their book “Absolute Value”: “A person’s decision to buy is affected by a mix of three related sources: The individual’s Prior preferences, beliefs, and experiences (P) Others. Other people and information services (O) and Marketers (M).”

Simonson and Rosen say that with near perfect information available for the consumer, we now rely more on (O) and less on (P) and (M). Let’s leave (M) and (O) aside for the moment and focus on the (P) in this equation. (P) represents our internal spreading activation. After we’re primed, we retrieve a representation of the product or service we’re thinking of. At this point, we make an internal calculation. We balance how confident we are that our internal representation is adequate to make a purchase against how much effort we have to expend to gather further information. This calculation is largely made subconsciously. It follows Herbert Simon’s principle of Bounded Rationality. It also depends on how much risk is involved in the purchase we’re contemplating. If all the factors dictate that we’re reasonably confident in our internal representation and the risk we’re assuming, we’ll pull out our wallets and buy. If, however, we aren’t confident, we’ll start seeking more information. And that’s where (O) and (M) come in.

Simonson and Rosen lay out a purchase behaviour continuum, from (O) Dependent to (O) Independent. It’s at the (O) Dependent end, where internal confidence in retrieved beliefs and experience is low, that buying behaviors are changing dramatically. And it’s there where conventional approaches to advertising are falling far short of the mark. They are still stuck in the mythical times of Mad Men, where marketers relied on a “Prime, Retrieve (Internal beliefs), Purchase” path. Today, it’s much more likely that the Prime and Retrieve stages will be followed by an external spreading activation. We’ll pick up that thread in next week’s Online Spin.

 

Are We Guilty of “Numbed” Marketing?

BombsightA few years ago, I was moderating a panel on mobile advertising. The room was full of marketers. After much discussion about targeting and the ability to track consumers both geographically and behaviorally, one audience member lamented, “Why don’t the carriers just share the subscriber information? They know who they are. They know addresses, family status, credit history, demographics – they have all that information. Then we could really pinpoint our market.”

I had to jump in. I asked this room full of marketers to indicate who would like to have access to that information by raising their hand. The entire room answered in the affirmative. Then I added a twist…

“Okay. Everyone in this room has a mobile phone. Who, as subscribers, would want your carrier sharing that information with anyone who wanted to target you? Keep your hands up.”

Hands wavered. You could almost hear the switch clicking in their brains. Every hand slowly went down.

That story came to mind last week when I read the following passage in a book by Arthur J. Dyck called “Rethinking Rights and Responsibilities: The Moral Bonds of Community,”

“In his study, (Robert Jay) Lifton takes note of a phenomenon he calls “numbed warfare,” a mode of combat in which participants have psychological contacts only with their military cohorts and their own equipment…. Lifton describes research that found a striking correlation between altitude and potential for guilt:

‘B-52 pilots and crews bombing at high altitudes saw nothing of their victims and spoke exclusively of professional skill and performance…’

Lifton calls these B-52 pilots “numbed warriors.” What have been numbed are their empathic emotions: ‘lacking emotional relations with his victims, the numbed warrior receives from them very little of the kind of feedback that could permit at least one layer of his mind to perceive them as human.’”

That may seem like a horrific parallel to draw with marketing, but the similarities are striking. One of the ways warriors have always desensitized themselves is by thinking of the enemy in non-human terms, either as a faceless, monolithic group, or by assigning a dehumanizing (and usually derogatory) label to them. We marketers have been doing this for years. What is more dehumanizing than taking a thinking, feeling person and calling them a “consumer?” Someone once described consumers as “mindless wallets eating shit and crapping cash.”

Warriors have to clearly delineate the concepts of “us” and “them” in order to do what they have to do. But as my room full of marketers realized, when it comes to marketing – “them” is “us.” In a recent PEW study, 80% of social network users were worried that their data would be accessed by advertisers. That means 4 out of 5 people don’t trust you, Ms. or Mr. Marker. They’d rather you didn’t know who they were. If you knocked on their door, they wouldn’t answer. Maybe it’s because you keep calling them a consumer or a target market. I’m also betting that if you were asked that question, you’d answer the same way. Because even though you’re a marketer, you don’t trust other marketers.

In a recent interview, I was asked what one piece of advice I would pass on to other marketers. I said, “Be an empathic marketer.” Or, in plainer terms, don’t numb yourself to your market. I’m not alone in saying we can be better. Fellow Spinner Cory Treffileti talked about the importance of emotion in ad messages. And Katie Meier recently asked the question, “What if data wasn’t about numbers, but instead we made it about the people the numbers represent?”

Technology has put us at a crossroads. We could use it to further distance and dehumanize our market, turning real people into digital data points. We could become “high-altitude” marketers, never coming face to face with the humans we’re trying to connect with.

Or, we could use it to create, as my friend Scott Brinker likes to say, “markets of one.” But before we do that, we have to make them want to listen to us. They have to answer their door if we knock. And that will take some work. We have to start treating them the way we want to be treated, when we’re not wearing our “marketing” hats.

The Metaphysical Corporation and The Death of Capitalism?

Something strange is happening to companies. More and more, their business is being conducted in non-physical markets. Businesses used to produce stuff. Now, they produce ideas. A recent op-ed piece from Wharton speculated that companies are working their way up Maslow’s Hierarchy. The traditional business produced things that met the needs of the lowest levels of the pyramid – shelter, food, warmth, security. As consumerism spread, companies worked their way up to next levels: entertainment, attainment and enjoyment.  Now, the things that companies sell sit at the top of the pyramid – fulfillment, creativity, self-actualization.

ComponentsSP500_2010The post also talks about another significant shift that’s happening on the balance sheets of Corporate America. Not only are the things that corporations sell changing, but the things that make up the value of the company itself are also changing.  According to research by Ocean Tomo, a merchant bank that specializes in intellectual property, the asset mix of companies has shifted dramatically in the past 40 years. In 1975, tangible assets (buildings, land, equipment, inventory) made up 83% of the market value of the S&P 500 companies. By 2010, that had flipped – Intangible assets (patents, trademarks, goodwill and brand) made up 80% of the market value of the S & P 500.

Chains vs Networks and the Removal of Friction

Barry Libert, Jerry Wind and Megan Beck Finley, the authors of the Wharton piece, focus mainly on the financial aspects of this shift. They point out that general accounting principles (GAAP) are quickly falling behind this corporate evolution. For example, employees are still classified as an expense, rather than an asset. I’m personally more interested in what this shift means for the very structure of a corporation.

If you built stuff, you needed a supply chain. Vertical integration was the way to remove physical transactional friction from the manufacturing process. Vertical integration bred hierarchal management styles. Over time, technology would remove some of the friction and some parts of the chain may evolve into open markets. The automotive industry is a good example. Many of the components of your 2015 Fusion are supplied to Ford by independent vendors. Despite this, makers of “stuff” still want to control the entire chain through centralized management.

But if you sell ideas, you need to have a network. Intangible products don’t have any physical friction, so supply chains are not required. And if you try to control a network with a centralized hierarchy, branches of your network soon wither and die.

The New Real Thing

coca-cola-freestyle-machineCoke has not been a maker of stuff for quite some time now. Sure, they make beverages, so technically they’re quenching our thirst, but the true value of Coke lies in its brand and our connection to that brand. The “Real Thing” is, ironically and quite literally, a figment of our imagination. If you were to place Coke on Maslow’s Hierarchy – it wouldn’t sit on the bottom level (physiological) but on the third (Love/Belonging) or even the fourth (Esteem).

Coke is very aware of its personal connection with it’s customers and the intangibles that come with it. That’s why the Coca-Cola Freestyle Vending Machine comes with the marketing tag line: “So many options. Thirst isn’t one of them.” You can customize your own formulation from over 100 choices, and if you have the Freestyle app, you can reorder your brand at any Coke Freestyle machine in the world. Of course, Coke is quietly gathering all this customer data that’s generated, including consumption patterns and regional preferences. Again, this intimate customer insight is just one of the intangibles that is becoming increasing valuable.

Coke is not only changing how it distributes its product. It’s also grappling with changing its very structure. In a recent conversation I had with CMO Joe Tripodi, he talked a lot about Coke’s move towards becoming a networked corporation. Essentially, Coke wants to make sure that worldwide innovation isn’t choked off by commands coming from Atlanta.

The Turning Point of Capitalism

As corporate America moves away from the making of physical stuff and towards the creation of concepts that it shares with customers, what does that mean for capital markets? If you believe Jeremy Rifkin, in his new book The Zero Marginal Cost Society, he contends that capitalism is dying a slow death. Eventually, it will be replaced by a new collaborative common market made possible by the increasing shrinkage of marginal costs. As we move from the physical to the metaphysical, the cost of producing consumable services or digital concept-based products (books, music, video, software) drops dramatically. Capital was required to overcome physical transactional friction. If that friction disappears, so does the need for capital.   Rifkin doesn’t believe the death of capitalism will be any time soon, but he does see an inevitable trend towards a new type of market he calls the Collaborative Commons.

Get Intimate

My last takeaway is this – if future business depends on connecting with customers and their conceptual needs, it becomes essential to know those customers on a deeply intimate level.  Throw away any preconceptions from the days of mass marketing and start thinking about how to connect with the “Market of One.”

A Prospect Ignored isn’t Really a Prospect

asleep at work / schoolI’ve ranted about this before and – oh yes – I shall rant again!

But first – the back-story.

I needed some work done at a property I own. I found three contractors online and reached out to each of them to get a quote.

Cue crickets.

No response. Nothing! So a few days later I politely followed up with each to prod the process along. Again, nothing. Finally, after 4 weeks of repeated e-nagging, one finally coughed up a quote. Most of the details were wrong, but at least someone at the other end was responding with minimal signs of consciousness.

Fast-forward 2 months. The work is still not done. At this point, I’m still trying to convey the specifics of the job and to get an estimated timeline. If I had an option, I’d take it. But the sad fact is, as spotty as the communication is with my contractor of choice, it’s still better than his competitors. One never did respond, even after a number of emails and voicemails. One finally sent a quote, but it was obvious he didn’t want the work. Fair enough. If the laws of supply and demand are imbalanced this much in their favor, who am I to fight it?

But here’s the thing. Market balances can change on a dime. Someday I’ll be in the driver’s seat and they’ll be scrambling to line up work to stay in business. And when they reach out to their contact list, a lot of those contacts will respond with an incredulous WTF. If you didn’t want my business when I needed you, why would you think I would give you it when you need me? A prospect spurned has a long memory for the specifics of said spurning. So, Mr. (or Ms.) Contractor, you can go take a flying leap.

If you’re going to use online channels to build your business, don’t treat it like a tap you can turn on and off at your discretion. Your online prospects have to be nurtured. If you can’t take any new business on, that’s fine. But at least have enough respect for them to send a polite response explaining the reason you can’t do the work. As long as we prospects are treated with respect, you’d be amazed at how reasonable we can be. Perhaps we can schedule the job for when you do have time. At the very least, we won’t walk away from the interaction with a bitter taste that will linger for years to come.

In 2005, Benchmark Portal did a study to compare response rates for email requests. The results were discouraging. Over 50% of SMB’s never responded at all. Only a small fraction actually managed to respond within 24 hours of the request.

I would encourage you to do a little surreptitious checking on your own response rates. Prospects contacting you need your help, and none of us like to hear our pleas for help go unanswered. 24 hours may seem like a reasonable time frame to you, but if you’re on the other end, it’s more than enough time to see your enthusiasm cool dramatically. Make it someone’s job to field online requests and set a 4-hour response time limit. I’m not talking about an auto-generated generic email here. I’m talking about a personalized response that makes it clear that someone has taken the time to read your request and is working on it. Also give a clear indication of how long it will take to follow up with the required information.

Why are these initial responses so critical? It’s not just to keep your field of potential prospects green and growing. It’s also because we prospects are using something called “signaling” to judge future interactions with a business. When we reach out to a new business we find online, we have no idea what it will be like to be their customer. We don’t have access to that information. So, we use things we do know as a proxy for that information. These things provide “signals” to help us fill in the blanks in our available information. An example would be hiring new employees. We don’t know how the person we’re interviewing will perform as an employee, so we look for certain things in a resume or an interview to act as signals that would indicate that the candidate will perform well on the job if hired.

If I’m a prospect looking for a business – especially one providing a service that will require an extended relationship between the business and myself – I need signals to show me how reliable the business will be if I chose them. Will they get the work done in a timely manner? Will the quality of the work be acceptable? Will they be responsive and accommodating to my requirements? If problems arise, will they be willing to work through those problems? Those are all questions I don’t have the answer to. All I have are indications based on my current interactions with the business. And if those interactions have required my constant nagging and clarification to avoid incorrect responses, guess what my level of confidence might be with said business?

The Apple Watch – More Than Just a Pretty Face

wpid-iwatch-goldI just caught Tim Cook’s live streaming introduction of the Apple Watch (I guess they’ve given up the long running “i” naming theme). What struck me most is how arduously Apple has stuck with traditional touch points in introducing a totally new product category (well, new for Apple anyway).

If you glanced quickly across the room at someone wearing Apple’s new wonder, you probably wouldn’t even know they’re wearing technology. The Apple Watch looks a lot like an analog watch. There is even a Mickey Mouse face you can choose. The interchangeable bracelets smack of tradition. Jon Ive verified this point in the video that ran at the introduction, saying they borrowed heavily from the “watchmaker’s vocabulary” in the design process. They even consulted “horological experts from around the world” to provide a time keeping experience rooted in cultural nuance. The primary interface to the watch is a modified version of the very old fashioned watch-winding crown.

Now, appearances can be deceiving. As Cook, Ive and Kevin Lynch put the watch through its paces, it was clear that this is an impressive little piece of technology. Particular attention has been paid to making this an intimate device, with new advances in touch technology, biometric and motion sensors and the ability to personalize interfaces and hardware to make it uniquely yours. Watching, I couldn’t help but compare this to Google’s introduction of Google Glass. In many ways, Glass is the more revolutionary device. But the Apple Watch will have a much faster adoption path.

Google impresses first with sheer brute-force technological effort. Design is an afterthought. Google uses UI testing and design to try to corral a Pandora’s box full of raw innovation into a usable package. Apple takes a much different approach. They look first at the user experience and then they pick and choose the technologies required to deliver the intended experience. They lavish ridiculous amounts of time on seemingly miniscule design details but the end result is typically nothing less than breathtaking. We’re impressed with the technology, sure, but the overriding emotion is one of lust. We just have to have what ever the hell it is that is being introduced on the main stage of the Flint Center.

larrygiseleDespite the many who have said otherwise, including the late Steve Jobs, Apple has never really made a revolutionary device. Others have always been there first. What they have done, however, is taken raw innovation and packaged it in a way that resonates with its audience at a deep and hormonal level. Apple products are stylish and sexy – the Gisele Bündchen of technology – yet attainable to mere mortals. They take the “next big thing” and push them past the tipping point by kindling lust in the hearts and wallets of the market. Google products, despite their geeky technical prowess, have a nasty habit of getting stuck on the wrong side of the adoption curve. They are the – well, let’s face it – they are the Larry Page of technology – smart, but considerably less sexy.

Apple times entrance to the adoption curve to near perfection. They have a knack of positioning just ahead of the masses. Google’s target is much further down the road. They release betas well ahead of any market demand. That’s why most of us can’t wait to wear an Apple Watch, but wouldn’t be caught dead in a pair of Google Glass.

One last thought on this week’s introduction of the Apple Watch. Wearable technology is following an interesting path. Your smartphone now acts as a connected main base for more intimate pieces of tech like the Apple Watch or Google Glass. Increasingly, the actual user interfaces will be on these types of devices, but the heavy lifting will happen on a smart phone tucked into a pocket, purse or backpack. Expect specific purpose devices to proliferate, all connected to increasingly powerful MPUs (Mobile Processing Units) that will orchestrate the symphony of tech that you’re wearing.