Archive for March, 2013|Monthly archive page

Simplicity drives sales

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

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

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

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.