Friday, 11 December 2009
Santa has won the hearts and minds of his customers. But growth is fuelled by population expansion, retention rates are average at best. The customer relationship starts round age three and fades ages 7 to year 9. Santa is privately owned so there is no financial reporting requirement. The business model is hazy; it is not clear how Santa makes its money. To grow the business you require cashflow or substantial capital. Property lease back is a non starter; they only seem to have seasonal concessions within a variety of retail outlets. Lapland HQ is not practical for other businesses of this scale, so you wont be able to find alternative tenants. Opportunity cost of these assets would seem to be close to zero.
The solution to turning Santa around must lie on the revenue side of the equation.
1. Brand identity. Santa, St Nicholas, Father Christmas, Papai Noel, Babbo Natale – the different names dilute the brand. Choose one name and stick to it. It worked for Snickers. Whilst a name that resonates with the Chinese market is tempting we feel an English name provides the greatest global reach. SantaServices gives you brand stretch.
2. Create added value services e.g. charge for different delivery options, delivering on Christmas Day should be the premium not the standard service.
Why not charge for returns or provide warranties? It estimated that 15% of presents are damaged on Christmas Day. This must be a significant revenue opportunity.
3. Merchandise yourself how about replica kits for children; think laterally! What would be the equivalent of the soccer away strip? What about a light suit for hotter climates. Don’t be a slave to red.
4. Investigate sponsorship opportunities. Formula 1 would offer the best benchmark. Look for brand synergies, but obviously avoid competitors like DHL, red letters days unless there is a clear income opportunity.
5. Share of hearts. Make sure Santaservices.com is on all packaging and clothing. “This present was bought you to by Santaservices.com” reinforces the brand.
6. Embrace digital. Letters posted up chimneys is a nice touch but difficult to believe it is practical. And this hardly good for the environment. Email has to be the way forward. Make the website work harder, a personalised web experience is essential. And of course this year we are expecting mobile technologies to take off so integrating SMS is a must.
7. Brand experience days help your best customers embrace the brand. It is probably Pizza Express No.1 marketing activity. Children come along make Pizzas in the morning and pester their parents in the afternoon to return in the evening - and they pay for it.
8. Business continuity. Business is over-reliant on one man; no one is going to invest in a business without a clear succession plan. Consider an X-Santa type show.
Give Mrs Santa more of a role cf Cameron and Brown. Older men into children can be perceived as unusual e.g. Michael Jackson.
9. Go beyond the seasonal demand. One day a year! Enormous opportunity even if we don’t go 24x7x365. Of course it is possible more frequent Christmases may be difficult to market but the core competence is distribution and logistics. Look to provide corporate outsourcing solutions.
10. Develop a retention program for teenage into adult years, you know all about random acts of kindness. Make sure the C in CRM stands for Christmas.
11. PR. Appearance is everything. Looking that comfortable in the present climate does not seem appropriate. Even Puff daddy is forgoing bling in concession to the crunch. Obesity and children is a hot topic. We really do live in an age of style over content so think about going on TV with Gok or Gillian Mckeith.
12. Crisis management. Don’t get pissed in public even seemingly indestructible can be destroyed with 1 or 8 moments of madness. (Tiger Woods)
Thursday, 10 December 2009
Sunday, 22 November 2009
So when i am head of marketing for Bernard Matthews, Krispy Kreme or ACME I'll try to remember.
1) When i am offered a big sponsorship opportunity, look for a series of smaller simpler events that could potentially achieve the same results.
2) Look for opportunities before i am asked
3) Make sure it fits the business (before someone says anything obvious)
4) Think of sponsorship as earned rather than paid media i..e the cheque is only the beginning of a great relationship
Unless of course my new boss likes football and wants tickets to the world cup final. In which case i will pretend my 6 year old wrote this.
Wednesday, 18 November 2009
Second order decisions are the rules we make up in our lives either to avoid making complex trade offs or remove the need to continuously reassess everyday choices.
So for example ...
* Sticking to one commute route regardless of traffic and weather conditions
* Putting your credit card in the freezer to avoid over usage.
* Deciding to buy - before entering the shop - what ever shower gel is on offer.
* Selecting an IFA you like rather than researching the product itself.
* Repeating your grocery order on line.
Identifying which decisions (and when) are second order and which are primary is a really good way to think about both categories and consumer decision making. If your market displays a high degree of second order decision making then the chances are the persuasion model of marketing may be less effective, your job is to break the habit get consumers to do something different.
Monday, 26 October 2009
Sharing a summary of implications of behavioural economics for marketing and us agencies. Most of the specific examples are borrowed from the books listed at end of doc. The rest i hope is orginal. And thanks to Rory and the IPA for encouraging me to to dust off the old economic text books and take a second look at them.
- A marketing perspective -
What is it?
Traditional economic models and assumptions don’t explain why people or consumers do what they do. Behavioural Economics has evolved to help us better understand how economic and consumer decisions are made. And increasingly behavioural economics is being used to explain anything and everything from why people don’t put enough money into their pensions to why it is difficult to get taxis on rainy days (and it is not because they are busy!)*
Behavioural economics is the study of why consumers and economic agents do what they do, especially when what they do is seemingly less than rational.
What is wrong with traditional economic thinking?
Traditional economics is normative in approach. It is rational and deductive, in other words you have to be very good at higher level maths, and a PHD helps.
It utilises two key assumptions.
- Perfect information or knowledge. All possible outcomes and corresponding rewards of an action are known in advance
- Every agent looks to maximise their ‘utility’ or profits at all times over the long term time horizon. I.e. they are rational.
If you adopt these assumptions then it follows, for one, that all stock markets would be efficient, they would assimilate information immediately and there would be no bubbles or ‘sentiment’. [this is a vast over-simplification but don’t worry about it]
Behavioural economics is different to traditional economics, it is built on observation. And observation shows we behave very irrationally. We display brand preference and establish purchasing habits. We spend today and save tomorrow. We smoke. And buying a Porsche is hardly a rational decision.
Why all the excitement now?
We have seen a vast increase in the availability of information, near perfect. Technology has provided us with tools to make more rational choices and as marketers we can increasingly measure what we do and observe behavioural clues (increasingly on line) – but still consumers behave in what we could refer to as irrational ways.
* See last page
Behavioural economics is intuitive
No one believes for a second that we make purely rational choices all the time or reappraise our purchase, health and educational choices on a regular basis ‘in order to maximise our utility’, but the assumption has always been that everything would even itself out over time across the population.
But we see people buying the same detergent their mother always bought. We do follow other people across the road without looking. We do consistently refuse to put enough into our pension. We have unsafe sex, none of this is rational but it makes sense. We do things with our right side of the brain. So clearly we can be rational, habitual as well as intuitive.
What makes behavioural economics doubley fascinating for us is that it is interested in how we can change this behaviour with what Thaler and Sunsten call ‘Nudges’.
Here are a couple of examples (from controlled experiments, not real life). They are taken from Nudge and Predictably Irrational.
Say a travel agent offers a weekend break to
If you ask an (uninformed) group how many people live in
And a real example:
Teenage mothers were given a $1 for every day they did not become pregnant with a second child. The birth rate dropped significantly even though the state benefits would outweigh the relatively insignificant $1 per day contribution. This is what they call a nudge, think of it as an incidental stimulus that modifies behaviour.
The language of behavioural economics
Behavioural economics has its own terminology. Here are the more commonly used.
Choice architecture: The way we present options determines your choice. Kids sweets at the check out or make up at the front of the store are examples.
Loss aversion: this reflects our tendency to prefer avoiding losses to acquiring gains. Experiments have revealed we are infinitely more annoyed about losing £10 as we are gaining £10. This has implications for how we present price rises, direct debit charges and incentives.
Status Quo bias: people will only change a habit or established behaviour if the incentive is significant.
Gambler’s fallacy: the balls have no memory! In other words just because it has not come up red for the last three spins it does not mean the next spin of the wheel is any more or less likely to come up red.
Self serving bias: Simply put I deserved my promotion, he was lucky. We look through the world through our very own goggles.
Money illusion: Economists refer to sticky downward pricing. People won’t sell their house at a nominal loss even if every other house is going down in value; we prefer to wait for our house to go up in nominal terms even if inflation has reduced the real value of the house.
Inequity aversion: Cut off his nose to spite his face if he thinks you are getting more than your fair share!
Herd behaviour: Individuals act in a group without thinking, believing that not everyone can be that wrong.
Calender effect: The classic one being the New Year resolution. Days and events in the calendar change our behaviour. Are you nicer at Christmas?
Hyperbolic discounting: Within reason – people state a preference for money now over a little bit more in a month’s time. However if they are given the same offer but it is delayed for 12 months they are happy to wait the extra month for the extra amount. So why the change in preference? This explains our attitudes to pensions.
Paradox of choice: Give me a choice of two or three things and I can hopefully decide what I want. Give me 27 (insurance services) and I am lost. This partly explains the existence of middle men and aggregators.
The good news
Most of us are regularly doing or have ‘done’ some behavioural economics within our roles as marketers. In many ways it is what we have done intuitively, behavioural economics is applied marketing.
- Prize draws and incentives. Don’t miss out (rather than make sure you get).
Holidaycompanies. Book early to avoid disappointment. .
- Application forms. Just tick this box and we will do the rest.
- Loyalty programs utilising inertia.
- Amazon. People like you also purchased.
- Leisure brands. You deserve it.
- Bigger red buttons.
- Pill packets with dates
- Telecoms. Different calls packages with various free minute options to reframe the choice around incremental value.
- Insurance brands. Automated renewal
- Savings (or credit cards). “With just a £1 a day ...”.
- Smoking cessation products.
And you could probably add semiotics and any re-positioning projects. Even our very own moments of truth are examples of utilising behavioural economics. Essentially behavioural economics explains what we, as marketers, have been doing for a while but importantly it gives us a framework and a language to do more of it, more often as part of ‘what we do’.
The big implications of behavioural economics
1. Perhaps more than we thought people are doing things without rationalising the decision. This challenges the traditional communications model of change attitude, then change behaviour. We know that if we make products and services more available or simpler to use they will be adopted. Perhaps communications should increasingly be used to reinforce the purchase and encourage inertia rather than change behaviour. Inertia, availability, group behaviour, options, comparisons are much more important marketing tools than we realised.
In other words getting them to do (respond, buy) first; worry about attitude later. Direct marketers take note.
2. The consumer may be making an active decision when and when not to be rational. For example, habit is fine when you are doing the weekly shopping. But if you love running you are going to take a bit longer choosing a pair of trainers and maybe the same applies when you buy a car.
Time is precious and sometimes we can’t be bothered to look around. So intuition and inertia are rational choices if the cost of error i.e. choosing the wrong product is deemed to be insignificant or the cost of acquiring the necessary knowledge to make the ‘correct’ purchase is perceived to be high. So if the consumer is less involved in the category, the chances are there is a greater opportunity to use the tools of the behavioural economist. This would apply to utilities and commoditised markets.
3. Agencies need to encourage their clients to let them focus on the problem, not the medium. How we solve it should not really matter. How we get paid for it will though.
Some final thoughts
- If we can influence choice literally by how we present the options what happens if the choice architect is unethical. (and is not paternalistically libertarian)
- Marketing and communication agencies are probably in the best place to utilise this thinking, how do they charge their clients way of thinking – about them?
- How do we structure our behavioural economics story or even our approach? When do we engage our client?
Want to know more? Then read
The economic naturalist
*The taxi example: Taxi drivers make more money in wet weather faster. So once they have reached their target, it is off to the golf course. Makes sense when you think about it.
Tuesday, 20 October 2009
Saturday, 10 October 2009
Thursday, 8 October 2009
Its Anadin, what do you think it is.
That was a one off, but just in case i got something small, hard, shiny and comes in a canister.
... not a lot of garlic, why?
3 or will 2 be enough ... any brand preference?
The vending machines in the mens (mid market hotel) sell condoms, condoms - coloured, condoms - with Ferraris (why speed?) on the pack, something for erectile disfunction (whatever that is), headache tablets and, of course, mints
Great thinking. Good marketers solve a customer problem, they sell the solution - not the product. I get the nagging feeling they are missing a trick but cant think what that would be or whether it would fit in a vending machine?
Sunday, 4 October 2009
- 200m blogs on blogger
- 100m Youtube videos watched every day
- 5,000m facebook minutes daily
- 38% of all on line media is on social media platforms
- 2/3 of the global internet population visit social networks and they are the 4th most popular on line activity
- 20% of twitter conversations mention brands
Now to bring everyone back down to earth (because that is what i have to do as a job more often than not) we could make a rational argument pointing out the resource, content, relevance demands and complexities. It would be dull and you won't remember it anyway. Lets try another way.
WH Smiths have just launched their facebook page and you can twitter with them when ever you want. How does that make you feel? Excited? Thought not. But point made, that is how customers may see your brand's social media activity. By the way WH Smiths haven't or i hope they haven't.
Everyday millions of people commute into London by train, they sit there for two to three hours a day. A captive audience, waiting to be marketed to. That is why i am launching my commuter marketing agency tomorrow. I suspect your first reaction is, he is an idiot. Second reaction is why not just put an ad in the newspaper at least they will have something useful (content) to read. Third reaction is, if you are still being polite, 'we will include transport in the media schedule if it fits with the strategy, thanks for your contribution'.
So just because the customers are there does not mean there is the opportunity to market to them. Social media is a really confusing term. Most of them are social networking sites not marketing tools waiting to be utilised.
By all means use social media to listen, or resolve, engage and participate if you can add value but don't think of it as a marketing panacea. And of course first work out what your customers want and if you can credibly provide a solution. Many brands have used social media well (Dell, Mini, Amex, BT) but they have invested considerable time and resource, they also know what they wanted to get out of it.
The social media strategy is easy, do things that customers want or find useful. It's the execution which is the tricky time consuming bit.
Monday, 21 September 2009
The problem is similar to the one in the 90s when we all talked about the wonderful world of what CRM technologies would deliver. We could all talk an infinitely better game than any clients internal system would let us deliver. And even today when businesses undergo a CRM audit or CRM capability analysis, the good ones score 40% or even lower. That wouldn't even get you an A* in media studies.
The same is happening with digital. We can can create a wonderful vision of tags, cookies, virtual databases, personalised web environments and collaborative filtering (what amazon do) but delivering is a bit tricky. The frustration is the deliverable gets diluted and can be miles away from what we can do or are allowed to - unless of course you are a pure play e-commerce or your business is doing badly enough to force you to re-engineer yourself.
That i am afraid is the silver lining upbeat swing at the end of the downbeat article, some organisations have no choice but to do things differently. Lack of budget focuses the mind. However i am an optimist - eventually.
And no I am not thinking about my clients.
Only positive cheery comments please.
Friday, 7 August 2009
But here is a great digital example. A chumby is a wi-fi device on which you can run apps, facebook, ebay, radio, transport information, news feeds, webcams. Keep it in the kitchen. They cost about £100.
But the really neat thing is that you can run a virtual chumby on your pc before you buy. Technology isn't real until you experience it.
This illustrates another point about digital making relationship marketing before the sale simpler and more cost effective.
Thanks to Rory Sutherland for showing me his virtual Chumby. If you want to set yours up go to www.chumby.com .
Wednesday, 5 August 2009
Do we sell a mobile phone tariff for £10 pcm with 50 free minutes or 150 free minutes? They both undercut the competition but clearly the 150 minute free minutes tariff creates less margin but will be more attractive to consumers. So what do we do?
The answer. Do both. And put the price up.
So you have two potential communications
A) £10 pcm with 150 minutes
B) Choose between £10pcm and 50 minutes or £12pcm and 150 minutes.
Which sells more?
It's B) and they buy the more expensive option. This is counter intuitive but the consumer rationale is 100 free minutes extra for £2. No brainer.
It's all relative!
Tariffs and offer changed to protect any potential client confidentiality.
Friday, 19 June 2009
- Don't brief them just ask them to do an ad or a letter or something.
- Never write anything down for them.
- Definitely don't give feedback, why should they have any clues.
- Make sure they understand that anyone who has money is in the target market.
- Under no circumstances provide information that suggests your product or service is different in any way shape or form.
- If they question this remind your agency of the power of your brand.
- BUT Provide attachments, as many as you can find. Too much knowledge can't be a bad thing.
- Talk about samples of one and your neighbours experience as much as you can.
- Never tell them the results of the campaigns or impact on sales
- Only allow a couple of days for them to produce the work, afterall writing can't be that difficult.
- Ensure that they work at cost, profits just go on long lunches anyway.
- Draw a concept for them in the briefing meeting, and tell them what your boss likes to see.
- Ask them to communicate as much as feasibly possible in anything they do.
- On no account ever present to them.
Saturday, 30 May 2009
But the weird thing is it is still an information short cut. Because there is too much information out there, we cant be bothered to do all that research so we opt for a brand we trust.
30 years ago we couldn't possibly do all the research we should to be 'rational' consumers
Now we have the information available and we cant always be bothered. We haven't got time.
Of course if you are spending lots of money or buying your favourite toy we will research it, but brands still matter. They still communicate but just in different ways.
Sunday, 24 May 2009
However we should be more focused on things like ... Do you find this brand interesting, or different or appealing. Do you prefer it? Nothing else really matters - apart from whether they buy it or not.
I recognise this means it is even harder to separate the impact of the advertising and communications from the product or brand experience but unfortunately that is tough. It definitely doesn't work that way any more, assuming it ever did. I can think a brand is the coolest thing in the thing in the world but if 16 out of 37 reviews say it is crap i am not going to buy it.
Monday, 18 May 2009
What exactly is a quality lead, our clients always talk about them but rarely does it get defined. The sales perspective is something like a prospect who invites them to tender. But this is not perfect, the likes of IBM, HP, Vauxhall will more often than not be on the shortlist as part of a benchmarking exercise. Marketing would probably define a lead as anyone who has engaged with the organisation, either via an event or on line.
Clearly there is a disconnect and explains why sales often complain about marketing, sales understandably want easy sales.
We could 'settle' the argument is by linking the marketing database to the website to ad serving data and other on line marketing activity. Easier said than done. But in the meantime if anyone has a better definition or two of leads (that marketing and sales agree on) i would love to hear about it.
Friday, 8 May 2009
Here are some headline stats
2. Of 4.68m private sector enterprises in the UK, 3.6m don't have any employees and are probably shells.
3. There are less than 27,000 companies with more than 50 employees.
4. 50% of SMEs with 50 to 250 employees are family owned
Saturday, 2 May 2009
Rule 1a is 'Be where they are'.
You have probably used this in every pitch involving digital so it is not original but it highlights the importance of media context as well as the opportunity to exploit search, social media and digital influence. It is pretty difficult to argue with rule 1a when we see how much consumers rely on search and peer opinion when purchasing anything more sophisticated than toilet duck. You regularly see figures like 90% plus using search before making a purchase on or off line. Last week i researched trainers, found out about over and underpronation (exactly), went to the store, happened to remember the brand and product; Brooks, Adrenaline. Then bought them up. Unfortunately for the marketing manager at Brooks they couldn't track this.
So the only marketing rules you need are :-
1. Be interesting
1a. Be where they are
I wont be adding any more rules in the forseeable future.
Friday, 24 April 2009
Now I have to fess up. It was on a business site and the banner was taking me to a sister publication so you could argue it was a button or a link dressed up as a banner. So the only time i have clicked on a banner is in a contextual environment. I am not saying network buys don't cost in. Network buys clearly make sense for mass market products and awareness objectives but for specialist categories and b2b you may be better off looking at specialist networks or finding different ways to spend your money, like sponsored email, smarter search, links and buttons. Focussing on those people in the market mood. Never the less it still feels odd that this great thing the internet is premised on its ability to serve up relevant content but we still deliver marketing messages on a semi random basis.
The easy counter argument to this is that brands do invest in network display campaigns because it works; but you would be assuming that they can track activity through to sale. You would be surprised how few brands do this as well as they profess to.
Do you click?
Friday, 10 April 2009
Ok we have known this for a while and you could say it is just another way of saying content, content, content.
But to be interesting you have to all of the following.
(1) segment your market - create personas if we want to get digital about it.
(2) understand your customers requirements
(3) give them the personal treatment
(4) be relevant
(5) get to the point quickly
(6) ignore your (product) agenda until you know what the consumer wants
I quite like the way HSBC give lots of business advice on their business banking pages but there again the choice for them is easy, business banking is inherently dull. I also had a look at Evans's website (the cycle people). They have some interesting areas like 'ride2work', 'news and events' but they should be part of the landing environment not something to do after you have scanned the product pages. And why don't they have lots of pages about great places to cycle or videos. If it is there, it is very well hidden.
Sales people always want the products up front which is ironic given that sales people always say good ones engage the customer before they talk about the product. You know the car salesman who asks you how you are going to use the car, what sort of trips you will make before talking petrol and cars.
Are we all just too good at ignoring our own advice?
Sunday, 5 April 2009
(1) Make sure the website was a focal point of the business
(2) Invest time in creating interesting content covering the category, events to video.
(3) Get a few staff to blog their little socks off
(4) Optimise the site for organic search
(5) Share as much as possible with key influencers
(6) Capture customer data, give customers a personal service, do CRM, maximise retention
(7) Give their brand personality
(8) Develop affiliate relationships - old style and new style affiliates
(9) Link, link, link
... and so on and so on
If they have too much money they :-
(a) Do big ads and talk about big ideas, (not lots of great little ideas)
(b) Run regular DM programs, saying the same thing to the same prospects again and again.
(c) Do lots of paid search
(d) Try to sell off the page
(e) Talk about being customer centric
(f) Copy their nearest competitors