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September 2007
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October 2007

Engaging Generation Next - Customer Loyalty

Loyalty marketing is being redefined in the age of multiple product alternatives and equal quality between products.  While many continue to chase loyalty, customer loyalty meaningfully exists in one or two product categories:

- Insurance (72%)
- Healthcare

As a juxtaposition, apparral brands have a 26% loyalty quotient.

Source: Focalyst UK - study of Baby Boomer Behavior - 2007

Susan Wagner, the CMO of Orbitz has some helpful perspective in the September issue of 1:1 Magazine. (Psychology of Next - by John Gaffney).  Susan points out that the key to loyalty is to build engagement over purchase and in between purchases.  She outlines several objectives for a contemporary loyalty program:

- Discover a Point of Connection - focus on human truths with microsites targeted individual audiences (family, business etc in the case of Orbitz)
- Measure things that are actionable - where does the brand make a difference in people's lives
- Strive for engagement, not loyalty - this is where things like online games come into play.

Source: 1:1 Magazine, Forrester Marketing Forum (April, 2007)

Wanted: CMO Magician at Home Depot

I was reading an article in MediaPost regarding Home Depot and the decision to replace ROGER ADAMS, who has been in the position for just one year with John Ross, the new vice president/advertising.   We've all seen this movie before, a company with declining sales brings in a CMO to right the ship.

Adams described his strategy at the Association of National Advertisers Conference (as quoted from Sarah Mahoney in Mediapost:

"Adams talked about the reinvention of Home Depot as being "our home improvement project. The magic behind the brand is the emotional connection, the power of 'I did it.' Home Depot's overall strategy is to deliver empowerment to people." Adams oversaw ads that let all kinds of consumers--Hispanics, African-Americans, and single moms--show off what they were able to accomplish with the Home Depot's help."

Having worked with multiple Fortune 100 companies it could be pretty safe to say that Adam's career "unfolded" as follows:

Job Interview:    Roger, Home Depot needs you.  Your solid track record of developing marketing campaigns that turned around brands is impressive.  We think you can bring that kind of insight to "Home Depot"  We have world class resources, advertising agencies and people, but we need you to shape the image of the company in order to drive sales.  And oh by the way if you survive you are going to be rich based on this options package.  Don't forget the keys to the company car after you sign the contract.

Roger:  I accept.  Now let me get at the data and see where the need gaps are.

Agency:  Roger, based on our research sales are going down because do it yourselfers do not have confidence.  You need a big campaign that appeals to the everyman so that they have an emotional connection with Home Depot.  If you look at the studies for every successful campaign we have done at "big agency" while ignoring the campaigns that were done for those failed brands (which of course was not our fault since the product was flawed) you can see that emotional advertising is where you need to go.

Roger:  You are right.  I need to excite this organization and hold a mirror up to our customers and employees and rebuild the pride in Home Depot.  Do you think we can address the store experience so the advertising matches what happens when someone actually comes to the store.

Home Depot CEO:  Roger you are new.  Prove yourself and maybe you'll earn the organizational influence to change what is not yours.  Play in your sandbox.

Customer lost in aisle 17 of  Home Depot:  Now where are the custom blinds.  I've found them.  Hmm, I need help.  Help...someone help me.

Home Depot CEO:  Roger, that campaign that you are running doesn't seem to be getting us any traction.  Yes I know you've only been running it for 6 months, and yes I know that network TV just doesn't do the job you think you need to do.  And stop complaining about operations and the store experience, that's not your job.

Roger:  *&?#%(#

I could go on and on.  Usually companies believe that the CMO's job is to create communications that define the brand on one dimension - perception in the absence of store and customer experience.  Yet the CMO has little influence to "move the planets".  In other words to make the organizational changes necessary to project a clear positioning to the market.  The agency wanting to collect its fees does its best, but since they narrowly are looking at communications as the only tool at their disposal, are not considering the authenticity of the entire customer experience.

It's just a guess.  Best of luck to Roger Adams and John Ross.  I'm sure Roger is thinking..."John, you are going to need more than luck".


Ben Stein's Money

Money is a funny thing.  A behaviorist friend of mine says that the behavior associated with money is the same as someone that is having a secret affair.  Money is something that we are not comfortable talking about in public, it tends to occur between two people and there is a range of emotion associated with the topic. 

It is with this as a backdrop that countless advertisers seek to convince us that we need a financial planner.  The impetus for getting a financial planner is usually due to other advertising or television programs that convince us to buy individual stocks online, then after we lose our shirt we seek a financial planner that teaches us what we should have done anyway.   We do need a planner, but  more because  most of us don't have the time to do it ourselves, there just has to be a better way to convince us to get one.  Pursuing my dreams, the focus of most advertising seems a bit thin when making such a big decision.   By the way a financial planner cannot come from my bank that is asking me to go further in debt through a home equity loan at the same time they want me to buy random investment products.

In the midst of all this noise and multiple failed attempts to win at buying stocks I found Ben Stein and his column in the Sunday New York Times.   Every time I listen to Mr. Stein I make money.  In his most recent column called Sound Investing and Peaceful Sleep he has some simple investment advice which I think is worth sharing:

- Invest for the long haul
- The average investor cannot pick stocks
- Buy broad based mutual funds, index funds, exchange-traded funds and variable annuities (low fee)
- Look at the Morgan Stanley exchange traded funds, Fidelity and Vanguard low cost index funds
- Buy domestic funds, foreign funds, foreign developed markets funds, foreign developing market funds
- Consider the Fidelity Spartan Total Market Index fund (FSTVX - domestic stocks)
- iShares MSCI Emerging Markets Index fund - invests in developing countries (EEM)
-ishares MSCI EAFE Index fund for Europe, Australasia and the Far East (EFA)

Makiing News Count - the new PR

Jeff Stewart in the blog Applied Disruption points out that to get press attention it is better to include a long term market projection that results in a big number instead of pointing out short term results.  Jeff includes two examples:

"When government talks about saving (or investing) they don’t say $10 billion a year.   Yearly numbers may be practical for executives who are accountable to quarterly projections, but it’s not going to generate press inside the beltway.  Savvy Politicians say “$100 Billion dollars by 2017”

Hewlett Packard got press attention by projecting that the digital print market is 53 trillion pages instead of a much smaller number today. 

Lesson learned.


Radiohead and the Rules of Marketing

Radiohead and its new direct distribution model is entirely consistent with  consumer expectation of how the internet should operate.  For those just waking up, Radiohead is distributing their music directly to the public via their own site called In Rainbows.   The difference in the approach is that consumers that want the music are asked to name their own price.

From a publicity standpoint the approach has put Radiohead on top of the charts that count such as Hype Machine.  From a financial standpoint, this is only the beginning as bands need to figure out beyond the music how to monetize the millions of people a promotion like this is going to attract.  Do I hear advertising (although imposing an advertising into something like this that definitely rises to the level of "cool" might be a mistake or said another way a "culture clash").

Advertising Agency 2.0

Good piece in the September 24 issue of Advertising Age by Jennifer Rooney and Avi Dan on the fundamental components of what an advertising agency business model should look like.  The article points out 5 pillars for an agency:

Compensation - tied to value creation instead of labor.

Outsourcing - the agency should be an organizer of creative talent.

Revenue Streams - licensing of content.

Speed - as a strategic asset for an advertiser

Social Responsibility - needed to recruit talent

As a client I of multiple agencies I couldn't agree more.  While it sounds cliche, agency's will always be best at developing ideas that reinforce or change the meaning of brands.  The value creation is in the creation, articulation and evolution of the core positioning or value proposition. The challenge is in measuring this value and how it translates into the client's world of ROI and dashboards.

The Value of Google

Google is valued at more than Time Warner, Disney and News Corp. combined.  With a $600 stock price and no end in sight, Google Nation is on a roll. 

I'm a huge fan of Google and what they've done for the marketing and advertising industry.  They are doing a great job in integrating all of the information a marketer needs to make smart ROI driven decisions.  Hopefully with size they will maintain their focus.  I've seen no sign that they haven't.  Google is the leader, and by definition no one else can be. advertising looks interesting and is compelling as they are claiming ownership of 3-D search, but it hasn't gotten me away from my Google habit.  The reason is that I am not in pain.  I didn't wake up today thinking boy my search engine isn't working and therefore I can't do my job.  No, I woke up saying, it's another great day because Google search is going to generate hundreds of leads for my company, the tests I am running with Google radio promise to combine awareness objectives with ROI goals and because I have outside consultants figuring out, not how to avoid Google, but how to spend even more. 

Can anyone say Google $700?

Service Logic - Home Depot, Circiut City vs. Best Buy, Starbucks and Southwest Airlines

I just got home from Home Depot where I watched two separate couples storm out of the store due to bad service.  One couple couldn't find anyone competent enough to handle a large custom blinds order and the other was charged for the order of the person in front of her.  In both instances salespeople that were standing nearby just watched.  At Circuit City I wanted to buy a TV and like the other 5 people waiting couldn't find anyone to help....for an hour.

Compare this to Starbucks where I've never had a bad service experience or Southwest Airlines where on a recent flight someone that was off duty actually volunteered to help the on duty personnel because the line for help was so long.  When I walk into Best Buy 3 people rush over to help.

It's easy to see which retailers are going to win in the long run which ones aren't.  What is amazing is that the management of those that aren't delivering can 't just adapt the best practices of the service leaders.  Maybe the answer can be found in the words of the Home Depot salesman that I convinced to help me...."what kind of service do you expect for $10 an hour".  Enough said.

Online or Off - The Battle oif the Office Software Giants

Adobe just announced their purchase of Virtual Ubiquity, the maker of the online word processing software Buzzware.  The purchase was made in a competitive environment that is dominated by Microsoft Word with every other player such as WordPerfect and Google Doc trailing far behind.

Buzzware marries online word processing with group collaberation tools.  It makes editing one document easier between groups.  While I like the concept, I'm reluctant to call it a success.  From a marketing standpoint it is near impossible to unseat the market leader Microsoft Word.  With a highly satisfied user based and cross platform compatibility with other Microsoft products, replacing the leader is near impossible and will cost hundreds of millions of dollars.  With no second place brand, there is an opening in the market for a number 2 player, either online or offline - the marketing opportunity.

If I was advertising Buzzware or Google Docs, I'd establish it as the number 1 alternative to the market leader with all the features of Microsoft Word plus the features of Adobe.   This of course will not happen since most brands believe that they should not be comparative (wrong) and most developers believe that they can win markets on their good looks alone (wrong again - can anyone say Zune).

You can read more about this at a great post by Keith Miller on the website.  The post calls out one of the key advantages of Buzzware; the ability to print a document accurately off of the internet.  For those that have tried to print anything online, it is a challenge with frequent text problems and pictures that just disappear.  Not a bad feature, but I'm not sure it defeats Microsoft Word which makes printing as easy as pushing a button.

You can click here to try out Buzzware .  This battle of the titans is going to be fun.  In first place by a mile, Microsoft.  Second Place goes to ?.

Sales People and Leads - They do What They Do

Feeding a 70 person sales department leads is a harrowing occupation.  Satisfying them is a constant challenge since by definition a lead is never perfect on some criteria such as revenue potential, customer willingness to buy, the desire of a particular person to do their job that day, the end of the bi-polar personality spectrum they are experiencing that day etc.

After months of feeding sales leads and having to continually follow-up with them to make sure that they did the necessary follow through is the realization that sales will do what sales wants to do.  Feeding them all leads makes no sense when they will only call those that they like.  Developing collateral and selling process that isn't completely personalized to them will just not be used.

The answer.  Turn the table.  Let sales select those leads they want to pursue and develop alternative processes to follow up on what is left.  Create variable data fields in printed materials that allow them to put their name on every page of every document.  Establish personal landing pages on the internet that feeds leads directly to the salesperson.  If you don't achieve happiness at least you have a shot at graceful co-existence.