Friday, September 15, 2006

Who values who

Most people get the whole customer value thing wrong. I heard a famous keynote speaker and guru the other day talking about customer life time value and how we can identify customer value. She recommended we estimate the sum of what our customers are worth (purchase volume, frequency, etc.). I read another article (click on title to see the article) from the folks at Maritz and they made the same mistake. This approach is wrong. Dead wrong.

Customer advocacy only occurs when customers value you. It's about their perceptions of you. The customer doesn't care how rich they or their friends are when they decide if they like YOU. Could you imagine a wealthy person saying, "I value Joe because he likes me for my money?" It's absurd. Yet, these experts are asking you to do the same thing. Don't.

If you want higher customer advocacy, get customers to value you more than ever. Then, you'll achieve the results you want.

Thursday, March 09, 2006

Microsoft fails to understand buzz

At first, it appeared that Microsoft was "going to school" on Apple. They leaked the existence of a product code-named, "Origami" in the attempt to create an Apple-level amount of buzz about the product.

However, Microsoft has created a disaster for themselves. From our perspective, there is a difference between simple buzz and advocacy - a nuance that appears to elude Microsoft. Advocacy is active positive communication (buzz) about something. Antagonism is active negative communications about something (also called buzz). Simply receiving buzz isn't enough for a company, it needs to be positive to be useful.

For example, there has been recent "buzz" in the political world about the Dubai Port World deal. None of the "buzz" was favorable. Rather, it was all negative. That is why the deal is now dead. Therefore, it is dangerous to instantly be happy when your product or company has buzz.

This is where Microsoft messed up. If you have read much of this blog or read our book, The Paradox of Excellence, you will know that we think expectation management is critical. We create positive buzz or advocacy when we positively surprise our customers - when the actual is better than the expected. Unfortunately, Microsoft didn't adhere to this philosophy - to its detriment.

Microsoft succeeded in creating lots of unrealistic expectations about what Origami was going to be. For weeks, there has been broad speculation about the potential of a truly exciting and exceptional new product. Yet, the actual product failed to capture our imaginations. In fact, it was such a disappointment, there is now a serious backlash. You know you're in trouble when ABC news calls your product the "Sum of Two Failures" and CNN says it looks "paper thin" (the non-flattering meaning). This is buzz, but sounds more like the buzz that comes from machine gun strafing than it does from the heart palpitations of gadget geeks worldwide.

Apple must be breathing a sigh of relieve. Not only is Origami a bust, it is clear that Microsoft still doesn't understand what it means to create brand advocacy.

Wednesday, March 08, 2006

Surprise, Surprise, Surprise

I'm not mimicking Gomer Pyle. I'm giving you the secret to creating more value and growing your business. The secret is to deliver positive surprise.

The other day, my son made his first big purchase, buying himself an iPod Nano. After three months of hard work, saving and scrimping, he had finally accumulated enough money. On Saturday, (after he had ordered it and before it had arrived) he came to me with some serious buyer's remorse. He started to realize how much money he had spent to buy this product, how much he had sacrificed to get it and he was filled with regret. As it normally is with kids, this remorse was temporary. But, what happened next teaches us a lot about why Apple is so successful.

He had purchased the Nano to listen to music and to see pictures. What he didn't know was the iPod had games. He was ecstatic. He had received something for free. He didn't know the iPod had a clock and a stop watch. His watch is on the fritz and he basically got a free watch. The iPod had many features he didn't expect and it was smaller than he remembered (especially after seeing his dad's big clunky one). As a result, he was surprised. Positively and substantially surprised. As a result, he has moved from remorse to advocacy.

If we want to build value with our customers, we also need to create positive surprise. There are several implications.

1) Apple plays up big general features, but leaves the small, cool features as surprises. Customers aren't told in advance (or aren't told as often.)

2) This means they UNDER market some features. For many marketers, this is very difficult. We want to "sell" everything we have to sell. Yet, the lesson of Apple is less is MORE.

3) Advocacy doesn't come from simply satisfying a need. It comes from exceeding an expectation. Apple had satisfied my son's need (want) for music to take with him. Yet, even before he got it, he was disappointed and sad. Yet, advocacy came when the product did things DIFFERENT than he expected. MORE than he expected. That is when he became an advocate.

4) Companies that want to create value must follow the same course of action. Creating positive surprise is the key.

Saturday, January 07, 2006

Spoiling the Surprise

Ted Landau has written a great article in The Mac Observer about Apple's rumor sites and about movie trailers. It captures a big issue - the issue of positive surprise. Landau says that rumor sites and trailers steal the thunder of the actual experience and news and create an artificially high level of expectations. I agree.

In order to build value, we have to create positive surprise. Without positive surprise, companies are only delivering what is expected - and customers don't value what is expected, regardless of its performance or utility.

A good example of this is Disneyland. The first time you visit Disney - the experience is filled with positive surprises. However, by the time you visit Tomorrowland, there is no positive surprise. As a result, value may actually decline because what originally was a surprise is now tired and predictable.

Thursday, December 29, 2005

Expectations are what AT&T needs to manage

According to an article on hostreview.com, AT&T is about to launch "its most ambitious and aggressive brand campaign in its more than 120-year history." What is fascinating about this campaign is a why they are doing it. Check out the quote from the article below:

"The research showed a remarkable 85 percent correlation across all customer groups as to what brand attributes are most highly valued. 'Our customers told us that, above all, there are three things they expect from us,'” said Whitacre. '“They want innovation thats meaningful, that makes a real difference for them. They expect us to earn their trust by keeping our promises and standing behind our products. And they expect us to treat them fairly, with no surprises. '‘Your world. Delivered.'’ is our way of pledging to all of our customers — from a teenager in California to the CIO of a global company— that AT&T's passion to invent and SBC'’s drive to deliver have come together to deliver what matters most in their lives.'"”

Customers want the company to keep its promises, stand behind its products and treat them fairly without surprises. WOW! These are truly revolutionary insights! Was AT&T surprised by these findings? Were they shocked that customers want to be treated with respect and honesty? Horrors! What's a marketer to do?

Underlying this entire plan is the need to overcome the Paradox of Excellence. Yet, I fear the company lacks a clear understanding that without shaping those customer expectations and without setting realistic expectations in the customers' minds, AT&T will have done little to get customers to believe in their brand again.

Saturday, December 24, 2005

Brand shifting - a new loyalty distinction

We tend to think of brand switching as a binary activity. Either we buy from brand A or from brand B, but not from both. However, real customer behavior doesn't support that binary pre-conception. In fact, most customers often multisource. This is true for both consumer and business purchases. For example, I shop at both Albertson's, Safeway, Trader Joe's, Target and Costco for items I would traditionally find in a supermarket. The same is true for business travel. I use multiple airline carriers and rental car companies - depending on pricing, availability and location.

The true customer behavior is neither black nor white, rather it is gray. The real issue is the weighting of spending customers apply across the various vendors. We call this BRAND SHIFTING. Customer don't eliminate your brand - they merely shift the volume away from your brand to another. So, let me ask a question. What mechanisms do you have in place to identify BRAND SHIFTS? Can you declare with any confidence that your business is suffering from BRAND SHIFTS?

For example, for companies that sell into a multi-supplier environment, what % of the business are you getting? How has that changed over time? If you don't know the answers to these questions, you have no ability to know the true impact of customer attrition on your business.

Friday, December 23, 2005

Expectations around opt-in mail lists

A month ago, I signed my son up for baseball using an on-line registration tool. Regretfully and despite my attempts to avoid it, I somehow made it onto the registration company's opt-in list. Now, I don't have any "relationship" with this on-line registration company. My relationship is with my local little league. Yet, this organization seems to think they have a relationship with me and has put me into their spam list - a frustration all of us suffer every day.

The company, active.com, thinks transactionally, not relationally. They have been taught by relationship marketing experts that getting my name and spamming me will improve my relationship with them. It doesn't and won't. So if your organization does the same thing - stop it. I never had a relationship with the company and if you do the same thing - I won't have a relationship with yours. The only trust between me and the organization is they will accurately place my order with the league and not lose, misplace or exploit my credit card information. Putting me on the spam list (I distinctly remember disabling that request) has LOWERED my perception and trust in the company. Moreover, like the loser in high school who clings onto you and thinks you are their best friend because you walk past them at school, Active.com thinks it has a relationship with me because I was forced to use its service. We aren't friends and I certainly don't advocate for them.

Now to the opt-in. Like all good, legal opt-in programs, there is an opt-out program. You click on the unsubscribe and you are removed from the list - at least that is the expectation! With Active, I got a promotion offer email on Dec 9th and unsubscribed. I thought I had unsubscribed to Active.com. But nooooo. It was like wack-a-mole. The next day, I got the local events newsletter. So I subscribed to that. Then today, I got the monthly newsletter. I unsubscribed to that. Unfortunately, my unsubscription letter said they took me off the weekly newsletter list (not monthly) - I guess as a threat that they still may send me the monthly letter I just unsubscribed to.

Who knows what evil lurks in the hearts of Active.com, perhaps they have a semi-monthly newsletter or a holiday letter or a Chinese New Year's offer. Who knows? I will - when I get yet another spam I don't want from a vendor I don't have a relationship with. Active, like many misguided companies believe that if I am on their current subscriber list, they are building a relationship with me and building value - they aren't. Furthermore, the clever marketing manager who designed the scheme that we only unsubscribe to a specific piece of spam and not all spam and thinks they are beating the system is a fool. He or she is simply unaware of or indifferent to the impact this behavior has on their brand.

This transactional mindset has defeated any relationship-building benefits that could be derived from their "customer communications."