Category Archives: Corporate Strategy

Brand Live and Die Face to Face

iStock_000004520845XSmallThe more I dig, the more I’m convinced that a big part of a brand’s success is the quality of its customer touch points, specifically, the face to face ones. Consider this overwhelming evidence:

The more emotion there is in an experience, the more vividly we remember it. It’s known as imprinting. So if we have very positive or very negative experiences, we remember them longer and more completely. Let’s say we visit a restaurant. If we have a terrible experience, we’ll remember it forever. If it was an amazing experience, again, we’ll remember it forever. If it’s mediocre and falls in the middle, it will tend to fade away.

Our memories are altered by the context in which we remember them. Let’s go back to our restaurant example. Whatever our experience, we will tend to alter it if we’re talking to a person who also had an experience with the same restaurant. If they had a great experience, but ours was negative, we’ll tend to alter our memory to make it more positive. Alternatively, if we had a positive experience, but someone else’s was terrible, suddenly we’ll alter our memory to make it less positive. This doesn’t tend to swing memories all the way from good to bad, but it alters and reshapes memories to better fit the context of recall. And over time, it can erode a once very good memory, or build up a rather negative one. Memory is not an accurate snapshot of an event, it’s a malleable story. So consistency of experience is important.

We get a much richer channel of communication when we’re face to face with a person. Studies have shown that receive only 7% of our communication from the words that are used. The other 93% is a combination of body language and tone of voice. So no matter how carefully you script your frontline customer encounters, the success will depend on the person delivering the message. We have very finely attuned credibility detectors.

The quality of the face to face interaction is the biggest factor in how satisfied we are in a product experience. Malcolm Gladwell used the example of doctors being sued for malpractice.

“Believe it or not, the risk of being sued for malpractice has very little to do with how many mistakes a doctor makes…. Patients don’t file lawsuits because they’ve been harmed by shoddy medical care. Patients file lawsuits because they’ve been harmed by shoddy medical care and something else happens to them.

“What is that something else? It’s how they were treated, on a personal level, by their doctor. What comes up again and again in malpractice cases is that patients say they were rushed or ignored or treated poorly. ‘People just don’t sue doctors they like,’ is how Alice Burkin, a leading medical malpractice lawyer, puts it. ‘In all the years I’ve been in business, I’ve never had a potential client walk in and say, “I really like this doctor, and I feel terrible about doing it, but I want to sue him.”

Medical researcher Wendy Levinson found that doctors that weren’t sued spent 3 minutes more with patients than those that were (18.3 minutes versus 15). But it wasn’t just time, it was the quality of time. More simply, it was the tone of the doctor’s voice. Recordings of interactions with doctors were recorded and then were played back for study participants, who then put the doctors into two groups, those that would be sued and those that wouldn’t be. The recordings were altered so participants couldn’t hear what was said, all they could judge was the tone of the voice. And even with this, they were able to judge with amazing accuracy which doctors would be sued. It wasn’t what was said, it was how it was said.

When you look at corporate examples, the power of person to person connections are clear in cases like JetBlue and Saturn. In both cases, the extraordinarily high level of customer satisfaction was due primarily to the quality of the face to face encounters. JD Powers rated the Saturn among the highest vehicles in terms of satisfaction not because it was a better car. It was because their dealer network didn’t follow the typical industry model, which was more like a school of piranhas. JetBlue’s employees had a mandate: make flying coach suck less.

Why is this important to remember? Because of the coming workforce crisis. The baby boom is shifting the majority of our workforce to the end of their working lives, and there’s a severe shortage at the entry level, typically the recruitment bed for service based businesses. This means good people are going to get tougher and tougher to find.

Also, there’s a move to cut costs by streamlining and outsourcing those vital customer touch points. Self serve customer service models are becoming more common, and in many cases, they’re backed up by a customer help line that’s been outsourced to an overseas call center. The call center has been provided the appropriate scripts, and, in most cases, adequate training on how to field a complaint. But, as we’ve seen, that’s really only 7% of the problem. The other 93% is connecting with a person who really cares about your problem and is trying to help you. That’s something you can’t script.

Let me give you an example. My wife and I recently flew to Lisbon on British Airways. We had to connect through Heathrow. I booked my flight directly through BA, but my wife flew on points, so that flight was booked through a partner airline. Both flights had less than an hour layover in Heathrow, and we had to change terminals. I didn’t really notice this at the time of booking, but soon, my partner airline notified us that they had moved my wife back to a later flight to allow her to make the connection. As anyone who has connected through Heathrow will tell you, the odds of making a connection with less than one hour is slim to nil.

I called British Airways to get my flight pushed back and was connected to what was obviously an overseas call center. The person on the other end, if they were considering a medical career, would be a sure bet to be nailed with a malpractice suit. The manner was brusque and indifferent. He informed me that they could change the flight, but there would be a $200 change fee, about 1/3 of the total cost of the flight. Plus, I would have to pay any difference in fares. I tried to explain to the person that the layover time wasn’t adequate and that BA screwed up with the initial booking, but to no avail. Finally, I hung up in frustration, to allow myself to cool down a little.

I resigned myself to the fact that I was going to have to cough up the extra $200, and phoned back a week later to make the change. This time, I got a much friendlier person who looked up my reservation and informed me that my flight had automatically been pushed back because an hour wasn’t an adequate connection time. I asked when this had happened and what had triggered the change. They said it was a flag that was automatically put up in the system so many days prior to a flight and had nothing to do with my previous call. It was the system correcting itself.

Everything worked out okay with BA, and the flight was actually one of the best transatlantic flights I had. But the poor quality of one encounter left an overall negative impression rather than a positive one. And, as reinforcement of it, when I was talking to a friend who had recently flown to Spain on British Airways, they had had exactly the same problem. Our respective memory retrievals quickly turned into a BA-bashing spree.

Realize the importance of person to person, and if you have to short cut anywhere, don’t short cut here. It’s the most important part of your business.

Why We Have to Keep Doing Market Research

Following up on my previous post about the problems with most market research, here’s a plea why we should keep trying to get it right.

At the recent London SMX show, I presented on the Ad Testing and Research panel. Like other times I’ve done this panel (this is probably the 3rd or 4th time) I hear about skillful practitioners employing various A/B and multivariate testing methodologies. Ad testing is a definite must do, but before my presentation, which came at the end of the session, I took a few minutes to provide an alternative point of view.

I asked the small crowd how many of them were doing regular campaign management, checking click through rates, conversion rates and optimizing their campaigns based on what they saw. Almost everyone put up their hand. Then I asked how many did A/B testing. This time, a little more than half put up their hands. Next, I asked how many were doing multivariate testing. This time, about one third of the crowd. Finally, I asked how many had actually sat, watched a customer interact with their site and then asked them questions. We dropped down to about 10% of the group, and most of these were in a fairly structured usability test, with limited or no opportunity for interaction with the user.

Now, campaign optimization, A/B and multivariate testing are all best practices and should be done religiously. But I urged the marketers in the room to step back from their data heavy, spreadsheet  bound view of the world and pick up a book on cognitive psychology, social science or simple usability. Better yet, spend some time just watching how real people interact with your site. Try, for a moment, to look at the world through your customer’s eyes.

The problem with the typical, quantitative methods are that they’re all lagging indicators. You don’t get an idea of what’s happening until after customers have interacted with your ads and your site. You generally get a good sense of what they did, but it’s very difficult to determine why they did it. To do that, you have to dig beyond the numbers. You have to try to get into that subconscious mind. And that’s not easy. Typical market research methodologies won’t cut it. To get some idea of what’s required, read Clotaire Rapaille’s The Culture Code, or Gerald Zaltman’s How Customer’s Think. Do some digging into the work of Herbert Simon.  It takes a deft combination of psychiatric know how and detective skills. But here’s why it’s worth it.

For the past Century, we’ve largely refined our marketing practices based on trial and error. Pretty much everything has been done through seeing what’s worked, changing something, and seeing if it worked better. That’s been okay, as long as the channels we used to reach customer’s were relatively limited. With limited channels and a certain amount of control inherent in the process, we could do this. But those days are over.

Now, rather than a few controlled channels that run pretty much straight from the advertiser to the customer, we have an explosion of information that turns the typical buying process into a Gordian knot of unbelievable complexity. We can’t control the variables anymore. When there are so many channels, so many interdependent factors and so much of it affects customers below the conscious level, trial and error is just not an effective testing methodology anymore. In fact, it was never an effective methodology, for all the reasons I stated in my previous post. It’s just the best we had.

Let me use another example. The way we did marketing was pretty much like jumping in a car, randomly making decisions whether to turn right or left, keeping track of our success rate in getting nearer to our destination, and using this method to eventually pick the right route. This method might eventually work okay in a town of a few thousand people, but try doing that to navigate through New York or Los Angeles. We don’t have enough time in our lives to leave this much to chance. A map (or better yet, a GPS) is a much better alternative.

But we’re just starting to put that map together. And it won’t come from market research. Market research, at least in it’s current incarnation, is hopelessly flawed. It will come from diving deep into the workings of our brains. And once we begin putting the map together, it will allow us to begin to measure leading indicators. It will keep us from the trap of relying on self reported rationalizations and dig deeper into all the activity that’s happening below the conscious surface of our minds. That’s where the answers will be found.

Here’s another reason. Our brains are not only complex, but they’re also highly adaptive. As we do new mental activities more often, and abandon previous ones, new routes are established through the neurons and old ones become overgrown and eventually, unused neurons are cut away. It’s called “pruning” and “neuroplasticity”. It’s probably why you’re much better at using a search engine now than you are doing the geometry you learned in grade 9. We’ve worn new paths in our brain.

This is also true of how we’re buying. The way we buy now is bearing little resemblance to the way we bought in 1975. As time goes on and we rely on the Internet more and more, the paths that we used to use for our consumer decisions will become overgrown and we’ll clear new ones. This will happen not only at the conscious level, but also the sub conscious level. We will literally rewire how our brains decide what to buy. So the body of market research that has laboriously been gathered over the past several decades will become obsolete. And to discover those again through trial and error will be an long and potentially impossibly task.

So, a word of advice. Step back from the spread sheet now and again. Take a break from looking at “what” and start to explore “why”. Dig into things like the triune brain, selective perception, bounded rationality, working memory and some other basic cognitive concepts. It will be time well spent.

What’s Wrong with Market Research

sharingbrainWhen we first started doing research at Enquiro into how people used search, we found very quickly that what people say and what people do are very different things. It just happened that we were doing a survey and a focus group at roughly the same time. In the survey, where we got the results first, we asked if things like the position of a listing was important in whether people read it or not. We asked people to rank a number of factors on their relative importance, including position, relevancy and trust in brands and vendors shown. Almost without exception, in the survey, people indicated that relevancy was the key factor. They also indicated that they read listings pretty carefully and gave a fair amount of thought before selecting one. Finally, many said they would never click on a paid listing.

Then, we invited about 30 people into our labs and actually recorded their interactions with the search engines (before our eye tracking studies) and it quickly became obvious that how they said they used a search engine and how they actually did were two different things. The vast majority of clicks happened in the first few listings. Many who indicated they wouldn’t click on paid listings actually did, and perhaps, most interestingly, the average interaction was around 10 seconds or so. Subsequently, we’ve seen this type of behavior repeated in eye tracking after eye tracking study. Of course, the famous golden triangle study we did with Eyetools and Did It, and subsequent ones conducted by Enquiro, have shown over and over how quickly we interact with a search engine and how much of our scanning activity is “top loaded”. Also, we don’t really skip over sponsored listings, but in some circumstances (research based activity) we’re less likely to click on them. We’ve used this body of research to come up with a fairly consistent model of how people interact with search results. The results belie what people indicated in our very first survey. Well over 60% of the clicks happened in the first 4 or 5 listings, including the top sponsored ones. People generally spent just a few seconds on the page (around 10 to 12 seems to be the average) in which they scan (not read) 4 to 5 listings. There was almost no deliberation. People click quickly, and if they don’t like what they see, they click back. It would take the average person about 2 minutes to actually read all the results on the average search results page. Even if we just read the top 4 or 5, we’d be spending about 30 to 40 seconds on the page. It takes about 7 seconds to read one listing. But we don’t spend much longer than this covering 4 to 5 listings, about 2 seconds per listing. Obviously, we don’t give a lot of thought to the credibility of the search listings.

So, were all 1600 of our original survey respondents liars? Were they intentionally misleading us? No, they were just being human.

What we found was the systemic fault with almost all market research. And there’s a very good explanation for it. We’re generally not aware of 95% of what we do or why we do it. That’s because much or what we do is hidden in our subconscious. I’m currently reading How Customers Think by Gerald Zaltman and he pinpoints the problem with traditional market research. In almost every case, we ask people to tell us, either verbally or through writing, what they’re thinking. Just by doing this, we kick in the cortex, the rational seat of our intellect. But Zaltman tells us that at least 95% of every decision is made subconsciously. There, in the murky depths of our brains, predating the evolution of our cortex by many millions of years, thoughts are created through tremendously complex connections of memories, beliefs, instincts and intuition. In many cases, our decisions are made long before they bubble up to our conscious minds. The conscious mind exists to put a little polish on them and, in most cases, to rationalize a decision that was largely based on primal instincts. We may have done what we did because our flight or fight mechanism kicked in, or because our need to procreate surfaced. That’s why we chose the minivan, or the red convertible. It really had nothing to do with the Consumer Reports rating. But, being highly evolved humans, we convince ourselves that our choices are much more rational than those of a lizard (our basic brain core, which rules many of our decisions, is basically the same as a reptile’s brain).

In our case, our initial respondents indicated that they deliberated over which search result they chose. In actual fact, there was little risk in choosing a wrong link (it’s not like our lives, our family or our money is at stake), so we cut off the amount of deliberation we did and after a quick scan, picked the result that seemed to be most relevant to our intent. The lack of deliberation wasn’t lack of intelligence, it was a survival instinct bred into us by eons of evolutionary refinement. If there’s no immediate risk to us, why should we kick in our brains and spend unnecessary time and cortex processing power to come to the optimal decision. It’s not required. A simple scan and click will suffice. Our brains are simply doing what they’ve been programmed to do. And it’s not that the decisions are bad. As Malcolm Gladwell shows in Blink, often these decisions prove to be better than the ones that we endlessly deliberate over. Our brains, especially the 95% that remains under the surface, are amazingly adept at making good decisions.

But there’s a more fundamental issue here. If what we experienced in search is typical in all market research (which it is) how do we ever find out how people actually make purchase decisions?

This is a significant challenge, the extent of which might not be obvious at first glance. Let me use an analogy to further illustrate. Remember the tale of the shoemaker and the elves? Let me use that and adapt it slightly for my purposes. For those of you unfamiliar with the story, a poor shoemaker only has enough leather left for one pair of shoes. He cuts the leather and lays it out for stitching the next morning. He awakes, amazed to find the shoes made, and meticulously crafted at that. Elves apparently helped out during the night, soon to bring fame and fortune to the shoemaker.

But what if the elves didn’t exist. What if, instead, the shoemaker was actually making the shoes in his sleep? The idea is not so ridiculous. Rumor has it that Coleridge actually wrote Kubla Khan during a dream, and managed to scribble it down before it faded from his consciousness. As any psychiatrist will tell you, we’re closest to our subsconscious when we’re hovering between sleep and wakefulness. It’s about the only time we get a glimpse into those murky depths.

So let’s say our shoemaker actually makes the shoes in some bizarre bout of sleepwalking. He awakes every morning, to find the shoes nearly perfectly finished. All he needs to do is add the laces and a bit of polish. And the shoes are fair more carefully crafted then he could ever accomplish while awake.

The shoemaker really isn’t aware of where the shoes come from. In fact, as time goes on, and as he receives more and more recognition for the quality of his workmanship, he begins to believe that it’s solely due to the little bit of work he does while he’s awake, threading the laces and adding a little polish. He learns to ignore the 95% of the work that’s done while he’s asleep.

Now, imagine someone comes to ask him why his shoes are so exceptionally crafted. Would he admit the truth and say he doesn’t know? No, pride and genuine lack of knowledge would keep him from saying that. He has no idea what he does while he’s asleep. It’s almost as if someone else did the work for him. His conscious brain would kick in and come up with some perfectly rational but completely untrue explanation. Clotaire Rapaille, in his book The Culture Code, cites an example of this:

In a classic study, the nineteenth-century scientist Jean-Martin Charcot hypnotized a female patient, handed her an umbrella, and asked her to open it. After this, he slowly brought the woman out of her hypnotic state. When she came to, she was surprised by the object she held in her hand. Charcot then asked her why she was carrying an open umbrella indoors. The woman was utterly confused by the question. She of course had no idea of what she had been through and no memories of Charcot’s instructions. Baffled, she looked at the ceiling. Then she looked back at Charcot and said, “It was raining.”

This is what happens in almost every instance of market research. Our buying decisions are like the shoemaker’s shoes. They’re usually quite good, but we have little idea how they came into being.

For most of the history of marketing, we’ve been restrained by the limitations of market research. It’s only recently, through advancements in cognitive psychology and brain scanning technologies that we’re beginning to get a glimpse of what might actually be happening. My next post (tomorrow) why it’s important that we keep trying.

Edison Also Asked: “When Will People Get It?”

First published November 15, 2007 in Mediapost’s Search Insider

Over the past few weeks, my general theme has been “why don’t more people get it?” Why don’t agencies get search. Why don’t CEOs get search? Why don’t more search portals get that it’s the user that determines your success? Why don’t more people get that the world is changing, quickly? What’s with us, anyway?

Well, this week, I gained a little insight; thanks to a paper by Paul David called “The Dynamo and the Computer.” Maybe we just need some time. It’s not the first time this happened. Let me tell you the story of the light bulb.

Lighting Up the Industrial Age

Edison introduced the first practical incandescent light bulb in 1879. The first generating stations in New York and London started their dynamos spinning in 1881. Profound changes were to follow. Productivity was to grow by leaps and bounds.

Factories in the 1800’s were dark, noisy and not particularly pleasant places to spend a day.  At the center sat the steam engine: a huge, hungry and finicky behemoth, connected by an extended system of belts to the operating machinery of the factory. Even the early electrical engines were smaller, cleaner and much more efficient. Electric lighting made 24 hour shifts more practical. The benefits were obvious. Electricity was the ultimate “no-brainer.”

Still in the Dark

But by 1899, almost two decades after the introduction of the light bulb, only 3% of homes were “wired.” And the much-predicted impact on the North American industrial engine would have to wait until the 1920s to take hold. It took a half century for electricity to make much of a difference in America.

You see, technology tends to move fast, but people move slowly. It’s because transition tends to be dependent on many factors. It’s not like the flicking of (quite literally, in this case) a light switch. It’s more like waiting for a long series of dominos to fall into place, each drop contingent on the previous one.

In the case of electricity, significant money had been invested in steam power. You don’t just rip it all out and start over again, no matter how compelling the advantages might be. So factory owners waited for things to break down, and then retrofitted with new electric engines. But even this retrofitting had to wait for the supply of electrical engineers to catch up. In 1899, not many people knew how to design an electrical delivery system. The skill gap had to be eliminated. And this lack of expertise also showed up in less direct ways. America also had to wait for a new generation of factory architects to appear, who could design factories built to be powered by electricity. For every obvious benefit of electrification, there was a long series of factors that had to fall into place first. That’s why it took five decades to turn on the light.

History Repeating Itself

This technology adoption curve has been repeated over and over. The replacement of horsepower with steam power. And more recently, the information technology revolution. We can get as frustrated as we want with the snail’s pace reluctance of many to grasp the realities of the new world, but the fact is, we’re just being human.

Technology adoption usually follows a predictable path: introduction of technology, commercialization of technology, layering the technology onto what preceded it, and finally, throwing out the old completely and building from the ground up to embrace the technology. Each step depends on the step before it. And in every case, legacy investment slows the speed at which we move from one to the other.

If we look at the adoption of Internet technology and compare it to previous technology adoption curves, we’re just starting up the beginning of the long and steep part of the “S” curve. There’s no doubt we’ll get there, but it will take time.

Android and Pondering the Future from Portugal

AlgarveSagresThis afternoon, I saw what was, at one point, probably the most exciting and terrifying place in the world. Sagres is the southwest corner of Portugal. From this point, sailing west, you leave the Mediterranean and enter the vast expanse of the Atlantic. Beyond Sagres was no man’s land. Everything safe and familiar was behind you. New worlds of discovery and vast expanses of the unknown lay beyond. It was a powerful personal experience. Sitting on a rock overlooking the cliffs, looking at nothing but water, you discover something primal in yourself.

It was also metaphorical. We’re on the cusp of our own voyage. In our world, there’s a lot of unknown that lies ahead. For anyone that has pondered where we’re at, and what it might mean for us in the future, the possibilities are as exciting and frightening as they must have once appeared from the vantage point of Sagres.

It was somewhat fitting that the day I visited Sagres was the same day that Sergey Brin announced Google’s support of Android developers, to the tune of $10 million. No one doubts the potential of mobile. We all know that ubiquitous computing and access to the Internet will change everything. It will put the world in our hands.

And Google’s move into the space is interesting to think about as well. They’re betting on the power of community and open source to be the best way to reduce the friction so prevalent in the mobile space. Lack of standards, in fighting between telcos, convoluted politics between hardware manufacturers and service providers: Google is saying to hell with it, opening the door and letting things fall where they may. It’s a greenfield ripe for exploring, so the more the merrier! If our bets pay off (and in the grand scheme of things, $10 million is less than a pittance) there’s more than enough potential here for everyone. Forget control, let’s just get the ball rolling.

So, not to get all metaphorical on you, but if you compare it to the exploration of the new world, with many of those voyages rounding the point of Sagres, you’ll find a lot of similarity. Unlimited potential, a lot of unknowns, great odds that somebody’s going to get rich and, if you really think about it, scary as hell. But then, that could just be the Madeira talking.

Caution Will Kill You in the Search Game

First published November 8, 2007 in Mediapost’s Search Insider

A strange thing started happening to me in the last two years or so. As I became more vocal about my opinion, people started seeking it out more often. The more I shared it, the more people nodded their heads. And the more obnoxious I got about it, the more people jumped on my own little opinion bandwagon. It you look at comments to this column as an indicator of striking chords, it seems like I touch cords either when I’m being a total dickhead (increasingly frequent) or introspective and emotionally deep (a much rarer occurrence). But other than a “right-on” post or comment, and the vigorous nodding of heads, I’m not sure it will go much further than that. Inside, we all like to be smarter than our bosses and a little bit revolutionary. But on the surface, where we live and work, we go with the flow. I call it the Cluetrain Conundrum.

The Cluetrain Manifesto was posted in 1999, when the Internet was still new and bold and gritty. Much of the initial grass-roots appeal that tweaked the interest of Messrs. Locke, Weinberger and Searles has since been paved over to make room for commercial storefronts. At the time of publishing, as an in-your-face, spit-in-your-boss’s-coffee and laugh-all-the-way-to-the-corporate-bathroom call to action against the cluelessness of the command and control establishment, it attracted its own rush of “right-ons.”. In fact, since it went online, thousands have signed the Manifesto. It seemed like the world could change. But now, eight years later, we’re still waiting.

You see, it’s one thing to say you’re ready to change. It’s another to convince the rest of the people in all the cubicles in all the offices in all the world that you’re right. You know it, and the person in the next cubicle knows it, but the chowderheads in the X-0 suites seem intent on running the company off the cliff. Why? In a word, caution.

No, Really, Tell Me what You Think…

In the last few months, I’ve been asked for my opinion on how to improve certain search properties. I think the people asking me are hoping for an answer like this: “You see all these ads you’re trying to get people to click on? Well, all you have to do is move them here and put this colored box behind them, and people will sprain a finger trying to buy from your advertisers. It’s that simple!”

Of course, it’s not. It’s understanding all the things that the Cluetrain authors were trying to get across. It’s understanding that markets are conversations, that we’re sick of advertising, that we long for authenticity and transparency, and that we can sniff insincerity and BS a mile away. It’s saying that you have to worry about users first, build up truckloads of trust, and then figure out how to make money. And that’s just not likely to happen when you already have an existing search property.

The problem is that you’re already somewhat successful. There’s existing revenue and advertisers. Generally speaking, although attrition is higher than you’d like, most of the advertisers keep coming back. And as long as they’re doing that, management won’t be very motivated to change. Because the changes required are not simple fixes. They’re stripping things down to the foundations and rebuilding for the user. And that means a lot of money, and almost certainly lost revenue in the short term, against the remote possibility of long-term gain. That’s a ton of risk, and it’s not surprising that someone in the C-level executive wing is unwilling to stake their corporate reputations on this particular roll of the dice. There’s a lot better chance you’ll go down in flames than be crowned a hero.

The Illusion that You Have a Choice

But the irony here is that while it appears you have a choice, you really don’t. Because if you don’t take this chance, someone with a lot less to lose will. And eventually, that someone else will win. They’ll win, and you’ll lose, because Web traffic is a zero-sum game. Just ask every search engine who’s not Google. So while it appears there’s way too much to lose by reinventing your business model, it’s much, much riskier not to. Because as much as you think you’re in control of your business, you’re not. The users are, and you have them now by the simple virtue of there not being a better place to go — yet. In the Internet world, there will always be a better place to go, eventually. Either you build it or someone else will.

Last month, in a hotel lobby, I was having this conversation with somebody who had asked me my opinion. I basically told him what I’m telling you today and asked him if his company had the courage to do this. He wasn’t sure, and asked how important it was. I said it depends on the competition. He was a little reassured, because their competition is even more cautious. The reassurance was short-lived when I replied, “Ah, but that’s the competition you know about. Chances are, this is going to come completely out of the blue and you won’t know what hit you.”

I suspect people are going to stop asking my opinion.

Why Do We Keep Buying from Bad Businesses?

There’s an Italian grocery store in the town I live in. In fact, there are two. Most of our family, including my wife, shops at the one. They very seldom go to the other. Yet, I constantly hear how bad the service is at the store they frequent. I’ve heard hair raising stories (I’m not sure how true they are because I don’t personally shop there) of repackaging outdated products so the best before date didn’t show, rancid cheeses, repackaging produce so the rotten ones were out of sight at the bottom of the package and the owner cruising other grocery stores, buying outdated products from them and then selling them in his own store. And if you happen to take something back and complain, you’re immediately questioned as someone who is trying to scam the store. At best, the store takes a “you should know better, buyer beware” attitude. Now, it’s a generational thing as well. The owner ascribes to the “whatever it takes to get ahead” school of business, where his children, who are gradually getting more involved, seem to be a little less clueless about the importance of happy customers and are trying to change things.

But my wife keeps buying there. Why?

The competition doesn’t seem to have the same problems, or at least, not to the same extent. My wife never shops there. Again, I ask, why?

Well, according to my wife and the few other family members I asked, it comes down to three things. Convenience, price and some twisted sense of obligation to the family that runs the offending store. I suspect the last one has a lot to do with Italian culture, so may not be applicable in all circumstances. (Incidentally, they used to know the family that ran the other store but stopped patronizing it when they sold to store to owners they didn’t know).  But the other two, price and convenience, are, I suspect, more universal motivations.

I’ve seen it myself. I hate shopping at Walmart. Most people I know hate shopping at Walmart. It’s too big, too messy, too loud and the service generally sucks. But I shop there. Why? Because of price and convenience. It saves me a stop somewhere else, because it has a little of everything. And the prices are generally lower than the competition’s.

Seth Godin himself, the king of the Purple Cow and remarkable products, regularly blogs about bad experiences he’s had with businesses he’d rather not frequent. Bad airlines, bad theme parks, bad hotels. And I use Seth as an example purposefully. There’s probably no one on the planet more active in exposing bad business, but even he’s still giving them his money, and then bitching about it after. Why? I suspect convenience and price are the culprits.

Now, sometimes, there’s literally no alternative. One of the worst airline experiences I ever had was on United. Try as I might, I just couldn’t find another flight from Chicago to Toronto that got me there anywhere close to the times I needed, so I had to suck it up and fly United. And sure enough, United delivered the experience I was expecting. In fact, they exceeded my expectations, but not in a good way.

We keep crowing about the new control consumers wield. But with that control comes responsibility. We complain about bad advertising and bad businesses, but we continue to patronize them. We absolve ourselves of any blame for the twisted, greedy, profit crazed culture we’ve spawned over the past century. But it wouldn’t be this way if we simply stopped buying from bad businesses. Ultimately, we’re to blame. We might have to pony up 10% more on occasion, or go a little out of our way so we don’t have to worry about getting two rotten tomatoes at the bottom of the package or a bag of rancid pasta. One of the beautiful things about our free market economy is that if people stop buying, companies go out of business. If you’re bitching about a business, remember, it’s you that’s keeping them in business.

The JetBlue Brand Index and Putting Some Skin in the Branding Game

Amy_C_-_2_144_188_c1Amy Curtis McIntyre, the founding CMO of JetBlue, and a guest speaker at last week’s Google B to B Summit in New York, unveiled a new barometer to measure the appeal of your brand. I called it the JetBlue Index in the title of the post, but to give credit where credit is due, it should be called the Curtis-McIntyre Index. Basically, this is how it works:

“If people steal your shit, your brand is in good shape”

Amy was talking about some of the things they introduced through her time with JetBlue, like inflight yoga cards and other promotional materials, and how they had to keep ordering new ones because people kept stealing them. After getting a few complaints from other top execs, she said, “Let me get this right. We produce these things to get people’s attention. People like them so much they actually steal them. And you’re telling me this is a bad thing? Give me the damn phone. I’ll order as much of this shit as people can jam in their purse.” (I probably paraphrased, but I think I got the intent right).

Advertising is all about connecting your internal message with an external audience. If you do it well, it might catch some attention. If you do it extraordinarily well, people might talk about it. If you hit it out of the park, people actually want to keep it. JetBlue hit a home run. It means people felt so strongly about the brand and the message resonated so strongly with them, they had to take it. This is the ultimate challenge. Build a brand message that people use as an indentity badge. Give them something with your brand on it that people can hold up and say, “see, this is me. This is what I’m about.”

So, taking that to the next step, as part of the BrandSense Survey conducted by Martin Lindstrom and Millward Brown, they actually asked people the brand they were most likely to get tattooed on them. This is the ultimate alignment with brand, a permanent brand badge. It’s literally putting some skin in the game.

Here were the top “tattoo” brands

Tattoo Brands – Millward Brown Brand Sense Survey

Brand

Percent

Harley Davidson

18.9

Disney

14.8

Coca-Cola

7.7

Google

6.6

Pepsi

6.1

Rolex

5.6

Nike

4.6

Adidas

3.1

Absolut Vodka

2.6

Nintendo

1.5

Okay, Harley I can understand. Even Disney. But Google? I guess it just shows how important search is to our lives. But more importantly, each of these brands says something about the people that choose to become brand advocates. They’re like personality short hand. If I have a Harley tattoo, you probably know more about me just by knowing that. Likewise with Rolex or Absolut Vodka. Personally, I wouldn’t be going out of my way to spend quality time with any of these individuals, but at least they warned my by tattooing a sign saying “I’m a dickhead” where I can see it, saving me the trouble and time of finding out for myself.

I had a friend in college who used to say he could know everything he needed to know about a person just by knowing what their favorite Beatle was (he was a John Lennon himself). Much as we all like to think we’re complex and multi-dimensional, it’s surprising how such big parts of our personalities fall so easily into common “buckets”. The first time I did a Myers-Briggs test I was a little spooked out by the whole process.

So..I asked myself. Is there a brand I feel that strongly about? Not really, but then, I’m a very complex individual. I might need two tattoos.

A Cautionary Tale about Friedman’s Flat World

the_world_is_flatI’m just plowing my way through Thomas Friedman’s “The World is Flat”. The “plowing through” comment is no reflection on Mr. Friedman’s writing ability, just on the sheer heft of the book. It’s several hundred pages long. Friedman talks about several dirty little secrets that are holding America back from maintaining it’s lead position in the global market, amongst them an education gap and an ambition gap. I tend to agree. I think North America is becoming complacent and is falling victim to an overwhelming sense of entitlement. I’ve always believe we have a rude awakening coming, and all signs are pointing it being just around the corner. One only has to visit China or India to feel the sheer momentum, driven by ambition and capitalist desire, to be struck by the difference in intensity you feel there and here. The immigrant fueled work ethic that made our society the leader is barely an ember now. Up until recently, that drive was fueled by a flood of top level immigrants from China, Korea, and India, but increasingly, those candidates are choosing to stay home, thanks to the connectiveness of Friedman’s Flat World.

But we also have to realize that we do have some tremendous advantages still in North America, thanks to a highly developed and largely transparent market, relatively free from the friction of bureaucracy or corruption. It’s not perfect, but it’s much better than in some other markets. This point was made clear to us with our recent foray into China.

We won a contract to do an eye tracking study in China, but it meant taking our eye tracking equipment with us. Knowing this could cause undue interest on the part of a Chinese customer official, we did our due diligence and spent several minutes on the phone with our local Chinese consulate to make sure this wouldn’t be an issue. We were assured over and over again that this would be a simple case of taking equipment in and out of the country, just like taking a lap top. “No problem” we were told.

So, we sent off our researcher, who luckily is Chinese and who speaks the language, and anticipated no problems. This, of course, was naive on our part. Sure enough, the customs official in China took one look at the large case with the odd looking monitor inside and threw up a red flag. The monitor was impounded. Jess, our researcher, with the help of the client, quickly got a government clearance form with all the appropriate stamps in place indicating that “one eye tracker” was cleared for entry into China. Jess went back to the customs official with paper in hand. She actually had the case in her hands when the official wanted to take another look at the equipment. “Hold it”, he said, “that’s not an eye tracker, that’s a monitor.” Jess tried to explain that the monitor was an eye tracker. It was too no avail. Tears, long explanations, pointing out a brochure, it was all for naught. Once Communist bureacrats make up their mind, there’s precious little wiggle room.

So, the eye tracker is still impounded. The study if 4 days behind schedule. The client is frustrated. We’re frustrated. And it’s all because of a petty bureaucrat and a serpentine system that no one, certainly not a westerner, can figure out. The world may be flat, but that doesn’t make it any less convoluted and complex. In fact, the flattening just brings the ugly mess inside closer to the surface.

 

The Wisdom of Consumer Crowds?

Following up on the theme of the rewiring of our brains, is the internet making us smarter consumers as well? There certainly seems to be evidence pointing in that direction.

A study by ScanAlert  found that the average online shopper in 2005 took 19 hours between first visiting a store and completing a transaction. In 2007, that jumped almost 79% to 34 hours. We’re taking longer to make up our minds. And we’re also doing our homework. Deloitte’s Consumer Products group recently released research saying 62 percent of consumers read consumer written product reviews on the Internet, and of those, more than 8 in 10 are directly influenced by the reviews.

In James Surowiecki’s Wisdom of Crowds, he believes that large groups, thinking independently with access to a diversity of information, will always make a better collective decision than the smartest individual in the group. Isn’t the Internet wiring this wisdom into more and more purchases? When we access these online reviews, we’re in fact coming to collective decisions about a product, built on hundreds or thousands of individual experiences. As the network expands, we benefit from the diversity of all those opinions and probably get a much more accurate picture of the quality of a product than we ever could from vendor supplied information alone. The marketplace votes for their choice, and the best product should theoretically emerge as the winner.

Of course, nothing works perfectly all of the time. As Surowiecki points out, communication can be an inexact and imperfect process, and information cascades based on faulty inputs can spread faster than ever online. But it’s also true that if a cascade leads to rapid adoption of an inferior product, we’ll discover we’ve been “had” faster and this news can also spread quicker. The connections of online make for a much faster dissemination of information based on experience than ever before, ensuring that the self correcting mechanisms of the marketplace kick into gear faster.

There’s a pass along effect happening here as well. For social networking buffs, you’ve probably heard of Granovetter’s “Weak Ties”. Social networks are made up of dense, highly connected clusters, i.e. families, close friends, co-workers. The social ties within these clusters are strong ties. But spanning the clusters are “weak ties” between more distant acquaintances. The ability for word to spread depends on these weak ties. What the internet does is exponentially increase the number of weak ties, wiring thousands of clusters together into much bigger networks than were ever possible before. This allows word of mouth to travel not only in the physical world but also in the virtual. I looked at a fascinating follow up study to Granovetter’s where Jonathan Frenzen and Kent Nakamoto also looked at the value of the information and the self interest of the individual and their “strong ties” within a cluster as a factor in how quickly word of mouth passes through a network.

Deloitte’s study graphically illustrates the weak tie/strong tie effect. 7 out of 10 of the consumers who read reviews share them with friends, family or colleagues, moving the information that comes through the weak ties of the internet into each cluster, where it spreads rapidly thanks to the efficiency of strong ties. This effect pumps up the power of word of mouth by several orders of magnitude.

But are we also becoming more socially aware in our shopping? The research by Deloitte also seems to indicate this. 4 out of 10 consumers said they were swayed by “better for you” ingredients or components, eco-friendly usage and sourcing, and eco-friendly production or packaging. The internet wires us into communities, so it’s not surprising that we become more sensitive to the collective health of those communities in the process.

What all these leads to is a better informed consumer, who’s not reliant on marketing messaging coming from the manufacturer or the retailer. And that should make us all smarter.