I'll Show You Mine If You Show Me Yours

I was in on a rather odd meeting the other day. A client of mine was meeting with a social networking team to add this important element to his opening, prelaunch marketing mix. The client wanted to have the team put a specific plan together with likely activities, goals/outcomes, and cost so that he could manage the effort and measure success. A fair and intelligent request, or so I thought. After my client articulated his needs, a very strange thing happened. The service provider wouldn't agree to provide any specifics.

"Surely he simply doesn't understand my client's needs," I thought. So I jumped in to try and add some clarity. No dice. Instead, we heard how difficult it is to measure this stuff, and coming with a set of expectations was counterproductive. That this work was organic and lots of things would get tried along the way. "Ah!" I said. "What might some of those 'things' be?"

"Could be anything," he said.

"Instead," he suggested, "why don't you tell me what you want, and then I'll do that. Usually my clients bring me something they've seen that they like and then we make it happen," he said, confusing me further. After all, these guys are the team that specializes in social media.

"You know, ultimately you'll just have to trust us to do this." Uh-huh. And I've got this bridge in Brooklyn I'm trying to get rid of, you know, for tax reasons. I wasn't about to stop.

"So what's an example of something that a client has seen and brought to you for implementation?", I asked, employing my best Perry Mason logic. I was going to pin him down yet. I could tell by the look in his eye that he had run out of room to maneuver. "Okay, maybe something like giving a book away to one of the people who've "friended" your company on Facebook." Eureka!

Turns out that the whole "avoidance" dance was driven by two things. First, my client had not fully expressed how he was going to pay the service provider for his insight and implementation. How they'd managed to have a half-dozen meetings prior to this one without that question resolved, I don't know. But I blame the service provider - always get that stuff clear at the beginning. Always!

The second reason, I hypothesize, was that the service provider didn't want to let the client know what happened inside the "black box", for fear that the client would take the ideas and implement them himself. That is something I see all too commonly from consultants and advertising firms. They hold onto every scrap of knowledge and IP as if each bit was as valuable as the next. Here's my take on that: your client doesn't want to steal the idea and implement it themselves. Who has time? Sure, some will try to do it, there's always an exception. But in my experience, entrepreneurs and small business managers simply don't have the time to learn how to implement a good idea. They want to pay experts to make things happen (usually involving ringing cash registers!) not learn how to manage social media or write code for a cool Flash effect.

Secondly, by protecting even 'generic' ideas/content as if they were the crown jewels, you diminish the value of the really good stuff. You miss an opportunity to a) demonstrate your expertise to the client, b) get the client on board with your service, and c) strengthen your own personal brand. Not to mention coming off like you simply don't have any ideas or don't know what you're doing.

Sharing something of value - giving it away - is becoming an increasingly important competitive tool in today's marketing environment. Access to all kinds of knowledge for free via the web is the new norm. But like giving a man a physics textbook doesn't mean it's likely he can actually build a rocket, sharing a bit of something you know about your field doesn't mean your client will put you out of work, either. So wise up and identify the real value you bring to your customers. Protect that core and use the rest to build prospects, clients, and good will. And for goodness sake, make sure you know how you'll get paid upfront.

Brands in the Crosshairs: Pontiac

The loss of Pontiac, the iconic brand from General Motors is a terrible thing for the thousands of employees who'll see their paychecks disappear along with the stylized arrowhead logo. But from a brand perspective, it's the best possible move for GM - a company that long ago lost the capacity to effectively design/build/market so many different brands.

Alfred Sloan's brilliant strategy, to combine different brands under one roof, maximize synergies while meeting the needs for every conceivable market niche or category, has run its course. Pontiac for the sporty car enthusiast, Chevrolet for the working folks, Buick for those moving up, Cadillac for the truly upscale (and lately Saturn for those who'd rather own a Toyota). This brand management model helped the company to own over 50% market share - once.

But the drive for "synergy" led the company to use a very limited number of platforms and simply rebadge car models, add leather seats and call a Chevy a Buick or a Pontiac, or, gasp, a Cadillac. Simple-minded customers that we are, we eventually saw through the deception. We can't be fooled forever (Really, did some executive actually think that this strategy would be a good thing? That brands with whole different philosophical foundations could share models with no real differentiation. Really?)

The loss of Pontiac provides GM with a couple of opportunities. First, of course, it helps the company remain in business. Second, it can balance production to actual demand, and with fewer models, the company will be able to differentiate the remaining lineup better. Other benefits include reduction in the dealer force and saving millions on marketing the brand.

The lesson for the rest of us is simple. Don't phone it in. That's right, General Motors has absolutely been phoning it in for nearly forty years. If you're going to support a brand/product, then do it right from the ground up. Build your product to meet the needs of specific customers. Don't think that simple modifications to existing products shipped with a flashy new package will give you a pass into a new market segment. At best that thinking can get you into the game, but you'd better come with game changing products PDQ or you'll find yourself Pontiacked before you know what hit you. Are you listening Saturn?

Amazing how the largest company in America managed to completely fumble their advantage. If you've managed to develop a defensible competitive advantage, study it, understand it, defend it, then evolve it. But don't take it for granted.

Are You Clinging to an Outdated Distribution Strategy?

For many years I have been following the development of various distribution models. The advent of the internet has, over the last ten years, really made a significant dent in the business of distribution companies. The ease of reaching large numbers of customers, combined with a variety of automated systems for order generation and fulfillment, has undermined the industry in some startling ways. Manufacturers of products ranging from hard hats to snack foods and automobiles, always hesitant to give away margin, are looking very hard at how they are currently getting their products into the hands of customers.

And then many aren't. I'm baffled by those industries that continue to pour money into the old models with no revision. A good example is the bicycle business. Manufacturers, by and large, remain convinced that the model of 1990 is still the way to get product to customers today. Their commitment to independent bicycle dealers is commendable, but in light of new approaches to lean manufacturing, mass customization, and logistics, can it really make sense to require dealers to buy tons of inventory, in multiple sizes, months and months before the season?

Here are three signs you may be clinging to an outdated distribution strategy like our friends in the bike business:

1. Do you get rapid feedback on your products from user customers? Middlemen are touted as conduits of customer likes and dislikes. That is a part of their value to you as a manufacturer. Do your channel partners provide you with weekly summaries of customer information? If not, you may be a clinger.

2. Does your salesforce abide by the notion of "stacking deep and wide"? Moving output from your factory into the warehouses of your channel partners doesn't get the product into your customer's hands. Any step along the way where product sits and waits adds cost. Don't agree? How many calls do you take from distributors wanting to return stale merchandise? Damaged goods? Or to make room for fresher seasonal goods? If you think that you are exerting positive pressure on distributors to focus on your stuff when you've managed to fill their racks with record levels of your merchandise you are harming your own long-term ability to work productively with that distributor.

3. You are not seeing market share gains, in spite of your very hard work. Distributors act as buffers between you and the market. They absorb some of the pain when things are bad, but they also dampen your ability to reach out and directly impact your customers. The best promotions are just ideas unless your distributor executes with energy and intensity. The problem is that you can't control that - you might impact it by offering spiffs or incentives, but that's yet more money out of your pocket. If you're frustrated by your market impact, you may be a clinger!

Great distribution channel partners can be worth their weight in gold. But if you continue to use the channel in the same ways you did ten years ago you are losing money, market share, and time. Think of the connections between you and your customers as links in a value chain. Take the time to understand how the system as a whole can make money and reformat your programs to allow that to happen. Use technology to speed information up and own the chain, and engage your channel partners in an ongoing dialog about how to increase total system profits. We'll talk more about how to do that in our next post.

Television and the Art of Panicking

Whenever we try new tools for getting our message out to the world, there will be a period of uncertainty where we're not sure if we're wasting dollars. For the past 36 hours my team has been running a test in the Fresno DMA for 30 second television ads. Our goal is to demonstrate the value of mass media in bringing sufficiently large numbers to our site so that we can sell our product.

During the next few hours is when clients, bosses, and we are most likely to panic. Maybe we should alter the run schedule? Change the website landing page? Make some other substantive alteration of the site to encourage customers to spend freely?? My advice is for you to take a deep breath and go do something else for the rest of the day.

Television is indeed a powerful medium. We can reach hundreds of thousands of people every day. The expectations that come with that, though, are dangerous. Seeing isn't deciding. Seeing once isn't learning. It takes time for potential customers to become comfortable with the purchase of new products - especially if they are unfamiliar with your brand or product category. Give your customer permission to take a few days to figure things out in their mind.

Conveying your message effectively is a game of repetition. Generally, we're not selling water to lost travelers in the desert. If your price point is more than $20 or so, you're prospect might just need to do some thinking to get comfortable with the purchase decision.

While my example is TV and it is by far the most expensive media choice in absolute terms, the idea of a little patience is applicable to all the new tools you may be trying - and even some old tools. If you've done a good job in identifying your prospects, you've generated good creative, and are deploying it wisely, then sit back, relax, and keep your eyes open. You might not make a change on day two, but by day four, it might make sense to adjust around the edges.

Advertising Creep

I've recently added Adsense to my blog page. That's it, over there to the left. It is indicative of the larger trend to plaster advertising everywhere it can be shoehorned in. The idea is to create revenue from otherwise unused pixels. As a marketer, I have to say that it's a great idea - in theory. All kinds of questions arise with these models. If you're a marketer, consider these thoughts before you put yourself on either side of the served ad equation.

First, is the inclusion of advertising congruent with the purpose of the site? Including advertising may prove to be a distraction from the page itself. Or, because these ads are so ubiquitous...

Second, will the ads get noticed? People are quite good at filtering out extraneous information. Yet another 200 pixel square ad may very well fall into people's filtration system, receding into the background like whitenoise.

Third, you may have precious little control over the type of product/service offered on your site. Do you want your identity to be linked to erectile dysfunction pharmaceuticals?

Lastly, there's quite a debate about whether or not these text ads are effective. Sure, they get lots of clicks, but do those clicks really translate into conversions? Could the budget dollars you're using for serving ads across a content network be put to more effective use? Can you develop direct contact lists where you can spend a bit more time laying out your product's case?

On the whole, serving text ads across networks is a fine idea - but one that requires that you actively manage your budgets and the creative pretty aggressively to maintain efficacy. Otherwise, you'll end up serving lots of ads to places where there's little hope of snagging a customer. And even if you're paying via cpc models, the time and energy spent managing these campaigns could likely be spent elsewhere with a better return.

The First Rule of Marketing

As with doctors, the first rule of marketing is to do no harm. It is tough enough to fight off competitive threats, environmental changes, and all the other enemies at the gate. There's no good reason to make things more difficult for yourself by making gigantic, entirely avoidable blunders. You might wonder if I have some particular blunder in mind. As a matter of fact, I do.

You may have heard about Wells Fargo and their planned junket to Las Vegas. If not, here's a portion of an AP story:

"WASHINGTON - Wells Fargo & Co. abruptly canceled Tuesday a pricey Las Vegas casino junket for employees after a torrent of criticism that it was misusing $25 billion in taxpayer bailout money.

The company initially defended the trip after The Associated Press reported it had booked 12 nights beginning Friday... by saying:

"Recognition events are still part of our culture," spokeswoman Melissa Murray said Tuesday afternoon. "It's really important that our team members are still valued and recognized.""

The branding implications are clear. Wells Fargo is saying, clearly, that "Our customers exist to serve us. We are paramount." The brand for this once venerable, long-standing banking titan is now as tarnished and as utterly valueless as any other. They had an opportunity, especially in light of AIG's epic blunder (doing essentially the exact same thing and receiving withering criticism as a result), to take the initiative, cancel all events, reign in executive pay and bonuses, and say to the American people, "We stand with you. It's an awful mess out there, but we'll get through it together." But no, that would have inconvenienced a whole generation of corporate executives that have come to believe that they actually deserve the perks, the bonuses, the unbelievable salaries.

I really was taken aback by their comment, echoed by Wall Street firms aplenty, that
"Recognition events are still part of our culture," spokeswoman Melissa Murray said Tuesday afternoon. "It's really important that our team members are still valued and recognized."

Recognition? What on earth might the senior management be recognized for? Nobel Prize winning new levels of ineptitude? Mismanagement so severe that they had to ask Uncle Sam for $25 BILLION? The recognition event that needed to happen was to have the board meet and 1) fire the senior management team and 2) resign for failure to oversee the juggernaut before the predictable train wreck.

So back to marketing. Your brand is your most precious asset. Everything you do impacts on your brand. Everything. Big things, and small things. Our collective perception of your brand is developed one person at a time. It's as simple as that. Once you cross a certain line, your brand, so carefully nurtured, becomes an albatross around your neck. Don't Wells Fargo your own brand.

Economics + Behavioral Psychology + Sociology Equals What?

As if touched by God, a few economists have come to a stunning conclusion. People don't always act completely rationally. Yeah, I know. Really amazing. Yet the field of economics has always had at its heart the assumption that people act in their own best economic interest. As an economics student, I or one of my classmates would sometimes ask about cases where a person might be motivated to make a choice not in their own economic self interest. The answer was that, summing up my professor's long winded response, since we can't model that, we don't worry about it. Now we are confronted with the results of economic policy that ignored the behavioral elements and focused solely on the "rational man". And this isn't just a phenomenon of the last eight years. It's always been this way.

So the Nobel Prize and kudos galore are going to economists that are working on integrating the fields of Economics, Behavioral Psychology, and Sociology in the hopes of creating tools and models that better reflect the real world and will lead to more stable economic outcomes.

Okay, so the point of all this in a blog about marketing. Well, isn't the combination of economics, behavioral psych, and sociology basically marketing? The economists have found their field hollow at the core and they've come a'poaching in our territory! Which is actually good news because, frankly, our tools are pretty inadequate to the task. Especially in an era when marketing must now be as accountable as any other part of the organization. The tools that marketers do have, for the most part, are horribly complex, expensive, and generally tough to use.

Marketers are collecting terabytes of customer data each day, but generally fail to explore the meaning of the data to any great depth. But here's an opportunity to leverage emerging thinking from the field of economics to craft tools that better meet our needs, helping us to model behavior in such a way as to finally be able to quantify the underlying drivers of behavior so we can begin to reliably communicate with prospects and customers in a meaningful and impactful way.

So here's the advice, rarely ever heard before by marketers. "Pay attention to the economists." Sounds funny just saying it.