Category Archives: Brand Loyalty

We want less facts, more stories

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Image courtesy Aint Life Grand

The most important person in an upscale restaurant is not the chef or the waiter – it is the sommelier. Sure, the quality of food is important and an excellent service equally. But, frankly, that’s the price of entry. The real difference maker is the sommelier: A great sommelier will transform your great meal into a memorable experience. How?

As a sommelier, you have two choices: You can overwhelm me with facts about geography, grapes and climate. And bore me to death. Or, you can tell me a story about the wine. Something infotaining, details about the wine or winemaker, insider information. My local wine store does a great job coming up with little stories, facts and fiction that warm my heart and make me want to taste that wine immediately.

Brands need people more than people need brands. And, people don’t need facts from brands. They have Google. Your brand objective should be to tell a story. A story that’s memorable. That can be shared. And spread. Brands without stories mean nothing and without any engaging stories people have nothing to talk about.

It’s the end of the world as we know it

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And I feel fine.

Why? Shouldn’t we be scared? BofA and Citi completely insolvent (Don’t trust one word of their CEO’s: Both institutions are dead in the water. The only question is how their shells will be propped up for a while.), the government clueless how to deal with these ongoing massive, financial tsunamis, Detroit basically done and unemployment increasing to scary levels. And, even worse, the real pain is still to come. 

So, why am I fine? Because this is not a typical recession. Or even depression. It’s a global shift in everything the capitalistic world believed in for the last decades. This can only be compared to the Continental Drift: an event that will transform us and our world for generations to come. And it will take at least one generation to adjust to the changes and come to grips with the idea that this transformation is permanent:

  • Large, decentralized corporations will disappear. These organizations were built for overconsumption, price pressure and cheap production. Micro-production is the future. Goodbye Detroit. Welcome to thousands of small car companies.
  • Destruction will be replaced with collaboration.We won’t destroy competition, nature or other nations to achieve our goals. It’s too costly, not efficient and goes against everything humans are wired for. Goodbye Wall Street. Hello Main Street.
  • Strategy will be replaced by mini-experimentation. Wars needed strategy. The 21st century economy needs mini-initiatives, mini-tests that continually evolve businesses. Goodbye Accenture. Hello lab operation.
  • Faking value will be replaced by real value. What’s the difference between Crest and Total? Exactly. But there’s a huge difference between an Apple and Dell experience. Goodbye advertising. Hello value creation.
  • Productivity will be replaced by creativity. We’ve had dumb growth for too long. We need sustainable, resilient growth. Goodbye China. Hello new world.

The 20th century was about consuming stuff. The 21st century will be about consuming ideas. Consuming stuff is too hard on the planet, laborers in the 3rd world and our wallet. Consuming ideas will still create a value chain but a value chain that’s more adjusted to changing the business world. Slowly, we see these idea consumption models popping up: Think Nike Plus. Think Twitter. Think Wikis.

We’re at Ground Zero. Things will get worse in the next few years. Much worse. But out of this destruction will come a new world. And the world we now know will be gone and in a few decades we’ll shake our heads and think: How did we ever believe these were the good times?

Hang in there. And create new ideas.

Twitter and VRM

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I was always intrigued by the idea of VRM: Providing customers with tools for engaging with vendors in new ways. Or as Doc Searls describes it in the Project VRM blog:

“VRM is Vendor Relationship Management. It’s how customers manage relationships with vendors. (Or with other individuals, or with organizations of any kind — such as churches or governments.)”

Basically, VRM allows people to create their personal RFP: Going on a business trip to Austin tomorrow? Send out an RFP to airlines, hotels, rental car agencies, restaurants communicating your travel dates and budget. It saves all of us a lot of aggravation because it will cut down on research times, brands won’t need to waste their money on irrelevant campaigns and a new form of partnership between buyers and sellers will be formed.

While I was preparing for the Twitter panel at OMMA Social, discussing possible business models for Twitter, I was starting to have doubts about my initial proposal:

“Charge each company in the CPC model: Each visit to a corporate Twitter site and each corporate tweet should be charged just like a click.”

Sure, we know that CPM models or contextual ads won’t really work on Twitter. They will be ignored and spell doom for Twitter since the platform would have to rely on traditional advertising to support itself. And that’s the last thing you want to do in the economic environment and the rapidly declining value of display advertising. The CPC idea was intriguing since Twitter has become my personal Google, it’s a self-regulating ecosystem that will punish brands that don’t behave and it’s an amazing opportunity for small, local businesses to connect with people: Get your message out to followers and each click outside of the Twitter Universe to a commercial message goes right into Twitter’s pocket. Mildly intriguing but not a real game changer for Twitter. At the current valuation of $250M, Twitter would have to work with hundreds of thousands of small businesses to be able to sustain this price tag. Sure, a wine shop would pay Twitter $20 for 20 clicks to their special offer. But you need a lot of wine shops to get to $250M. And here comes VRM into play. Doc Searls wrote in the ProjectVRM Blog:

“VRM is about providing customers with tools that make them both independent actors in the marketplace and better equipped to engage with vendors. Those tools are in development. We need to get some of them out there before we can even begin to have arguments about whether or not they’ll work. Fact is, they will or they won’t. But they deserve a chance before we go salting the soils in which they need to grow.”

Do we really need to build new tools? Or is Twitter almost there to be the tool to issue personal RFP’s and become the VRM hub? When you use Tweetdeck, you have basically four streams: Main Stream, Replies, Direct Messages and Groups. You could easily add another column for your personal RFP’s. Brands would gladly pay a fee to receive leads and, whoever, wins the pitch, will pay a sales fee as well. It could go like (the % is my symbol indicating a personal RFP)

%Los Angeles Hotel Rental Car Flight Leaving Austin 1/28 am Returning 1/31 pm 3 Star and up close to Beverly Hills

People would to be able to engage brands on their own terms, could take the first offer or decide to negotiate, become a real partner and not just a target. Project VRM and Twitter should involve the early-adopter crowd that’s still dominating the Twitterverse and let them participate in the product development process, helping all parties to work out the kinks. I’m not sure building new tools is the answer. We have a great tool that aches to expands its capabilities. And the time is ripe for a new way to deal with markets. Why not strike while the iron is hot?

What do you think?

Microsoft missed an opportunity

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Last week, Microsoft posted a profit for Q4 2008 and to celebrate this occasion they laid off 5,000 employees. A post-industrial reaction to an information age problem. While other companies are proposing pay cuts to share the pain and save jobs, Microsoft chose the easy and lazy way out.

Instead, they should have used this unprecedented financial crisis to transform the company:

  • Engage every employee to improve financial performance, make everybody responsible to save money and, at the same time, jobs.
  • Use all available tools (Wikis, Social Networks, etc.) to encourage conversation and an open discussion how to transform Microsoft as a company and, possibly, change the overall mission.
  • Change the focus of Microsoft from sucking up to Wall Street and start delivering superior service by empowering each employee and allow them to transform the company one social interaction at a time.
  • Communicate this new focus to the world and change Microsoft’s image from a dark, gray monolith to a lively, personable, caring company.

These are tough times. Even for companies that hoard billions of cash on the sidelines. How you deal with the crisis and adjust your brand to the new reality is the game changer. Some get it. Microsoft clearly doesn’t.

We need more leaders, less followers

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Image by Mike Monteiro

“Diederich Hessling was a dreamy, delicate child, frightened of everything, and troubled with earache.” That’s how the novel ‘The Patrioteer‘ by Heinrich Mann begins (one of my personal favorites). Decades later, and we still have way too many Diederich’s in this world. They are afraid of everything but they are mostly afraid of taking a stand, developing a unique opinion  that’s not already filtered by the opinion leaders of op-ed pages, blogs and Twitter. And most of them are not only troubled by earache – their spine and brains suffers heavily.

Following opinion leaders blindly has lead to the financial crisis, a deep recession, the Iraq war – the list could be continued for pages. We should trust Greenspan, right? He knew what he was doing. We should trust Paulson’s request bailout package, correct? He should know how to fix the credit crunch. We should trust Colin Powell and his UN speech, correct? He seems so trustworthy and would never fool us, right? The culture in the US doesn’t allow for and most people are not able to tolerate a lot of ambivalence. There are just a few brave souls that publish their opposing opinions and stick to it through attacks. In the Social Marketing field, we still see strong challenges of opinion leaders throughout the discussion of the Kmart promotion but once certain opinion leaders say their piece, the majority falls in line and accepts their opinion as gospel. Frankly, I was almost shocked to see that almost nobody criticized the Panasonic coverage throughout CES . At one point, Twitter felt like QVC: people discussing the awesomeness of Panasonic, their products and all their people. (That’s my only concern with these kind of promotions: You’re spamming me with irrelevant information, tweets of people wanting to get a Sears/Kmart gift card, clogging up a very personal channel of information. You’re doing exactly what advertising has done for year, not adding value to my life.)

The Kmart promotion might be one seminal moment in the history of Social Marketing – suddenly PR excursions are okay because the opinion leaders said so. This is proof of Robert Michels’ theory of the Iron Law of Oligarchy: Democracy leads to Oligarchy. A few tell many what to do.

We’ve seen this attitude of ‘If you’re not for us, you’re against us’, played out in US politics in the last decades. We’ve seen it wreaking havoc on major financial institutions when dissenting voices were shut down very quickly. (Just watch CNBC and see how pessimistic analysts are basically shouted down immediately.) And, in the end, nobody is responsible for anything because the system failed. The model failed. Not the individual failed. Nobody is taking responsibility for anything, it was always the fault of something we fools won’t understand anyway. Sure, there will be a perp walk sometime soon (Maddoff, are you ready?) but the real issues behind the meltdown will be covered by the opinion leaders, blaming it on VAR or other acronyms most of us won’t bother to even try to understand.

Obviously, the Social/Conversational Marketing field is still in the honeymoon phase and I’m happy to see that open discussions are commonplace and democracy still reigns. In order to survive and thrive, Social Marketing needs more leaders, more thinkers, more outspoken personalities, more provocateurs. We need to be able to live with and live through ambivalence. Actually, we should cherish ambivalence as one of the most important values in our continued exploration of this new space. Dissenting opinions should be further explored and not painted over with the broad brush of majority opinion.  This little, nodding and spineless Diederich needs to be defeated. Each and every day.

From wants to needs

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Image by Mike Monteiro

We see a dramatic shift in consumer behavior: Pre-Lehman we wanted to have the newest gadget, wanted that flat screen, wanted the luxury car, wanted the luxury vacation, wanted anything bright and shiny. Not anymore.

This dramatic shift is reflected in the dramatic decline of auto sales, horrible retail sales, how deflation rears its ugly head and consumer credit sees the biggest fall in decade. These are the symptoms of a behavior shift that will be us for long time to come. 

Marketers love wants. Their main job over the last decades was to convert wants into needs. Based on the Abraham Maslow hierarchy of need theory, marketers mostly forgot about the basic needs of people and appealed to the need for self-actualization: This car will make you more successful. This gadget will make everybody else jealous. This product will complete you. Those times are over.

While people are struggling to deal with the new reality, they are only concerned about their basic needs: Air to breathe, Water to drink, Food to drink, Sex to procreate. Add to that the need for Safety and Security, the need for love and belonging, the need for the respect of our fellow’s and for self-respect. 

0-60 times have become irrelevant. Same is true for claims of cars as ego extensions. Instead, people buy cars to go from A-B safely, efficiently, without being disrespected by their neighbors. This changed mindset will increase the value of WOM, digital conversations and honesty in marketing. Sure, it was fun to live in a dreamworld of wants being needs, supported by flashy advertising and singing monkeys. But, the party is over.

Throw those champagne bottles and glitzy toys away and go back to the basics: Listen to the needs of people. Understand how this new reality affects them. And how it changes their thinking, outlook on life and behavior. Connect with them. Don’t try to fool them anymore. It stopped working a long time ago and it’s completely counter-productive in this environment. And, don’t get fooled: This is not a temporary shift. This shift is a permanent change. Just like your post-Depression generation didn’t jump on the materialistic bandwagon, this generation won’t believe in consumption as self-actualization anymore. 

Just like The Who said: We won’t get fooled again.

Loyalty Marketing is overrated

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Image courtesy of Thomas Voorn

I belong to a few loyalty programs: SkyMiles, Starwood, Priority Club, Virgin Flying Club, Virgin Elevate. But almost every brand tries to sign me up for more programs: Supermarkets, Coffee shops, Gas Stations – you name it. My basic stance towards loyalty programs: You continue to make a great product/deliver a great service AND your competition doesn’t trump your efforts, I will keep coming back. Offering me loyalty points and bribes perks won’t keep me around. There are a few exceptions to that rule: airlines come to mind. I love Virgin America and Virgin Atlantic, can’t stand flying with Delta. But my Medallion Status (second group to board, a few upgrades once in a while) and the possibility to afford a business class ticket through my SkyMiles keeps me around. And the fact that Delta flies almost anywhere while my favorite carriers don’t fly to little towns such as Seattle or Atlanta. Brand often mistake loyalty for retention. Retention is just a behavior. I do fly Delta because nobody of my preferred airlines flies to that destination nonstop and I do accumulate points. Loyalty is an attitude: I wouldn’t recommend anyone flying Delta. The whole Medallion thing is rather ridiculous, the product and service stinks. 

Real loyalty is becoming more and more important for brands. But loyalty shouldn’t be confused with points, cards and status. Besides the obvious product/service benefits, people are looking for intangible benefits from their brands: Samsung with their airport chargers, Zappos with their commitment to service, Prius as a symbol for being on the green revolution party. 

Sure, keep on offering retention tools: Coupons, supermarket cards and special retention offers will people keep coming back to your store. Especially when times are tough and you offer the best deals. But, ultimately, you put your business at risk just focusing on retention tools. Times will get better and people will get antsy, looking for the new, new thing. Unless you converted them to loyalists through your extraordinary product/service, to people that want to spread the message for you, you will lose them. And no promise of points will make them return.