Herd Instincts

The Wisdom of Crowds Heard by Google

2010-02-13T19:00:00.001-08:00

Today Google posted a response to the tens of millions of Buzz users who provided feedback. This is now a great case study in social media listening.

Google said, "We've heard your feedback loud and clear, and since we launched Google Buzz four days ago, we've been working around the clock to address the concerns you've raised."

They even apologized to users saying, "We're very sorry for the concern we've caused and have been working hard ever since to improve things based on your feedback. We'll continue to do so."

I've checked out Buzz again and I feel much more comfortable with the new controls related to following. The new "suggested" followers feature revealed many members of my Twitter following. I'm a busy woman, and so I must admit this is convenient. If I re follow all these folks on Buzz in the not too distant future I will have a perfect replica of my Twitter social circle. Very interesting.

Google has still not invited Facebook to the Buzz party, and the battle for social share wages on. John Battelle has named Facebook the victor, saying in his recent post on Buzz, "Google taking on Facebook for the social graph is akin to Facebook taking on google in web search. IE, silly. Google should incorporate Facebook Connect into Gmail/Buzz asap, and then build on top of it with its powerful services and algorithms. THAT would be a win."

Why all the Buzz about Google Buzz?

2010-02-10T16:27:00.000-08:00

Lately I've been spending the majority of my time helping leading brands develop social media marketing strategies. It's not easy to integrate all of these new channels with existing marketing programs, but best practices are emerging that I will discuss in a future post. Today I want to share my thoughts on a new entrant to the social media space, Google Buzz.

Buzz allows users to start conversations about the things they find interesting and to share updates, photos, videos and more with their friends or followers. If Google had an ad for this it might be "No, this is not your father's Facebook," or "When 140 characters aren't enough," or "Yes Bill, this could enable enterprise collaboration."

I think there are three important things to note about this product launch:

1. Buzz poses a direct threat to Facebook, Twitter and Microsoft's Sharepoint as it offers many of the same features of the social networks and enterprise collaboration tool right in the Gmail inbox, where users already spend a huge chunk of time each day. Users are starting to fatigue from having to log into multiple social networks and Buzz addresses this by incorporating everything in one place. Google may only have 100mm active Gmail users today (Facebook is reported to have 400mm), but Buzz will be an excellent gateway drug to its suite of apps, will drive customer acquisition, and enable it to steal share from its competitors.

2. Buzz helps Google get a handle on the flood of real-time user-generated content that is the specialty of Facebook and Twitter and complements its newest acquisition of human driven social search service, Aardvark. Google already incorporates Twitter messages into its search results. Facebook has yet to embrace open standards and this limits its growth, but it recognizes that whatever is public will be indexed by Google and weaken their competitive position.

3. Buzz appears to put Google's corporate strategy, searching and organizing all the world's information and making it universally accessible, ahead of the user, and trouble could follow (no pun intended!). Buzz did not launch with easy to use privacy features, doesn't have an open developer API, and is not closed from the public in the way Facebook is private. Buzz makes sharing information an "opt-out" feature with "auto follow" so that when someone starts using the service, it "just works." When you first access Google Buzz, it automatically sets you up with followers and people to follow and by default, the people you follow and the people that follow you are made public to anyone who looks at your profile. This is frightening for users like my friend who shared, "I have a very paranoid feeling that somehow my Gchats are now on display for the world to see." Facebook learned the importance of privacy when it launched its Beacon program. Beacon was shuttered after it sparked a lawsuit alleging privacy violations.

I'm sure Google is listening to all the buzz about Buzz, which is hard to miss in Google's real-time search results, and I hope they will respond to their loyal users in an authentic and transparent dialogue and not lose sight of their core principal, "Focus on the user and all else will follow."

Do you have a relationship with your bank's ATM?

2009-11-30T12:26:00.000-08:00

Recently, on what I'd call a less than average day I visited a Wells Fargo ATM. We've all used ATMs before and are familiar with the buttons and messages and probably could conduct most transactions blindfolded. However on this day something caught my eye and then made me laugh out loud. No it wasn't that someone had deposited a large sum of money in my account, but an image of colorful balloons and this message on the screen "Congratulations on your third anniversary. Thank you for being a valuable customer."

I'm a marketer and a nerdy one at that so I probably responded more positively than the average banking customer, but still this was remarkable and ended up being the highlight of my day. Wells Fargo delivered this personalized message at exactly the right time. I had in fact relocated to San Francisco just three years prior and opened my account with Wells because the WAMU bank across the street happened to be closed.

I was already an emotionally loyal Wells Fargo customer and there aren't many brands for which I advocate. Wells Fargo understands the importance of having a single view of its customers and has a clearly defined value proposition which is personified by the brand and communicated in all channels: retail brick and mortar, ATM, direct mail, and call center. This is truly remarkable for a decentralized enterprise in the banking industry and will enable Wells to build customer loyalty, increase customer lifetime value, and sustain profitability.

This provides another valuable lesson to marketers which is that you do not have to buy customer loyalty. There are dozens of ways to establish authentic relationships with your customers besides free shipping, discounts, and points. It starts with a single view of the customer which is the foundation of a winning CRM strategy.

Mulit-Silo Retail Marketing

2009-07-14T21:23:00.000-07:00

"Tear down this wall!" was the famous challenge from United States President Ronald Reagan to Soviet leader Mikhail Gorbachev to destroy the Berlin Wall. I'd like to issue a similar challenge to today's retailers who continue to operate their e-commerce divisions in isolation from their offline organizations. In these multi-silo companies employees across online and offline divisions don't cooperate nor even communicate with each other regularly.

Today's customers expect seamless experiences across channels and many retailers have recognized for awhile that their multi-channel customers are often the most profitable so it makes sense to integrate marketing communications to reach them online and offline. Cross-channel shopping behavior from online to offline (and vice versa) is a significant phenomenon, yet I only know of one specialty retailer who has put this priority on their strategic agenda.

Multiple independent studies have confirmed that online advertising drives offline sales. It's time for offline-centric retailers to recognize the power of their online marketing channel to drive traffic to their stores. Jupiter Research forcasted in its 2006 study that the portion of online plus online-influenced offline sales in comparison to total U.S. retail sales is expected to grow to 47% by 2011. This implies that of the average dollar spent in retail 47 cents will be spent either online or influenced by preceding online browsing and research activities.

I believe that if you sat down with a retail executive and shared these research findings that they would not be surprised. Why is it then that they continue to let their online divisions operate independently from the offline divisions? I believe strongly that these retail organizations need to be redesigned and common key performance metrics (KPIs) put in place to align the objectives of the e-commerce and store divisions.

In the past two weeks I've have had a surge in calls from retail clients looking for recommendations and benchmarks to assist them in designing their e-commerce organizations. I hope that this is an indication that some retailers are getting the wake-up call. I took the liberty to let them in on the secret that tearing down the walls between their online and offline channels and building an integrated, customer-centric organization could improve their bottom line.

Social Media Marketing Framework: A repeatable approach for planning social media marketing initiatives

2009-07-06T16:26:00.001-07:00

Check out this SlideShare Presentation by Karen O'Brien, Partner, Interactive Services, Crimson Consulting. Karen is no stranger to communities and social and is doing some leading edge work for Crimson's F1000 clients.

Social Media Marketing Framework: A repeatable approach for planning social media marketing initiatives

View more documents from Karen Obrien.

Companies that Invest in Growth Break Away from the Herd

2009-06-25T16:07:00.000-07:00

When companies fall upon tough times it is often the case that executives turn to defensive tactics, and focus their efforts exclusively on cutting costs. Cost reduction is not a bad idea, and can increase margins and lift revenue, but it should be one of several priorities for companies operating in an economic downturn.

McKinsey and Company research of companies operating with decent financial strength in reasonably attractive markets that invest for future growth, rather than cutting Research and Development and other investment spending often experience the best long-term results.

Executives at companies with relatively healthy balance sheets and the courage to go beyond defensive tactics in The Great Recession should consider the following three marketing tactics to drive near-term revenue growth and increase share:

1. Build brand equity by communicating your core brand values. While it is tempting to eliminate advertising spending when times are tough this is not wise. Research has found that consumers have less confidence in companies who don’t promote their products and services in a downturn. "Consumers continue to turn to strong, trusted brands, particularly during periods of uncertainty," said Judy Ricker, division president of brand and communications consulting at Harris Interactive. "Strategic investment in and careful monitoring of your brand is critical in both good and bad times, and will help you navigate the volatile environment." A customer’s willingness to pay for your product or service is a function of their reference price and the differential value they perceive. Your pricing strategy during the downturn will impact your brand health and positioning in the inevitable upturn. Analyze your portfolio of products and services and price elasticity of demand. Ensure that marketing messages reinforce your reference prices and communicate the differential value offered by your brand. Don’t be afraid to raise the prices of goods and services that have a high differential value relative to the competition.

2. Leverage analytic insights from company data. Central marketing organizations have access to customer-relationship-management (CRM) and transaction databases and should find opportunities to more effectively use this data to better predict demand. According to McKinsey a specialty retailer that developed an analytic tool to determine which items to promote online and in circulars experienced comparable store sales increases between two and four percent in test markets employing the tool to increase promotion effectiveness.

3. Improve offline conversion by investing in online advertising. Companies that follow their natural instincts may slash their ad budgets in periods of economic weakness. This makes it an even better time for you to take a long-term view, be aggressive, and increase your share of voice. Procter and Gamble COO, Robert McDonald, calls their approach to thriving in the recession, wejii, a Chinese term that combines crisis and opportunity. The good news is you may be able to accomplish this with fewer ad dollars and some changes to your marketing mix. You can increase offline conversion by investing in online advertising. In 2007 Google and ComScore combined forces to measure the impact of online advertising offline. Their study tracked a behaviorally driven search and display buy and produced a $530,000 sales lift in the new deodorant product, 96% of it from new buyers who weren't swayed by offline, demographic-targeted buys. Kevin Kells, CPG Industry Director at Google believes that "it's not that demographics don't matter, but the reality for most mass brands is that there's not a type of person. There are types of groups, types of communities within them that drive their volume, and they aren't homogeneous."

Companies with strong balance sheets in growth markets can gain strategic advantages through increased investment. Here are three suggestions:

1. Don’t abandon research and development. McKinsey research found that high-performing companies are twice as likely to increase research and development spending in a downturn. Procter and Gamble is an example and is increasing its fiscal 2009 research budget by 4.5% to $2.3 billion according to Wall Street research firm Sanford C. Bernstein. I recommend using social media channels to facilitate customer collaboration and increase research and development spend efficiency. Dell has done this with its site http://www.ideastorm.com/ Here is how Dell explains it, “The name is a take-off on the word “brainstorm” and it is our way of building an online community that brings all of us closer to the creative side of technology by allowing you to share ideas and collaborate with one another. The goal is for you, the customer, to tell Dell what new products or services you’d like to see Dell develop to inform their investment strategies.” Dominique Hind provides a thoughtful overview of the evolution of Dell’s Ideastorm and Starbucks' idea model in this slideshow http://bit.ly/5c3QB.

2. Consider capex expansion in future growth areas. Procter and Gamble executives have a positive long-term outlook on consumer spending and are launching the biggest capital spending plan in their 171-year history: 19 new factories worldwide over the next five years. Wal-Mart is also investing in new regions including Chicago where they are evaluating the potential of a supercenter on the South Side.

3. Grow through acquisition. A study of deals conducted from 1985-2000 by the Boston Consulting Group found that the average merger in a downturn created an 8.5% rise in shareholder value after two years, compared to the average deal in good times that resulted in a 6.2% drop in the acquirer’s share. McKinsey recommends identifying low cost acquisition opportunities in a downturn. In the current recession consumers may not be going on a shopping spree but smart retailers like Toys ‘R’ Us are snapping up their rivals for undisclosed bargain prices. In the past four months it has acquired both eToys and FAO Schwarz. No company today is immune from the pressure to maintain profitability, but those who avoid the temptation to go on the defensive and retrench will be better positioned to participate in the inevitable upturn.

Source: Kevin Kells, CPG Industry Director, Google, SearchRev.com, April 2008; McKinsey and Company, November 2008; Gaebler.com, June 2009; Business Week, June 2009.

Dell Outlet Demonstrates Social Media is a Legitimate Marketing Channel

2009-06-12T09:24:00.000-07:00

Mashable today posted an update on the financial performance of the @DellOutlet program which I blogged about previously. You can read it here: http://mashable.com/2009/06/11/delloutlet-two-million/.

This is a major consumer brand driving real sales in a relatively short time via a new experimental platform. It took them two years to grow their follower base to over 620,000, but the payoff has been tremendous. They reported that they have surpassed $2M in sales through their Twitter channel.

This brings me to a topic that I have begun to think about in the past few weeks. Is social media going to become a new marketing discipline? Should your company be hiring a social media strategist who is an expert in Twitter and Facebook to manage social digital direct response marketing programs? In the short-run considering the weak economic climate and that there may not be a subject matter expert in your organization I recommend you lean on your existing online marketing teams who may manage email, site marketing, affiliate programs, SEM and SEO. If they are resource constrained you could also hire a Summer Intern, or contract some of the work to a social media consultant.

Regardless of who manages the work they should be setting up processes and procedures that are repeatable and scalable and that integrate with those already in place to manage your other direct channels. This is important because in the long-run Twitter, Facebook, and other social media platforms will simply become another direct marketing channel. The social media channel will differ from traditional email, direct mail, and catalog channels in three ways:

1. They are networks for distributing customer communications in real-time at scale to a highly engaged audience who has raised their hand and asked to participate in a relationship with your brand. The messages this audience receives are then spread throughout the networks of each of these customers which increases the reach of your original message.
2. They enable brands to listen and understand what customers think about their product or service. When was the last time you received a promotional email from your favorite specialty retailer that invited you to reply with your thoughts, post it on your blog, tweet it to your Twitter followers or to Digg it? In my experience, never. In fact these 1-way email communications state very clearly in their messaging, "Do not reply."
3. They are a relationship management platform that humanizes brands and allows marketers to engage in real-time 2-way conversations with their valuable customers.

So my advice is don't sit on the sidelines and wait for your corporate strategy, CRM or IT department to determine the impact of social media on your enterprise and how marketing should be leveraging this channel to drive sales. Instead innovate, get in the game, follow the lead of companies like Dell, test, learn and adapt. If nothing else, you'll have fun and who says work can't be enjoyable?

What do Dell Outlet and Kogi's BBQ have in common?

2009-06-02T14:31:00.000-07:00

Twitter allows individuals to freely and immediately communicate through the exchange of “tweets,” frequent answers to one simple question: What are you doing?

A recent poll of 3600 LinkedIn users asked: "What is the most important new platform for brands to master." Respondents could choose one of the following online member communities: Twitter, Facebook, the iPhone, Digg and LinkedIn. The number one platform was Twitter, chosen by 30% of respondents. Find a thorough analysis of this poll on ReadWriteWeb: http://bit.ly/9Vgnj.

Twitter may not have a business model, but businesses are quickly developing winning models to leverage the company's open platform to build their brands and nurture customer relationships. Some, including DellOutlet and Kogi's BBQ are using it to successfully drive sales.

These are both great retail cases. I’ll focus on Dell Outlet since Kogi’s case involves hyperlocal targeting, a topic worthy of its own post.

Retail inventory management is probably one of the most complex of all inventory problems to solve, and successful companies like Dell find innovative ways to turn product at the highest margin possible. Returns can be especially challenging and so when Dell Outlet receives an excess number of returns of a particular model it will consider a direct e-mail campaign to promote that particular system, generate incremental demand, and eliminate the excess inventory “bubble.” However, when the bubble is smaller, the major lever to stimulate sales has been to lower the price of the overstocked item.

In March 2007 Dell Outlet recognized that the Twitter platform could be an efficient channel to promote featured products. Its Twitter program now has nearly 600,000 followers. Stefanie Nelson who heads up the Twitter efforts for Del Outlet has two objectives for the program:

1. Increase demand for products for which Dell Outlet has excess inventory by offering Twitter exclusive deals.
2. Become a resource for Dell customers looking for tips and tricks and assistance with products.

The strategy revolves around posting Twitter-only offers to its followers. When a new tweet is posted, it generally provides followers a coupon code to obtain a discount on that particular model in the Dell Outlet. Typically, this coupon is exclusive to Twitter, so they are able to measure the redemptions and know that it was due to being posted on Twitter. Twitter followers may share coupons easily by "retweeting" the Dell Outlet messages to their Twitter friends in a viral fashion.

For Dell, Twitter represented a new way to reach customers and by tracking coupon redemption, in the first year utilizing Twitter as a promotional tool, Dell Outlet generated over $500,000 in revenue in sales of refurbished systems. Dell has proven time and again their ability to innovate in sales and channel management and I predict other brands will follow.

A May 2009 “Top Ten Twitter Trends” study of Internet, mobile and social networking users (n=1,850, twitter users, n=665) conducted by Thinktank Research found that 40% of Twitter users regularly search for products or services online via Twitter. About 20% follow at least one product or service, and 12% note they’ve chosen a service or bought a product online because of information they got on Twitter. To request a copy of the report you can email Robin Boyar info@thinktank8.com.

It will be interesting to watch the evolution of Twitter as it continues to gain momentum as the leading conversational marketing platform for brands.

When New-Product Development Marketing Plans #Fail

2009-05-24T21:41:00.000-07:00

John Steinbeck's book Of Mice and Men's title is taken from Robert Burns's poem, To a Mouse, which are often quoted as: "The best-laid plans of mice and men/often go awry."

Companies that fail to innovate and develop new products put their businesses at risk. There are many examples of companies that failed to adapt to changing customer needs and tastes, new technologies, shortened product life cycles, and increased competition. New-product development does not come without its risks and for most companies there are hits and misses. While some companies shy away from risk Amazon makes gutsy bets in new-product development.

Amazon has been working on a digital strategy for the better part of a decade. Those who closely monitor the company tend to agree that their digital music and movie download product launches have been a disaster. One person who worked closely on their Auction product told me that the company typically attempts to erase mistakes from everyone's mind and move on to the next big idea.

In 1999 it launched Amazon Auctions in an attempt to take on e-Bay thinking its loyal customers would immediately adapt to auctions and small businesses would flock to its site. The product never gained traction and ultimately failed.

In 2003 Amazon was so bold as to take on Google's dominant position in the search market with A9, which offered among other features, Search Inside The Book, which let users search for a book by character names or even obscure phrases. In characteristic Amazon style it was an aggressive move, but one that turned out to be foolish.

I've focused on Amazon's failures, but with their repeated upside earnings surprises and strong sales growth, it is clear that failures do not outbalance the company's overall success -- and its not likely to stop taking risks anytime soon.

There are many factors that lead to product failures including ignoring negative market research findings, overestimation of market size, poor design, weak positioning or pricing, development cost overruns, competitive response, and lack of consumer adoption. Let's take a look at the factors influencing the adoption process. Adopters of new products have been observed to move through five stages:

Awareness
Interest
Evaluation
Trial
Adoption

The product marketer must facilitate consumer movement through those five stages and also influence the following characteristics of the adoption process:

Differences in individual readiness to try new products
The effect of personal influence
Differing adoption rates
Variance in organizations' readiness to try new products

Everett Rogers, author of Diffusion of Innovations, recommends that innovating companies should research the demographic, psychographic and media characteristics of innovators and early adopters and direct marketing communications specifically to them. He claims that earlier adopters tend to be younger in age, have higher social statues, and a more favorable financial position.

Personal influence is the effect one person has on another's attitude or purchase probability. Its most important in the evaluation and consideration strategy of the adoption process than it is in later stages. It has more influence on the late adopter than early ones and is also more important in risky situations.

In attempting to reach influencers in today's fragmented media marketplace I recommend marketers consider all channels, but if budgets are limited then social media and word of mouth marketing can be utilized most effectively. Facebook, MySpace, Twitter, Digg, and LinkedIn are not created equal and managers should undertake a thorough analysis of their audiences to determine which properties will allow them to reach their target customers and influencers.

Rate of adoption is influenced by relative advantage to existing products or services, compatibility, complexity, ease of trial, and the degree to which a marketer can translate the new product features into clearly understood benefits. Organizations also will adopt innovations at different rates depending upon their leaders openness to change and other factors including pressure exerted by its administration.

Source: Philip Kotler, Marketing Management; Fortune, May 2009; Greg Linden, April 2006.

Control Alt Delete

2009-05-24T19:58:00.000-07:00

This is not my first post, but it's the one that shall remain in publication. I started blogging several months ago, but my writing, like a good wine, gets better with age. Today I'm starting over, "rebooting" my blog so to speak. Going forward I will build upon the knowledge that I've accumulated over the years studying marketing and working with Fortune 1000 corporations.

First, a bit of background about me. I was born and raised in Missouri, The Show Me State, in the Western suburbs of St. Louis. Like my fellow Midwesterners I have lived my life with a healthy degree of skepticism and follow the advice of my grandfather, Merle, who preached, "don't follow the herd instinct." To that end, in my blog, I will attempt to share insightful and original opinions on the digital media landscape and how brands and companies can build profitable customer relationships leveraging the social web. Thanks for reading and I hope you will share your opinions along the way.