Archive for the ‘Marketing & Branding’ Category

How great design can set you apart from competitors

If I could rank all of Steve Jobs’s business lessons, the importance of design in supporting business success would top my list.

Don’t take my word for it, though. Many global market leaders, and not just in fashion, electronics or luxury brands, drive growth by continuously enhancing product design. However, companies without a design heritage or capability can also use this strategy to improve revenue and brand image.

In a simplified process, designers working in collaboration with product managers and engineers take creative ideas and marry them with a customer’s requirements and the company’s goals. The integration of this effort hopefully leads to the creation of an aesthetically pleasing, functional and profitable product. Design is the sum total of the properties of a product or service made up of the form (i.e., the aesthetics around look, feel, sounds etc.) and the function (i.e., the practical benefits delivered). Good design can help a company create or dominate a category (think iPhone); poor design can kill a brand (remember the Edsel).

Design isn’t just the purview of high-end, iconic consumer brands such as Apple, Louis Vuitton, Nike, and Bang & Olufsen. Some B2B manufacturers such as IBM (laptops), Herman Miller (office chairs) and Olivetti (calculators) have used product design leaders to dominate their categories.

Then there’s successful and well-designed brands including IKEA, Samsung and Canada’s Umbria, which have proven neither price nor a Paris, New York or Milan address are required for using design competencies as a key differentiator.

Nor do you need a large investment or a creative studio to compete on design. Take, for example, the experience of one of my clients — a manufacturer of high performance automation systems. The company, challenged to build market share without resorting to price discounting, tweaked its product designs and saw an immediate boost to revenue and brand image. Research showed buyers perceived little difference between products (not unexpected since the systems looked remarkably similar) despite the fact that system performance and warranties varied significantly. Not surprisingly, pricing was their key purchase driver. To stand out, the company had to leverage other attributes.

Management agreed to run an experiment: redesign its product demo to make it visually appealing and high end, then gauge its success through prospect and client feedback. This involved some simple design changes — repainting certain components, enclosing messy cable assemblies and enhancing the documentation and packaging. The response from the sales team and prospects was overwhelming. Sales closing rates and perceived product value jumped. Based on these results, the CEO decided to redesign the entire lineup.

Leveraging design is not for the impatient, undisciplined or risk adverse. World-class firms build internal competencies and ensure they become part of their cultural DNA.

Three best practices to achieve this are:

Learn Acquire a deep and multifaceted understanding of your customers’ needs (including sub-conscious drivers of their behaviour), as well as an understanding of emerging trends, such as mobile computing. Be mindful of Sony founder Akio Morita’s observation that consumers often fail to see the appeal of a breakthrough product on first hearing about it (the Walkman in this case). Keep the creative juices flowing by being plugged in to what is happening in complementary industries and related fields such as technology, nature, entertainment and fashion.

Build Assemble the right ingredients — talent, tools and processes — then give them the freedom to follow a vision consistent with the company’s goals. Collaboration is essential; designers should spend much of their time working directly with the product development and operational groups as well as external partners. Employing the right knowledge management systems and metrics will help ensure design excellence is institutionalized, cultivated and effectively managed long term.

Persevere Making these changes stick requires strong leadership, the pull of motivational values and goals and perseverance, not to mention a re-balancing of priorities. Internal alignment won’t always be easy especially when you are asking engineers and production managers to collaborate with designers. Finally, you need to be realistic. Not every new design, no matter how elegant, will be a hit with customers.

Mitchell Osak is managing director, strategic advisory services at Grant Thornton LLP. He can be reached at Mitchell.Osak@ca.gt.com Follow him at Twitter.com/MitchellOsak

Are you charging your customers enough?

Nearly every executive pays lip service to “shareholder value.” But many of them readily, if unwittingly, make business decisions that run counter to that objective.

Over the long run, no variable correlates more strongly with shareholder value than profit maximization — something that many companies do not prioritize in spirit, let alone in practice.

Instead, they often focus on flavor-of-the-month strategies such as market share growth or product innovation. Believe it or not, these are not always compatible with maximizing profit over the long run.

The problem with focusing on market share is that growth is often achieved at the expense of competitors. “Switchers” are the most difficult customers to attract, frequently requiring discounted pricing or free trials, and are also the most difficult to retain. The result is generally a temporary increase in market share that does not translate into higher revenue or lower operating costs.

While focusing on product innovation is always a good place to start, it too can come up short when it comes to maximizing profit. One major reason is a failure to properly price the products. An introductory price that is too low for too long — usually in hopes of stealing market share — may never produce the return a company is hoping for.

The result is that companies often spin their wheels, leaving profit on the table because they don’t understand the true value of their enhanced product — or feel that their brand does not command the heft required to demand premium pricing for premium quality.

Why does pricing go off the rails?

Our consulting firm recently worked with a company whose stock was under-performing relative to its peers. The company’s solution had been to increase market share through product upgrades. Despite considerable money and effort, however, the strategy failed to build top-line revenue and, as a result, investors were unmoved.

When we performed the postmortem we determined that management put a great deal of care into identifying what customers wanted and how to market the products but put little thought into what to charge. Not only were the prices too low to feasibly provide a return on the organization’s R&D investment, customers failed in lieu of premium pricing to grasp the products’ premium quality.

Setting the right price

It can be a challenge to devise and stick to a pricing strategy that reflects the true value of a product or service without compromising competitiveness. Here are a few tips that can make the task a little easier:

  • Ensure that every stakeholder both understands the primacy of long-term profitability and is aligned around that goal;
  • Recognize that there may be special instances when premium pricing should temporarily take the backseat to marketplace competition;
  • Understand your existing and potential customers’ needs and budget and seek to meet both;
  • Enumerate the ways in which your product or service addresses those needs, using tools such as a customer-value model;
  • Consider if or how you need to differentiate and build your brand to support premium pricing.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

Unbrand to stand out in the market

For organizations hoping to grow, the mantra is often: faster, better, cheaper. But is this an effective way to build and sustain a brand in an age of consumer skepticism, marketing noise, economic uncertainty and declining product differentiation?

Studies show that as consumers move online, buying decisions increasingly hinge on factors such as social proof, honesty and regular engagement. Firms that fail to pivot their marketing strategy to address these trends increasingly lack integrity and purpose in the eyes of consumers and put themselves at risk of becoming targets of fickle, social-media-enabled customers and activists (see: J.P. Morgan’s #AskJPM campaign).

That’s why some companies are embracing what I call “unbranding” to maximize brand equity and minimize risk. While traditional branding appeals to the left side of the brain — faster, better, cheaper — unbranding appeals to the right side: trust, aspiration, purpose.

  • Trust is is achieved by building credibility through transparency (see: Costco).
  • Aspiration is achieved by developing a brand that aligns with who the customer wants to be (see: Coach).
  • Purpose is achieved by articulating a clear set of values that permeates the entire customer experience (see: Apple).

McDonald’s Corp. is perhaps the most successful unbrander to date. Spurred by customer research and in response to socio-cultural developments, they launched “Our Food. Your Questions.” — a digital hub where McDonald’s employees, suppliers and nutrition experts answer questions from curious consumers and dispel myths that have long plagued the global fast-food giant. Here is a sampling from the site:

Q Is your meat made of cardboard?
A “Cardboard is for moving boxes, meat is for eating.”

Q Did McDonald’s hold a competition to make an edible burger out of worms?
A “We’ve never held such a competition.”

Q Is your beef processed using ‘pink slime’ or ammonia?
A “No.”

Q Why is the food at McDonald’s so cheap?
A “Buying power.”

Q Is your food tasty?
A “Is the Earth round?”

This program is not about bragging, preaching or evading. Rather it’s about dialogue, humility and openness. For McDonald’s, this represents a paradigm shift in how the company builds its brand and reinforces its core message of quality.

“Today, brands need to get comfortable with being uncomfortable and challenge convention,” says Antoinette Benoit, senior vice president, national marketing, McDonald’s Canada. “It’s important for us to have an ongoing and transparent two-way conversation with our customers in order to make a meaningful and long-lasting connection with them. This not only enables us to tell our story but also to evolve our brand based on what’s important to our customers.”

This unbranding strategy has contributed to improving the overall perception of McDonald’s. The idea came out of the Canadian wing of the company, but benefited from further development by McDonald’s France and McDonald’s U.K., both of which were able to overcome business and public relations challenges and grow revenues. The campaign has now been adopted in Australia, New Zealand, the United States and parts of Latin America.

Behind the success of this unbranding strategy was an up-to-date understanding of consumer needs, a return to focusing on historical core values (“quality” in the case of McDonald’s) and courage on the part of management to follow though on the program’s requirement for honesty, transparency and directness. Moving forward, McDonald’s will build on the strategy’s success by incorporating these learnings across the entire customer and partner experience through new training, advertising and more.

How can you make unbranding work for your business?

  1. Understand who you are as company. This should be based on your institutional values, history and how you are perceived within the marketplace.
  2. Identify your customer’s needs. This should be accomplished through both traditional and new marketing-research techniques.
  3. Create a vision or ethos for your company. This should encapsulate who you want to be and how you want to be perceived as an organization.
  4. Select the appropriate communications methods. Understanding how to articulate your message is as important as knowing what your message is.
  5. Unify your message across all customer touch points. Consistency is key in articulating a message that will both resonate and change perception.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

5 steps to rebrand your business

The successful rebranding and strategic pivot of Tangerine, formerly ING Direct, was the product of strategic insight, thorough analytics and diligent planning. Just as critical was the firm’s ability to pull off a complex transformation in a time of market uncertainty and regulatory change. With 70% to 80% of change initiatives ending in failure, Tangerine holds many lessons for companies looking to strategically reposition themselves or undertake other change initiatives.

“Managing change can be both challenging and rewarding,” says Peter Aceto, president and CEO of Tangerine. “Since we all perceive change differently, it is a journey that must be met with honesty, regular communication, reassurance and, above all, a positive attitude.”

ING Direct was purchased by Scotiabank in 2012. The new entity had two ambitious goals to be achieved by 2014: first, to rebrand under a new name and identity (soon to be Tangerine); second, to expand beyond the firm’s core positioning (tagline: “Save your money”) to include new services and products relevant to their Web-based customers (tagline: “Forward banking”).

Execution missteps, such as ignoring cultural issues, poor planning or lack of management follow through, make real change very difficult to pull off. The challenge for a 1000+ employee bank like Tangerine is to execute major change initiatives with existing resources without compromising existing revenues, service levels or regulatory compliance.

“While it definitely had its challenges,” says Mr. Aceto, “I can say that we’ve come out stronger than ever before while staying true to our core values and the brand that Canadians know and love.”

Tangerine’s leadership deserves credit not only for formulating the right strategy, but also for executing on that strategy — arguably a much bigger challenge. The company pulled off the repositioning without missing a profitability beat or alienating its parent company. Since announcing its name change, Tangerine has exceeded its profitability and custom acquisition goals without compromising its image.

What best practices for managing change can other companies learn from Tangerine?

Start at the top

Successful change requires cross-functional involvement by senior leadership throughout the entire transformation process. Management accountability ensures appropriate focus, ownership and resources, as well as providing timely attention when unexpected problems arise (as they inevitably do). In alignment with Scotiabank, Mr. Aceto personally led the brand transition from the initial discussion through the planning and execution. He was also active in removing resource and organizational roadblocks when they occurred.

Create a narrative

A “change story” should be developed at the outset, connecting the change with who you are as an organization, how you generate consumer value and where you are going. Where cultural change is required, management needs to deploy detailed programs outlining target behaviours, processes and practices. Tangerine expended a considerable amount of effort developing a positive narrative for its customers, employees and partners — namely, that the acquisition was the best way of enabling future growth beyond the core business.

Communicate regularly

The likelihood of misinformation, rumour and uncertainty is quite high during transitions. To avoid these traps, leaders must regularly communicate to all stakeholders in a direct, honest and succinct fashion. Initially, key messages should articulate a desired end-state, a high-level roadmap and the benefits and risks associated with the strategy. Once the transformation has begun, communications should reinforce the narrative, acknowledge positive role models and provide progress updates.

Pay attention to the human element

Management actions early on signal to workers the priority and tenor of the change initiative, as well as what life will be like post-change. Successful change pays attention to each employee by creating individual metrics and adjusting priority lists. While plans and processes are important, ignoring the human dimension can scuttle buy-in and morale and increase business risk. When necessary, Tangerine’s managers undertook the “tough” conversations with employees in the spirit of mutual respect.

Don’t mess with success

Tangerine’s leadership, planning and execution were vital to ensuring the transformation happened in fewer than 18 months. However, credit must also be given to the role played by Scotiabank. Many acquirers feel compelled to take charge and be highly prescriptive in their oversight. Scotiabank’s post-acquisition leadership team understood much of what they were buying was a unique culture and aligned early on with Tangerine’s senior team to avoid over-managing during the transition or in ongoing operations.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

1:1 Marketing is here

If you are a forward-thinking manager, chances are you’re thinking about ‘personalization.’ Delivering a unique, tailored, 1:1 interaction with a customer based on previous interactions, the hardware they are using, their particular needs and location within the purchase cycle is a very compelling idea — if you can pull it off. Where do you start?

Thanks to the arrival of mobile computing, powerful smartphones and advanced data analytics, personalization is taking off. During the pre-purchase phase, firms can deliver special promotions or compelling content to make the shopping experience more engaging. Marketers can use social shopping communities to identify product trends and use these insights to enhance their product mix by segment. Companies can even target shoppers in-store in real time with relevant, personalized, location-based advertisements and promotions, thanks to technology such as Apple’s iBeacon.

Product companies are using personalization strategies to stand out by offering unique products such as do-it-yourself t-shirts, blankets and home decor featuring custom messages and designs. Web-based firms like Amazon are successfully using personalization tools to drive revenue, conversion and average transaction value. FRHI Hotels & Resorts uses personalization to create unique experiences for their three brands (Fairmont, Raffles, Swissôtel) both pre and post stay.

“The key to winning in today’s competitive marketplace is to have a universal commitment to putting customer’s first, understanding their stated and implied needs and providing solutions that address those needs on their terms,” says Jeff Senior, executive vice president and chief marketing officer of FRHI Hotels & Resorts. “It requires a holistically aligned organization, and is not a marketing initiative, but a company commitment.”

FRHI Hotels & Resorts maintains a single, holistic profile of each guest and their needs, with the ability to customize their stay, the promotions they receive and the prices they pay. This profile can seamlessly migrate from call centre and hotel to mobile device and social media platform. This personalization strategy has been an important driver in enhancing customer satisfaction and brand image, leading to market share increases in each of the past six years. Some of the best practices they follow include:

  • Align personalization strategies with well-defined brand strategies and values.
  • Act as an insight-driven organization. For example, the Company leverages big data to get a single, holistic customer profile. Furthermore, Fairmont expends a considerable amount of effort on customer research and social media analytics to define the ideal experience, with no detail escaping their attention.
  • Put the customer by segment (their needs, requirements and expectations) at the center of all operations and planning. Careful attention is paid to articulating the customer opportunity, understanding all business issues and producing creative solutions that fits local requirements.
  • Focus on real-time reputation management. Measure, track and evaluate a variety of customer metrics to better leverage existing programs and identify hiccups.
  • Optimize the operational (online and physical) and talent model to ensure alignment, collaboration, responsiveness and seamless execution.

Implementing your own personalization strategy can improve the value your firm delivers, the precision by which you target customers and the marketing efficiency of your programs. But first you need to do some serious thinking about your customers, brand and organization. Firms looking to implement a personalization model need adopt a customer-centric mindset that engages the entire organization. To do this, key activities such as IT, marketing, research and support must act in an integrated fashion, sharing the same information and strategic playbook. This four-step framework can help take a firm from a strategic vision to a personalized experience:

  1. Segment your customers by lifetime value, needs, and habits.
  2. Categorize them by the digital and physical channels they prefer across their entire purchase and support journey.
  3. Customize and choreograph your offering and experience based on where they are in this journey.
  4. Ensure your capabilities (people, systems, processes, assets) can support your personalization strategy.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Using behavioural economics to trigger action

Behavioural economics posits that all human behaviour, including in business, is shaped by irrational and unconscious influences, such as bias, social pressure and cognitive inertia. The notion of psychology as a driver of economic action is not new: As an academic discipline behavioural economics dates back to the 1970s, and the foundational principle back at least to Adam Smith’s The Theory of Moral Sentiments (1759). Behavioural economics has, however, only in recent years found widespread currency within the business world, spurred by a plethora of bestsellers, including Thinking Fast and Slow (2011) by Daniel Kahneman and Predictably Irrational (2oo8) by Dan Ariely.

Increased interest from the business community is due to the insights gleaned from the discipline, which have been used to successfully “nudge” customer behaviour in a variety of sectors, such as wealth management, insurance, customer products and retail. Specifically, behavioural economics has been used by product managers to guide consumers toward certain product choices (i.e., “choice design”), by marketers to develop brochures and Web sites that more persuasively communicate marketing messages and by service managers to design better support experiences.

The field can provide hundreds of potential “triggers” to augment behaviour, depending on the business objective, situation and context. Psychologists Robert Cialdini, Noah Goldstein and Steve Martin identify 50 different possible applications in The Small Big: Small Changes That Spark Big Influence (2014). Three among the list include:

  1. Leverage social proof: People will make the same decisions as a group with which they identify. Nudge people to adopt a new behavior by showing them a training video featuring their peers doing the same thing.
  2. Invoke first names: Get and keep people’s attention by frequently using their first name. A sales representative’s repeated use of a prospect’s name will cue their attention through the clutter of other sensory inputs and focus attention on the key message.
  3. The power of loss avoidance: Individuals strongly prefer avoiding losses to acquiring gains. Marketing studies have shown that consumers would rather avoid a $5 surcharge then get a $5 discount even though the net effect is the same.
    Case study: behavioural economics in action

Communications Case Study

A technology company was struggling with customer support issues, resulting in unsustainable levels of customer churn, high support costs and wasteful discounting. We were tasked with identifying the root cause of the problem and recommending fixes.

We reviewed the support scripts and escalation processes and listened to call records. Using the lens of behavioural economics to look for unconscious biases, explicit and implicit incentives and insidious social pressures, we discovered both that the existing scripts were ineffective and that the prescribed escalation process was not being followed by most service reps.

While management believed more resources and training were the answer, we convinced them to first experiment with a pilot program that featured rewritten scripts and process redesign. These changes included a variety of nudges to trigger the desired service experience, including:

  • Establishing a rapport from the get-go: People are more easily persuaded by those that they like and have some connection with.
  • Starting with the bad news but ending on a high note: Getting bad news out of the way shows empathy, acknowledges responsibility and allows for a good finish.
  • Following the script: Because a good process is only effective if it is consistently applied, we recommended having service reps formally and publically commit to following the revised protocol.

By implementing insights gleaned from behavioural economics, customer satisfaction scores increased, service escalations fell and cross-selling rates improved.

Behavioural economics for your business

As mentioned earlier, how you should apply behavioural economics insights to your business depends on your circumstances and your goals. However, here are five general tips to guide your strategy:

1.  Understand the business context:  What business problem are you trying to solve?
2.  Audit key customer decision points:Look for hidden bias, social and incentive pressures and opportunities to catalyze desired actions.
3.  Prioritize your opportunities: The economic, operational and brand impact of each decision should be considered.
4.  Identify suitable nudges:This should involve an optimized choice design that guides actions and decisions toward your desired result.
5.  Experiment, measure and scale: Only then will you discover the optimal strategy for your business.

For more information on our services and work, please visit our web site at Quanta Consulting Inc. 

4 rules for running a business

Many companies in mature sectors have been known to embrace the latest management thinking (or fad) to help cope with low market growth, margin compression and lack of differentiation. Examples of these “big ideas” include lean management, outsourcing, business process re-engineering, offshoring and, lately, social business and cloud computing. Despite considerable effort and investment, most of these firms have been unable to outperform their peers over the long term, often due to weak strategic fit, poor planning or flawed execution.

In fact, only 344 of 25,000 public companies analyzed in the Harvard Business Review by Michael Raynor and Mumtaz Ahmed of Deloitte consistently produced above average return on assets from 1966 to 2010.

What made these firms special? Two rules identified in the study — noteworthy for their simplicity, reliability and practicality — helped drive the extraordinary business performance. Below them, I’ve included two other rules for achieving exceptional performance well worthy of consideration.

Better before cheaper

Companies need to focus first on service, quality, design or distribution — not on being the lowest-price competitor. Non-price differentiated brands tend to command richer margins, which can support further product and marketing investments, which, over time, further sustain the firm’s competitive position and profitability.

Revenue growth before costs

Leaders should prioritize top-line revenue by driving volume gains, competing in growing categories and taking advantage of every opportunity to maximize pricing. Volume increases also bring other benefits, including scale economies and channel optimization, which help drive down operating costs and block out competition.

Brands matter

“Brand equity might be the only asset that consistently generates differentiation, higher margins and long-term revenue streams,” says Jerry Mancini, president, Dole Packaged Foods Company. “Dole’s focus on value, quality and brand-building has helped deliver almost 100% brand awareness in close to 100 countries. This allows us, for example, to provide transient consumers around the world with the same quality and unique products they are familiar with, wherever they go.” This strong brand equity has enabled Dole to more easily tap new markets and categories — and drive higher volumes.

Maximize human capital

“Competition, technology and customers are never static,” says Paul Bruner, a partner with McCracken Executive Search. “The key to long-term success is attracting and developing leaders of exceptional character, with the brains, passion and resourcefulness to adapt to and lead through changing circumstances.” Organizations need to focus on recruiting and training the right employees and reinforcing positive behaviours through innovative training and compensation programs.

To be clear, the above four rules suggest a direction, not specific strategies and tactics; it is up to management to make the tough strategic choices and back them up with good plans and sufficient investment. Leaders still need to understand where they should compete (i.e., which markets with which value proposition) and what they are especially good at (i.e., organizational and asset fit). They’ll also need to support their mission by assembling the right capabilities and cultivating them through a culture of continuous improvement and adaptability. Finally, the company and shareholders must recognize they are playing the long game — they will need patience and resilience as well as management systems that reinforce long-term thinking.

For more information on our services or work, please visit the Quanta Consulting Inc. web site.

How winning companies go digital

Whether it is creating a winning online experience or enabling mobile commerce, digital marketing is a hot topic, with most companies either revamping or implementing new strategies.

Through consulting experience and research, Quanta has uncovered some industry and technology-wide learnings that can improve your odds of market and financial success. Consider the following best practices in your digital design and planning:

Power to the people

“In the next five years, traditional marketing will shift to digital channels to capitalize on the ‘power of the people’ phenomenon to displace brand-centric strategies in favour of buyer-driven everything,” research firm Gartner says. Buyers can control the marketing messages they receive and are only a click away from a competitive product.

That means the onus is on companies to provide a digital experience that powerfully delivers on their customer’s needs. All technology choices must be driven by customer needs and their desired experience as opposed to organizational or IT considerations.

This buyer-driven world requires personalization and location-based services. Consumers want to be treated as an individual with bespoke interactions and services based on their past experiences with the firm, the device or platform they are on, and the information they require at the moment.

Social not transactional

The buying journey is no longer linear — i.e. build awareness, generate interest and trigger purchase. Now, consumers rely more on peer recommendations, are less iterative and more information-driven.

Knowing that, companies should carefully consider what information, tools and functionality are needed. For example, to leverage the power of word-of-mouth endorsements, marketers need to understand how and when their customers are using social media and target them differently by platform at each stage of the customer life cycle — from awareness building and information gathering to seeking out peer recommendations and finding timely support.

One brand, many channels

Market researcher Forrester reports that companies in 2014 “overwhelmingly plan to continue investing in DX [digital experience] technologies, with a clear emphasis on multichannel delivery and analytics.”

New technologies, applications and platforms have dramatically increased the number of channels between customers and firms, and the potential for misaligned strategies and programs. Marketers are challenged to offer a compelling omni-channel experience that delivers a consistent and competitive brand message, price and service experience. This requires management to view their businesses in non-traditional ways, master new skills sets and define new organizational structures.

Structure follows strategy

From the outset, senior leaders will need to acknowledge the traditional marketing model may no longer be ideal for a digitally driven organization. Where the function is going is difficult to say. IDC, a research firm, contends that “by 2020, marketing organizations will be radically reshaped into three organizational systems — content, channels, and consumption [data]. The core fabric of marketing execution will be ripped up and rewoven by data and marketing technology.”

The best practice marketers we see are: team-focused incorporating a variety of skill sets including data analytics; tightly integrated with other functions including IT and operations and; are intrapreneurial in nature with free-flowing data, flat decision-making and rapid experimentation.

One common barrier to going digital is the need to satisfy the traditional business case. It is often difficult to generate sufficient return on investment when quality market and costing data is unavailable, revenue and usage is unpredictable and senior managers lack the technical confidence to place important bets.

In a recent survey, roughly one-quarter of respondents named “inability to prove ROI” the top barrier to budget increases, outpacing other concerns such as lack of overall revenue (18%), lack of buy-in from management (15%), and lack of clear strategy (15%),” web research firm Marketing Charts said. Digital pacesetters, on the other hand, make greater use of lower-risk market experiments, as well as employ more advanced approaches to evaluating strategic, time-sensitive investments.

Get it right and fast

In high-stakes industries such as banking, airlines and retail, the days of introducing beta-level technology and fixing it on the fly is quickly coming to an end. Most consumers will not tolerate shoddy products or a confusing online experience; product alternatives are often well-known and immediately available and; serious threats such as cyber crime are no longer rare. To cope, firms are adopting a variety of methods to improving digital quality, performance and agility including co-creating products with customers, integrating development and testing activities and; bringing in-house strategic parts of the value chain.

There is no magic bullet to digitally enabling marketing. Successful firms are choosing their technologies and channels based on consumer needs and habits, leveraging the power of social influence, developing the right organizational alchemy and learning from their pilots and other’s experiences.

For more information on our services and work, please visit the Quanta Consulting Inc. web site

Optimizing the insurance broker’s channel

Gone are the salad days for many P&C (property and casualty) insurers, the companies that insure our cars, homes and belongings. The sector is facing many headwinds including rapidly changing consumer needs, increased risk (particularly around climate change) and rising costs. One vital component of the P&C insurer value chain, the independent insurance broker, is at the centre of change. Insurers that can deftly navigate this transformation will deliver higher consumer value, increased revenues and enjoy better relationships with their broker partners.

Historically, most insurance carriers distributed their products through local insurance agents or brokers. However, times have changed as new distribution channels emerged. Web-based technologies now allow customers to quickly and directly deal with insurance companies and get around-the-clock peer feedback. Insurers now have better predictive tools, advanced pricing algorithms and straight-through underwriting data that allow them to offer quotes instantly while minimizing risk and cost. Finally, providing a differentiated customer experience has become more challenging when consumers can deal either with brokers or with insurance companies that offer their products directly to consumers and influencers. These changes have important implications for the provider-broker partnership.

Contrary to the hype of a decade ago, the Internet is not dis-intermediating channels like insurance brokers even when consumers have a direct-provider option. To wit, a 2012 McKinsey study of the U.S. auto insurance sector found 59% of consumers dealt with a broker and directly with an insurance provider through their customer journey. For the foreseeable future, good brokers will continue to play an important role in the marketing, selling and servicing insurance products by providing choice and advice to consumers.

While marketing through this multi-channel world can complicate an insurer’s business model, it also presents opportunities to outflank competitors and deliver more consumer value. How can insurance companies work better with their brokers and deliver on joint goals?

In our client work and research we have found that P&C insurers share similar channel issues as other sectors including banking, travel and industrial goods. Leaders in these markets have thrived in a multi-channel environment by using strong, intermediary relationships to deliver an omni-channel brand experience — a compelling value proposition consistently delivered through every online and offline channel. Some best practices to enhance the broker relationship include:

1. Align around the consumer

Many factors — social media, mobile computing and a continuing recessionary mindset — are affecting the way most consumers research products and want to deal with brokers and insurers. Successful providers and brokers are embracing these trends through: an integrated, customer-centric model; the capture and utilization of partner knowledge of local markets and sub-segments, and; sophisticated, qualitative Big Data analytics that enable insurers to better understand customer needs wherever they are in the purchase or support journey so they can provide the brokers with the right products, tools and information. Failure to stay abreast of consumer needs can result in a compromised value proposition and lower market share.

2. Get closer to the channel

Smart providers understand that partnership is the foundation of a high performance broker channel. The way to achieve this is through multi-level communication, common goals and ongoing collaboration — not conflict. This partnership mindset includes understanding its entrepreneurial brokers, aligning everyone’s business interests and giving the broker a differentiated reason to favour them over other providers. Market leaders seek to embed this cooperation into their cultures as well as management practices.

“Insurance companies who rely on brokers for the sale of their products will succeed only if brokers are successful,” said Monika Federau, chief strategy officer for Intact Financial Corporation. “This is why we aim to be the insurer that is the most conducive to their growth by providing them with financial, technological, and marketing support.”

3. Enabling the broker’s business

Making significant investment in technology, innovative products, joint marketing and capabilities are needed to reinforce verbal commitments. For example, Intact has invested millions of dollars in technologies that make it easier for brokers to deal with it and allow them to focus their efforts in better serving their own customers. Furthermore, Intact provides differentiated products and services that meet the bespoke needs of its 2,800 brokers and their customers.

Intact’s strategy has paid off. Today, the company is the leading P&C insurer in Canada with a market share that is nearly double its nearest competitor. Furthermore, Intact has consistently outperformed the industry in terms of revenue growth and profitability. Clearly, working with — not against your channel — can pay significant dividends.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

3 ways to maximize sponsorship ROI

If you followed the World Cup, you would have noticed the many corporate sponsors of the event, the teams and players (i.e. the properties). Sponsoring the right property can give a brand a major boost in awareness and appeal. However, having the wrong approach or property could waste the investment and compromise the firm’s brand image. Fortunately, there are some best practices to follow to maximize a sponsorship’s potential.

Corporate sponsorship is big business. Annual global investment exceeds $25-billion, growing at almost 10% each year. Sports — teams, events and athletes — make up the majority of spend. Growth is being driven by an increase in the number of new properties like rock bands, festivals and charities, the rising value of some properties as well as the growing practice of tiering sponsorship support (think platinum, gold, silver levels).

Sponsorships are an important way for many companies to get their brands in front of elusive, skeptical and mobile consumers who are regularly bombarded by numerous marketing messages. Opportunities can range from naming rights on a stadium and client relationship events to limited edition products and custom advertising programs. Sponsorships can significantly build a business (think Michael Jordan and Nike) or hurt a brand image, as was the case when Kate Moss’ personal issues led to major problems for Chanel and H&M. How do you ensure you get the most value from this powerful but risky marketing tool?

The best programs get three things right:

1.  Align the opportunity to business objectives

Given the range of properties, you need to use a thorough process to filter and analyze the sponsorships to find strategic congruence between the property, brand and target audience. When affinities are lacking, the opportunity and investment could be wasted. In a high-profile program we studied, a mismatch between the firm’s customer base (women, 18-49) and the properties’ core audience (men 18-24) led to a lower than expected ROI.

2.  Promote the sponsorship

Companies often spend a lot of money acquiring sponsorship rights but very little on the promotional support that would magnify its impact. Various studies suggest that underperforming programs spend less than $1 on promotion for every $1 spent on sponsorship rights. The lack of marketing support may trace back to management neglect or the need to limit spending after paying for the rights. In one case, a client of ours believed that becoming a concert sponsor alone would drive their business. Though the sponsorship was deemed a success, management acknowledged that a lack of promotional support resulted in the firm missing out on millions of dollars in merchandise sales. Conversely, higher performing companies spend more than $1.50 in promotion for every $1 in sponsorship. Not only do these firms magnify their sponsorship investment but they also integrate their properties within their marketing mix.

3.  Evaluate performance

Despite the importance of sponsorships, many firms do not effectively quantify the impact of their expenditures. This is not surprising given the difficulty of linking sales directly to sponsorships. Successful companies use a variety of approaches. The simplest way is to survey customers, partners and employees on program impact and lessons learned. Firms can also tie total program spending to key metrics such as unaided awareness or purchase intent, and then link them to sales using regression analysis. The most sophisticated approach uses econometrics to ascertain links between programs, awareness and sales, and then isolate the impact of sponsorships from other marketing and sales activities.

Maximizing sponsorship value can be a challenge, especially when firms have multiple properties, customer segments and marketing tactics. BMO Financial Group is a major sponsor that has figured this out. The bank successfully operates a North American-wide program with dozens of properties and partners including: NBA Basketball (Toronto, Chicago), NHL Hockey (St. Louis, Chicago) Major League Soccer (Toronto, Montreal), amateur sports and the Calgary Stampede.

The Bank looks at sponsorships strategically, with a proven approach to identifying, evaluating and managing sponsorship deals. Each property — whether it is in sports, arts or regional events — aims to reach diverse customer segments within local communities as well as appeal to broader national audiences. The bank magnifies the impact of its sponsorships by integrating its elements with other marketing activities. For example, BMO was able to quickly maximize its sponsorship of the Toronto Raptors during their 2014 playoff run by increasing media advertising and launching a new Twitter campaign.

Finally, BMO sees a deal signing as the beginning of an iterative win-win relationship between the parties and not an end in itself. Justine Fedak, senior vice-president and head of brand, advertising and sponsorships for BMO, emphasizes the importance of long-term partnership. “Similar to marriage, a sponsorship begins with a mutual understanding of shared values and then evolves over time. Gone are the days when you slap a logo on something and walk away.”

For more information on our services and work, please visit the Quanta Consulting Inc. web site.