The Failure of Marketing

Irritation as Marketing Strategy

2009-11-06T09:10:00.002-06:00

Can you irritate people into becoming your customers? What a concept.

But some idiot attempting to market a Canadian (?) pharmacy is working cleverly to do just that by sending remarkable quantities of spam my way. What's clever is that the person has thought up all kinds of almost plausible names that shoot right by my spam filters with the subjects always something almost requiring legitimate attention, once again shooting past my spam filters.

Now I've caught on to the game. I know what to look for. I just need to educate my spam filter.

But is this any way to get customers? Don't think so. The only relationship the spammer's built is to educate me to his stupid attempt to drum up business.

Unfortunately too many "business people" figure they can sell you if they can only get you to visit their site, apparently feeling their value proposition is so weak it won't meet that first test of attracting your attention. So they try subterfuge to get you there. Why should a prospect trust the seller if the initial approach is to lie?

One can only hope they go out of business quickly.

The Critical Mental Flip

2009-09-16T11:27:00.002-05:00

So many companies fail to grow for two fundamental reasons: first, they are wedded to their products and second, they measure themselves against their competition.

It's natural to fall in love with your product or service. It's defines what you do. It's how you defined yourself. "My company is the leading supplier of widgets to the world." But to the rest of the world, particularly your customers, it's not what you do. They don't buy your product or service, they buy what it does for them. The product of the product or the product of the service.

And you measure yourself, naturally, against your competitors. You've been doing it since grade school. Who had the better grades; who won the football game? So, "we're growing faster, or we're larger or we have higher quality standards or we're more profitable." We all want to be the best at what we do -- better than the competition.

Here's the problem. The most important person in the entire equation hasn't been mentioned yet -- the customer. They are the ones who put up the money that buys your plant, your raw material, pays your labor and all your other costs, and if you run a cost-efficient business, some of their money becomes your profit. But it all starts out as their money. So maybe you should pay attention to what they think, what they believe.

They don't purchase your product or service because "you're the leading or the biggest or the fastest growing or the most profitable." They buy it, they pay their hard-earned money for it because they want what it can do for them. And they've judged that what they buy is the best at doing that.

They don't really care about your product. Or you. Or your company. Or how fast you're growing. Not a whit.

Maybe now they're your loyal, loyal customer. But along comes someone else with something that does what they want to do better than whatever it is that you have been offering. Then that customer becomes your ex-customer. And that someone is all too often not one of your old, familiar competitors.

You're now yesterday's news.

Why didn't you develop that new product that has just captured your customer?

It's simple -- you love your product more than you love your customer.

How do I know? It's because companies that love their customer more than their product or service, continually grow. They set the curve. They value innovation. They continually try to obsolete their own products. Their customer's values are more important.

They have made that mental flip from loving their products to loving their customers.

United breaks guitars ... and more than a few customers

2009-08-25T12:29:00.003-05:00

A friend sent me a cool video created by Dave Carroll after he had a terrible and expensive experience with United Airlines. As he was traveling with his band, United baggage handlers threw his guitar case off the plane, ruining it. After nine months of frustrating dialogue, United finally and flatly denied responsibility and his claim. He responded by posting a music video on YouTube. You'll find it by searching for "United Breaks Guitars"on YouTube or Google "United Airlines" and you'll find it as the third listing.

Pre-internet, the general rule of thumb was that one friend telling another would eventually reach about 100 people. With friends emailing stories to friends who then forward them to more friends, this now must reach thousands, maybe tens of thousands or more. While I doubt that United really wants that kind of negative exposure, it sure won't result in a noticeable dent in their business.

But as of now, the video has been viewed over 5 million times. And this is increasing by about 30,000 more viewers per day, equivalent to 60 planeloads of a 747. This might actually hurt United.

Like so many have said so often, the internet is great for connecting marketers with their customers. More importantly, nothing connects your customers with your other customers like the internet. We are all turning into evangelists and critics. Marketers need pay attention.

United clearly doesn't understand that the most important principle of marketing -- your job is to create and nurture customer relationships -- has more impact than ever before. In United's case, 5 million and counting.

This can't be good for United's business. If they had just apologized and tried to make good for their employee's negligence they'd still have Dave for a customer. No video; no 5 million hits on a very persuasive critique of their service. I guess they've lost more than enough fares to pay for the guitar several times over.

The internet forces you to follow the most basic tenant of marketing -- it's about customer relationships not transactions -- or pay big for it. Those are your only choices. Ignoring customer complaints is no longer an option.

Companies finally start to focus on Customer Satisfaction

2009-07-27T08:41:00.003-05:00

I guess it takes a downturn before the companies that don't like customers begin to see their error. The latest report from The American Customer Satisfaction Index is out with a few surprising findings:

Sprint has improved. The average subscriber only called customer service four times last year, down from eight. I guess this is good.

Comcast, another favorite, cut repeat calls 30% last year. Hmmmm.

US Air reduced mishandled baggage by 43% in 2008 compared to the prior year. Wonder what they'll do this year now that they charge for checking your bags? And passenger complaints fell 35% in the first quarter. That's worth celebrating. Wonder what they did.

And Southwest, with the best customer satisfaction scores in their industry cut passenger complaints 56% in the first quarter.

Wonder why United wasn't mentioned in the article.

A few knew there would always be a future

2009-06-30T09:07:00.005-05:00

Interesting article in Ad Age yesterday titled, "Unilever, Walmart, P&G Buck the Short-Term Trend." While the premise of the column is that all three companies are focusing on the long-term, having scrapped the Wall Street tradition of quarterly investment advisories, what was more interesting were comments on their marketing activities.

If you compete against any of these three, particularly P&G, watch out. Their CTO predicted that 2010 would be their biggest year in a decade for innovation. They are out to capture your customers with new products, expensively developed when others were cutting costs.

Knowing there would be a tomorrow, a future, knowing that the best time to drive your business is when everyone else is pulling back, P&G maintained their relentless drive for growth. They saw the terrific opportunity when so many others saw the potential for disaster.

Where are you now? Where will you be when your competitor pulls "a P&G?"

Is this guy interesting or what.

2009-06-10T15:32:00.002-05:00

David Meerman Scott delivered the keynote at BMA National Convention, addressing the group with thoughts and examples from his books, "The New Rules of Marketing and PR," and"World Wide Rave."

He has a great take on the impact of internet marketing and Web 2.0. Check out his site at www.davidmeermanscott.com or his blog at www.weblinknow.com.

He's one of the most thought-provoking speakers on this subject.

The Terminix Gaurantee

2009-04-29T09:02:00.002-05:00

I just received my second mailing in three weeks from Terminix. For under $25 per month they guarantee to protect my home from termites. The card details all the terrible things termites might do to my home. But they guarantee they can protect me.

Terminix should ask for a similar guarantee from their list provider. Their mailing to me is not much of an endorsement of their marketing prowess. I live on the 14th floor of a high rise, made from concrete and steel. We're in a zip code where I'd be surprised if there were more than 10 structures made from wood. The buildings are either concrete high rises or steel high rises. Only a few wood buildings remain.

Not much for termites to munch on.

Apple: Doing it right pays off

2009-04-23T13:07:00.003-05:00

Apple is absolutely one of the best marketing companies in the country. They understand their market; they design products their market will love; they promote them brilliantly, distribute them carefully and price them accordingly.

And while a good part of the rest of the world is wondering where the next sale is coming from -- Apple reported a 9% growth in revenue. Not too shabby. But, as they say, there's more.

AT&T reported a net increase of 1.2 million wireless customers driven by iPhone sales.

When you really understand the gut of your market, you can really drive growth -- even for your distribution.

Great marketing.

The end of tea leaves?

2009-04-14T14:28:00.003-05:00

Michael Fassnacht wrote an interesting article in Ad Age today, "The Death of Consumer Segmentation," his basic premise being that the traditional segmentation methods of geo- and demographic segmentation don't work.

What a shock.

They didn't work in the past; why should they work now?

For way too long marketers have attempted to understand purchase behavior based on surveys. If most of the people who purchase our product wear blue shirts, then we should market to people wearing blue shirts.

Or the better marketers tried to make sense of the numbers, sitting quietly in their armchairs, way up in their ivory castles, far removed from the consumer asking, "Why do people in blue shirts purchase more of our product?"

And a few even smarter, asked consumers, perhaps in focus groups, "Hey, you in the blue shirt, why did you buy our product?"

But none of this resulted in more effective marketing. Lots of numbers, lots of ideas, but not much better.

A very few have an even better idea, let's really get to know our consumer, not as an abstract set of numbers and abstract ideas, but as people, real people with needs, wants, aspirations, successes and failures. Really know them.

Then we might find segments that differ. And some might be worth more than others. But by knowing them intimately we will understand why they purchase, we'll be better able to help them purchase and they will be better satisfied with their purchase.

How could you ever expect to understand this by reading tables, charts and tea leaves?

Not to hammer on the airlines too hard, but...

2009-04-04T17:39:00.003-05:00

So, in my last post I suggested that a CRM tool for most airlines was a waste given that the tool is only as good as the craftsman. And airline personnel tend not to really care about customers. Why give these people a sophisticated tool like CRM when they have a tough time saying, "Hello?"

Today I came across Tim Parry's blog on Chief Marketer -- chiefmarketer.com -- entitled, "American Airlines Sucks, and I'm Not the Only One Who Says That." His problem started, "When the customer service luddites don't have the common courtesy to help my elderly mother and I at a kiosk ... as we're running late to catch a flight, that's a customer service issue. When the customer service guy laughs at my mother as she tries to figure the kiosk out, that's even worse. And then we're told we can't get onto our flight because we're now too late for a boarding pass, it's a big issue."

Do the senior managers at American really think they'll improve customer service by implementing a CRM system?

Not a chance. The tools aren't the problem; it's the people and their culture.

And this also points to another of my main themes -- this blog drew 17 comments this past week. One complaint inspires 17 others to air their grievences. Which can only convince the readers that American is the last airline they should consider.

The internet revolution continues to roll.

Do You Remember -- " It's the computer's fault?"

2009-03-25T09:59:00.003-05:00

Scott McCartney's latest column, "The Middle Seat," for The Wall Street Journal brings back those heady days of blaming the computer for everything. The title of his post is, "Your Airline Wants to Get to Know You." He announces, "Airlines are getting closer to rolling out new technology that tells airport agents your ticket-buying and travel history, flags key customers to flight attendants and instructs them to offer personalized apologies, or sends you sales targeted to your vacation patterns."

Whoop. It seems the airlines have discovered -- now wait, don't get too excited -- CRM technology.

If the airlines wanted to apologize for poor service, they don't need a computer to do it. Say they lost my luggage. When I point this out to them they capture my name and address, the better to return my luggage should they ever find it. If they want to apologize, that's the time to do it. They can send me a letter and perhaps a free drink coupon or upgrade.

What the airlines haven't discovered is that the technology is totally dependent on the service person to use it. And this doesn't happen by fiat. The service people, those facing the consumer, must want to use the tool.

And right now, the only airlines where this is part of their culture are Southwest, Alaska -- used as an example in the post -- and Midwest.

Great tools are one thing; great tool users are another. And the legacy airlines don't have the necessary skills to use the CRM tool. They're not even close.

They're the last bastion of that great quote that went out of fashion everywhere else in the '70s. It's the computer's fault.

They don't need the tool. They need the skill to use it. Michelangelo's chisel in my hand would never result in "David." CRM at the legacy carriers won't result in great customer service.

Attitude

2009-03-06T23:09:00.002-06:00

Yesterday at the BMA luncheon the speaker mentioned, "We are choosing not to participate in the recession."

And they aren't.

That's attitude.

So they continue to grow when so many are not. What do they know that the others don't?

The know that companies still need to purchase their products. They know that they have to build market share. They know that they must be better than their competitors. They know that their service must be the best. They know they can't cut back but must, in fact, be better than before.

These are the times when the market finds out what you're made of.

And they're out to prove they're made of the best.

So they continue to grow and their competitors participate in the recession.

Attitude.

Let’s Ban “Sales”

2009-02-16T20:04:00.001-06:00

What? In times like these? We need all the sales we can get. Don’t we? Sure do. But what I’m talking about is the word, “sales.”

It’s a bad word. And I don’t mean “sales” as in marked down prices. I mean calling the top line of your income statement, “sales.” Yes, those sales. Sure you want that number as big as you can get it. But calling it sales is not only a misnomer; it often leads to problems that hinder its growth.

First, management problems.

You want more sales. So what do you do? Hire another sales person, raise goals, change bonuses, jigger with the territories, what else? How can you increase sales, particularly now? Just push harder.

Not only will those actions not increase sales, they’ll confuse and demoralize the sales force resulting in lower sales. If you increase sales from these efforts, you were mismanaging your sales force.

Second, sales force issues.

Your sales force often thinks they are responsible for sales. That is unless there aren’t any. Then marketing, pricing, engineering, or a competitor is the problem. And every sales person seems to have a solution to the problem but the sales force as a group can rarely reach consensus. And if you intimate that they might even be a small part of the problem, you’re in trouble.

Here’s the crux of the problem.

Your sales aren’t really aren’t sales. They’re purchases. And there’s a world of differences between your sales to customers and their purchases from you. This may sound simply like semantics but it’s all about who does what to whom.

Selling and sales imply you have control over the outcome. You don’t. Your customers have control, not you. They purchase. They make the decision. You can try to influence them, in fact, you should. But in the end it comes down to their decision.

Not yours.

If you continue under the illusion that you sell your product, thinking you have control, you make all the wrong decisions. You’re bound to. You don’t understand the problem. Here’s where you need to start.

Start thinking about how you can earn more purchasers. What else can you provide them? What can you change, enhance, improve? They know and they can tell you. But only when you – and the purchasers – recognize that you aren’t selling but helping them purchase.

They can help you build a better product or service.

They can help you figure out how to price it.

They can be very helpful with distribution.

And they can help you promote it with just a nudge from you.

So yearn for more purchasers making more purchases. This will take you much farther than “sales.” And your sales personnel will also realize that their job is helping the customer purchase.

(With credit to Bob Lambert, Samurai Business Group)

What is marketing Part 23,789,478,422,783,...

2009-02-11T16:56:00.003-06:00

A respected website developer -- if you want his name, send me an email -- authored this comment in an article, "The Web is a conversation. Marketing, by contrast, is a monologue… "

He should know better. Another one confusing advertising with marketing.

Hey, folks, they're different. Advertising is part of marketing. But to equate the two is like thinking your tire is your car. It's a piece of it, an important piece at that. But it's not your car and advertising is not marketing.

Once again, marketing is about creating and nurturing customer relationships. Conversation is necessary to accomplish this. Absolutely critical.

Until business managers understand what marketing is, businesses will suffer crappy marketing.

Time to get with it. Particularly in this economy.

And now the airlines take a hit

2009-02-03T14:22:00.002-06:00

Wall Street Journal article today -- in the online version you can catch it at http://online.wsj.com/article/SB123362464275141955.html . The title is "When the Airlines Make the Rules" and discusses the arbitrary and customer-unfriendly rules of the airlines. The author, Scott McCartney, highlights some particularly nasty policies at both American and Continental. New policies, new rules. As if the old ones weren't bad enough.

How would you like your company to take hits like this. In the Wall Street Journal no less. But to add more heat to the fire, the online version allow readers to comment on the article. Relatively quickly there were 25 vitriolic reader comments. Not one in defense.

And the anecdotes in both the story and the comments, well, they make driving look like a pretty acceptable alternative.

How long can the legacy carriers continue to anger their customers? Don't their BODs ever hold managers' feet to the fire, asking, "Why aren't we more like Southwest?" (which was widely complimented in the comments.) Why would you ever want to hold the stock in these companies?

The "big" three automakers never quite maddened customers the way the airlines have. Look how far Detroit has fallen. The legacy carriers can't be too far behind.

And then they'll wonder why. Talk about failures of marketing.

Fine Chocolate Lovers Take a Hit from Hershey

2009-01-29T13:34:00.002-06:00

Hershey announced yesterday they were closing the Scharffen Berger Berkeley plant. Those of us who had visited the plant knew it as more than a plant. It also had a terrific although too small restaurant. The people who worked at the plant obviously loved as family making special chocolate. The plant tours were delightful and full of their passion as lovers of fine chocolate. A tour and a lunch was a memorable experience that symbolized the meaning of the brand.

Now it's gone.

Hershey either didn't seem to know or else didn't seem to care about the symbolic importance of that plant to the brand. It embodied the brand; it served as a solid touchstone of what Scharffen Berger meant, much more solid, tangible, touchable, than any written brand description of promise and personality will ever convey.

Now it's gone.

Hershey purchased Scharffen Berger and Joseph Schmidt to gain entry into the rapidly growing premium segment of the chocolate market. While they are one of the largest chocolate companies in the world, entering this elite club of fine chocolate eluded them and the other large American chocolate companies. Europeans and a few specialty chocolatiers were driving the market as Americans discovered the many French, Belgium, Swiss and other European fine chocolate makers. Rather than learn how to manufacture and market to this fine niche, Hershey bought.

Back about thirty years ago a few enterprising foodies started Dove Chocolates in Chicago to offer an incredible chocolate ice cream bar. The ice cream was from rich whole cream, the chocolate rich and thick. But then they sold to Mars. And slowly it changed. Now Dove is still a good ice cream bar but it doesn't carry the cache it once had. It went from being the Ferrari of bars to just being a fast BMW. Companies that value tonnage rarely have the fine touch to stay on the leading edge of a specialty market.

And now Dove is chocolate pieces, and cookes and whatever. An expensive Hershey bar.

Hershey will never understand the challenge of being a specialty marketer. It is not in the genes of a company that large. They understand tonnage. Not specialty. Just another Mars.

The challenge of creating and nurturing the customer base for a specialty product is in a different world than marketing Hershey Kisses. Tonnage marketers fail to understand the critical importance of a touchstone such as the Berkeley plant. They think they can use their tonnage approach to market their specialty product. The customers are different; they value different things. And they expect that their loyalty will be honored with challenging new and exotic tastes.

Kisses with caramel doesn't work.

Scharffen Berger will probably continue to be a great -- at least very good -- product. But when the chocolate market continues to move to greater heights, to country of origins, to fine chocolatiers like Vosges and the many fine Europeans, Hershey will once again be left behind as they watch their specialty brand turn into just another very good chocolate.

It's not that they closed the plant. They closed the soul of the brand.

A Parable

2009-01-25T13:32:00.001-06:00

Let's say you want acorns. Lots of acorns. What do you do -- you go out and purchase an oak tree.

Then to get lots of acorns you become skilled at making that oak tree "happy". Water, some fertilizer, plenty of sunshine, good soil. Everything an oak tree could want. And then it gives you plenty of acorns.

But you want more acorns. Lots more. And you have mastered making that first oak tree happy. You can't make it happier.

You need another oak tree. And you treat it like the first one. And it gives you many acorns.

The finest in Chocolate Milk

2009-01-19T15:53:00.002-06:00

At the market today I noticed a new product. Always on the lookout for anything new and for anything chocolate. This was both so it really stood out.

And it stood out for another reason -- $5.49 for a 32 oz bottle.

Liquid gold. But the packaging was classy, the bottle made of glass. Great design. And it had a whole paragraph of how this was good for you because chocolate was so good for you. And then another paragraph about the milk which was from organically grass fed cows. And the milk had not been homogenized and contained something that actually helped your cholesterol.

But did I buy it -- almost. It had too much sugar.

Maybe tomorrow. At that price it's got to be grand. Doesn't it.

Funny how a high price, great packaging and a good story all add up to our impression of a premium product. While that packaging has to cut into their margin, they would never get that price with cheaper packaging. Stories come free -- with good storytellers. Although, organic milk has always carried a slightly higher price.

This is a great paradigm for the small CPG marketer. Because of the small size, distribution takes a lot of the margin. If you can create enough margin, you'll build up the funds to build a brand as a premium product. With the growth of the brand, the leverage of distribution diminishes while your margins just grow.

Sweet.

Great Moments in Marketing 103

2009-01-06T09:52:00.002-06:00

Having passed through fatherhood some years ago, I find the E-Trade baby spitting up a reminder of days gone by.

But not good days.

I particularly remember having my then baby daughter spit up, her breakfast running down the front and back of my suit as I was leaving for work. Yeeech.

Does anyone else find this baby annoying?

Does annoying make good advertising?

And why does the Scottrade guy fly around in helicopter - other than to write it off?

The Revolution Picks Up Speed

2008-12-11T16:42:00.002-06:00

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

2008-11-20T10:30:00.003-06:00

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

2008-11-11T13:30:00.002-06:00

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?

2008-11-07T09:59:00.003-06:00

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?

2008-11-03T15:03:00.002-06:00

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

2008-10-06T16:12:00.004-05:00

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

2008-10-06T15:56:00.004-05:00

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

2008-08-11T13:00:00.003-05:00

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

2008-07-18T15:16:00.006-05:00

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

2008-07-02T13:58:00.002-05:00

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.

2008-06-10T12:02:00.002-05:00

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.

2008-05-21T17:18:00.003-05:00

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.

2008-05-07T10:51:00.002-05:00

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

2008-04-17T14:00:00.001-05:00

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.

2008-04-03T15:02:00.003-05:00

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"?

2008-03-21T10:46:00.005-05:00

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?

2008-03-10T16:06:00.000-05:00

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?

2008-02-26T13:07:00.000-06:00

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?

2008-02-22T16:39:00.002-06:00

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?

2008-02-07T15:12:00.000-06:00

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!

2008-01-25T09:17:00.000-06:00

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

2008-01-18T16:22:00.000-06:00

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.

The Limping Leopard

2007-11-20T16:12:00.000-06:00

Eric Zorn, a popular columnist for the Chicago Tribune took out after Apple and their new operating system, Leopard. He attempted to install it with terrible results and ended up paying $468 to Apple technicians to have it fixed.

Not a happy camper. But, as he pointed out, that is the gamble you take as an early adopter of technology.

But on his blog, an astute individual -- a potential great marketing person -- had this insight:

For early adopters the marketer should provide a safety net of a warranty that protects against undiscovered bugs.

What an idea! Perhaps this would have saved Apple from having a very popular columnist in a major market trash the company for their lack of caring for customer relationships.

What a thought.