The Revolution Picks Up Speed

As the internet continues to allow us to find others based on their point-of-view, experiences, willingness to eat fried bugs, whatever, an interesting new site has arrived.

Go check out www.telonu.com

Yup, that's it -- tell on you. Here's where you can complain, comment, even compliment just about anything or anybody. It's still in beta and will be much more valuable as more people find it and express themselves. But it could sure be a great place rant.

I'd go into more detail but I first must post a few words about my "favorite" company, Comcast.

First, build the relationship

At a presentation last night on social marketing the speaker offered the example of Upumpitup, a new site by Crystal Light. Neat site, created to help young women with their challenges and very well done. It's getting great traction with about 54,000 members and apparently growing fast.

As the presenter finished this part of his discussion came a question from the back of the room, "Have they seen a jump in sales?"

The questioner didn't get it. First you build the relationship, then you get the sales. At 54,000 thousand members, you're just starting. But with the growth, it's meeting a need. Then it will boost sales. And not just the occasional sale but loyal sales that just keep on growing.

Why don't so many marketing people understand the need for a relationship?

Take a look at the site: www.upumpitup.com

Another nail in the coffin of focus groups

Catching up on my reading from an August issue of BusinessWeek...

As any of you in clothing retailing know, Gap has had a few problems. They have hired a new design head, Patrick Robinson, a bit removed from their norm: he has worked for Anne Klein, Armani, Perry Ellis and others, none of which you'd compare to Gap.

He started with a few simple ideas, and you can tell he's not your classic MBA marketing guy. "For several years, Gap ... relied heavily on focus groups and spent little time in the stores. ... Says Robinson of a meeting with store managers. "They are the only people who don't have a motive except to sell product. I've said to every designer, 'Get into the stores and talk to the sales people.' "

What a concept! Actually talk to the front line, maybe even customers.

How many marketing people really are committed to getting their butts out of their comfy chairs and into the market. Talk to the customers. Find out what's really going on. It may save your butt, and your comfy chair will last longer.

Never over-promise?

One of the key tenets of marketing is to never over-promise. You're trying to build a relationship and the letdown the customer feels when they realize you won't deliver is often a deal breaker.

Does this hold true in politics?

It seems so many I know who voted for Obama have expectations so high I can't imagine he'll be able to deliver. In fact, I'm not sure he ever directly created those expectations; I think many people have read into his promise for change the expectations that they desire.

Best of luck. We don't need more cynics when it comes to politics and the political class.

Cutting marketing expenditures? Why not?

Addressing a high-powered group of marketing executives last week, one question they asked was about cutting marketing expenditures during a downturn.

Go cut. Why not?

Earlier I had polled the group as to their definition of marketing; only one had a good answer. The rest saw marketing as sales support or doing marketing things: ads, direct mail, catalogs, websites and emails, trade shows and so forth. They might as well cut their budget since they were wasting their money anyways.

Until you understand the fundamental basics of marketing and have a sound strategy in place, there's no reason to spend money on tactics.

Wow! Customer Satisfaction directly impacts stock price

While many marketers have intuitively felt this, there is now proof. The American Customer Satisfaction Index has made an exhaustive study of companies that consistently outrank their competitors. And those companies offer significantly higher returns to investors.

Customer satisfaction pays off.

So the next time your CEO cuts your marketing budget, remind him of his fiduciary responsibility to maximize the return for his investors and that marketing is the critical link to customer satisfaction.

Take a look. Interesting site: www.theacsi.org

A service that's great but shouldn't have to be

Gethuman.com is the place to go when you have problems with customer service. They have directions on how to access a human when you're caught in the usual ladder of menus. A great service. Too bad it's needed.

Taking a look from 30,000 feet, why even bother to have customer service if it's not going to be good. If you as a marketer are upset when people have problems with your product or service, get out of marketing. It's a fact of life -- things don't often go as planned. And when that happens you owe it to your customers to make it right, right now.

What a failure of marketing.

Irritating customer service very clearly states the company doesn't value it's customers. The customers may be the people who provide the money to pay the salaries of the employees, but all too often these same customers expect the product or service to work.

What were they thinking?

What a failure of marketing. What a failure of management. And then the CEO wonders why the company fails to grow.

I wonder why.

Life Imitates a Southwest Airlines Ad

Water is now $2 on US Air. How much do they charge for the oxygen mask?

If they lose one customer at a $300 fare, that's 150 bottles of water. I don't think they've repealed the law of supply and demand.

Fewer travelers, higher fares but they'll still be unprofitable.

Marketing Fads

Are you at all amazed at the continual fads of marketing? I have several friends who consult in other disciplines -- operations, finance, accounting -- and they don't have the fads that so typify marketing.

So what's hot now? W_O_M (word of mouth for those a little behind the curve), Web 2.0, blogging particularly (Like this one), ethnography (we'll follow you around, and you won't even know it).

Going back 30 years here are a few of the other big ones. In the early seventies, the big hit was promotions. Promotion agencies sprung up like weeds. Unfortunately many were. But a few really provided value; Frankel comes to mind.

Then there was direct. The big and the good are still around. But in the early eighties, if you weren't looking at direct agencies, you just weren't on top of it. And a few minor fads like fax spam, although it wasn't called that then, came and mostly went.

Then the fadulous nineties which gave us branding (back to the basics of customer value), the internet (do you have a website?), email ( it's not spam to me, much), which pretty much brings us back to now.

All of these fads spawned their specialists, their agencies, and all promised to drive your marketing through the ceiling. You would grow and continue to grow forever. (Actually, for many of the fadsters, you would pay and they hoped you would pay forever.)

At their core, each of these fads has just enough value to where it could help grow your company. But on top is all too much BS. And as the next fad emerges, the old fadsters, riding the past fad slowly die out. Good riddance.

The specialists and agencies that do survive all do so for the same reason. Underneath all the hype, the dogs and ponies, the PowerPoints, they understand the foundation of marketing -- understand your consumers so well you can continually innovate new ways to delight them.

The essentials of marketing haven't changed. Unfortunately so many marketers and their CEOs are always on a quest for the silver bullet, you know the one that only costs a few pennies and solves all your problems, that we will always have fads. The next fadsters see you coming.

Airline Pricing, #2

A friend forwarded an email that reinforces how the airlines are shooting themselves in the foot with their pricing policies. Does this sound like it was written by a happy, loyal customer?

NEW AIRLINE RULES .......... Attendant: Welcome aboard Ala Carte Air, sir. May I see your ticket? Passenger: Sure. Attendant: You're in seat 12B. That will be $5, please! Passenger: What for? Attendant: For telling you where to sit. Passenger: But I already knew where to sit. Attendant: Nevertheless, we are now charging a seat locator fee of $5. It's the airline's new policy. Passenger: That's the craziest thing I ever heard. I won't pay it. Attendant: Sir, do you want a seat on this flight, or not? Passenger: Yes, yes. All right, I'll pay. But the airline is going to hear about this. Attendant: Thank you. My goodness, your carry-on bag looks heavy. Would you like me to stow it in the overhead compartment for you? Passenger: That would be swell, thanks. Attendant: No problem. Up we go, and done! That will be $10, please. Passenger: What? Attendant: The airline now charges a $10 carry-on assistance fee. Passenger: This is extortion. I won't stand for it. Attendant: Actually, you're right, you can't stand. You need to sit, And fasten your seat belt. We're about to push back from the gate. But, first I need that $10. Passenger: No way! Attendant: Sir, if you don't comply, I will be forced to call the air marshal. And you really don't want me to do that. Passenger: Why not? Is he going to shoot me? Attendant: No, but there's a $50 air-marshal hailing fee. Passenger: Oh, all right, here, take the $10. I can't believe this. Attendant: Thank you for your cooperation, sir. Is there anything else I can do for you? Passenger: Yes. It's stuffy in here, and my overhead fan doesn't seem to work. Can you fix it? Attendant: Your overhead fan is not broken, sir. Just insert two quarters into the Overhead coin slot for the first five minutes. Passenger: The airline is charging me for cabin air? Attendant: Of course not, sir. Stagnant cabin air is provided free of charge. It's the circulating air that costs 50 cents. Passenger: I don't have any quarters Can you make change for a dollar? Attendant: Certainly, sir! Here you go! Passenger: But you've given me only three quarters for my dollar. Attendant: Yes, there's a change making fee of 25 cents. Passenger: For cryin' out loud. All I have left is a lousy quarter? What the heck can I do with this? Attendant: Hang onto it. You'll need it later for the lavatory. Airlines New Policies: 1 – 25 passengers on plane Add $35.00 per person 26 – 100 Passengers on plane Add $25.00 per person 101 – 200 Passengers on plane Add $20.00 per person 200 – 300 passengers on plane Add $15.00 per person 300-450 passengers on plane Add $10.00 per person We aim to get you there in one piece!!

Pricing is an art that the airlines haven’t mastered.

Most haven’t come even close. True, the airlines have a huge problem. With their fuel costs headed through 40,000 feet and climbing they haven’t been able to raise fares. With consumer confidence dropping, the consumer is cutting back, staying closer to home, trying to minimize their already sizable credit card debt. Business is keeping a tight rein on cost, cutting travel expenses.

Kind of the perfect storm for the airlines.

So what do they do? Fees, surcharges and charges for previously free services. By now you’ve heard that American is charging to check luggage. $15 for the first bag.

A friend just came back from a trip to Dallas with this story. She felt that the overheads would be stuffed as passengers tried to avoid the new charge. Running behind she realized she would be boarding late and most of the overhead space would be taken. So she checked her bag. But when she boarded she discovered there was plenty of space so she folded up her raincoat in the overhead. The flight attendant came down the aisle, removed her coat and handed it to her, explaining that the overheads were reserved for luggage. She had to fly all the way back to Chicago with the coat on her lap.

This was her last flight on American.

The airlines need to look at how the rental car companies alienated their customer base in the eighties doing the same thing. It created all kinds of ill will which led to lawsuits, the rise of discounters, legal constraints on collision damage waivers, FTC actions on advertising and promotion and a host of other painful problems.

Once again, Southwest has it figured out. Fair service. Fair prices, with no nonsense, hidden fees or last minute surcharges. They don’t seem to cutting back much.

A few failures -- a few successes. The study is out.

The results are in for the latest quarterly report of the American Customer Satisfaction Index. Using a sophisticated customer satisfaction algorithm, they measure 40 industries annually, reporting on 10 of them each quarter.

See if you're included -- and whether you're up or down. Or as Heidi Klum says, "Out!"

Go to http://www.theacsi.org/

When you get there, consider the likely results of the rumored merger between United and US Air.

By the way, the study is sponsored by the Ross School of Business at the University of Michigan and their business partners.

Go Blue.

I should handle your products because they taste great? No, don’t think so.

At the Fancy Food Show last week I noticed the strong similarities between the marketing approaches of the majority of the exhibitors. This was particularly true of the smaller ones, the ones with the 10’ by 20’ booths. The show features high-end gourmet food products. If you are looking for exotic cheeses, crackers, cookies, sauces, chocolates, candies and confections, this is the place to be.

The small companies – most of the exhibitors, are all looking to expand distribution. They are unknowns, many family operations, offering the kind of products you’ll find in the specialty section of the grocery store, gourmet specialty store, the liquor or party store, perhaps even gift shops. And if they have any distribution it's in a few local stores.

Their booths all shout the same message, “We taste great!”

If every exhibitor were to move down one booth, only changing the name on the booth, you wouldn’t notice a difference. The claims are all the same.

Here are the key questions:

“If the product doesn’t taste great would you exhibit?”

“If everything at the show tastes great, how do you decide on which ones to handle?”

“Is taste the most important criteria for distribution?”

Now, obviously not everything at the show tastes great. But there are no absolute dogs, either. Allowing for the differences in individual tastes, everything tastes pretty good, if not great.

So how is our distributor to choose?

The buyers have heard this claim so much they're deaf to it. It doesn't register.

Why can’t anyone address what the store buyer really wants? Truly wants? Deeply wants, in their heart of hearts?

Why can’t anyone claim that their product will jump off the shelf?

Think like a store owner.

As a store owner, that’s what I want, to own the product for as short a time as possible. Right after I buy it and put it out for sale, I want my customer to buy it. Right away. If not sooner.

At your booth I want to know what you’ll do to help it sell. What’s your merchandising plan? Coop? Sampling allowance? Display ideas? What should I be doing to accelerate sales? How should I display it? What other products go particularly well with it? What have you to say that will help me?

Dead silence.

Last year the show was held in combination with FMI, the marketing show for the big guys and Kraft, Nestle and the other big guns in the food industry all had mega exhibits. And they all told me how best to sell their product.

You might have thought some of their insight would have rubbed off on these small marketers. But no.

A few conclusions:

First, the customers who come into my store come because of what my store means to them. They are not coming into my store to find your product because they have no idea you even exist. They are my customers, mine. If you want me to give you access to my customers you are going to have to pay me. It cost me many dollars and lot’s of effort to create that customer base and it still costs me to nurture it. Don’t expect to have access without paying.

Second, maintaining that customer base is the most important thing I do. If you want to be exposed to the most important people in my world you need to tell me how you think it should be done. You must be willing to help. I want to hear your ideas, see your support, understand how you think you can help me. What will you do to help me grow my customer base?

If all you’re bringing to the party is “it tastes great” please stand over to the side, right over here, at the back of the very long line of others here before you who also only offer the same. “It tastes great.”

But if you can help me and my customers, well then, step right up here in front.

You better believe it – Distribution’s a business

So many marketers, particularly smaller marketers of consumer products, are under the impression that their distributors are their friends. Well they may be. But that doesn’t mean they handle your product at their sacrifice.

Distribution’s a business and they intend to make a profit as much as the manufacturer does. But being very close to the customer, they realize the key factor of marketing, the foundation of marketing is customer knowledge.

Distributors, be they grocery stores, hardware stores, bearing distributors or industrial distributors, work hard to build customer relationships. This takes work, effort, tools and money.

You see, for most distributors, the products they handle are essentially commodities. The customer can purchase the exact same product from some other distributor. Very few distributors have exclusives. Why should the customer purchase their Revlon shampoo from me rather than from the store down the street?

Because I have worked hard to build up a relationship with them.

Now you as a manufacturer want me to handle your product. Why should I do that? What kind of customer relationships have you built? Will my handling your product bring new customers into my store? Will it result in my customers being more loyal to me?

No? Well you better be prepared to “pay” because it looks to me like you want me to handle your product because of the customers I bring to you.

That’s going to cost you.

I may be your friend and we all prefer to do business with friends. But this is business now and we must be fair. I own the customer relationship and I’m not going to just give it to you.

I’m running a business.

Are you listening? They're talking to you.

I had the good fortune to address the MENG group (Marketing Executives Networking Group www.mengonline.com ) Tuesday morning regarding the essential premise of the book. Nothing like laying it out to almost sixty seasoned senior marketing veterans to get the day started right.

Afterwards the discussion was particularly stimulating. But the real challenge came with the thoughts regarding how to induce the change to solid marketing strategy in the corporation. The real need is for companies to pay attention to the needs/wants/desires/values of the consumer.

Chris Rollyson, (www.rollyson.net) Buck Brinkman and I continued the dialogue late into the morning when Chris suggested that companies may have no choice but to pay attention. The incredible spread of Web 2.0 allows all of us to bloviate about whatever, and favorite subjects are what’s wrong with what we buy, or perhaps what you sell.

You may be slandered without knowing it.

Great. You spend millions on advertising, your website, direct mail, catalogs, whatever and some punk customer is getting more exposure on the internet for free.

Think not?

Go to comcastmustdie.com and read a few of the entries. Bob Garfield, the columnist for AdAge Magazine started this last September with a post on his blog and it generated so much traffic and comments he had to create a separate site. This has been huge and still attracts tremendous following. Posters often include their phone numbers so Comcast can contact them, and some have even had luck. But Comcast attracts so much dislike management might want to consider taking control.

Now go to www.dell.com and click on the link at the bottom of the page, Dell Community. They have posted a blog for you, in fact several. They have taken charge; they have indicated they care; they have taken this further to indicate what they are trying to do. And it’s great. Involving your customers like this often creates remarkable loyalty.

That’s marketing. It starts with listening to your consumers, paying attention and then understanding. Dell took the challenge and delivered.

Comcastmustdie(.com).

Do they really understand "Churn"?

Interesting article on the front page of the Chicago Tribune, "Call for wireless regulation gets louder." This has been a long time coming. In 2000 there were 100 million wireless customers and 31 million changed carriers that year. All the industry talk focused on decreasing this churn.

And the churn rates have improved. Better networks, better phones, better equipment all around has reduced the amount of churn. Along with the general impression that all carriers are just not that good. Why switch from the devil you know to the one you don't?

The problems arise from the same challenge AT&T faced when deregulated. Customer Service. It stunk. And for the wireless companies, it still does. The carriers are great until you have a problem. Then they are terrible. You become their enemy.

And being an election year we're bound to have the politicians step in to solve the problem. The complaints are that frequent and loud that our representatives think this will help them with re-election. Wow. That's really bad.

But there isn't a law that can solve this. Until the wireless companies realize that customer loyalty and profitability have a strong relationship, that successful, growing companies actually care about their customers, they will have lousy service.

It's a dramatic failure of marketing and it leaves the carriers in a terribly vulnerable market position.

The first carrier that realizes the critical importance of building and maintaining strong customer relationships will dominate the market.

Who’s Job Is Marketing?

Last week I spoke to a group of travel agents, talking about my book, The Failure of Marketing. Granted, it was perhaps a little unexpected by the audience. But they paid attention.

And most of them didn’t get it.

Marketing is everyone’s job. Particularly if you interact at any level with the customer.

You have to understand your brand.

You have to believe in what your company stands for, what it promises.

And you have to work ferociously to deliver on those promises – to everyone – everytime.

I used the Oriental Hotel in Bangkok as the main example. Every employee there understands it. You will never experience service like they deliver. Personal. Caring. Attentive without being overbearing.

That is why this hotel is continually rated the finest in the world.

The hotel understands that the only thing that can distinguish them over the long run is their people and their culture.

Travel agents have had a difficult go of it the past several decades. Airlines and other travel providers have been cutting their agent commissions. The agents have tried to charge fees but their revenue has been hurting. Their customers have headed to the internet.

Perhaps they need to take a lesson from the Oriental. They need to understand the critical nature of providing service.

I provided them a road map. Most didn’t understand.

As a new day dawns?

BusinessWeek in their March 3 issue devotes their cover story and several additional stories inside to customer service rankings. They first did this a year ago and must’ve received a strong response for them to continue the series this year.

Believe me, this is much more important than the Fortune 500 rankings. For too long, customer service has been the dirty end of marketing, those small group of people over there who handle the malcontents. Companies have failed to realize that each reasonable call to a customer service rep presents a failure of marketing. Each call could represent the end of the customer relationship. And companies have failed to address customer service. Even after professing that terribly high cost of bringing in new customers.

Peter Drucker, in 1954, recognized that customer service should not exist if marketing is successful. That’s over 50 years ago. Do the BusinessWeek articles herald new attention to customer service? I hope so; it’s way overdue.

If you look down your nose at customer service, if you wonder why your marketing is moving at the speed of molasses, you should pick up this issue and read the articles. Pay particular attention to the article entitled, “Love the customers who hate you.”

Just what is marketing?

During a presentation of my new book, The Failure Of Marketing, we discussed the appropriate definition of marketing. Most agreed with me that marketing was about a relationship while sales were about transactions. However, most also defined the relationship as one in which the marketer provides a product or service and the customer provides money. I suggested that this was no more than a transaction that looked like this:

My audience argued that when a customer continually repeats the transaction over time it becomes a relationship. But, I countered, this still is not marketing. It’s simply a transaction repeated again and again and again. Here's the difference. When another company comes along with a new product that better meets the needs of the customer, the customer will shift allegiance. If this were truly marketing, the first company would always be looking to improve its product whether by meeting changing needs or adopting new technology.

This customer relationship looks like this:

Notice here that the customer is at the top and provides to the marketer a discussion of needs and wants. The marketer now understanding the changed needs of the customer creates a new or improved product that better meets those needs.

This is a dynamic model of the marketplace that reflects the reality that customer needs and technology are continually evolving. If the marketer is going to gain and maintain the loyalty of the customer, he must continually monitor these changing needs and create innovative products that better meet them than his current products.

That’s how you create customer loyalty. That is marketing.

Old Wine in Old Bottles?

Ad Age published a book review this week. The book, Stopwatch Marketing, a tome on marketing strategy, appears to highlight time as the key differentiator in the consumer's buying decision. The authors propose that there are four classifications of shopper: impatient, recreational, reluctant and painstaking. Their key differentiator, according to the review, is time.

Now the four typecasts they create are nothing new. But time as they fashion it is a dependent variable and hardly the most important variable in the mix. For example, their last classification, the painstaking shopper, is "characterized by fear of making the wrong decision." Their thesis is that because of that fear the marketer has more time to convince the buyer. But because of the fear, the buyer may leave with remorse.

They then offer a case history featuring Lexus, which due to their dealer training, reduces this remorse by recognizing the fear.

Just what does this have to do with time?

I have several friends who purchase cars every two years. They take their time because they really enjoy the process of shopping -- the test drives, the comparison of specs, talking with the sales people. They can shop for weeks before their purchase. After they purchase, they have little remorse.

Yet another friend is terrified of purchasing a car and always asks friends to go along. He is just not confident about evaluating cars. But once he decides he's going to go out and buy a car, he takes considerably less time than my first friend. And afterwards he, too, has little remorse.

Then again, I've had lunch with friends who have buyer's remorse after ordering a sandwich at Subway. Hey it's a sandwich. It's only a few bucks. But there's remorse.

Time and again in the examples highlighted in the review (and this assumes the review accurately reflects the book) time is just not a critical factor.

So much has been written about purchase behavior, and so many consultants have proffered hypothesis on why and how people buy that I'm not sure we need another. And when that other is parsing purchasing behavior based on time, well, there seems to be little that's new.

And somehow I think I've read this before.

Goodness, this will be one huge marketing war!

About two weeks ago, McDonalds announced they would be adding gourmet coffees to their menu by building new coffee bars in their restaurants. They presented this like a natural expansion of their coffee business which they have been trying to improve for several years.

Of course, Starbucks has been selling breakfast bakery items for several years but recently has been expanding into cooked egg items and luncheon items. And they announced about a week ago that they would begin selling regular coffee for a buck -- with free refills.

Take that, McDonalds!

Now Dunkin Donuts has joined the fray. They're redecorating stores, investing heavily in new locations, expanding existing ones, expanding their breakfast and lunch menu and spotlighting their espresso beverages.

Take that, Starbucks!

It appears that the three will meet somewhere, perhaps out in a rural field or under a viaduct in a back-of-the-yards neighborhood, to slug it out, lit only by the headlights of the cars they arrived in.

Should be fun to watch. Although with that much caffeine we may be up all night.

The disconnect is larger than the author thinks

A prominent author writing in a journal published by a well-known consulting company wrote:

"There is often a fundamental
disconnect between marketing and sales. Marketers,
both a company’s own marketing department and the
agencies it works with, don’t pay enough attention to
the point where their efforts should hit home, the
moment of purchase decision. That is where sales support
is absolutely crucial. But by ignoring the motivations
and interactions with a company that drive
customers to choose one product over another, marketers
are missing the opportunity to uncover critical
insights that can dramatically affect results."

They are right, there is a disconnect. But the disconnect is with their knowledge of marketing.

First, they are focused on transactions. Marketing is about creating and nurturing customer relationships. As soon as you focus on transactions you turn into a sales-focused company.

The authors then go on to suggest that marketing deliver the tools and support that the sale person needs to close the sale.

At this point, the transaction becomes a zero-sum game and any pretense of marketing is lost. As great sales people know, relationships are critical and what they as sales people do between sales is more important than their actions during the actual purchase. If they have built a solid relationship based on serving the customer's needs, they'll get the order.

That's the basis of the relationship.

But articles like this just hinder the growth of real marketing and continue to give marketing and marketers a bad name.

A failure of marketing.