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In conducting a brown-bag marketing innovation brainstorming session with a company’s marketing team last week, an interesting question came up - is Apple doing good for its customers?

The answer of course is that they are doing well - their financial results and their emerging business in corporate environments are a testimony to that. But are they really doing what’s best in the company’s long term interest?

Think about it - people trust the Apple products. But do they trust the company? With the battery fiascos, the iPhone warranty story and some other things that they have done, they are eroding the trust that people have in the company - and that could hurt them in the long run.

Sure, the PC industry and the consumer electronics space is littered with companies that nobody trusts, but if someone were to emerge who can produce great products and engender trust as a company within its user base, that company will take marketshare and profits out of the market faster than you will be able to write about it.

Remember - it happened in other industries…

What do you think?

Joseph Jaffe delivered the Society for New Communications Research keynote speech last night. During his presentation he was making the case that marketing can be conversational.

As I have written before, I do not believe that marketing can be conversations. First off, and as David Weinberger suggested in an interview I did with him last year, I do not trust marketers to carry conversations without screwing it up for the rest of us.

I also do not think that all aspects of marketing can be or should be conversational. Think about new product innovation as an example. Sure, you will benefit from getting ideas and feedback from your user base and especially you prospecting base, but at some point the marketing product manager needs to act as a benevolent dictator and make decisions on what goes into the next generation product - and that may include features that did not pass the user popularity filter, or features that may not even come from the user base at all. The same is true for pricing - where coming to a price based on user feedback may in fact mean leaving a ton of money on the table.

Markets are conversations - marketing is not…

A new research study by the Society of New Communications Research (disclosure - I am a senior fellow in the society and have been peripherally involved with the study), “Exploring the Link Between Customer Care and Brand Reputation in the Age of Social Media,” found that affluent consumers are using social media to share their customer service experience and learn about other’s care experiences when making purchase decisions.

Some of the top findings include:

• 59.1% of respondents use social media to “vent” about a customer care experience (ed. note: glad to see I am in the majority…)
• 72.2% of respondents research companies’ customer care online prior to purchasing products and services at least sometimes
• 74% choose companies/brands based on others’ customer care experiences shared online

Again - proof that while positive word of mouth may outweigh negative word of mouth, and that off-line word of mouth may outweigh online word of mouth, the online negative word of mouth may have much more impact on purchasing decisions as they are found while the buyer is in active buying mode.

One other thing that came out of the Conference Board meeting is the need for a common nomenclature when referring to marketing related activities within companies. The problem is especially a big one in large companies that grew through acquisitions. When you have employees in different divisions that use the same terms to mean different things – that is a recipe for disaster.

One of the most interesting ways to cope with that problem came from MetLife, which has a program in place for every person from the Chairman on down to go to a one week executive education program on marketing strategy at a major university in Massachusetts (it sounded like the Strategic Marketing program at the Harvard Business School – which is a great program). By doing so, everyone at MetLife supposedly uses the same terminology when referring to marketing activities and goals.

That made me think of the terms used during this conference vs. some other marketing conferences I attended in the past – especially West Coast conferences. The popular terms at this conference were customer needs, positioning, marketing ROI, engagement, market research, brand attributes, brand equity, segmentation, differentiation, targeting, partnering and perceived value. Very little or hardly ever did I hear discussions about conversations, attention scarcity, lack of control, social media, platform of participation, customer empowerment, customer attraction, customer assistance, affiliating, or community-based marketing.

Now I know that I am comparing apples and oranges in many cases, but the point I am trying to make is that it must be hard for marketers to have a consistent lexicon, when the marketing thought leaders keep using different terminology.

I was invited to attend The Conference Board meeting on Marketing Effectiveness yesterday. The main theme focused on how companies keep their marketing departments accountable.

Surprisingly, but as most research shows, a majority of companies are nowhere near being able to hold their marketing departments accountable. Not only are some companies measuring the wrong things, a majority of them have no ability to measure anything at this stage. Columbia Business School Professor and Conference Chair Don Sexton further noted that the lack of progress in marketing effectiveness is also visible in the budget process. Research shows that 54% of companies set their marketing budgets based on historical data – clearly indicating that they have no clue on the effectiveness – and only 20% of marketing executives report being able to forecast the impact of a 10% budget cut.

Now in some cases it’s no wonder than companies cannot measure their marketing effectiveness. A new study by The Conference Board, which will be released later this summer, found that half of the companies which reported no progress with marketing ROI had nobody assigned to the task. Duh…

According to Kevin Clancy, another keynoter at the conference, most marketing programs have an ROI that is zero or negative, which could of course be another explanation for why no progress in measuring marketing effectiveness has been made in the last 40 years - people in charge don’t want that dirty secret to be exposed.

One Fortune 50 company which had a few representatives at the meeting had a very interesting approach to marketing measurement, although one that was running into cultural and political barriers. They recognized that marketing is indeed a large multi-variable complex system that needs to be measured as such. You cannot measure the impact of a campaign without also keeping pricing, packaging, and competitive changes into the mix, just to name a few variables. So they hired a bunch of PhD’s in systems dynamics and operational research to measure marketing as a complex system. Unfortunately, and because they lack marketing expertise, marketers are resisting cooperation with them at this time.

Based on research in the field of virtual communities, most business thinkers will agree that there are 4 fundamental pillars to successful communities - content, members, member profiles and transactions. If managed properly, these 4 dynamics can lead to economics of increasing returns that characterize most successful communities. The more members you have, the more content they will create. That in turn will increase the value to the community members and attract more members. If you capture information about your members and you make it easier for them to find stuff in the community based on their profile, the higher the value of the community to the members and the more members you will attract. It’s easy to understand the workings and to get the benefits of the dynamics of increasing returns that happen in successful virtual communities. Many of those were first described by business thinker and management consultant John Hagel in Net Gain more than a decade ago.

There are other aspects that drive and define communities, such as the social and technology infrastructures of communities as well as the business processes that they support. But none of those characteristics have the power to create the positive value creation loops that the original four can.

While most successful communities will have a mix of all of the ingredients - we can characterize communities by their dominant dynamic.

First there are content-based communities, where members interact with one another primarily in the context of content - either consumer generated or licensed/acquired. News sites or blogs are communities that would fall in this category.

Then there are communities that are primarily member-based. Member-driven communities can take on many different forms. Brand communities like the Harley or the Ducati communities are clearly member-centric communities, even though some companies mistakenly think that the brand is at the center of those communities, and not the members. Networking communities like LinkedIn and Facebook are clearly communities that have members at their core. Many developer communities in the tech world also fall within this category.

Lastly there are transaction-centric communities. eBay and Amazon.com come to mind when talking about those communities.

Of course, all of those communities have content, and all have members, and most have transactions - it’s just that they are more heavily tilted towards one of the community ingredients than another. And in some cases communities with the same end-goal can take on very different forms. Brand communities could also be set up as content-centric communities or as transaction-centric communities. Customer support communities or developer communities could also be started as content-centric communities - and perhaps evolve into transaction-centric communities.

The reason it’s important to understand the different types of communities is because of the requirements to get them started. You cannot start a member-centric or a transaction-based community without a critical mass of members or offerings - something most companies do not have. Without a critical mass of members or offerings, there will not be enough content generated (i.e., customer reviews, etc.) in order to make the interaction for the community members valuable. So if you have a total potential number of users ranging in the hundreds, you will never be able to set up a vibrant customer support community as Intuit. Microsoft or Apple can. That does not mean that you cannot leverage customer support communities, it means that you have to start them up as content-driven communities. Instead of relying on the community members to re-write your manuals and to create meaningful FAQs, you may have to hire a few people to kick-start the process on a for-hire basis.

While the economics of increasing returns may be somewhat diminished with a smaller number of members and some hired guns, they are still very much present. Most likely they will handily beat the economics of diminishing returns that most business practitioners face when trying to interact with customers and prospects in the old-fashioned interrupt-driven way.

Some of these thoughts have been triggered by the many conversations I have had the pleasure to have as part of the Community Effectiveness Study that we are conducting with Deloitte and the Society of New Communications Research. Some of the preliminary results of this study will be discussed at the Society for New Communications Research Forum in two weeks and more detailed results will be unveiled at the Community 2.0 Conference in May.

As a senior research fellow with the Society for New Communications Research I can extend a special discount to some of my friends who want to attend the forum. Email me if you want to attend at a special rate (francois [at] emergencemarketing [dot] com). Note that there are also 1/2 day flex passes available for those who can’t attend the full event.

Another great experiment by MIT behavioral economist Dan Ariely as described in his book “Predictably Irrational” shows that it is not the product that counts but the information about the product.

In one experiment, they sold SoBe drinks to two groups of students who were about to exercise. The first group paid full price, while the second group got a 30% discount. After exercising they asked the students whether they felt more or less fatigued than usual - and all reported that they were indeed less tired. Except that the group which paid full price was less fatigued than the group which paid less. The 50c aspirin does work better than the 5c aspirin…

They then did an experiment where they sold students SoBe, which claims to provide “energy for the mind,” before administering a 15-word puzzle. Again, one group paid full price and another paid less. They also baselined the experiment with a group that did not take SoBe. The group that paid full price solved as many word puzzles as the group that did not get the drink, while the group which got the discount solved about 30% less word puzzles.

WOW…we are doomed.

But wait! It gets better. They then performed the same experiment except that this time they printed the following message on the cover of the quiz booklet “Drinks such as SoBe have been shown to improve mental functioning, resulting in improved performance on tasks such as solving puzzles.” They also stated that the SoBe web site referred to 50 scientific studies to support these claims - information which was totally fictional. The results? The ones that paid full price solved 33% more puzzles than the ones who did not get the drink, and the ones that got the discount solved 7% more word puzzles.

And who said that messaging was dead? The things you say about your product may indeed be more important that the product itself…

A new study found that if you have a UK Birmingham accent, you are likely to be perceived as less intelligent than if you have a Yorkshire accent - in fact a Birmingham accent will make you sound more stupid than silence.

A friend of mine spent hundreds of thousands of dollars on making his online service a few tenth of a second faster.

What’s the connection? Are people with certain accents really more stupid than others? Do people using online services really care about improvements that range in the tenths of seconds response time?

No - it’s the hidden or unconscious associations that lead to perceptions that make all the difference. In the case of Birmingham, people associate the city with crime, unemployment and other negative things - leading to the perception that people with a Birmingham accent must be less intelligent than others, including silence. In the case of speed of online offerings, people associate that with ease-of-use. If you enter a query and the results come back in a jiffy, you will perceive that service as really easy-to-use.

So do you know what your customers are unconsciously associating with some of your product or company attributes?

It could make or brake your offerings…

I think we should - and I explained why in a new post at the Marketing 2.0 group blog.

What do you think? Let me know…

We recently launched a new blog on the future of marketing - and called it marketing 2.0 - a term that surely will draw some criticism, but which very well describes the conversation we want to have.

Where is marketing going? Why are the marketing processes that we have grown accustomed to no longer delivering the predictable results that we were used to? What should we change to succeed?

We have assembled a great group of people to lead this conversation - including David Berkowitz, Paul Dunay, Lois Kelly, Valeria Maltoni, David Rogers, and Constantine von Hoffman. You can expect additional contributors to join the group over time.

We hope you will enjoy and join the conversation.