Influence and social media marketing
Filed under: Marketing & Branding, Social Media | Tags: Key Influencers, Marketing, New Product Launches, Social Influence, Social Media, Word-of-Mouth
Leave a Comment Social media marketing is a large and growing part of every company’s marketing budget and plan. Conventional wisdom says leveraging “influential” people like friends or celebrities can trigger many others to do new things like purchase a product or join a community. However, new research published in the Harvard Business Review challenges this view and suggests a significant amount of social media investment and focus is being improperly allocated.
Over the years, millions of dollars of social media investment has been directed at finding and leveraging influential consumers who will virally persuade others to try a new product or service. On the surface, this notion makes a lot of sense. Marketers can improve effectiveness and efficiency by targeting only those customers that will use their product and trigger others to do the same. Much of the rationale behind this premise dates back to Malcolm Gladwell’s book, The Tipping Point, which explored why some ideas take off and others don’t. Does this “cause and effect” hold up to statistical scrutiny?
No, or at least not yet. In a social media universe, it still is very difficult to separate influence from other factors in a purchase decision. “Real influence depends on personalized and engaged relationships,” says communications pundit John Barker of Truenote. “However social media often dilutes digital relationships to the point where ‘influencer’ impact becomes increasingly abstract.”
To get closer to a definitive answer, NYU management professor Sinan Aral conducted a number of experiments to understand who and what is most influential, and who is most predisposed to their influence.
Results
We know from psychology that human behaviour clusters among friends over time. What we don’t know is whether or not this is due to peer influence or another factor, such as similar interests. In one experiment, Aral studied the adoption of a mobile service product within the 27 million-member Yahoo! instant messenger network. The research used the latest analytical models to separate social influence (i.e. how does a friend’s usage or recommendation impact another’s decision to use the product) from another factor, homophliy. A sociological phenomena, homophily is the preference of individuals to associate with, have the same habits as, and like the same things as other people (the proverbial ‘birds of a feather, flock together’ concept), even if these people have no direct connection to each other.
Interestingly, Aral found that traditional measurement models overestimated the impact of a friend’s social influence on purchase decisions by a factor of seven times. Furthermore, these models overstated the role of social influence early in a product’s life cycle (or when a trend should begin). In fact, his research shows half of the perceived influence could be attributed to homophily effects alone. Early adopters tend to be so much alike that social influence plays a lesser role. To see this phenomenon in action, check out the people standing in line at an Apple Store before a new product launch.
Another experiment looked at the role of social influence versus a common digital marketing program on the downloading of a Facebook app. Aral found that while personal invitations from a friend had a higher response rate (6%) versus an automated announcement (2%), the automated messages still generated much better results. Their adoption rates were significantly higher (246%) versus a personal invitation (98%), due to the higher number of automated messages that went out.
To sum up, it appears that using outdated analytics and shaky strategic assumptions is leading marketers to rely too much on social influence-based tactics at the expense of more traditional yet successful homophily (i.e. segment) driven programs.
Implications
This research has significant implications for a firm’s marketing strategy and planning, especially around new product launches.
- Peer-to-peer tactics (e.g., referral incentives) designed to leverage social influence will be less effective and more costly than previously thought. This is not to say that P2P programs should be abandoned; rather they would be more effective introduced later in a product’s roll out.
- Well designed digital and traditional advertising and promotion tactics that target discrete segments (based on homophily characteristics) will be more effective and efficient, at least initially.
- Marketers will benefit from using the latest Big Data models so they can design plans with the optimal mix of influence and traditional-based tactics.
Exploiting Big Data may hold the key to super charging the role of social influence. According to Mr. Barker, “Big Data can now provide customized social influence at scale. Building a virtuous circle of “mass personalization” that is both deep and broad could be the “tipping point” for digital marketing. Think influence on steroids.”
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
Sync your supply chain and business strategy
Filed under: Consumer Goods Industry, Performance Improvement, Supply Chain & Operations |
Leave a Comment It is self evident that a company’s supply chain should be aligned with its core business strategy and value proposition. For example, a retailer following an everyday, low-cost positioning should have a supply chain built to minimize cost and maximize inventory turns, potentially at the expense of other capabilities such as innovation or sustainability. Yet, our research suggests many organizations retain supply chains that are out of sync with their core business goals, leading to lower financial and market share results. Fixing this problem is part analytics, part strategic planning and part organizational redesign.
Syncing your strategy and supply chain is a ticket to superior performance. There are many examples of market-leading firms with strategic congruency including Dell,Walmart, Nordstrom, Cisco and McDonald’s. These firms diligently manage their supply chains to support their core positioning and deliver superior value — not to mention creating industry barriers to entry. For example, Walmart has achieved outstanding operational performance by developing sophisticated inventory management, logistics and procurement systems. These capabilities have played a key role in Walmart delivering on its everyday-low price brand promise while achieving industry-leading margins and profitability. In another case, Dell vaulted to the leadership of the PC industry in the 1990s by offering low-cost and customized products through a build-to-order manufacturing model backed up by extensive procurement and inventory-management competencies.
Most companies, however, are not strategically coherent. This can occur for a variety of reasons. For example, firms competing in multiple product categories face a myriad of competing demands from different product teams and functional departments, leading to a convoluted supply chain design and bloated product portfolio. In other cases, weak centralized management control combined with an outsourced and global supply chain will often result in misalignment. Finally, some firms do not posses a consistent strategic position in their marketplaces. Instead, supply chain decisions ebb and flow depending on short-term market conditions rather than long-term considerations like sustaining a differentiated market position.
One of our consulting projects illustrates the causes and dangers of supply chain incongruence. We were engaged by a customer-driven industrial goods company to help fix its customer satisfaction problem. The company was losing revenue, facing higher cost-to-serve expenses and experiencing historically low customer satisfaction scores. Its distributors were getting short shipped of high-velocity items and incurring extra costs through persistent errors in filling orders. After a thorough analysis, we discovered the problem was not localized to the logistics group (as assumed by management) but had to do with the design of the supply chain. Over time, major parts of its operations had drifted away from the firm’s core positioning around maximizing customer satisfaction. Specifically, production planning was being under-resourced and the product management and procurement teams had quietly (and independently) shifted their focus towards launching multiple products and aggressive cost reduction respectively. Our solution got their supply chain back on track by enhancing their product life cycle management policies, improving order fulfillment capabilities and moving production to a more flexible manufacturing model.
Senior leaders need to develop the right supply chain and capabilities for their business strategy and keep it there. To do this, we recommend a simple three-step approach:
Clarify
Although many companies pursue a hodge-podge of strategies, they tend to focus on a couple of parameters (singly or in combination) like cost leadership, premium positioning, or service excellence. However, many managers may not know what levers drive their success and what to leave for their competitors. By undertaking a thorough strategic planning process, leaders will understand their ‘winning’ positioning, where they merely need to meet competition and what they can ignore because of poor strategic fit.
Prioritize
Misalignments often occur when short-term management decisions undercut the optimal supply chain model. This is understandable given the dynamic nature of some markets and quarterly financial imperatives. One example could be the launch of a cost savings initiative for a premium car brand. The purchasing department may choose the lowest cost, but least reliable and innovative, parts suppliers. Managers need guiding policies and discipline to ensure their supply chain decisions and capability investments efficiently reinforce their core business strategy and value proposition.
Measure
As the saying goes, you can’t manage what you don’t measure. I will add the truism that you need to measure the right things, too. Unfortunately, numerous organizations rely on incomplete metrics, which do not measure the link between corporate strategy and supply chain design. Leaders must focus on or identify key performance indicators (KPI) that reinforce strategic coherence. For example, one KPI — ‘shipments on-time, and complete’ – is a good proxy in customer-drive product companies for supply chain performance areas including production, customer service and logistics performance.
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
Cross sell to grow
Filed under: Customer Insights, Growth Strategy, Healthcare Industry, Marketing & Branding, Sales Optimization | Tags: Cross Selling, Growth Strategy, Organizational Barriers, Relationship Management, Solutions
Leave a Comment In a low growth economy, many companies understand that one of the best way to grow revenues is by selling more goods and services to existing customers. At the core of this strategy is ‘customer focus’ – providing better solutions to satisfy more customer needs. Yet, this easier said than done. A variety of factors can combine to scuttle the best designed plans. Managers can overcome these barriers and be ‘cross sell ready’ by optimizing their organization structure, product portfolio and incentive schemes.
A corporate buzzword for the past decade, CF is a simple idea: understanding and targeting a customer’s full gamut of needs will enable the delivery of solution value, therefore catalyzing the cross selling of other products. Our clients that have gotten CF right have generated millions of dollars in profitable, new revenue along with higher customer satisfaction scores and lower marketing costs. Though each firm had a unique CF strategy, they all share three important characteristics: a deep understanding of customer needs across a purchase life cycle; a shift from selling products to marketing solutions and; a focus on relationships versus transactions.
Despite a compelling premise, increasing cross-selling rates is not a slam dunk. There can be multiple organizational barriers to better performance. For example, most firms are organized in product, geographic or functional silos making information sharing, collaboration, and joint selling very difficult. These silos often extend down to the IT systems, restricting visibility into a client’s sales history and requirements. Secondly, compensation schemes and metrics often do not support cross selling versus other goals like client acquisition. Finally, the culture in many organizations is a barrier to implementing a CF mandate, collaborating or cross selling.
Our consulting experience suggests that the difference between leading cross sellers and under-performers comes down to who can get the 3Cs of organizational alchemy right:
Capabilities
Customer-focused firms have deep knowledgeable of their customers and the capabilities to enable them. Len Lyons, General Manager of Workplace Medical Corporation a leading occupational health service company, asserts: “We demonstrate to our clients that we’re experts in our field and in theirs. People maintain strong loyalty to someone they trust and for us, this has had the added benefit of significant growth through customer referrals.” Companies with a strong CF have well-developed people, technology and marketing competencies. Their workforce features a large coterie of generalist, and team-driven problem solvers who can interact directly with the customer. Formal corporate education programs and defined career paths cultivate and reinforce these vital individual traits. Moreover, these firms will have: an advanced CRM and data management systems that deliver a comprehensive view of each customer and prospect’s buying behavior; a long term, relationship-inspired sales approach and; product and R&D teams that are connected directly with buyers and users.
Cooperation
Being internally cooperative (as well as with channel and supply chain partners) is critical to aligning around customer needs and deploying maximum capabilities. Workplace Medical implemented this shift in two steps. Says Lyons, “first, we systematically recalibrated our entire organization and marketing strategy from a transaction focus to a solution-driven model. Then, we led our clients through a paradigm shift in the way they perceive the nature and value of our service.”
Customer-focused enterprises encourage and reward cooperation across the organization. For example, they foster accountability by having all team members measured against key performance indicators like customer satisfaction and cross selling rates. And, they subordinate departmental metrics to larger, more customer-centric measures. However, achieving higher levels of cooperation and information sharing will be problematic in low-trust cultures. Many firms will need to undertake change management initiatives to get recalcitrant or skeptical employees (particularly disinclined sales people) to go along.
Coordination
Maximizing cross selling activities requires internal departments as well as channel partners to be strategically and tactically aligned. High levels of coordination – enabled through supporting technology, regular communication and processes – are needed to share information, efficiently deploy resources and solve multi-faceted customer problems. One way customer-focused companies achieve this is by putting sufficient authority in the hands of an ‘owner’ who is closest to the customer or segment’s requirements – and opportunities. In some of our clients, the leaders needed to dismantle their siloed department-based structures and replace them with multi-functional, autonomous customer-based teams.
Improving a firm’s organizational model to deliver high cross selling rates is not for the impatient or clumsy. It is part culture change, process redesign and incentive re-engineering. Furthermore, cross selling efforts need to be consistent with the company’s value proposition and brand image, not to mention the best interests of the client. Managers should expect to spend at least six months transitioning to a new model while they work through hiccups. Though the process is time consuming, the rewards are undeniable.
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
Innovation from left field
Filed under: Innovation | Tags: Disruptive Innovation, Innovation, Problem Solving, Productivity, R&D
Leave a Comment Most companies are on the hunt for breakthrough ideas and technologies that will enable them to leapfrog competition. Increasingly, the big innovations are found outside of their existing products’ or technologies’ domains. Usually this is a result of serendipity but it doesn’t have to be. New research out of Wharton Business School (published in the Knowledge@Wharton newsletter) outlines how creative problem-solving techniques can be used to bring new innovation to products and service categories.
There are many examples of innovation that have seemingly come out of left field. Semiconductor firm Qualcomm’s unique colour display technology is rooted in the microstructures of the Morpho butterfly’s wings. The cushioning in Reebok’s best-selling basketball shoe is based on technology borrowed from intravenous fluid bags. Design firm, IDEO, leveraged technology from a shampoo bottle top to create a leak-proof water bottle. How can other firms efficiently find and exploit innovation from the outside?
Wharton management professor, Martine Haas and doctoral student Wendy Ham, studied how to harness ideas from the “periphery”. Their conclusion — supported by our client work – is that there are two ways to bring in peripheral knowledge to advance breakthrough innovation: Idea transplantation and perspective shifting.
Idea transplantation is the leveraging of technologies or practices from outlying areas into core product domains, with or without some modification. This is what IDEO and Reebok did. Perspective shifting occurs when a R&D team’s know-how or experience in a tangential area leads them see a problem in their core category differently, thus revealing new solutions. The researchers cite the example of Israeli entrepreneur Shai Agassi and his mission to commercialize electric cars. Agassi borrowed the concept of contract-based leasing from the mobile phone industry and applied it to battery purchasing and consumption, one of the barriers to consumer acceptance.
Both idea transplantation and perspective shifting rely on individuals paying attention to and filtering seemingly irrelevant information in a systematic fashion. This can be a time consuming task fraught with many false starts and dead ends. Some of the challenges include information overload, not choosing enough peripheral domains to study, and neglecting the importance of idea filtering criteria.
As with other complex undertakings, using a disciplined analytical framework can help improve the chances of success. The authors along with our innovation generation model recommends a number of strategies including:
Consider multiple external domains
Initially, there is often no way of knowing whether one external domain will yield breakthrough innovation. The odds of success improve when the team considers a range of peripheral areas and where these might be compatible with the current technology set.
Naturally, companies that already compete in different product categories will be at an advantage (although internal silos may scuttle this advantage). For single-domain firms, managers should look outside through open innovation strategies and regularly engage in collaborative outreach. A word of caution: studying too many peripheral areas can result in diminishing returns.
Focus matters
Since exploring new domains is not easy, companies can maximize the effectiveness of the effort by increasing organizational and individual focus like adding more people, raising the percentage of the day focused on key domains, and lengthening the mandate.
Yet, sustaining this focus can be a challenge. Firms need to ensure their R&D initiatives have the appropriate internal priority and time to conduct a proper assessment. Furthermore, managers can institutionalize “patience” by tweaking management schemes. Still, being focused is not a sufficient condition by itself.
Dabble outside
The Wharton study reinforces the problem-solving and brainstorming value of taking breaks and engaging in outside activities (like a hobby or project) while undertaking innovation-oriented work. However, it is unclear how much outside activity is too much or too little to stimulate the identification of peripheral innovation. The research suggests that breakthrough innovation will be more quickly generated by input from seemingly irrelevant areas, such as creative industries, product design or entrepreneurship” – as opposed to fields that have “rigid problem-solving paths,” like engineering or accounting.
Some of the innovative companies we work are successful at bringing outside creativity in. They maintain a variety of policies including deliberately looking for hires outside of their industry or technical domain; encouraging employees to pursue outside interests during company time, and teaching creativity and problem solving skills as part of corporate training.
At the end of the day, you often don’t know where the big idea will come from. Firms that can be optimistic, patient and deliberate in their approach will maximize their odds of success. They should also be mindful that tapping peripheral innovation is as much about the journey as the outcome.
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
Filling middle manager skills gaps
Filed under: Executive Education | Tags: Education, Middle Managers, Skills Shortage, Training
Leave a Comment Much has been written about our country’s pervasive skills gap: the gulf between the existing and growing need for skilled and technical labour and our economy’s chronically high unemployment. Less advertised but equally as important is the skills gap within a major segment of our workforce — middle managers. For many growth-focused firms this middle manager gap is a barrier to higher productivity, increased innovation, and faster execution. Companies that can address these shortfalls with new educational approaches and tactics can dramatically improve their chances of long-term success.
Low-level skills shortages are not the only human-capital issue plaguing employers. Skills deficiencies among middle managers — those white-collar, knowledge workers — is a significant and hidden drag on organizational performance. While hard, economic data on this problem is difficult to find, anecdotal feedback from dozens of firms is worrisome. The knowledge gap ranges from basic skills to advanced thinking. If workers are under the age of 40, there is a good chance they lack essential writing, presentation and quantitative skills (e.g., basic statistics, finance). Beyond these core skills, many middle managers have difficulty with important activities like synthesizing disparate pieces of information, undertaking financial modelling or structuring a business case. Moreover, talent deficiencies are not limited to analytics or communicating. Project execution and collaboration competencies are also in short supply.
The scale and needs of the middle manager layer amplifies cost and compromises outputs (productivity and thinking). Because middle managers are numerous and expensive, their skills deficiencies will have a large and negative impact on financial and operational performance. Moreover, talent shortfalls hinder middle managers from problem solving, fostering innovation, and leading change, three critical ingredients for dynamic and globally oriented enterprises.
This issue is expected to get worse. “The pressure on middle managers to perform is only going to increase due to population demographics,” according to David Maddocks, president of WorkSmart Education, a provider of eLearning programs to banks. “Organizations are facing a huge loss in institutional knowledge with baby boomers retiring, and there are fewer entry-level employees coming into the workforce. This means the talent pool will shrink, forcing labour costs higher.” Furthermore, the talent gulf may not be easy to close. The kinds of skills needed by employers have changed from incremental new ones that can easily be learned on the job to those that require advanced technical and “soft” skills (in problem solving, communication, teamwork, and leadership, etc.) which cannot easily be learned in a workplace.
In the short-term, filling the gap will remain the responsibility of employers. Sending more people for MBAs won’t solve this problem, so what can companies do?
Understand the problem
Leadership needs to grasp what and where the talent gaps are, and why they occur. In large companies, this is an onerous task. The analytical process should be focused towards more manageable lines of business, divisions or departments. Talent assessments should be holistic if possible, based on existing performance appraisal processes, benchmarking and online tests.
Address strategically
Training can no longer be approached in an ad hoc fashion driven by employee desires. Firms need to prioritize education according to business needs and make ongoing skill development a part of career building. These initiatives should focus on offering workers career pathways, not just skills for the initial job. This life cycle approach can begin with running internships or cooperative degree programs for university or college grads. This “try before we buy” approach allows many employers to assess the skills, work ethic, and attitudes of prospective workers and to give them training tailored to a firm’s specific needs. Furthermore, companies can optimize their talent-management strategies by tweaking their hiring practices (to focus more on capabilities) and through better retention strategies that minimize turnover of the most skilled managers.
Organizations need no longer rely on vanilla, push-based training methods. New and improved educational programs combine cutting-edge content, experiential learning tools and ongoing measurement. Online and classroom education can be integrated with opportunities to apply new concepts and skills in actual or simulated work settings — an approach proven to be the way adults learn best. “What gets measured gets done, and its no different with education” says Maddocks, “Companies must make education a priority by holding each layer of management responsible for its connection to the business and successful implementation. As well, each layer has to get better at coaching the layer below it for results.”
Finally, expert and holistic knowledge is now a mouse-click away. A variety of third-party educational providers assemble the expertise of leading schools like Harvard, Stanford, and Princeton to develop online courses as well as web-based certificate programs. And, our firm mines consulting learnings from dozens of companies to create unique, cross-discipline programs in strategic thinking, change management and ‘executing with excellence.’
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
Gamification 101
Filed under: Customer Experience & Service, Gamification, Marketing & Branding, Organizational Transformation & Culture, Performance Improvement | Tags: Adobe, Best Practices, Deloitte, Duane Reade, Employee Engagement, Gamification, Microsoft, Nike
Leave a Comment Over the past year, our firm has received more calls on Gamification than any other new business topic. Two client questions stand out: What is Gamification? And, what problems does it solve? When answering, I begin with a tale of two employees, Mary and Greg.
Mary is one of thousands of disengaged employees working in a typical call centre. Her year-old job is lonely and repetitive with little autonomy or creativity. Mary’s daily tasks have become so routine and measured that she vacillates between boredom and fear. Although she is supposed to receive quarterly performance reviews, her boss spends most of his time recruiting and fighting fires. Senior management regularly mandates her department to implement process redesign and change initiatives, many of which are divorced from what really goes on in her job. Most likely, Mary is monitoring online job postings, a prudent strategy given that the COO regularly muses openly about outsourcing her function. The chances of Mary staying another 12 months are only 50%.
Ten months ago, Greg was fortunate to get a call centre job call in a firm employing gamification principles and technologies. Greg can’t wait to start his day by logging into his firm’s “gamified” workflow management system. The first thing he sees is an Avatar — a virtual and personalized representation of himself. His Avatar acts on his behalf, taking customer calls, going to meetings with other Avatars and updating his skills. Information about his team’s progress is fed to Greg in real time, including critical customer issues and company social outings. Instead of the usual call centre metrics, Greg competes with his colleagues for badges and ranks. Moreover, he accumulates a virtual currency (that can be exchanged for special perks) when he distributes best practices and assists co-workers with problem solving. A combination of game-enabled fun, friendly competition and subtle peer pressure has helped Greg become a fully engaged employee. Not surprisingly, he has developed new leadership, communication and collaboration skills that put him on track for a promotion.
The first story is illustrative of many companies. The second tale is fictitious but will soon be commonplace. Firms as diverse as Adobe, Whole Foods, Nike, Microsoft and Duane Reade are using games to transform routine and mundane tasks into more useful, fun and financially rewarding activities. The business outcomes are compelling: improved consumer loyalty, increased employee engagement and higher levels of collaboration & information flows.
Gamification is hot. According to a 2011 Gartner Report, more than 70% of Global 2000 organizations will have at least one gamified application by 2014. Even if you square root these numbers, Gamification is destined to be the next big thing.
Gamification defined
The most common definition is the use of on and offline game principles, techniques and technologies in an organizational context to improve business results. At their core, Gamification programs use stories, missions, incentives, and real-time feedback to change a person’s behavior over the long term. Stories can be anything that captivates and catalyzes a person’s interest over an extended period. Incentives can range from simple leaderboards, ranks and badges to the creation of virtual currencies that can be traded.
Problems solved
Gamification has been used in a variety of applications, including:
- Improving operational productivity – Microsoft uses team-based competition and leaderboards to more quickly and thoroughly find software bugs.
- Driving consumer awareness and engagement – Duane Reade uses location-based, competitive gaming to build awareness of their stores and merchandise selection.
- Deepening product usage – Adobe has gamified their Photoshop tutorial to improve a trial user’s knowledge of core functionality.
- Facilitating employee learning and participation – Deloitte uses Gamification to better address employee concerns and manage performance in areas like training, document creation and community engagement.
- Increasing employee engagement – One of our pharma clients used a game to better align around corporate goals, teach workflows and promote cross department collaboration.
- Triggering lifestyle changes – The Nike+ game promotes exercise by allowing people to track their results and compete against their friends and others.
Four pillars
Winning Gamification strategies artfully combine four elements:
- Business strategy – Powerful Gamification programs are tightly coupled to core business strategies and metrics
- Motivational science – Successful games leverage key precepts of behavioral and social psychology such as the importance of continuous feedback, competition and public recognition.
- Video game learnings – Popular video games have been shown to increase brain endorphins, which lead to higher levels of blissful happiness.
- Collaborative technology – A variety of companies like Bunchball and Salesforce.com have deployed enterprise-level Gamification platforms that can run different games
Both consumers and employees just want to have fun. Indulging them is becoming a sure path to business results (when the Gamification program is properly designed). Ensuring this happens will be the subject of the next Gamification column.
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
Simplicity drives sales
Filed under: Customer Experience & Service, Customer Insights, Growth Strategy | Tags: Client Experience, Complexity Reduction, Online Buying, Sales, Simplicity
Comments (1) Virtually every company shares one goal: increase revenues by better delivering on customer needs. To this end, marketers will regularly add product features, tweak their brand messages or increase product availability. A no-brainer approach, right? Wrong, according to new research published in the Harvard Business Review. Besides generating excessive operational complexity and cost, this strategy is turning off the very customers you are trying to keep and sell more to. The better strategy would be to simplify your offering, streamline the purchase experience and optimize the amount of information provided.
New Research
The study’s authors looked at buying behaviour though a typical purchase cycle. In the U.S., Australia and the U.K., 7,000 consumers (plus 200 senior marketers) were given pre- and post-purchase surveys on their attitudes and buying experiences (e.g., information gathering, product evaluation) of different products across a variety of categories. Specifically, the CEB wanted to know what made some customers “sticky” (i.e. follow through on an intended purchase) and others not. Studies like these are important for companies looking to maximize sales opportunities, improve customer satisfaction and boost returns from marketing and IT investments.
Surveys says...
The findings are thought-provoking. Managers think that most consumers want more product information and choice, to participate in a community and stay connected through social media. The research found that the opposite is true. Many consumers feel overwhelmed by information and are confounded by the purchase process. They don’t want a relationship with a company. Rather, they only seek services and messages that facilitate an easy buying decision and transaction. These include a simplified buying process, less (but more relevant) information and greater visibility into available discounts.
A wealth of academic research has found that offering excessive product choice or complicated messages leads to consumer indecision and angst, and ultimately less satisfaction with the process and the products themselves. Our firm has seen similar results in packaged goods, retail and IT firms during complexity reduction and client experience projects.
At the root of this paradox is the differing perceptions of what the customer really wants and needs versus what management thinks they want and need. This mismatch has many causes. Proper customer research is not undertaken often enough to keep pace with evolving customer needs. In other cases, organizational factors such as departmental or management bias, cultural practices or compensation schemes generate an impetus for more products, messages and processes. Finally, complications inherent in business these days – think technological change, channel proliferation and inflexible infrastructures – virtually guarantee more complexity, minimal integration and less consistency.
Keep it simple, Stewart
Smart firms make simplicity a goal in itself. To simplify the buying experience, we recommend managers follow these three basic steps:
Update
Company’s need to be vigilant that what they are saying, doing and selling is aligned with what consumers really want and when they want it. As such, marketers should regularly update their knowledge of consumer needs, requirements and online behaviors by looking at a variety of data sources including CRM data, social media activity and independent market research.
A holistic analytical lens can lead to some interesting learnings. For example, some auto manufacturers, travel businesses and retailers discovered that the platform used for searching product information plays an important role in the timing of the purchase. Specifically, 70% of people who use a mobile device for search are hours away from a purchase. On the other hand, 70% of people who used a desktop for search are roughly seven days away from a purchase.
Optimize
Too many brands lead consumers down unnecessary and frustrating purchase paths or clutter their message with too much information. This can be fixed by providing better navigation and search tools that enhance the buying experience. These tools would guide consumers to the right products by helping them evaluate available choices, choose relevant features and provide trustworthy external input. Furthermore, managers would be wise to benchmark their buying process against industry best practices from companies like Amazon, Victoria’s Secret and Intuit.
Reduce
Less is often more. Product managers should periodically cull under-performing products, prune the amount of information provided and scrap redundant marketing & sales programs that add more confusion than revenue and value. Firms should institute and enforce guidelines to prevent this complexity from returning. Finally, companies should standardize on proven, simplicity-enabled products, messages and practices and roll them out throughout the organization.
For many enterprises of any size, increasing simplicity is the new black. Getting to the ideal purchase process will require managers to conduct unbiased consumer analysis, simplify the buying experience and product portfolio, and have the fortitude to prevent confusion from creeping back in.
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
6 Ways to Viral Content
Filed under: Customer Insights, Marketing & Branding, Social Media | Tags: Blendtec, Content, Social Media, strategy, Viral Marketing
Leave a Comment Whether it’s a new restaurant, toy or the Gangnam Style dance craze, everyone follows the crowd at one point or another. Certain ideas and products have the uncanny ability to become instantly popular, driven by powerful word-of-mouth and online viral effects. Capturing and leveraging this elusive “x factor” is the holy grail of many marketers, especially when they seek to exploit the reach of social media technologies. Fortunately, new research is available that helps them improve their odds. A new book, Contagious: Why Things Catch On, was recently reviewed in the Knowledge@Wharton newsletter (published by the Wharton School). The book’s author, Jonah Berger, studied the idea of contagiousness and explores what companies can do to bottle it.
In our client work, we often come across managers who try to generate contagiousness through guerilla marketing or zany creative ideas. While both of these have the potential to trigger contagiousness, they may not be sufficient in their own right. Although creating viral content or products is an art, a little management discipline can go a long way.
Based on research, Berger identified six success principles – the STEPPS acronym – for why some things catch on and others don’t. Infectious content and products feature these social elements:
- Social currency – People tend to talk about things that make themselves look good, rather than bad.
- Triggers – Individuals more readily talk about ideas that are”top of mind and “tip of the tongue.”
- Ease for emotion – We are inclined to share more of what we care about.
- Public – People tend to mimic what they see others doing.
- Practical value – We tend share useful information to help others.
- Stories – Content that is shared is usually wrapped up in a story or narrative.
According to Berger, managers that can incorporate STEPPS principles have a better chance of increasing brand awareness, relevance and word-of-mouth transmission of their content.
STEPPS in practice
Any company or person can insert contagiousness within their content, regardless of the product or brand. The key is to think about what elements about a product would make people want to talk about and share, and then build that into your creative execution or message. The story of Blendtec, a household appliance manufacturer, perfectly illustrates this approach.
This medium size firm builds high quality blenders. Their first video featured a CEO doing what he did on a regular basis: throwing items like golf balls or pens into a blender to test product quality and performance. The video was distributed to their customer mailing list, who in turn forwarded it to others. Soon, the videos went viral, generating more than 10 million views. Based on this success, the Company launched a series of videos called “Will it blend?” – where they stick all types of different things in a blender. This series has garnered over 150 million views. To be clear, this video series was not the outcome of a large marketing budget or effort. A new marketing person spent $50 on a white lab coat and safety glasses and he filmed his amicable boss torture-testing various products in a lab. Yet, the videos were based on a powerful but simple notion that people would enjoy seeing an appealing demonstrator use a familiar household product to destroy a wide variety of items.
Leveraging these insights
Be real – Firms need to recognize their core brand essence (every firm or product has one) and seek to authentically embed this in their marketing content and products. For Blendtec, it was about performance, approachability and inventiveness.
Make it social – Marketers should understand the psychology behind what makes people talk about, share and endorse things. For example, people are resistant to sharing content that overtly resembles an advertisement. The STEPPS framework is an effective tool to gauge the social appeal of new content.
Experiment – You cannot guarantee a Gangnam Style success every time. What you can do is improve your learning, test different creative ideas and boost interest by launching ‘quick and dirty’ experiments as well as being open to customer-generated content and creative ideas wherever they come from.
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
Innovate better
Filed under: Innovation, Performance Improvement | Tags: commercialization, Experiments, Innovation, Mitchell Osak, Simulations, strategy
Leave a Comment Much has been written about the challenges of generating and commercializing innovation. It is a truism that any company that can translate more innovations into commercial success will be able to outflank competition, improve financial performance and better meet customer needs. By leveraging new technologies and practices, firms can build new experimentation capabilities that will improve their odds of success. However, these approaches would have to be baked into the innovation generation and commercialization process.
Most companies make fewer but larger innovations bets – often missing key data on customers, costs and competitors. An experimentation-focused company, on the other hand, looks first to place more, smaller bets or experiments. The role of these tests are to generate critical internal and external learning around consumer uptake, usage etc. As such, they must be quickly designed, deployed and measured Innovations that pass muster have fewer data gaps and will more quickly secure management attention and resources, thereby increasing its chances of success. Like any significant change, however, building an experimentation capability will often require a process and cultural shift within the organization.
Below are 3 ways firms can use experiments more to develop better ideas, faster and at lower cost.
Open up the innovation process
Managers can increase the intake and vetting of new ideas by opening up their innovation and R&D effort through ‘Open Innovation’ strategies that foster linkages with entrepreneurs, suppliers, universities and other firms. Many companies have successfully deployed this approach including P&G, 3M and Eli Lilly. To successfully implement this practice, organizations need to adopt an ‘open innovation’ mindset as well as ensure there are supporting management systems.
A good first step for managers should be inward, by breaking down internal barriers like geographic, departmental or data silos that limit the cross-pollination of ideas and technologies. Firms can also implement a variety of innovation-enabling strategies such as deploying gamification systems, fostering horizontal job mobility and creating collaboration platforms.
Exploit enabling technologies and processes
New tools now give managers the ability to perform quick and dirty, yet feedback rich, experiments in real-time. For example, Amazon has the capability to quickly run and measure a number of different online marketing, design and functionality tests aimed at different customer groups. In the consumer and industrial goods sectors, rapid advances and falling costs in 3D-printing technology gives managers the ability to quickly ‘print’ prototypes and test market small batches of customized goods. This capability avoids the cost and time of developing tooling and sourcing bulk product orders.
The emergence of online virtual worlds such as Second Life, Eve Online and Habbo give enterprises a new channel to test new products and get intimate with their target consumers. These environments are ideal for measuring innovation interest, simulating retail conditions and exploring competitive reactions. By using Avatars to represent themselves online, consumers can provide rich feedback on their needs, especially in sensitive areas like healthcare.
Leverage the crowd
A number of new operating models are exploiting the power of the ‘crowd’ to deliver concept or product feedback, provide decision making support or raise capital. Organizations like Netflix, IBM and the X Prize Foundation have used crowdsourcing to leverage a large number of people (often through online collaboration tools) to address specific tasks that can benefit from collective wisdom or effort. Crowdsourcing practices have proven to reduce the cost of software testing, spark creativity, raise fund for early stage ventures, and solve difficult technical challenges. Despite its value, crowdsourcing practices should be used prudently.
Predictive markets are another method to forecast the success of an innovation. Predictive markets are based on the notion that the buying decisions of many individuals within a speculative market can produce an accurate prediction of a development or an event’s occurrence, success or failure. The current market prices are interpreted as predictions of the probability of the event (e.g, product launch) or the expected value of the parameter (e.g., the likelihood of its success). These tools are considered sufficiently accurate for many businesses like Siemens, Pfizer, and GE to use them internally for product planning, innovation assessment and evaluating marketing ideas.
Building a core competency in experimentation does not happen overnight. Leaders may need to re-tweak their management systems, workflows and cultures to more willingly tolerate failure, share information better and leverage external input, partners and resources. However, those that can embed experimentation within their organization will gain a significant competitive advantage.
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
Big Data 1-2-3
Filed under: Analytics, Customer Insights, Growth Strategy, Marketing & Branding | Tags: Analytics, Best Practices, Big Data, Marketing, strategy
Leave a Comment Taking advantage of the insights buried in Big Data is all the rage in many companies. An omnibus term, Big Data is the accumulation and synthesis of all kinds of customer data collected but lying dormant within an organization. However, exploiting its potential could be a daunting task for many managers. Here are three foundational steps to help kick off a high return, low risk analytics program:
Begin with a hypothesis
Big Data presents so many opportunities it’s often difficult to know where to start. The journey can finish at many end-states, some providing real business value but others offering nothing actionable. Moreover, data analytics competencies are not easy to assemble. Analytics experts are expensive and often difficult to find. You need to know where you are going if you want to extract value and not waste time and money.
One way to ensure you are on the right track is to create a hypothesis about your customers that is directly linked to corporate strategies and metrics. For example, an explicit hypothesis could be that the existing digital marketing plan is not effectively targeting the needs of the highest potential customer segments. This hypothesis would then be tested against the insights produced from an analysis of the pertinent customer and operational data.
According to Casey Futterer, vice-president of strategic new business at Nielsen Canada, “Coping with large amounts of data with few analytical resources creates an imperative for laser focus — what issue to solve, what action to take. Important issues will relate to questions of: who? (consumer/shopper); what? (proposition); and/or, how? (plan).”
Balance left and right brain thinking
Many assume Big Data is a mathematical and IT exercise based on customer relationship management data. While these three drivers are critical to producing meaningful insights, they cannot tell the entire picture about the customer, particularly if the data is internally siloed or incomplete. For example, firms can find in Big Data a link between nice weather and increased purchase behaviour but they often can’t tell you why these correlations occur. Do people buy more because it’s sunny outside, springtime or because of a recent price promotion? Without knowing the ‘why’, marketers will have a difficult time turning the insight into something actionable that generates solid financial returns.
To get to root causes of behaviour and a critical 360-degree view of the customer, managers need to look elsewhere at non-quantitative factors — the right brain or emotional side of behaviour — through tools such as ethnography, neuroscience and qualitative consumer research. In addition, managers should round out their quantitative analysis with a holistic examination of the customer experience including service, channel interactions and their actions with competitive offerings.
“There is no magic box that spits out the answer,” says Futterer. “Managers need to combine analytics with emerging tools and your team’s collective experience and brain power to extract insight and drive action.”
Test and scale
Once you know where you are going and have the right approach to get there, its time to put your strategy into action. When it comes to high-impact initiatives like Big Data, prudent firms walk before they run. This is often done for practical reasons. For one thing, few senior managers have direct experience with complex analytical tools or methodologies. Secondly, Big Data programs can be costly to implement. Finally, organizational and IT challenges may initially limit data accessibility and quality.
Using pilots is a common sense approach when experience and investment are low, and uncertainty is high. By running a number of small tests, managers can identify resource requirements, learn by doing and build internal momentum behind quick wins. Pilots could be structured around important questions such as which purchased products trigger the cross-sell of other items. Or, they could be run in specific geographies, lines of business or with single products.
Finally, collecting and analyzing more data does not always lead to better results. According to the former CIO of CIBC and McGraw-Hill Companies, Peter Watkins, “There is a common fallacy that more data is better. Best practice research shows that it is not the volume, rather it is the variety of data, and the better quality of that data, particularly on customer behaviour and characteristics, that enables smart analytics to produce rapid insight and speedy action.”
Properly executed, analytics has the potential to transform an organization. Tapping this opportunity need not be intimidating or unmanageable. Following an analytics strategy that aligns to marketing goals up front, adopting a holistic analytical approach and focusing on generating quick wins and learning will increase your firm’s chances of success.
For more information on our services and work, please visit the Quanta Consulting Inc. web site.
