Archive for the ‘Social Media’ Category

The App Economy takes off

Mobile computing is growing so fast and evolving so quickly it is hard to make sense of it all. The most recent leap, which includes sharing platforms, wearables and mobile payments, are based on unique service applications (or apps) that run on a smartphone and seamlessly handle everyday activities.

Although still in its early days, the rise of the app economy will have profound implications on the nature of many industries, the ways consumers interact with businesses and how companies structure their operations.

Since the mid-1970s, the world has gone through a technological revolution roughly every 10 years. It’s then taken between seven and 10 years for the new technology to achieve mass market adoption. However, the app economy is different. Many of the upstarts in this sector quickly started making gobs of money, usurping their competition and expanding globally.
For example, service-sharing platforms Uber and AirBnB are disrupting traditional industry players and are significantly changing consumer behaviour and value expectations. Their rapid growth plus big upside make them worth more than the traditional taxi and hotel companies they compete against. This one example should be a clarion call for more traditional businesses battling it out in the consumer and corporate services markets.

The stakes are huge: Mobile commerce will account for 24.4% of overall ecommerce revenues (which are themselves growing rapidly) by the end of 2017, a study by marketing automation firm Hubspot found. Add incremental revenues from app-based sharing platforms and you are probably north of $100 billion in mobile ecommerce revenues in the U.S. alone.

Among the many facets to consider, I believe leaders ought to pay close attention to these two:

Service apps take over

For most people, life is increasingly centered around a mobile device and the services it enables. Increasingly, apps address your personal needs, often in ways never imagined. Uber and Lyft are replacing car ordering; TaskRabbit is handling our deliveries and dating apps such as Tinder are helping people find a life partner.

So too are people’s professional lives poised for change. A recent job-matching app, Switch, allows candidates to thumb through job listings: flick left if uninterested and right to register for a potential work match. Another swipe-if-you-like competitor, Jobr, uses information from LinkedIn to recommend jobs that candidates might find interesting. Since its launch last year, Jobr has submitted more than 100,000 job applications for its members each month.

Businesses are also jumping on the bandwagon, using apps to re-engineer traditional but important practices. Last year, Zappos, an online retailer based in Nevada, scrapped formal job postings and replaced them with a new site encouraging candidates to engage with each other and the firm in a way not dissimilar to online-dating forums.

Although the service apps business is growing rapidly, there is still plenty of upside left. Existing providers can drive higher usage and fees by adding new functionality, entering new geographic markets and retuning their service to appear less like a standalone, phone based-app. As well, there are many opportunities for a high-quality model in unexploited personal and corporate services categories.

Tightening the relationship

Apps are now the focal point between the customer and company. Companies can now engage deeper and longer term with its customers to create a 1:1 relationship, and with it higher revenues, loyalty and satisfaction thanks to three symbiotic forces: ‘always on’ connectivity via smartphones; advanced data analytics and; collaborative social technologies.

To fully leverage this opportunity, transaction-orientated businesses will evolve into service subscribers requiring them to engage throughout a customer’s or product’s life cycle irrespective of channel. In retail banking, for example, you might receive a message on your smartphone with your daily account balance, personalized RRSP advice in January, or ways to spend your credit card’s loyalty points.

To make long term engagement a reality, companies will need to redesign their service/product model (i.e. what and how they deliver value), pricing strategy and marketing programs, not to mention their technology infrastructure. Moreover, their apps will need to evolve beyond transaction-based functionality to include personalized content, multi-platform integration, location-based services and recommendation engines.

To avoid disruption and to capitalize on opportunities, companies should already be exploring and investing in apps applicable to their market and relevant to their customers. But they will also need to be mindful of getting it right: thoroughly understanding customer needs, designing a seamless customer experience, building practical data analytics capabilities and delivering compelling and relevant content. However, to truly take advantage of the app economy, leaders will also need to be mindful of the impact of emerging technologies like wearables and mobile payment services.

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

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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.

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

Social business replaces social media

Busy managers should be excused if they are not current on every development in the social media world. In discussions around digital transformation, one question regularly comes up: “Where is social media heading?” Based on our research and project work, we have identified four emerging social media trends. Overall, social media is morphing from a communication tool to a larger social business enabler.

1.  It is not just for the marketers

Marketing no longer has a monopoly on social media programs. Other groups like HR (for external recruiting), product development (for innovation) and customer services (for product support) are increasingly driving usage on these platforms and delivering business value.

2.  Content strategies are evolving

Most marketing efforts “push” content out more than 90% of the time. Marketers (and other departments) will progressively become more social, seeking a balance between pushing information and engaging their customers in dialogue around the content. Moreover, visual content will likely become more prominent in these social and collaborative conversations. Expect new social apps to better support the embedding of visual content (including live video) into conversations to better deliver sales demos or technical support.

3.  Resetting the community button

Many attempts at community cultivation are failing due to a lack of resources and mismanagement. Equally important is the dearth of dialogue-fostering social elements in the content, such as relevance and uniqueness that cater to specific interests. “At its core, social media is about being social. Your social strategy should be designed to deliver an interesting core message that wants to be shared,” says Marilyn Sinclair, president of communications company All About Words. Companies are steadily getting serious about building focused communities that emphasize social sharing.

4.  The rise of social analytics

To better target business problems, understand customers and generate enterprise-wide ROI, firms are beginning to analyze, listen and learn from customer experiences, and tap into the social pulse of customers, advocates, influencers and their collective networks. These learnings will improve the quality and quantity of social media interactions.

Social business initiatives are all about enabling workers to collaborate with customers through social media to solve problems or capitalize on opportunities. To do this, participant conversations will need to cross functions, locations and devices, blurring the barriers between the internal and external roles. This transition won’t be easy for every firm. Gartner, an IT research firm, predicts, “Through 2015, 80% of social business efforts will not achieve the intended benefits due to inadequate leadership and an overemphasis on technology.”

The following success factors can help a firm exploit the trend towards social business:

  • Make strong leadership and expert change management a priority

When it comes to leveraging IT, the corporate Achilles Heel is often internal adoption. All senior leaders — and not just the CIO — should prioritize social business initiatives, model the right behaviours and deploy the right change resources and tools to drive employee acceptance. For example, some CEOs are appointing Chief Digital Officers to drive digital adoption across the organization. In other cases, companies have created senior, cross-functional steering committees to secure alignment, focus and investment. Technology is merely the delivery system

  • Establish a clear and compelling purpose for social business from the outset

Most organizations look at collaboration as a technology platform issue not as a solution to a specific business problem. Having a platform view isn’t necessarily wrong from an enterprise perspective but it frequently leads to band-aid approaches that don’t get to the root cause of problems and typically get bogged down in organizational inertia.

“Organizations fall in love with the newest ‘thing’ and they want to be cool, but they forget that their objective is to compel an audience to do something specific. Clear, consistent and compelling messaging that address social business needs across all platforms is key,” says Sinclair. “Technology is merely the delivery system.” Social business is best enabled when the business problem drives all key decisions including technology choice.

  • Consider systems and cultural tweaks to support social business

Many companies today are not well organized to conduct social business. For example, community management and customer-service efforts often lack sufficient capabilities including tools, people and skills to deliver credible programs that address customer needs. In other cases, a firm’s organizational dynamics (e.g., siloed structures, and oblique processes), performance measurement tools and culture norms do not promote free flow communication let alone collaboration.

Companies can maximize the value of their social media investments and efforts when they shift from a marketing-centered, “push” approach to an organization-wide, problem-solving strategy that engages both the community and firm. The first step in leveraging social business comes from exploring how a company can meaningfully talk and listen to their customers and stakeholders to collaboratively address their needs through the right business solution.

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

Digital transformation’s first step

Most leaders we speak with are considering how to use digital technologies to improve business and financial performance. Research shows that digitally transforming a customer interaction or operational process can significantly improve bottom-line performance and enhance competitiveness. To exploit the potential of digital technology, the optimal strategy is to identify high-potential/low-risk opportunities, find enterprise-wide technological solutions and learn as you implement.

Digital business can be a game-changer. According to a multi-industry McKinsey study, digitizing the customer experience can boost sales and profits an average 20% over five years. From an operational perspective, leveraging digital technology can drive cost reductions, leading to a 36% improvement in profits after five years.

Digital technology can impact every facet of a company’s business model. Two areas in particular can yield significant value:

  • Improve the customer experience: Digital technology enables customers to get information and tools when they want it, as they want it. For example, the rapid rise of mobile computing has triggered major changes in buyer behaviour. Banks have responded by delivering their products and services through “always on” and data-driven mobile channels — and enabling more targeted and timely cross-selling of complementary products.
  • Automate manual back-office tasks: Digitizing boring, repetitive and error prone tasks can reduce cost and improve cycle times. One of our clients reaped major efficiencies by automating basic-level customer service (through enabling customer self-service) and the review and payment of expense reports.

Every sector can benefit from enabling digital technology. In fact, some of the necessary ingredients are already in place. Specifically, many firms already incorporate digital technologies like Big Data analytics, ERP systems, and cloud services. Unfortunately, these tools are often deployed selectively within a line of business or functional silos with little consideration paid to the bigger enterprise-wide impact, standards etc.

Nominate champions

Digital transformation can be the most difficult business shift many companies face; it is part technology adoption, part process redesign and part behavioural/cultural change. This transformation should be not undertaken without strong leadership at the C-suite and board levels; it is vital that these mission-critical initiatives have senior champions who possess an organization-wide and holistic customer view. Some firms have gone so far as to create the role of a Chief Digital Officers to lead digital efforts.

Understand the impact

The return on your digital investment can be compelling — and difficult to accurately estimate. Firms can not rely only on aggregated numbers like McKinsey’s; they need to undertake a wide-ranging business-case analysis that considers the full range of benefits including cost savings, improvements in customer satisfaction and higher cross-selling rates. The business impact should be measured through digital targets to evaluate progress and influence future investment and roll-out decisions.

Take an end-to-end view

Maximizing the value of digital requires a consideration of scope and scale that cuts across the firm. For example, automating sales activities will have important implications for inventory availability, product design and marketing channels. Managers also need a 360-degree view of organizational issues like available skills, cultural impact and change requirements.

In the above areas, we have found that companies need a detailed view of user needs and behaviour as well as formal and informal workflows. Digital transformation will often precipitate a need to refine processes, the nature of the service, and in some cases, the operating structure.

Carefully choose your opportunity

Leaders need to prioritize what to digitize. Trying to bite off more than you can chew may ruin the business case, quickly bog down implementation, and lead to conflict over scarce resources. On the other hand, having too narrow a focus may leave significant value on the table. Whatever the choice, managers must ensure the potential business value is compelling, the selected initiatives align to business priorities and they have the right resources and partners to execute. Leaders also have to accept that over time, some lines of business, activities or jobs will be displaced by digital technologies; these shifts — often sudden — can have important organizational ramifications.

Going digital is a journey. Hype may turn transformation into a sprint but in reality it should be seen as a marathon. Starting with a digital pilot is prudent for the technologically risk averse or inexperienced. In some cases like iTunes or Netflix, digitally transforming a product may call for a totally new business model. Managers will maximize digital’s value when they: select “low hanging fruit” opportunities, prudently invest based on the right risk/reward profile, get their workflows optimized and ensure the right resources and change methodologies are employed.

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

5 Steps to Digital Transformation

Most companies want to better leverage digital technologies — social, mobile and cloud services — to deliver an enhanced customer experience, enable new business models and drive greater operating efficiencies.  They also dread falling behind their bolder, more agile competitors. Yet, most leaders are unclear as how better to use the technology they have or decide which new tools to adopt. How can these laggards prudently catch up?

It is well documented how transformational leaders like Starbucks, Nike, Cisco and Apple have employed digital enablement — organizationally and technologically — to generate new revenues, extend market leadership, and reduce cost by streamlining processes and practices.  Unfortunately, these firms are the exception not the rule.

MIT Sloan Management Review and Capgemini Consulting conducted a survey in 2013 of 1,559 executives and managers spread across a wide range of industries. The survey looked at the state of digital transformation, and the barriers and enablers that are impacting this journey.  To be clear, we are talking about embracing breakthroughWeb 3.0 technologies such as cloud computingcrowdsourcing3D printing andlocation-based analytics, not more common applications like e-commerce or server virtualization.

The study’s key conclusion is sobering but hopeful. Despite the promise (or hype) of a digitally enabled business, most companies have been tentative in fully adopting new technologies and supporting them with organizational changes.  Fortunately, the study also highlights some best practices that point a way forward to fully exploiting potential of digital technology. Some of the study’s key finding are:

  • There is a digital imperative. A convincing 78% of respondents said achieving digital transformation will become critical to their organizations within the next two years.
  • However, words do not match with reality.  Only 38% of respondents said digital transformation was a high priority on their CEOs’ agendas.
  • Awareness of the intent-action gap is a good first step. A strong 63% of the executives acknowledge the pace of technology change in their organization is too slow.
  • Firms that were considered digitally savvy typically outperformed companies that lagged in technological implementation.

There are worrisome but often benign causes for this lethargy.  The study and our research point to many factors, including:

Lack of urgency: Firms with no ‘burning platform,’ competing management priorities or who focus inordinately on short-term results will be less willing to put sufficient focus and resources behind digital initiatives.

Pessimistic culture: Many organizations are naturally risk averse, have management systems that don’t handle technology issues well or display a ‘not invented here’ mindset to technological adoption.

Low digital awareness among leaders: A digital divide exists in many companies between junior or middle managers who understand the potential of digital technology and those leaders who make strategic and financial decisions.

These barriers must be overcome. Entire industries (e.g., travel, music, retailing) have been disrupted by digital pure-plays and/or seen their margins shrink significantly.  Acknowledging the issue is no longer enough; organizations must get in the game.  Here are five best-practice recommendations we have made to a variety of clients:

Raise digital literacy. To begin with, all cross-functional leaders need to understand key digital trends, what their competition (current and emerging) is doing and what are some best practices from outside their industry.  Nike looked beyond the apparel industry to the wireless, controls and sensor industries when launching its Nike+ offering.

Focus the impact. Technology should not be adopted because it is cool and flashy. It must support the core mission and priorities of the firm — not create new ones.  When Starbucks made its digital transition, it added services that would enhance the customer experience (free wi-fi) and streamline operations (add digital payments to speed up the order/payment process).

Organize for success. Companies can take many steps to support transformation, including mandating digital representation on cross-functional teams, forming digital ‘centres of excellence’ and giving enterprise-level authority for digital investments. When media firm Gannett and Columbia University wanted to accelerate its adoption of digital technologies, it created a new chief digital officer position with a mandate to spur technological adoption and relentlessly evangelize the vision.

Re-tune practices. Make digital literacy part of key practices like recruiting, research and training.  Create and connect digital transformation metrics to reporting, incentives and the performance management system.  One of our clients in the IT sector requires their planning activities and templates to include a digital lens.

Walk, don’t run. Big bang technology adoption rarely works.  Pick an operational, service or marketing pain point and investigate how digital technology can help solve the problem or improve performance.  Pilot something.  If it works well, scale quickly.  If it doesn’t meet expectations, kill quickly, inculcate the lessons and move on to something else.

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

Bridging the new-old marketing divide

In many organizations, two factions within marketing are grappling over a core question:  should their role and plans fundamentally change given the emergence of digital technologies and the multi-channel universe? One team considers social networking merely as another tactic within a larger marketing mix.  The other group sees these same technologies as game changers that will redefine the marketer’s role and programs. At issue is the direction of the marketing plan and the funding & resources that enable it — and ultimately the performance of the business.  Truth be told, both viewpoints are critical for success and need to be inculcated into daily thinking, practices and planning.

For simplicity sake, we can reduce this battle for marketing’s soul down to two competing stereotypes:  Mike is an old-school marketer whose mindset emphasizes control of message and channels, and focuses on traditional research techniques and conventional metrics like customer awareness, acquisition and retention. Managers like Mike are comfortable with a “ready, aim, fire”  broadcast model that relies on studio-based agencies to develop creative and push it out through media buys. He recognizes the potential of new technologies but needs to see tangible ROI, proven success stories and strategic fit before committing a substantial amount of his tight budget and time.

At the other end of the spectrum is Lynn, a new-school” marketer in her early thirties. She fully embraces the ubiquity and power of mobile computing, social networking and rich media, because she lives it. Her Millennial-focused strategy looks to engage web-powered, trendy audiences on a 1:1 level wherever they are.  Lynn’s digitally-focused tactics look to leverage user-defined content, community-building and sharing.  A consummate experimenter, Lynn is challenged determining the ROI of new technologies and getting her programs funded in mature companies.

According to best practice research and our experience, marketing performance will be maximized when both Lynn and Mike’s thinking are part of the whole team’s DNA and practices. The key is to find the right balance between their approaches and get them to work collaboratively.

Advice for Old Schoolers

Open up the creative process: Great ideas and content can come from anywhere.  Marketers need to open up their broadcast-content model and consider more of an editorial approach to developing and managing their message in conjunction with customers and influencers.  This requires them to adopt new skills like brand story-telling, facilitating and integrating multi-channel conversations and fostering shareability, tailored to each digital platform.

Engage the customer: Millennials and other customer segments can quickly change their buying behaviour (think mobile commerce), habits and beliefs as a result of technological developments.  For example, many of these people are using new technology to skip advertisements.  Instead, many consumers look to be part of an entertaining, meaningful and authentic conversation where the brand is part of the context and not necessarily the focal point.

Embrace speed: The traditional slow and plodding approach to developing and implementing marketing programs is becoming anachronistic.  Old schoolers need to figure out ways to get their creative and programs out quicker (even it is not polished), more broadly and tightly integrated across all channels.

Experiment regularly: New technologies and methodologies give marketers an unparalleled ability to quickly and inexpensively test new ads, creative and promotions as well as refine existing programs and websites.  Marketers should prioritize continuous improvement initiatives as well as explore breakthrough innovations.

Advice for New Schoolers

Be analytically rigorous: You don’t jettison proper financial and consumer analysis because Facebook offers new functionality or Instagram suddenly takes off. As digital marketing moves beyond the novelty stage, its programs should be expected to demonstrate hurdle-rate ROI and be aligned to the consumer and marketing strategies.

Use the right metrics: Many of the popular digital metrics like re-tweets and Likes cannot be linked to real business results. New schoolers should measure the impact of social sharing by using innovative metrics like ‘positive-neutral-negative’ ratings.  These can provide a more accurate picture of program success and word-of-mouth impact and better link to strategic goals.

Consider context: Without a doubt, content is important.  Increasingly, brands will also need to take into account the digital context of where they will live and propagate. Marketers need to leverage the right context for consumer conversations and content sharing. Companies like Virgin Mobile and Coca-Cola do a great job of producing interesting content and brand stories tailored for the characteristics of the platform.

Heed the Old Schoolers: Remember that marketing was around long before the Internet. New Schoolers would be wise to study the lessons of pacesetters like Michelin Guides (original content marketers), Harley-Davidson (community cultivators) and Disney theme parks (pioneering experiential marketers).

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

Lady Gaga, social media queen

The inspiration for this week’s column comes from my daughter.  I was musing out loud about what to write in an upcoming column. While dancing to a YouTube video, she said, “Dad, why don’t you write about Lady Gaga.  She’s cool and all over the Internet.”  It just so happens my daughter was on to something. Much of Lady Gaga’s success can trace to her skill as a digital marketer;  her approach holds many lessons for marketers looking to quickly build strong and compelling brands online.

Lady Gaga exploded from relative obscurity in 2007 to become one of the biggest pop acts in the world, selling millions of songs and performing in front of millions of admirers.   She did it with a combination of talent and showmanship plus an adroit use of social media.  Today, Lady Gaga is an online heavyweight with roughly 19 million Twitter followers and 48 million Facebook followers.  Her total number of YouTube views has exceeded 2 billion.

What is her secret?

Lady Gaga pursues a social media strategy we call “mass intimacy.”   This approach looks to build an emotional connection with fans by leveraging a unique brand identity, regular communications and exclusive, web-friendly content.

Keep it personal

When it comes to her fans, Lady Gaga is anything but a poker face.  She strives to create emotional relationship with her fans.  One way she does this is by telling her “little monsters” (the affectionate name she gives her fans) stories about her life and values, in particular about her challenges growing up. Lady Gaga comes across as candid, approachable and authentic in all interactions. Fans can easily relate to her and be inspired by her.

Embrace your loyal fan base

Lady Gaga prioritizes her devotees and tries to make them feel special.  She typically does not use publicists or canned content, preferring to connect directly and personally by regularly tweeting and replying to tweets. Through all channels, Lady Gaga communicates to fans as if they are part of her team or family (i.e. using the plural “we”) as opposed to them being outsiders (i.e. using the singular “I”).  Finding new online connections is not as important to her as cultivating her existing fan relationships and turning them into ambassadors for her music and message on empowerment, acceptance etc.At the same time, Lady Gaga encourages her “little monsters” to participate in her career.  In one case, she asked her fans to upload videos of them singing and dancing to a newly released song. These clips were compiled, edited and premiered during her performance at a Saturday Night Live season finale.

Regularly offer unique content

Lady Gaga uses social media like the vast majority of her fans:  to update her friends, share her thoughts or ask questions (as opposed to promoting products and bragging about her success). Lady Gaga treats her social media friends better, in many cases, than the media.  Friends often get compelling content not always available elsewhere.  This includes regular news updates, announcements, prizes special features and exclusive interviews, all of which help to prevent the relationship from getting stale. Finally, many of Lady Gaga’s music videos appear tailored for the Web.  Some of her web-only videos are almost nine minutes long (instead of the standard four-minute clips produced for traditional radio and TV).

Align with a cause

Consumers respond positively to brands that care about something more than their commercial interests.  Lady Gaga is a pioneer in linking her social media activity with good causes.  In 2010 she pledged to stop updating her social media platforms until $1 million was raised for Alicia Keys’ ‘Keep a Child Alive’ charity.  In addition, she actively promotes tolerance through publicizing her Born this Way foundation on Facebook and Twitter.

Her strategy

Unlike many artists in the mid 2000s, Lady Gaga quickly embraced the potential of the Internet.  As the brand custodian, she is personally involved in all social media and branding decisions.  Working with an agency, she built an informative and appealing website, habitually engaged fans through MySpace, Facebook and Twitter and communicated her message via 50 interviews with popular online bloggers.  Lady Gaga accelerated her web coverage by forging strategic promotional partnerships with a variety of firms including Starbucks, iTunes, VEVO, HBO and Zing.  Finally, she looks to have all her marketing channels working together through a single brand “voice” and marketing message.

Obviously, Lady Gaga’s experience will be not be relevant for many firms.  However, it does show that employing a winning formula — having a strong brand identity, understanding social media’s key success factors and delivering compelling value — can rapidly propel and differentiate a  new or existing product.  When it comes to social media, Lady Gaga may not have been born this way but she learned quickly.

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

Customer fees spark a backlash

Millions have enjoyed Seinfeld’s “The Library Book” episode, in which an aging library official zealously pursues Jerry for an overdue book from 1971.  Though a parody, the plot’s sub text – the perversity and unfairness of an organization’s penalties – clearly resonates. Managers that heed this message can reduce business risk and improve customer satisfaction.

Understandably, firms look to cover extra costs and encourage certain behaviors by imposing supplemental fees.  Many consumers, however, resent the use and fairness of these practices and will quickly desert (and bad mouth via social media) a brand when they believe they have been treated unfairly.  New research published in Business Horizons, a journal of the Kelley School of Business at Indiana University, discusses how companies can prudently employ extra fees to cover reasonable costs without inciting a popular backlash.

A tough habit to kick

Today, many companies especially in the Telecom, Airline, Retail, Banking and Credit Card sectors, rely on extra fees – for late returns, cancellations and service changes – for a significant portion of their revenue and profits.  For perspective, penalties for late payments in the U.S. credit card industry almost tripled from 1997 to 2007, generating approximately 10% of profits over that period. In 2009 alone, airlines in the U.S. reaped about US$2.4B (or roughly 3% of their overall revenue) from fees assessed for changing or canceling flights.  For some enterprises like Blockbuster Video, these revenues represented the difference between profit and loss.

Fee-addicts are not irresponsible or stupid; they understand they will lose customers and suffer from a reputational hit. However, they believe the short-term benefits outweigh the long-term pain.  What many companies do not realize is that the era of consumer passivity may be coming to an end and the risks have increased, particularly given the power of social media and activist groups.

The survey says…

The study’s authors surveyed a representative sample of 200 U.S. consumers who had been charged a penalty of some sort over the past six months from a variety of industries.  Not surprisingly, almost 75% of the respondents who previously had a positive impression of a company reported being upset with the way they were treated.  More importantly, 18% of those surveyed reported bad-mouthing the firm to their on and offline friends and co-workers.

There are many reasons for this anger.  Firstly, 64% of the respondents thought the charges were unfair.  Almost 50% claimed they were unaware that they would be penalized, either because the penalty notice was buried in the fine print or because it was never communicated.  Secondly, 74% of those surveyed considered the penalties excessive, especially when they resulted from an unforeseen emergency or because they felt the penalties were applied punitively.   Finally, only 27% of the consumers reported that the company waived the charge out of courtesy or to appear fair.  Given these findings,  organizations run a major risk of treating (or appearing to treat) consumers poorly.

Prudently avoiding risk

A number of steps can be taken to soften the blow of applying extra fees:

Get your data

Policy changes should not be made in a vacuum.  Managers need to understand the true revenue and profitability contribution of extra fees.  On the cost side, they need to know the revenue loss from customer churn and the negative impact of a decline in brand image. If costs exceeds revenues, then the policies should be reconsidered.

Moreover, every customer is not the same and should not be handled with a blanket policy.  For example, some people are habitual late payers while others through their loyalty have earned the right to make an honest mistake. Managers should segment their consumers through qualitative research and gauging call center interactions.

Provide flexibility to staff

Prudent managers know when to cut their losses in certain situations. To a point, they should properly train and empower front line staff to waive fees for emergencies, one-off cases or when dealing with a valuable customer.

Be transparent and explicit

The majority of people do not read terms and conditions, particularly if they are confusing or tough to find.  Companies should simplify and make more transparent their messages around fee changes and penalties.

Revisit some policies

For every possible penalty clause, ask yourself a simple question:  Would the policy really upset you, if you were the client?  For the clauses that carry a ‘yes’ answer, it is likely they do not pass a fairness test and would not be suitable.  Companies should also consider fixing touch points in their customer experience that are needlessly frustrating such as long phone queues and multiple customer representative hand offs.

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

Influence and social media marketing

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.