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As I may have mentioned before, I worked a good number of years for DHL (a multinational, wholly owned by Deutsche Post, with an annual turnover of AUD $7bn), in various European senior marketing roles. Since moving to Sydney, I’ve worked on the other side of the fence, both in research and advertising agencies, and, having worked with a number of clients, I’ve come to the view that DHL was a highly data-driven organisation.
I believe many Australian businesses would benefit from instilling a stronger culture of analysis within their organisation, by adopting some of the following practices employed by DHL:
DHL used business goals to drive decision making.
One of the common problems with analysing data is that companies look at their numbers without putting them in the context of their overall business. As a result, when they receive an analytics report (often in a crisp, new binder with colourful, attractive charts) they sift through it without knowing what it means to their bottom line. Data-driven organisations make sure that goals and metrics are defined and agreed on, and they communicate them to everyone according to role.
Data-driven organisations never rely solely on gut feelings.
For sure, data and research will never give you definitive answers. However, making educated decisions based on analytics-driven insight will help you meet your goals. This doesn’t mean you should throw your experience out the window. But you should be honest with yourself about what you really know and don’t know. I have observed many clients mistake their own personal likes and dislikes for insights in customer behaviour.
Successful data driven organisations spend money in the right places and in the right way. As a result they can justify every marketing dollar they invest and tie it to business goals and KPIs.
For example, instead of putting millions of dollars every year into a full website redesign, they target their spending according to where it will be most effective. To do this, you first need to identify which aspects of your website are most important in driving your business. Let’s say you have a lead generation site that tries to get visitors interested in you offerings so they will request a meeting with a sales rep. Every upgrade you make to the site should improve the way it converts your visitors into high quality leads. Your efforts may involve highlighting calls to action or streamlining request forms so that it’s easier to separate good prospects from bad.
Companies like DHL that are serious about data also use analytics to maximise their ROI for online and offline initiatives. If you have an underperforming marketing campaign, you should reallocate resources to areas that have a better probability of success. That way you’ll always be sure you’re investing wisely and strategically in areas that drive your business goals.
In a data-driven organisation, every team, business unit and individual operates under a unified, global set of standards.
To do this, you need to set overall business goals and metrics. Then you assign different groups in the company their own targets and metrics based on how their works impacts the top-level goals. This process continues down the chain of command until it reaches individual employees. In the end, everyone is aware of how their actions contribute to the success of the company. I’ve found that once people and departments have clear and specific metrics to define their success, they tend to have an entirely different (and often much more motivated) approach to their work.
Whenever a data-driven organisation launches an initiative or campaign, it has already put together a forecast of its potential impact on the business and bottom line. When these projects are complete, the organisation also wants to know how the outcome of the project compared to earlier estimates. For this, you need to include a full post-launch analysis in your process. You should not only focus on the outcome but also use the opportunity to look at the forecasting process. Are you making accurate predications and if not, why?
Woolworths (aka Woolies) are really getting their act together. The big supermarkets in the UK introduced a loyalty card to their customers about 20 years ago. This year Woolies introduced their version – the Everyday loyalty card. After Coles introduced their card, it’s a distinct case of better late than never. And from what I can gather it’s been a great success, which isn’t a surprise.Woolies has around 4.5 million people signed up to the loyalty program, and is sending an estimated 1 million emails each week to the 3 million who have registered their personal details, according to The Age. Their offering is centred on petrol, with the card a simpler alternative to dockets for providing customers with fuel discounts. Their tie-up with Qantas has apparently given their card a strong boost.More importantly, Woolies now have the buying habits and shopping patterns of its customers in a mega-database, which it can, in turn, use to target customers with promotions and offers (and this is important) that are relevant to them. This drives loyalty differentiation.Having registered online for my Everyday card, I recently received this very good DM piece from Woolies. Essentially it was a solid promotion targeted at and relevant to me: it offered me a good credit card deal with 5% off my groceries for 3 months (this was pertinent because I usually buy my groceries with a credit card) and 40c/litre off my next fuel visit (again, this was attractive because I top up each week).Above all that though, the look and tone is so right. It’s colourful with not too much text. The informal, un-corporate-like tone is pitch perfect. The first line says, “Hi Alex, Here’s a new offer from Everyday Money that I thought you’d be interested in.” There's no off-putting hard sell here. Just a “thought you might be interested in this” sentiment. And with its “Yours Sincerely, Deborah, Everyday Rewards” sign-off, I was left with the feeling that Deborah was a pal, not a faceless corporate big wig. Nice work Woolies.
I recently read that the US computer game industry is now bigger than Hollywood. Multi-player gaming as well as file sharing, online communities, and user-generated content are redefining entertainment as we know it.
A key driver of this change is that one-man band of digital devices, the mobile phone. Consumption of games, music and TV on mobile phones is growing along with the uptake of 3G services.
A recent survey in Europe suggests that 70% of teens use their phones to listen to music, with games and video penetration just behind. The mobile facilitates seamless retailing with ‘purchase and play’ whenever and wherever we feel like it. Handset manufacturers are pushing the next phase of mobile music consumption hard. The Nokia Music Store http://www.nokiamusic.co.uk/#/manifesto4/ and iTunes http://www.apple.com/au/itunes/mobile/ allows you to download music to a mobile. It seems the hardware, the connectivity and marketing dollars are all in place to deliver a new form of music on the move, assuming the price is right.
From a gaming and video perspective, made for mobile shows and games have created a new usage occasion and a commensurate need to cater for the additional opportunity, increasing the size of the industry. Mobile games will incorporate additional features, such as a GPS, enabling a truly unique gaming experience.
User-generated content has added a new dimension to entertainment. Cameras on mobiles are enabling opportunistic content creation that can at times have a profound effect on the viewer - think of the recent images, beamed around the globe, of the disgraceful treatment of protesters by authorities in Iran.
Additionally, social networking has become compulsive viewing. The mobile products of both MySpace and Facebook have been hugely successful, allowing you to communicate for less than an SMS, share anything you want instantly through mobile upload and see exactly what everyone in your life is doing all the time. Global CEO Chris De Wolfe said he expects up to 50% of MySpace traffic to be from mobile devices within the next 2 years. Interestingly, he went on to say that users return multiple times per day, indicating snack consumption for the moments in between times.
It seems unlikely mobile TV will replace home entertainment centres, but it can augment your entertainment experience. For example, in addition to made-for-mobile content, Foxtel iQ has launched a mobile product that allows you to plan your evening’s entertainment from the comfort of anywhere but your lounge http://www.foxtel.com.au/discover/mobile/default.htm. It’s a great example of how the mobile platform can act as enabler and add value to other platforms.With processing power ever-increasing, you’ll soon be able to continue playing World of Warcraft even when you leave the house. Because of the constraints determined by the size of the handset, it’s debatable though whether the mobile phone will ever replace the mainstream gaming console. However, it looks certain to complement the online variant, with the trading and training of characters being activities that will be managed on a mobile.
An increased consumer repertoire will continue to grow the entertainment market, specifically the share attributed to mobile. Some of this will be pure entertainment on the handset, but increasingly we shall see cross-over with other entertainment platforms.
I’ve been thinking a fair bit lately about the future of the web. It’s tough to make predictions, but hey, it’s fun to think about how radically the web will transform our lives and the way brands will need to evolve to attract and retain customers. With computing power doubling every 2 years, it’s predicted that at the current growth rate computers should be equal to the intellectual processing capability of humans by 2019! This seems a bit far fetched to me.
Nevertheless there is no doubt that sooner rather than later computers will become super-smart, meaning that the future may be less about what we do as a race but more about what happens to us as a consequence of the technology we have developed. Indeed, it has already begun - many folks claim that visiting virtual worlds helps them understand more about themselves.
The number of people ratings products and services on the web will increase. Only those brands that can monitor and respond effectively to this online scrutiny will prosper. Consumers will discuss benefits rather than features. Niche players will multiply leading to greater diversity of product and offer and, ultimately, consumer choice.
The online space will eat up an ever increasing portion of the sales cake due to lower cost of sales and consumers' buying habits. Brands on the High Street will have to increasingly create innovative, experiential environments to attract customers, like the Apple Store in Sydney or Nike Town in London.Tools for creative self expression will continue to emerge, allowing for works limited only by the imagination. Brands that celebrate the individual nature of humans will increase. As consumers experience greater variety and diversity, they will tend to value the unconventional over the conservative.
In his now-famous book The Long Tail, Chris Anderson describes how the web is transforming mass markets into millions of niche markets, observing that the "tail of available variety is far longer than we realise" and that "all those niches, when aggregated, can make up a significant market".
Companies have begun chasing those niche markets. Consumers have found themselves inundated with an unprecedented amount of choice, in music, video, movies, information and products that span a huge range of interests. Add to that the explosive growth of user-generated content (from blogs to You Tube and Flickr) and you begin to see the problem facing users today: finding a way to navigate this vast landscape of choice.
By using the power of collective intelligence, that is by getting millions of consumers to share their tastes and recommendations, companies going after the niche markets in the long tail are providing ways to ease that navigational problem.
The idea of web discovery is not new. Yahoo began as a portal with pre-selected links to help users find interesting websites by topic. The web outgrew these editorial "best of" lists and instead the best lists became based on the wisdom of the crowd.
As Mr Anderson puts it, "millions of regular people are the new tastemakers...These new tastemakers aren't a super-elite of people cooler than us: They are us."
More importantly, Mr Anderson says that "for the first time in history, we're able to measure the consumption patterns, inclinations and tastes of an entire market of consumers in real time, and just as quickly adjust the market to reflect them".
This notion of crowd-sourcing is at the heart of web discovery. With the enormous amount of data and processing power residing on the web today, the discovery process is largely automated. Launched as a browser toolbar, StumbleUpon lets users give thumbs up or down ratings while the tool profiles their tastes. This profile data feeds into a set of algorithms that decide which sites to display next.
Discovery is burgeoning. Music in a way is all about discovery. Apple's iTunes app Genius recommends new music based on your past purchases. But my favourite music discovery service is MOG, an online community that combines social networking with music, where you can "discover people through music and music through people". You can download an app that can in turn upload the basics of music collection so that MOG can automatically make recommendations. Next thing you know, you'll be inviting your friends to use the service, link to your MOG page and further enhance your music discovery experience.
Another website that provides an innovative approach to entertainment and discovery is Funny or Die, where users get to vote on whether a video is funny. If it is, it stays. If it's not then it's relegated to the "crypt". In a way, Funny or Die represents an attempt to provide some structure for the disjointed content found on sites like YouTube.
I believe that web discovery is an important business lever for many companies. A sure-fire way to increase revenue is to surprise and delight customers and a fantastic way to do that is to deliver recommendations quickly and with minimal input, gathering preferences that in turn allow a progressively better discovery experience.
It’s now widely acknowledged that human behaviour is causing climate change. If we don’t stop polluting the earth’s sea, there’ll be no more fish in the sea. If we don’t stop polluting the atmosphere, we’re heading for drought and famine and many more parts of the world will be under water.
Similarly, the ecology of market research is under threat of extinction. In 2007, the Advertising Age in the US reported that 50% of respondents come from less than 5% of the population. And 0.25% of the population supplies more than 32% of responses to online surveys. Clearly, this will not give us a reliable basis to make important business decisions. There appears to be a dangerous slide taking place where market research is dependent on a small number of professional respondents. This means we’ll not have a representative sample that reflects reality. Why? Well as the Advertising Age article put it we’re in a Catch 22 – “No-one really knows whether people who don’t answer surveys are similar to those who do. Because they don’t answer surveys”.
There is an interesting dichotomy here. Many people are willing to share their opinions and views via blogs and online forums, but not so willing to take part in market research surveys. Let’s face it – market research doesn’t have a good name. Ask around what people think of market research and their unlikely to say that it’s about businesses understanding their customers better so they can provide better products and services. Many people just feel like their being played – some are asked to participate and then later get harassed by sales calls, some are called/emailed out of the blue without opting in to participate. Respondents give their views but nothing changes, like the bank still treats them harshly and charges an exorbitant fee when they go overdrawn a few dollars.
So how can we use the digital environment to enhance respondent engagement, and what measures can we take to ensure market research has a sustainable future?
Over recent years, there has been a shift from telephone to online surveys. This has been driven by a number of factors including reduced cost. Many online panels have been created. The better research operators recruit a good number of their panel offline to ensure the panel is representative of the population. They make it clear to their panellists that their details will not be passed on and will be used for market research purposes only. They make it clear that panellists will only take part in approx. 6 surveys a year, and are not paid per survey. Essentially, the better panels are compliant with ESOMAR guidelines.
Perhaps the main benefit of online panels is that it helps researchers to build a trusting relationship with respondents. A panel website with clear communication and the opportunity to feedback on surveys offers vital reassurance for respondents and enhances their engagement with the operator and the survey. Rather than a financial reward per completed survey which encourages professional respondents, entries into a prize draw should be considered or perhaps a non-financial reward.
A good panel should seek to establish a sense of community – panelists want a sense of belonging to something worthwhile and valued. They want to be part of the process in developing a user friendly and effective survey. Co-operation depends not just on the now, but how the respondent feels about previous surveys. If participants know that this is an ongoing communication, not just a one-off invitation to participate, then they are more likely to give of their best.
We also need to tailor our research approach to the needs of the specific audience to remove some of the obstacles of participation. There is an array of data collection interfaces available from SMS polls to blogs to asynchronous online discussions.
Mixed mode data collection may be appropriate, for example, where it is important to get a representation of the entire population and not just the research population. An online data collection method might be complemented by an offline method, combined with propensity weighting, which takes account of demographics, beliefs and attitudes.
The development of the web has triggered a social change where consumers are more informed, involved and connected. Marketing is no longer about one-way communication; we seek to engage with consumers and encourage a two-way dialogue with the brand. Research should reflect this too. Rather than ‘respondents’ we should talk about ‘participants’, which suggests a two-way interaction.
We should look to be more creative in engaging with participants. One idea is to invite participants to an event and expose them to issues presented by speakers, video and props. This helps them understand the issues, set the agenda and participate in a more considered and engaged way. Online blogs via the panel website can be used to encourage debate and discussion on a topic and to give our participants the opportunity to refine/define the topics from research. And we should look to make the survey interface a more interesting and enjoyable experience, not just in terms of closed questions with no visuals.
These measures will not be cheap or easy to implement in the short term, but by doing so, we will get better quality results and greater co-operation from the general public.
I’ve just put down Dr Peter Steidel’s recently published book Survive, Exploit, Disrupt – Action Guidelines for Marketing in a Recession. It’s an excellent read and I highly recommend it to executives navigating their way across the stormy waters of the current economic downturn.
You know there is a theory out there in the land of academia (one, incidentally, to which I adhere to) that argues that recessions are part of the grand evolutionary process. A recession blows across a country or the world weeding out the inefficiencies and the excesses, the bad ideas and sheer human stupidity. This leaves room for the good stuff – good ideas and innovations - to develop and grow leading to the wealth of the future.
Steidel asks us as marketers, what can we do to ensure that we are one of those businesses that evolve, survive and continue to grow?
I’d like to pick out and elaborate on a particular element that Steidel highlights. It is an area that I believe is of particular relevance and importance in the current business environment and should occupy the business leader’s attention. It is this:
Sharpen your understanding of consumers and how they are affected.
There is one factor that is certain in a recession - consumers review and change their behaviour and buying habits. We do not know the scope, timing or scale of these changes and so it is essential we attempt a well-informed assessment.
This exercise should seek to establish the extent to which consumers will:
a) Drop out of the market because they cannot afford to buy
b) Modify the trade-off decisions they make leading to a change in their consumption patterns
c) Not change their purchase patterns significantly
This assessment falls into the category of understanding what consumers are doing. It should be made on a continuous basis so that as we come out of recession we are able to gauge the way the relationship between the brand and consumers has changed. For instance, some consumers may have switched to own-brand labels (like Woolworth’s ‘Home Brand’) and will stick with them following the recession as they have found the own-brand to be just as good as the brand bought before.
During a recession we need to know how consumption patterns evolve and the associated pressures that impact on purchasing behaviour. Having a better understanding of how such patterns evolve gives us a better understanding of the consumption patterns of tomorrow.
It therefore seems appropriate to have smaller, ‘dip’ surveys than one big one. Surveys that employ conjoint methodologies help us identify the trade-off consumers make. Many businesses have Data Warehouses that enable the wily Group Planning Manager or Product Manager to analyse shifts in purchase behaviour in terms of product categories, distribution channels, price brackets and so on. This analysis can be supplemented with an appropriate conjoint survey, that further enhances our understanding of consumer trade-off patterns.
We also need a better understanding of how consumers feel and why. In a recession, consumers’ modified purchase behaviour is underpinned by that most powerful of human emotions, fear. They will be fearful of losing their job. Will they be able to pay their mortgage/rent/bills? Will they have to sell their home?
Clearly, the feelings that we need explore are highly emotional and negative. It is highly unlikely that in a focus group, surrounded by strangers in a highly artificial environment, people will talk about their true feelings and motivations. New methods need to be employed such as a technique described by Gerald Zaltman in his book How Customers Think. The ‘Mind-of-the-market’ methodology relies on images to open pathways to emotions. Participants are asked to bring images to a one-on-one, in-depth interview and these are discussed. The images act as a metaphor that more accurately describes the participants’ emotions than a verbal and, invariably, rationalised and misleading response.
The point is that in a recession we need to modify the way we do consumer research. Conventional methodologies like focus groups are unlikely to deliver the insights into the emotions that modify the trade-offs consumers make and their purchasing behaviour. Immersion programs, where executives spend time with consumers, are increasingly seen of value, to observe how consumers shop, prepare meals, discuss bills etc. Proctor and Gamble have institutionalised such programs.
To conclude, recessions change markets. They change consumers’ purchase patterns, which in turn changes consumers’ perceptions, expectations and values. The marketing strategies of the pre-recession period will not wash going forward. Neither will consumer research. It should adapt to unearth the new consumer mindset brought about by the tough economic times. Businesses that invest in sharpening their understanding of how and why consumers alter their purchasing behaviour will be well placed to return to growth.
Marketing consultants and social watchers love devising new catchy monikers for consumer groups. It goes with the territory. There were the Yuppies, which, for those of you who were trapped under a rather large rock in the 1980s, stood for young urban professionals. And we had the Dinks – double income no kids – another 1980s marketing buzzword. Recent descriptors such as Glams (greying, leisured, affluent and middle-aged) and Nilkies (no income, lots of kids) didn’t have legs and died. The metrosexual burned brightly then faded away when marketers realised that the number of young, sensitive urban males interested in skin-care products had been exaggerated.
While such terms as yuppies and dinks have become part of the vernacular, most descriptors have struggled to gain widespread acceptance. Other recent efforts include Oinks (one income, no kids), Tinkies (two incomes, a nanny and kids), Rappies (retired affluent professionals), Sinbads (single income, no boyfriend, absolutely desperate), Sitcoms (single income, two children, outrageous mortgage) and Kippers (Kids in parents pockets eroding retirement savings).
But that hasn’t stopped marketers from coming up with new ways to describe consumers. The New York marketing firm Consumer Eyes, which works for companies such as P&G, Kellogg, PepsiCo, released a year or so ago a book entitled Karma Queens that identified nine consumer groups that companies should consider when they develop marketing strategies.
Three of the nine types relate to men: Denim Dads – the stay at home fathers focused on achieving a work-life balance; Middle Men – aged 21-35, who have a laid back lifestyle and are happy to be in jobs that are going no-where fast; and Geek Gods – aged 20-35 who have a lot of free time and disposable income.
Two of the consumer groups are women: Karma Queens, who in their 40s and 50s are often former hippies, are drawn to products and brands pitched directly at women and focus on mind, body and spirit; and Ms Independents, who have no children, no partner and a high disposable income.
The other four consumer types cover both sexes. E-litists are ‘light green’ consumers who worry about the environment, climate change and so on, buy organic food and cycle to work. Parentocrats have a different obsession: their children. They are happy to spend big bucks to get the best of everything for their kids and to push them along in what they see as a highly competitive world.
The final two types are Culture Crossers – people who are drawn to book, music, clothes, homewares etc from other cultures, and Innerpreneurs, who are constantly thinking about and working on their next business idea, how to improve both their lives and the world.
The descriptors are catchy and might become part of the vernacular. Maybe.
The important point to my mind about having descriptors is that it’s more useful to identify consumer ‘types’ than consumer trends.
Trends inform you about consumer behaviour without necessarily helping you understand the reasons behind it. Consumer types go further because they identify the consumers who set the trends. Types illuminate the consumer psyche, while trends merely articulate consumer behaviour.
For example, let’s suppose you market an upscale cosmetics line. Traditional segmentation might identify your core target as a working female, 25 to 45, urban dweller, with an income of $45k+. But what do you really know about her? Is she sports focused? Which sports? Confident about her looks? Likely to workout or visit a spa more frequently than the typical woman of her age? Could you pick her out at a cocktail party? That’s what consumer typing is really all about.
I was recently having a chat with an old pal who'd just landed a vice-president of marketing job in the US working in the B2B sector. He'd got in touch, amongst other things, to ask me about how to approach B2B research. He knew I had worked for the global distribution company DHL as their European Market Research Manager working on both consumer and business research projects and so thought I might be able to give him some pointers. He was right because while working for DHL I found that many agencies failed to understand the nuances of B2B research.
I thought I'd share with you some of the points we discussed. Here are some of the factors you should consider when conducting B2B research.
1) The challenge of talking to the right person
The initial step is to determine to whom you want to speak to: it may be the decision-maker, influencer, or the person who does the day-to-day interaction with the organization. One should also consider whether the decision maker is in fact a group and, if so, who are the key stakeholders. Such complex decision making structures often means increased time and cost in conducting the study.
Interview briefing is also critical. Interviewers need to be aware of the barriers and difficulties they may face in reaching the target respondent and apply appropriate techniques to draw out accurate and relevant information from the interviewee.
Once you know who you want to speak to the next step is to think about the most effective method of reaching them, in terms of time and cost whilst maintaining a high probability of quality responses.
2) Increasingly sophisticated segmentation
Segmentation is a central pillar of marketing and a term used to describe a variety of different ways in which distinctive, differentiated groups can be identified and profiled within the marketplace. Methods vary and include demographic profiling, behaviour, attitudinal, psychographics, and needs (and/or a combination of these).
Historically, segmentation has been used more in the B2C sphere than in B2B. However, over recent years a sea change has begun. Increasingly, businesses competing in B2B markets are adopting a more sophisticated approach to segmenting their targets, realising that the single ‘one size fits all’ offering to customers - perhaps supplemented by special arrangements for key accounts - or segmentation based on estimated revenue potential, is just not adequate.
B2B organizations are looking to gain a more detailed understanding of customer needs with a view to introducing a range of services to match these needs with the goal of drive increased sales and profitability. In simple terms, this customer needs-based segmentation (categorising customers by the kinds of service they would like in future and price sensitivity) supports a customer-focussed culture, a culture which is increasingly seen as the best path to success.
At DHL, after receiving sign-off from senior management to proceed with the project, I opted for face-to face interviews and a trade off methodology for our customer-needs based research. We gathered detailed customer requirements on pre-defined service features with many different potential levels for each feature. A variety of statistical techniques such as factor and cluster analysis were then used to group customers into segments, each one of which required a distinct service offering. The data were then cross-matched against existing market size data to make sure that each of the segments was large enough to be worth targeting. Follow-up in-depth interviews gave additional information on each segment’s attitudes.
The final step in the process was to implement the needs based segmentation in the field. The data were further analysed and a short subset of questions to be asked of customers were developed to enable the salesforce to allocate customers to the correct segments.
The result of this extensive exercise was increased sales and more satisfied customers.
3) Ascertain who owns the customer data
Clearly, a key difference between consumer and business research is that businesses can supply the customer contacts for the survey. Its easy to get drawn into thinking that this will simplify the study. This tendency should be avoided as the process for the the client to access the data may be lengthy and complex as the clientside Market Research Manager speaks to and organises provision of the data to various departments and stakeholders. The researcher needs to be careful to assess the impact this may have on timelines and ask appropriate questions of the client upfront.
In addition, external data may be needed to make a comparison of the organizations performance against the competition. This possibility should also be taken into consideration when planning the project.
4) B2B is notoriously dry
A key difficulty of B2B research is that respondents invariably find it dull. The smart researcher should spend some time to enliven and add sparkle to the questionnaire to maximise engagement. Researchers need to think of ways to excite and ignite respondents.
5) The client’s customer
When you want to understand consumers’ beliefs, attitudes, perceptions etc you ask consumers. But B2B research differs in that it entails getting into the mindset of the client’s customer, seeing things from their perspective and not your clients. Again this adds complexity and difficulty and should be taken into consideration when planning B2B research.
6) Level of organization
Its important to ascertain the level of organization the study is to cover. It may be that a particular company site, the head office, regional or global is the required target. In each case, the design needs to be modified accordingly.
7) Don’t forget B2B respondents are people as well
There is a tendency to view B2B respondents as a different breed. People are people and B2B respondents do not turn into rational machines for a B2B survey. They are often motivated by the same needs, desires and interests as respondents in a B2C survey. For example, B2B respondents will often select suppliers on the basis of how it will make them look within the organization. I’ve had the experience of working on a project where B2B respondents said that they aim for the best in everything they do at work so they simply chose the best. Another finding was that some people chose to use a brand simply because they were widely regarded as the best in the business and that they would be open to criticism if they chose another supplier.
My partner and I are regular restaurant goers. We’ll often quite decadently travel a not insignificant distance to go to a great restaurant, like for instance Eschalot in Berrima (a one and a half hour drive south of Sydney). Recently we’ve started to pull our horns in a bit by spending less per head. I’ve also noticed a distinct reduction in the number of empty tables at restaurants. I take this as a clear sign that the global recession has arrived in Australia.
People who overconsumed during the past decade are rejecting extravagant lifestyles. Following 9/11 when, in particular in the US, it became patriotic to shop and spend, people are now spending less and more wisely. The penny pinching is showing up in the numbers with personal consumption falling, exacerbated by huge consumer debt ($2.6 trillion in the US).
Which brings us to what John Maynard Keynes called the paradox of thrift. What’s good for the individual, argued Keynes, can ignite or deepen a recession. But that won’t deter the newly thrifty. It isn’t hard to hear the millions of those in debt exclaim, “I can’t help the economy, I’ve got to help myself”. Thrift has gone in and out of style over the years often sparked by recessions. Indeed the Great Depression marked many and their siblings for life. In the 1930s, it was typical for son’s to see their fathers out of work for years, perpetually hungry, scraping together a living. Those sons today, many who are now in their 80s and wealthy, shop with coupons, drive a Ford and take the subway rather than throwing away money on a taxi. Their baby boomer children grew up without psychological scars from the Depression. And the boomers’ children have come of age in an era of abundance, easy credit and a taste for luxury. “We want to build a culture that’s more hospitable to thrift, so it’s not seen as odd but fostered and nudged along,” says Barbara Whitehead, co-author of For a New Thrift: Confronting the debt culture, a new report from The Institute for American Values, a think tank.
As joblessness creeps up, many more will receive their own crash course in thriftiness. Some will spend more up front to reap savings over the next few years, like installing expensive but energy sipping light bulbs or solar panels. Some will switch from shaving cream to shaving soap – a relatively small saving per year but a sizable psychological benefit. People are learning the difference between necessities and discretionary spending. Maslow’s hierarchy of needs is as applicable now as it ever was.
People are eating in more, buying more second hand clothes and turning the lights off when they leave the room. In late 2008, Booz & Co conducted a survey of nearly 100 households and found that 43% of respondents said they are eating at home more and 25% said they cutting spending on hobbies and sports activities. In both cases, most said they’d continue doing so even when the economy improves. Much the way the inexorable rise in petrol price have prompted many to forsake SUVs for smaller cars, the likely fall in home values and the size of consumer debt, will make consumers think twice about hitting the mall and lead, I fear to say, to a more lengthy contraction than some commentators would have us believe.
You know there was a time when my parents didn’t have a clue about computers or the web, let alone Skype or IM. Their generation, those born before 1946 (aka the Builders), were used to stuff in the physical world; purposeful machines you could see working, that could be taken apart, fixed and put back together again. The thought of a mysterious black box sitting in the corner with alien, magical powers that allowed you to get in touch with anyone in the world at any time sent shivers up Builders’ spines. The idea of online shopping was attractive because it removed the hassle of driving or calling around to get the best deal. But there was always the nagging security concern - what if someone intercepted my credit card details? What if I pushed the wrong button while entering my details for payment and ordered the wrong thing or paid too much?
The following is a classic, though admittedly somewhat exaggerated example of my parent’s (actually my Dad’s) first effort to make an online purchase. I have no doubt it’s similar to those efforts of their neighbours and fellow Builders. I guess it’ll strike a chord with my fellow army of Gen Xers who’ve attempted with varying success to educate their ol’ folks of the ways of the web.
- So have you booked your holiday?
- Yes, Dad booked it last night.
- Did you manage to book it online, like we talked about?
- Yes, he booked it all himself online.
- Really, Dad? That’s brave; I thought he was still getting to grips with the computer.
- Well he sorted out the email; he sent you a message.
- Yes, 134 actually. Still it’s good he’s using it, we’ve all got to learn hey. Anyway, where you going on your hols?
- We’re flying to Milan.
- That’s fantastic, it’s a great city. Where are you staying?
- Well, the hotel is a little way outside Milan itself.
- Yes?
- It’s in Miami.
- Dad booked the hotel in Miami but the flights are for Milan?
- Yes, he’s a bit reckless with his mouse. We’re hiring a car so we’ll be able to drive there.
- From Milan?
- Oh no, not from Milan, we’ve got to pick the car up in Manchester.
- Mouse problems again?
- No, no, Dad dropped his bifocals on the keyboard. Still, it’ll be a nice long break. Dad spilt his cocoa on the keyboard and some of the number keys started to stick so he’s managed to book the hotel for 33 weeks…
- Oh no…
- For 222 people…
I am pleased to say that nowadays my Mum - and Dad – use the web successfully, to search for information, to buy various goods and services, to download files and software. They are also fully Skype literate. As I beam into their UK study all the way from Sydney, it is, amongst other things, a pleasure to see their faces filled wonder; the wonder of this technology and the magic it can perform.
Us marketers need to take note. Builders make up a not insignificant 17% of the Australian population (ABS) and therefore present a great business opportunity. Though still weary of the computer ‘thing’ in the study, Builders have embraced the web and are demanding more from us, the young upstarts that have upset their apple carts and brought them this pragmatic magic.
(Note: McCrindle Research have excellent papers on generational differences including internet usage trend variances.)
Just finished reading Barack Obama’s ‘life story’ Dreams from my Father. As he does on the Telly, in his writing he comes across well. I was left with the distinct impression that he is a thoughtful, diligent and considerate person. Above all, he seems like a decent human being who plays with a straight bat.
But the sceptic in me kept asking, Am I being played, in a good way or bad? For goodness’ sake, he’s a lawyer and a politician (and we all know politicians don’t lie straight in bed). Was the entire book a brilliant piece of spin doctoring? Like a good spin doctor, had he worked out the questions to come, and the kind of replies he needed to make in his build up to be President of the United States.
Some years ago I was told a story by someone who was brilliant at working an angle:
A customs officer stopped a youg boy who was cycling from Mexico into California. Across the handlebars of his bicycle he had two great big sacks. And of course the customs officer threw up his arm – drugs being blatantly taken across the border! “What’s in the bags?” “Sand.” “Oh yeah?” “Yeah.” “All right, let’s empthy the bags out here.” So he emptied the bags out and it was sand.
The customs officer couldn’t see anything wrong, so he let the boy put the sand back in, searched him, and watched him pedal into California.
This happened every week. Every Monday, along came this boy on his bicycle, and the customs officer examined the bags and found nothing wrong.
Finally, the customs officer became so frustrated he said, “ Look, I know your putting something across me here. We examine these bags and search you every time you cross, now what are you taking across the border?”And the boy thought for a moment and said: “New bicycles”.
Now that was a great bit of spin. All the attention was directed onto something else. How do you put an angle on something?
Some of the best examples come in speeches. When Martin Luther King said: “I have a dream, my friends,” it was a great piece of spin doctoring. It was putting the right words in the right place to the right audience. Obama’s more recent “Yes we can” mantra is pure spin.
Spin has been around a long time. I think it was Goebbels who said: “Tell a lie often enough and everyone will believe it”. That’s not true anymore. Sooner or later people are going to start asking: “Is that right? Has the emperor got clothes on?” With greater access to information, people are more sophisticated today and it doesn’t work.
An example of spin doctoring gone wrong was when Richard Nixon was advised to go on the Telly and say: “I am not a crook”. It was like, if you could fake sincerity then you’ve got it made. But Tricky Dicky looked like a sweaty crook and everybody could see it. It was bad advice.
So what are the characteristics of successful spin doctoring? To my mind, there are few points:
The first is, be genuine. Simple communication and absolute straight up integrity and honesty is key.
Two, it has to be a presentation, not a show. You can’t put on the falsity of a show. Abraham Lincoln said: “I couldn’t be two-faced, because if I had two faces I sure wouldn’t wear this one”. Straight up works best.
Third, you have to understand what your message is. Obama’s message was “Vote for Change”, a clear, simple message that made him different. People instantly knew what he stood for.
Fourth, you have to be able to see yourself as other people see you and be prepared to laugh at yourself. I remember reading a piece by the acerbic Alan Clark, the craggy old Tory MP, who described an official dinner in Peru. The host thought it would be nice to give Alan a British toast, so everyone took up their glasses and said: “Up your bottom.” Sir Alan took up his glass and replied: “Up yours”.
And finally, good spin doctoring is nearly always 90% positive. I remember reading a piece about “that woman” as I call her, Margaret Thatcher. Working on a speech, an advisor said: “I don’t like that bit”. “Don’t you, what would you put in its place?” “Well…” “Don’t waste my time. I’ve got a country to run. If you’ve got something better to suggest, fine, let’s have it. Otherwise, shut up.” Knocking all the time doesn’t attract people to you, doesn’t attract the attention that you’re looking for, doesn’t give the image you want.
Obama’s book meets my criteria. So it was an excellent piece of spin doctoring. Whatever, it felt good reading it. Perhaps, this is the most important thing for a spin doctor to do - make people feel good. Obama has certainly done that.
In these tough economic times, I’ve been thinking about corporate reputations and I've come, I think, to a rather compelling theory: nasty companies will become extinct and nice companies will survive and thrive. The reason why nice companies will do well is that they establish attractive reputations. Companies that have reputations for being good employers find it easier to recruit and keep good people. Companies that have reputations for being good citizens are looked upon favourably by consumers. These days, companies that give to charity and are genuinely concerned about the environment tend to attract more customers. Companies that care about their customers as well as their suppliers give to their products and services an additional, and rather special kind of value. Business leaders are getting very interested in this ‘reputation’ value. They’re beginning to see it as an asset on their ‘invisible balance sheets’. Those are the balance sheets accountants can’t see, but which contain the really crucial things like brand values, intellectual property and know-how of employees.
If we agree that a company’s reputation is its most valuable asset, and if we recognise that reputation consists not of reality but of perceptions, then it is essential for a company to market a strategy. Reputation building and maintenance are going to be key management tasks going forward. It will become routine to acquire reputational assets at every opportunity. Until now, the big question for companies has been: ‘What shall we do?’ Henceforth the big question will be: ‘What am I?’
The theoretical part of the argument for how a nice company behaves is based on the theory of games. The game I think models nice businesses very well is ‘The Prisoners Dilemma’. Games theorist Robert Axelrod tried to discover the best strategy – the one that accumulated the highest score by inviting games theorists to enter their strategies in a computer tournament. To cut to the chase, the nice strategy did surprisingly well. (Axelrod defined the nice type of strategy as one that was never the first to make an aggressive move). It was a surprise because the conventional wisdom was to be first to defect (i.e. make an aggressive move). The reason why the conventional solution does badly in our game is that we are playing the repeated version. Players meet each other frequently, as they do in business, and soon establish reputations. A nasty player does well at first, but then gets a reputation for being nasty and finds that no-one wants to play with him any more.
The strategy that actually won Axlerod’s tournament he called ‘Tit for Tat’. It always cooperates on the first move and then always repeats what the other player does. Its simplicity is its strength. Other players recognise it; they know that if they’re aggressive it will be aggressive back. They also know that if they’re nice, it will be nice back, and that a long and mutually profitable relationship will begin.
It is this kind of niceness I mean when I talk about the nice strategy. It’s a clear, deliberate and disciplined kind of niceness. It’s not woolly, soft, weak niceness. Axelrod attributes Tit for Tat’s success on four qualities: it’s nice, it’s retaliatory, it’s forgiving, and it’s clear. I think all these qualities are desirable in a business strategy.
I'm convinced that the dominant business strategy of the future will be nothing other than to behave as a nice company.
As I may have mentioned before, I worked a good number of years for DHL (a multinational, wholly owned by Deutsche Post, with an annual turnover of AUD $7bn), in various European senior marketing roles. Since moving to Sydney, I’ve worked on the other side of the fence, both in research and advertising agencies, and, having worked with a number of clients, I’ve come to the view that DHL was a highly data-driven organisation.
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