Emergence Marketing: March 2006 Archives

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March 30, 2006

Mercedes - a case study on how to squander a great brand

Almost 5 years ago - I decided to buy a Mercedes E320 for my wife's birthday. The brand attributes that were appealing to us at the time were:

safety - important as she was driving around our 6 year old son in New England weather
reliability - we trusted that the German engineering would not cost us a fortune in service charges
a relationship - we were looking for a relationship with the car manufacturer instead of a dealership . We were told that we were buying a Mercedes, and that all promises would be honored by any dealer - no matter which one
luxury - that is what the brand stands for after all
status - in hindsight there was unfortunately some of that

It did not take long for us to realize that Mercedes was not delivering against most of its implied brand promises.

I bought the car from Herb Chambers' Flagship Motorcars, as they were the only one willing to provide me with a quote via the Internet at the time. Soon after we bought it, various parts of the car started to break down and the engine started to lose oil. And soon after that we found ourselves looking for an alternative dealership as we were very dissatisfied with this dealer's service level. One dealership, which was actually closer to us, did not have Saturday servicing. Nor were they willing to provide a loaner car during major services to customers who did not buy the car directly from them. So much for the promises across dealerships.

We ended up with Foreign Motor West, a 45 minute drive from our house, and over the years spent thousands of dollars with them on all kind of problems, which ranged from small things, like various indicators and buttons failing, to bigger issues such as a leak in the air conditioning system in year three which unfortunately could never be located and resulted in repeated air conditioning failures, to brake problems, to the ongoing oil loss problems and more expensive repairs for things I don't even understand - nor care to understand. What I do know - it is a long, too long list.

Less than a month ago we had the car serviced again - this time it needed a new air flow meter and a few other things - costing another $1,100. Three weeks later , while driving to our son's birthday party, my wife's car blew up on the highway less than 3 miles after leaving the house. To our surprise, Mercedes Roadside assistance did not cover the tow - which ended up costing $5/mile. We had it towed, at our expense, to the nearest dealership.

But the biggest surprise came a few days later when they called us from the dealership with the estimate for repairs. Turns out something had blown a hole the size of a quarter in the side of the engine. Which meant we needed a new engine. The cost: $14K!

I am not a car expert, but I feel confident saying that a 5 year old Mercedes with 100K miles (mostly highway miles), should not blow a hole in the engine. The dealership where we had the car towed to told us there was nothing they could do other than putting a new engine in. When we contacted our dealership they towed the car back to their garage for inspection, only to get back to us a week later and tell us that the engine had overheated because there was no antifreeze in the car. A rather important point here: the other dealer had told us that the reason there was neither antifreeze nor oil in the car was because of the aforementioned quarter-sized hole in the engine.

Now I really felt taken for a ride (and not the smooth, luxurious one Mercedes promised us)... Mercedes was turning what should have been their problem into a chicken or egg problem - did the hole come first or did the antifreeze disappear first? And they were blaming me for not having antifreeze! Where, oh where, did the antifreeze go in the three weeks since they ran all their sophisticated electronic equipment on the car? Maybe most Mercedes customers are stupid (including me for being motivated by emotions instead of economics), but to me (and the other dealer) it seems obvious that the antifreeze leaked out after something blew a hole in the engine!

Still believing that this was just a bad movie and that nobody at Mercedes corporate would want anybody to perceive their brand this way, I wrote to Mercedes customer service asking for their help and also emailed a few PR folks as well as their newly minted VP of Marketing - Mark McNabb - asking for help. I never heard back from the office of the Vice President, but someone from their PR got back to me and introduced me to Paul Juron, the GM for the Customer Assistance Center. I pinged him twice but never got any response. Finally I did get a response from someone in his department - simply stating "Thank you for your recent e-mails to Mercedes-Benz USA, LLC. After review, I have been asked to respond on our organizations behalf. Arrangements have been made for your concerns to be reviewed on a local level; you may expect further contact shortly, if not already." Well, as it turns out, the local decision stayed the same...it was deemed to be our fault/problem that something got loose in the engine and blew that hole in the engine block.

My final analysis? No wonder Mercedes has tumbled to 21st in the most recent JD Power Satisfaction Survey. It is mind boggling (instructive too) to witness and experience how such a prestigious brand has fallen so far so fast. And while I've learned something, believe me that it's been no fun being on the receiving end of this knowledge.

Oh one more thing: Mr McNabb, if you happen to stumble upon this post, I would like to extend you a complimentary invitation to our upcoming Innovative Marketing Conference's CMO Summit - a $1,500 value. Not only would it be fun to have you there to discuss Mercedes as a case study, but you might actually walk away from the event with some valuable lessons on how to do the right thing for your customers.

Check here for the rest of the story, and here for another follow up.

Other posts linking here:
Pito's Blog
The brandbuilder blog

PS - if you like this story - please digg it!

[Technorati Tags: Mercedes Mercedes customer satisfaction mercedes benz e class Foreign Motor West Flagship Motorcars customer service]

March 29, 2006

[announcement] innovative Marketing Conference with The Columbia Business School

As you will have noticed from the button in the sidebar, Corante is organizing a two day marketing event in partnership with the Columbia Business School and the Center for Global Brands. The event will be held at the Columbia University campus in NYC on June 8th and 9th and promises to be a chock full of interesting activities and sessions. You can find up-to-date information about this event at http://events.corante.com/imc.

The first day of the event will be a highly interactive day for a small group of VP's of Marketing and CMO's. The main premise is that the current marketing rule book has dissolved and that we are in need for a new marketing foundation. During the first day we will tackle 3 main topics - the emerging challenges related to creating new products and services; "attention" being the new scarcity in the marketing value chain; and whether you have the right skill sets in your marketing department - or whether we actually still need a traditional marketing department. Those three topics will each be introduced with a short 10 minute provocative point-of-view. Following those intros, attendees will split up in smaller groups to discuss those topics from slightly different angles with qualified facilitators. So for example, following the attention scarcity point-of-view, one group might go off and debate what attention scarcity means to reach your audiences, while another might go off and debate what attention scarcity means to your brands. Following those small group discussions, the group as a whole will reconvene, where we will have report-backs from the small group discussions, more interactions, and then a closing summary by the original speaker to tie it all back together. The day will be framed by two keynote speakers, an opening keynote by a CMO who will talk about life in the trenches, and a closing keynote by Prof. Bernd Schmitt from the Columbia Business School, who will attempt to tie it all back together at the end of this exciting day.

The second day will follow the same themes, except that we will have a lot more speakers as well as report-backs from the previous day's findings. We will also experiment with some different formats that will ensure a high level of interactivity.

We want everyone who attends this event to walk away with actionable things to do and test out.

If you would like to nominate someone for the first day, please fill out the following form. If you'd like to register for the second day, click on the button in the sidebar of this blog.

[Technorati Tags: marketing event marketing conference innovation marketing conference imc corante]

March 28, 2006

More thoughts on selling complex products

I've been involved with the challenges of marketing and selling complex information technology products and services ever since the computer industry was known as IBM and the seven dwarfs. (I'd love to hear back from anyone who remembers who the dwarfs were). Over the years (make that decades) I've seen a recurring set of barriers that stand in the way of adoption of such products. In fact these barriers are as high today as they were when Honeywell (they were one of the 7 dwarfs) was desperately slugging it out with the other 6 for the 15% market share that IBM didn't own.

What I find surprising is how few companies selling complex products today have learned anything from the past. As Winston Churchill advised: "the further you look back, the more clearly you can see ahead." So here is my look back at what stands in the way of success when selling and marketing complex products. The good news is that it is a very short list. The bad news is that they must all be dealt with equally if success is to be achieved.

Barrier 1: Integration.
Complex products rarely stand alone. They must be integrated into existing systems and work flows before they can do anything worthwhile. It is this requirement to work with other stuff that contributes to their perception of being complex. The problem is that many potential customers see the challenge of successfully integrating the new product into their environment to be beyond their capabilities, and for a variety of reasons are not convinced that the vendor can solve this problem for them. Companies that successfully overcome this barrier often do so by pro actively addressing integration as a part of their product offering, They frequently brand the integration process and sell it as a service, with a detailed action plan that lets the buyer see what happens when, and very importantly, what responsibilities the buyer must assume during the integration process. If the seller does not have the resources to handle the integration themselves, they would do well to partner with an integrator whose brand is respected in the market they are selling into. In effect, they can borrow the brand equity of their system integrator to overcome the buyer's concern about achieving a successful outcome.

Barrier 2: Transcendence
The decision to acquire a complex product cuts across multiple organizational (and political) boundaries. Sales success depends on the near-simultaneous buy-in from multiple influencers and approvers, each with their own receptivity to innovation. The bell curve that describes the diffusion of innovation reminds us that the majority of people in any market are followers, not leaders. They resist change, especially when change may require learning and applying new behavior (see barrier 4).

The problem for the seller is that their internal champion is likely to be an innovator/early adopter. They "get it" early in the sales cycle and are eager to see their company adopt whatever the new solution is. So the salesperson is often seduced by the champion's ability to derive the benefits his or her product offers (rarely to be found in any marketing materials about the product) by understanding how the product works. But keep in mind that while the internal champion gets an A for his/her technical understanding and enthusiasm, the typically get a D or F for their ability to build the same enthusiasm across the organization. Why? Because they are not trained sales people. When they share their insight about the product with others they do what they know best: the describe how it works. And in doing so, either put others to sleep, or worse, scare the hell out of them.

To overcome this barrier, the "how it works" story that appeals to early adopters must be supplemented by one or more "how you'll benefit" stories that the champion can use to influence the more conservative decision makers within the organization. The way to think about it is to remember the following play on words: The way most innovators and early adopters think is. "I'll believe it when I see it." But for the early and late majority, that changes to, "I'll see it when I believe it."

Barrier 3: Trialability
Due in large measure to the first barrier, complex products are difficult, if not impossible, to try before they are bought. Many companies attempt to overcome this barrier by offering scaled down "pilot" versions of the product that attempt to give the potential buyer a sense of what the product can do. All too often the pilot fails to impress for two major reasons.

First, buyer expectations are set too high. By the end of the pilot program the results represent a small subset of what the vendor promised the product is capable of. The buyer finds it difficult to extrapolate these results into a full blown implementation and decides against purchasing.

Second, and even more problematic, is the reaction of the end users who are selected to use the product during the pilot project. Typically these poor souls are caught in a tough spot. They are asked to use the new product, while at the same time continuing to perform their assigned tasks using current tools and procedures. Naturally to use the new product effectively they need to go through a learning process (often taking time away from their assigned tasks). And once they learn how to use it, they need to use it a lot in order to truly experience its benefits. The latter requirement is rarely met because they really didn't have enough learning time, and they are too busy keeping up with activities that require use of existing systems. So it is not surprising that these early testers are often unenthusiastic about the product and help contribute to a growing consensus within the company that the product doesn't offer enough benefit to justify the price.

To get around this barrier, wise companies avoid pilots like the plague. Instead they offer a well-defined multiphase implementation (typically three phases work best). This enables them to control buyer expectations, especially during the initial phase. Ideally during that critical phase, you want to define a level of improvement or performance that if attained will pave the way for the customer to fund the second and third phases. To help insure success, some innovative companies provide on-site mentors that work side-by-side with the initial end user group in a master/apprentice relationship.

Barrier 4: Behavior
In order to take full advantage of the many features offered by a new complex product, individuals, departments, and sometimes entire organizations must change their behavior. And the more enterprise-oriented the product is, the more significant this barrier becomes. Lots of enterprise software winds up as shelf ware, not because it couldn't be installed or or used, but because users simply were not motivated (though training, incentives, or stronger measures) to use it effectively. What many sellers of complex products fail to grasp is that there is significant revenue to be had by offering branded programs that focus on bringing about the changes in behavior that are needed to fully exploit the benefits of any new product; especially one that is complex.

Customer's expectations of sales people does not match vendors' expectations

drunk sales.jpg The latest issue of the Harvard Business Review contains an interesting short article on customer expectations for sales people: "What B2B Customers Really Expect" (requires subscription).

There is a tremendous mismatch between what customers are expecting from their sales people and what vendors think customers expect. Amazingly, there is also a big gap between what vendors think their customers expect from their sales people and what vendors actually recruit for.

The top quality that customers are looking for is salespeople's subject matter and solution expertise - followed by understanding of customer's business and industry, and professionalism. Vendors thought that subject matter and solution expertise would only rank third on customers' priorities - after professionalism and understanding of customer's business and industry. So vendors have their customers' priorities for sales people reversed.

Most interestingly is how vendors actually recruit. The top attribute that vendors recruit for is social and communication skills - a priority that ranked dead last for customers. The second top attribute vendors hire for is organizational and decision-making skills - which ranked just before last on the customers' priority list.

The authors of the article - both partners at Infoteam Sales Process Consulting - recommend that companies hire for industry and subject matter expertise instead of social skills.

It makes no sense for sales people to acquire subject matter and solution expertise, nor understanding of a customer's business and industry on the job.

[Technorati Tags: sales sales recruiting sales people selling]

March 27, 2006

The challenges of selling complex products

Even though products can have great and demonstrable benefits to organizations, sometimes they can be very hard to buy. That can happen when products are used across functional areas, with no single owner. Or when a product is being sold too high up within an organization. It can also happen with new innovations in markets with few innovators and early adopters as buyers. Or it can happen when products have more than one barrier to adoption, as is the case with most collaboration-based products.

So what is an organization to do when faced with this kind of dynamics? Sure, you can do what most of them do: improve sales force training, develop better tools with tangible ROI's and case studies, have better demo's and make it easier to try out the product, etc. But those are all efforts focused on improving the seller or selling channel for the product.

There are two other levers you can play with in this equation - specifically product and buyer related levers. On the product level you could "dumb down" the product so that it becomes a single problem solution, with a clear owner for that problem. You could also evaluate whether your product could be turned into a service - and as such reduce the buyer's risk for trying the solution. On the buyer side of things you should look at your value proposition and find ways to tweak it so that some, if not all of the value, benefits the buyer personally instead of the buyer's organization. Is there something in your value proposition that the buyer could put on their resume or gain additional professional status or advancement from? Because remember - if there is nothing in it for the buyer or the users of your product, your product will fail - even if you can achieve a few sales early on!

The key point which most companies miss is that they should be focusing on the "buying cycle" instead of the "sales cycle." The buying cycle has a lot more moving parts than the sales cycle - and thus a lot more alternative solutions when things don't work as planned.

[Technorati Tags: sales buying buying cycle selling sales cycle]

March 22, 2006

More feedback on hyper-specialization and innovation

Last week's post on hyperspcialization drew quite an interesting discussion, which is being summarized here.

Olivier Blanchard over at the BrandBuilder blog picks up the conversation and adds a lot of interesting examples of how a broader background may help you innovate better then by being overly focused. He also makes the following recommendations "... my advice to you if you're in a rut (or if you're looking for your next big idea) is to just relax and go outside. Take a road trip. Take the afternoon off and go ride a bike. Go into a computer store and find out everything there is to know about inkjet printers. Go pick up a graphic design magazine and hang out at a tea bar. Take a stroll through an antique shop or your town's hippest interior decorator's gallery. Read a book about something you've never read about before. Go have a drink with a friend or a colleague or a competitor" - something I believe Tom Peters recommended over 20 years ago.

Mohamad Mova Al 'Afghani over at NanoTechnology Law argues specifically about law in nanotechnology, and how a well formed legal platform for nanotech will have to be much broader than just one based on IP law. He also quotes Peter Drucker as saying "This is particularly important as innovation in any one knowledge area tends to originate outside the area itself..... The new approaches to the study of history have, for instance, come out of economics, psychology and archeology all disciplines that historians never considered relevant to their field and to which they had rarely before been exposed....... By itself, specialized knowledge yields no performance."

Chuck Frey over at Innovation Tools wrote about this in the past and agrees that we need generalists to connect the dots.

Gautham Gosh over at Gautham Gosh on Management also wrote about this in the past, in one posts pointing to Dave Pollard from How to Save the World as saying that: "We live in an age of specialization, where we are encouraged to narrow our interests and our activities, to focus and limit ourselves to doing things at which we are very competent. So parts of our brain get a lot of exercise and other parts very little. What's worse, this can actually narrow our comfort zone, the range of things we enjoy doing or thinking about and are competent in."

Steve Hardy over at Creative Generalist argues that ideas come from the confluence of multiple disciplines but that innovations are always the result of specialists.

In the comment section of the original post it was also suggested that perhaps hyper-specialization might have a negative effect on ethics.

Here are some other links on the topic if interested:

- The Business Innovation Insider
- Mises Economics Blog

[Technorati Tags: management innovation human resources]

March 20, 2006

The end of the next big thing?

According to a CNET article, IBM's executive VP for Innovation and Technology Nick Donofrio said last week that "An era of inventions ended with the passing of the 20th century. The fact is that innovation was a little different in the 20th century. It's not easy (now) to come up with greater and different things. If you're looking for the next big thing, stop looking. There's no such thing as the next big thing"

Microsoft's Don Dodge over at Don Dodge on The Next Big Thing does not believe so - saying that "The Next Big Thing does exist...it just doesn't look BIG to IBM," and listing a whole bunch of companies he is working with that could be the next big thing.

Charlie Bess over at EDS' Next Big Thing Blog also chimes in, saying "Each organization will have their own next big thing. There will be some massive industry wide changes, but those are much more rare than the shift within a single organization — at least for most organizations."

History (especially tech history) is littered with predictions along the lines of "this is the end of ...(fill in the blank)" - and they have often been an indication that the author of the quote or the company they were affiliated with had reached an innovation impasse.

You really believe that there is no Next Big Thing? There will be Next Big Things for as long as humans do not screw up this planet. Saying that there is no Next Big Thing is like saying that we are the end result of evolution - millions of years were spent to this as an end result. That, of course, would have some serious implications.

But back to a more mundane level - of course there will be ongoing breakthrough innovations and a lot of Next Big Things. There are fuel innovations in the works that could lead to many next big things, there are management innovations that could lead to new type of organizations and governments that could eclipse existing organizations, there are innovations in the world of physics, and at the confluence of multiple disciplines, that could lead to many next big things. It is just all around us!

[Technorati Tags: idea management innovation the next big thing]

March 17, 2006

The importance of ideas and idea management

idea small.jpg "There is no way to create wealth without ideas. Most new ideas are created by newcomers. So anyone who thinks the world is safe for incumbents is dead wrong."
--Gary Hamel, chairman, Strategos

(from the Fast Company Blog)

It is so true that many companies are really bad at idea generation and management. They typically fail to realize a few things:

It takes a lot of ideas to get a few viable ones that lead to true innovations. Most products fail because the ideation process starts with too few ideas - and selecting from an anemic pool of ideas invariably leads to bad ideas being selected for new products or product features.

Ideas do not always come "on-demand", and yet that is how most companies manage their idea generation process. They turn in on when they are ready for a new product cycle and off when they have a new product specification. It is a bit like turning on democracy every 4 years when we go for elections, only to turn it off again when the elections are over. Directed innovation can lead to some good ideas but in general people get great ideas off-cycle as well, and those are rarely captured. In fact, and in the consumer electronic space, most people have ideas about product improvements one or two weeks after they first buy the product. If they are part of the buyer group who purchases their product right after the launch of a new product, most of those ideas are likely lost.

While it is unclear that all ideas come from newcomers, it is a fact that many breakthrough ideas originate from places that are not related to where the idea eventually leads to innovation. An example of that is how ideas from the biological world have led to breakthrough innovations in management. Most companies are not equipped to capture and manage this type of cross-boundary idea management

Many good ideas come from recombining seemingly unrelated ideas together. While idea A and idea B may not have much merit on their own, it could spark a new idea C in someones mind that leads to a truly breakthrough innovation. In order to fully tap the power of idea recombination, companies need to involve a lot more people in the process than they typically do - both from inside the company as well as outside.

Many people are actually bad at coming up with ideas unless they can react to some sort of straw-man. If you want to tap those ideas as part of the process, you need to jump ahead and develop simple prototypes of existing ideas to capture the reactions and associated ideas from those people. Most idea management processes don't allow for that. They have a commit phase before which nothing gets developed and after which everything is committed - no matter what other improvement ideas might come up.

Idea management is an important component of the overall innovation process. While most companies think of idea management as a funnel process - they tend to end up with a piped process where the pipe is slightly wider at the entrance than at the exit. What most companies fail to realize is that it should be a funnel process full of feedback loops and forward loops. Not only do they need to make the entrance of the pipe wider by getting many more people involved in the process and by being "always-on" for idea capture, they also need to focus on making the exit of pipe narrower by by killing more ideas in the process. Failing to do so leads to too many ideas being under-resourced - which again results in higher failure rates.

Considering that the tools which enable companies to build complex funnel processes with tons of feedback loops and forward loops are widely available - there should be no excuse for companies to mangle this process any longer.

[Technorati Tags: idea management innovation ideas]

March 16, 2006

Communicating with your competitors' customers

This is a pretty cool Durex ad (via Coolz0r).

[Technorati Tags: advertising viral advertising]

March 15, 2006

The role of advertising in startups and new product categories

Research, such as the research reported by Everett Rogers in Diffusion of Innovation, has shown that advertising works best on innovators and early adopters. It does not work as well on the early majority buyers. For majority buyers, interpersonal communications (word of mouth) from peers is the preferred mode of getting information. In fact, the same research shows that for all buyers as a whole, interpersonal communication has an effect on buying behavior that is over tenfold that of mass communication.

Furthermore, advertising works best in the awareness stage of the buying cycle. That is, if the buyer has the right predisposition to be informed by the ads. That occurs when the buyer has a need, or when some other change agent has approached the buyer about the possibilities first (i.e., expert in the press, colleague, etc.). If neither of those happen, then the buyer will not even hear or see the advertising – it will just be tuned out. In the preference stage, when the buyer starts forming an opinion about the product, most information comes from interpersonal communication. In the preference-forming stage, interpersonal communication may sometimes be substituted by expert commentaries and reviews.

Based on this, and stating the obvious, start ups who are peddling new product categories to innovators and early adopters should not waste their time and energy on brand advertising. Instead they should focus their efforts on lead generation and on influencing the influencers so that the right interpersonal conversations can get started.

[Technorati Tags: word of mouth marketing WOM brand advertising advertising]

March 13, 2006

Being descriptive works better than being prescriptive

ants small.jpg Have you ever noticed how most people are prescriptive when they ask you to do something? Whether it'd be a colleague or a boss at work, or a friend, or a parent - not enough people ask for help in a descriptive way - they rather give you the exact steps they want you to follow in order to achieve their intended goal.

It is so deeply ingrained in our society, even most religions are like that - at least the three major Mesopotamian ones: Judaism, Christianity, and Islam. They are full of "do this" and "don't do this". This is in stark contrast with some other religions - like for example Zoroastrianism, which only says "think well, speak well and act well" - and leaves the interpretation for how to do that to the individual. It's a bit like saying "do to others what you would like them to do to you" - which would result in very different outcomes for different people and cultures.

Many aspects of government are like that too - take as an example the "sentencing guidelines" for judges in the US.

And most old-fashioned marketers act like that as well - trying to "control" how people should interpret what happens around them.

In a way, being prescriptive in an insult to human intelligence - or to any intelligence, really. It assumes that the people who are being given the directions would never be able to get there by themselves. In a lot of ways it assumes that most humans are on a inevitable and permanent path of self-destruction. It is interesting that we developed such behavior in the first place - when none of the natural processes surrounding us, including some which led us to where we are, have prescriptive behavior built in.

Perhaps more importantly, such behavior stands in the way of innovation and somewhat consistent behavior in crowds, companies, religions, and citizenry.

The next time you ask someone for help - try describing what end goals you have in mind and let that person come up with a path for how to get there. Try it when asking a child to do something. Try it by by being honest in your communications with customers and employees. Then see what happens...

[Technorati Tags: marketing self-organization HR communications]

March 10, 2006

[shameless self-promotion] Podcast interview on marketing, Corante and a few other things

Eric Schwartzman from Spinfluencer was kind enough to interview me for a his podcast show when I was out in California last week.

It was a fun experience and the questions he hit me with were quite varied - ranging from Corante to BlogBridge to marketing, religion and self-organization. You can download the MP3 here.

[Technorati Tags: marketing self-organization corante blogbridge]

March 9, 2006

Negative word of mouth hurts retailers

According to a new research study from Wharton and the Verde Group - published in the Results of The Retail Customer Dissatisfaction Study 2006 (PDF) - of those shoppers who experienced problems with a retailer, only 6% contacted the company, but 31% went on to tell friends and family. Of those, 8% told one person, 8% told two people, and 6% told six or more people. The study further found that out of 100 dissatisfied customers a retailer stands to lose between 32 and 36 current or potential customers.

While this is less than the old rule of thumb which said that you typically only hear from 1 out of 10 dissatisfied customers - the impact of negative word of mouth can be more devastating as the tools that amplify word of mouth are getting increasingly powerful.

The study truly illustrates the power of negative word of mouth and the retelling of stories. Indeed, and according to the study, "the complaints have an even greater impact on shoppers who were not directly involved as the story spreads and is embellished. Almost half those surveyed, 48%, reported they have avoided a store in the past because of someone else's negative experience."

[Technorati Tags: word of mouth marketing WOM viral marketing retail marketing]

March 8, 2006

Another "old" marketing voice bites the dust

After the Ries statement on branding, we only needed to hear the Trout statement on word-of-mouth marketing to conclude once again that the world is in need of new authoritative marketing voices.

Here is what Trout has to say about Word of Mouth Marketing:

"Now for the really bad news. There's no way to control that word-of-mouth. Do I want to give up control and let consumers take over my campaign? No way."

The amazing thing is that even in Jack Trout's heyday (a few decades ago) products were being bought because of the story about the product more so than because of the product itself. And most marketers ran into trouble when their product story was too hard to "re-tell". So in effect, he is right when he says that word-of -mouth marketing is not new - it's just surprising that he never realized the power of it.

As for the new marketing voices, the story was picked up and intelligently commented on by Olivier Blanchard at the Corante Marketing Hub as well as by ~~two~~ (updated 3/9) three other Corante contributors to the Hub - Johnnie Moore, John Moore, and Mary Schmidt (and as an active Corante team member, I am off course biased).

[Technorati Tags: word of mouth marketing WOM viral marketing new marketing voices]

Do you hire for talent/IQ or for business savvy/EQ?

This is always a difficult decision - and for startups one that can make or break a company. Do you hire bright talent - regardless of experience or emotional intelligence? Or do you hire people who have been there, done that and who have developed ways to navigate the complexities of humans-at-work?

We know that competent jerks do not achieve much - which can be one drawback of hiring for IQ regardless of experience or EQ. On the experienced-based recruiting front you have potential issues as well. For some people, too much experience can lead to a well-defined box in which they tend to operate - never to leave the boundaries of their comfort zone. For others, more experience somehow results in less and less boundaries - their comfort zone includes the unknown, and they like to venture there.

It is particularly interesting to watch what happens when two giants in the same industry start showing very different hiring practices. The jury is still out, and this may be too much based on anecdotal evidence, but watch the difference between who Google is hiring and who Yahoo is recruiting. Google seems to be going for raw intelligence - only the brightest math and science PHD's and cute puzzles to even get your resume into their hands. Yahoo on the other hand seems to be aiming for people with broad backgrounds, and proven track records in innovative corporate environments.

It will be interesting to see the differences in emerging cultures and in market success for both those companies in the long run.

[Technorati Tags: management talent human resources hiring practices]

March 7, 2006

hyper-specialization is not always the right thing to do

aura sm.jpg People and companies tend to hyper-specialize - getting to know more and more about less and less. While this Cartesian-based view of the world may have had it's benefits in the past, it is full of dangers as we move forward.

First off, hyper-specialization may very well stand in the way of breakthrough innovation. Indeed, most breakthrough innovations happen not at one level of specialization - but they increasingly happen at the confluence of multiple disciplines. People who have the capacity to scan across multiple businesses or vast amounts of information, and who can translate innovations from one field to the next are as likely, if not more, to come up with breakthrough innovations as the specialists.

Which brings up another important negative side effect of hyper-specialization. Hyper specialists know very much about very little - which means that they do not understand what happens in adjacent spaces. What should be valuable information coming from other sources within the company or markets now looks like data - with no meaning, nor the ability to influence the hyper-specialists' work. Worse, in hyper-specialized environments, you could conceive that the hyper-specialists will not understand the impact of their actions on the broader picture - which can have especially dire consequences when it comes down to environmental impact of innovation.

Even at a more fundamental level, hyper-specialization can have severe drawbacks for companies. For example, saying that you can never bring an inside sales rep outside because he or she needs a totally different skill set to succeed outside may lead to overall company moral issues that far outweigh the benefits of honing someone's skill sets in one area of expertise only.

[Technorati Tags: management innovation human resources]

March 6, 2006

Back in the saddle

After a vacation week and a week of heavy business travel - I am back in the saddle.

Last week was very productive week which included a presentation at the New Communications Forum (comment on the panel by the moderator here, picture at the event by JD Lasica here).

It was good to see many Corante Contributors in person, and also interesting to note that 10 of us were speaking at the conference.

March 1, 2006

In education, class matters

As someone fortunate enough to live in one of the more affluent suburbs of Boston, I must admit a certain smug pride in the well above average scores the town's students achieve on the state-wide MCAS (Mass. Comprehensive Assessment system) tests every year. Their performance on these tests helps ease the pain (somewhat) of the huge portion of my property tax bill that goes to funding the local school. But hey, the better the school and the better the teachers, the better the education. Right? Well, according to a study from the UK, reported in the Feb. 28 issue of the Guardian, maybe not.

A study by academics at University College London (UCL) and Kings College London has given statistical backbone to the view that the overwhelming factor in how well children do is not what type of school they attend- but social class.

The report, which uses previously unreleased information from the Department for Education and Skills, matches almost 1 million pupils with their individual postcode and exam scores at ages 11 and 15. This unprecedented project has revealed that a child's social background is the crucial factor in academic performance, and that a school's success is based not on its teachers, the way it is run, or what type of school it is, but, overwhelmingly, on the class background of its pupils.

The study found that, whatever their background, children do better the more "middle-class" the school they attend, and also that more than 50% of a school's performance is accounted for by the social make-up of its pupils.
Put simply, the more middle-class the pupils, the better they do. The more middle-class children there are at the school, the better it does. It is proof that class still rules the classroom.

Emergence Marketing

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