Yahoo! Answers

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I just started using Yahoo Answers again. This is a great source for blogging content. Just search through the questions, find something that you might be able to help with and write. What I really like about it is that it's a step beyond search; i.e. most people don't ask, "What's CPC?" You can find that on Google. The questions are much more difficult than that and thus a foundation for great content.

Here's an answer I just gave to an important question while I was riding the Acela back to New York.

Question: What is best way to keep long term clients and customers?

My Answer: I think there are three key ways to address this challenge:

  1. Find a way to make leaving difficult for your clients. That is, create substantial "switching costs". And I don't mean cancellation fees, that'll just cause ill will. Instead find ways to make your product or service more valuable by becoming more intimate with and integrated into what matters to the client.
  2. Innovate, innovate, innovate. Watch your competitors and run as fast as you can to avoid becoming a commodity. When your clients are only talking about price you know you're running much too slow.
  3. Make big promises and over deliver.

Consumers as Partners

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A post by Seth Godin the other day stirred up some controversy among click advertisers. Check it out here.

It reminded me once again of a paper I wrote in business school proposing that marketers (and I suppose publishers) move towards more of a partnership with consumers

The post can be found here but the relevant section is below...

I propose that marketers change the way they view the consumer. Currently, it seems marketers see their function as a game of “cat and mouse.” They are chasing the consumer and the consumer is trying to escape.  Instead, they should view the consumer as a partner. In a partnership, both parties benefit from each other.

Marketers should begin to appreciate the consumer who is willing to learn about their product offerings. Consumers should be rewarded for this willingness. Learning about product offerings takes time, and as the old saying goes, “time is money.” Thus, it seems only logical that marketers should pay consumers to learn about their products. That is, marketers should pay consumers to watch, read, and listen to their advertisements. This strategy has been gaining popularity recently, and smart marketers will begin to incorporate it in their plans.

So how does it work? Two examples:

A marketer sends a brochure on a new product to a consumer through the mail. The brochure includes a questionnaire on the content of the brochure. If the consumer answers the questions and mails it back, the marketer sends the consumer a check.

Marketers put informational commercials in movie theatres and pay targeted consumers to watch the movie. Of course, the commercials would be entertaining ― most already are.

An interesting extension of this concept was recently proposed by two professors at Yale School of Management. Their idea was to apply this thinking to the Do Not Call Registry. Households that sign up for the Do Not Call Registry would be allowed to authorize their phone company to connect any call that meets their price-per-minute. Households could charge different prices for different times of day or for different types of calls, a kind of reverse 900 service. Telemarketers of course pay only for the households that they reach, not for the ones that hang up. And if the telemarketer doesn’t think the consumer is listening, they can simply hang up. Consumers are equally free to quit the call and stop getting paid.  This idea could easily be extended to faxes and emails.

Given the way that marketing has been done in the past, this may seem like a radical idea. But after taking a second look, it seems much more plausible. Think of the advantages for both the marketer and the consumer:

For the marketer:

  • No more wasted marketing dollars on mass advertising. Rather than paying millions of dollars for mass advertising campaigns that reach consumers that will never buy their products, marketers could focus their ad budgets on selected consumers. Because the consumers are getting paid, they would be willing to give up specific demographic information. People are more than willing to give personal information to their employers, as long as they keep getting a paycheck.
  • An improved image. People generally trust the people that they work for and because it is clear that consumers are getting paid to learn about products, the image of the sneaky marketer will slowly fade away.
  • Compensation would make consumers much more open to exposing themselves to marketing messages.

For the consumer:

  • Less exposure to annoying marketing tactics. While questionable marketing strategies will likely always exist, smart companies will cut down on traditional “involuntary” advertising strategies.
  • Getting paid to watch TV. Many advertisements are already quite entertaining. Some people actually enjoy watching commercials on television. Getting paid for watching TV is a pretty good deal.
  • Getting paid to learn. Many people like to learn about new products that make their lives more enjoyable.

Over time, marketers will be seen more as educators than salespeople. When companies realize the benefits of this image makeover, they will realign their marketing tactics to see the consumer not as a potential customer, but as a potential partner. Conversely, consumers will begin to see marketers not as adversaries but as partners.

Short Term Pricing

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I just bought a new BlackBerry and when reviewing my plan the associate found that I spent $120 last month on text messages -- $0.20 per message. We made a simple adjustment in my plan; now I can send as many messages as I want for only $20 per month. Amazing. Texting is fairly new for me so I'm not sure how long this robbery has been occurring but it's still quite disturbing that the cell phone company I've been with for years would rip me off.

The Associate explained that they do this to incentivize customers to upgrade to a messaging plan. I suppose this is one way to drive new upgrades; once again a good short term strategy.

Another example of a short term strategy that will cause long term pain.

Inventory

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Did a little shopping today. Went to Kenneth Cole to buy shoes and Staples to buy a file cabinet. I found two pairs of shoes that I liked and a file cabinet that was perfect. When I asked the sales associates for my size and for the file cabinet they came back with the same answer: "out of stock -- best to check online."

This has been happening to me so often lately. It happens almost all the time at Banana Republic. What happened to all of that Kanban, just-in-time inventory stuff I read about in business school?

I'm convinced that this is not happening by accident. I'm convinced this is a calculated business decision; that is, the risk of having me not go home and go online to buy the items I want is outweighed by the costs associated with ensuring full inventory.

Interesting.

By the way, I'll probably wind up buying all this stuff online.

B2B Citizens

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Once again the great Seth Godin and friends are changing the language of marketers.  I love when this happens so I hope it takes hold.

He's recommending that we stop referring to potential buyers as prospects and targets; rather we should refer to them as "citizens".  See the post here. 

While I love this word and agree with his motivation, doesn't this seem a bit B2C driven?  That is, I'm not sure we should refer to potential B2B buyers as citizens. 

What's the difference?  When I think of a consumer in this context, I think of a person that doesn't need me, that has choices, that has power.  When I think of a business in this context, there's less power.  That is, while a business may not need me, they do need solutions to big problems to keep their business running.  Citizen is a great word because there's this sense that they're just standing around and might never need to do anything other than eat and sleep.  I have to make something that's great to get them to act. 

Businesses aren't just standing around, they need to act to survive; they (in many cases) need me more than the consumer.

I think there's a difference.  Thoughts?

Happiness

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Last night 60 Minutes took a hard look at why, in nearly every survey, Denmark ranks as the happiest country in the world. The answer?  Expectations.  Danes simply don't expect too much from life so normal day to day ups and downs seem better than countries with higher expectations.  I think America ranked 23rd.

More proof of the importance for marketer's to spend as much time setting expectations as they do influencing perception.  More on this topic here.

Credit Cards

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Because of the credit crisis, I've been force-fed so much information about the credit industry over the past few months.  I'm starting to feel like an expert and I don't like what I'm learning. 

The most recent horror story was a cover story in Business Week about companies that are reselling forgiven debts owed by consumers that have successfully declared bankruptcy.  That's right, a consumer declares bankruptcy, a credit debt is erased and then a few months later that debt is sold to a debt collector who goes after the consumer for payment.  Often, these consumers pay because they're just trying to get their credit back on track or the debts are held over their head as they attempt to secure new loans.  This is allowed to happen because credit card companies don't report that the debt has been forgiven (not surprising, there's nothing in it for them) and there's nobody overseeing the process.

In some ways, these companies are doing what drug dealers do; they're exploiting a human weakness for their own gain.  That is, they know that people want fast cash. They also know that people don't manage money well and bite off more than they can chew when it comes to easy credit.  To them, this is their one and only market opportunity.  They hand out easy money and when someone misses a payment or can't pay the balance they swoop in and make their millions (outrageous late fees, service fees, finance charges, etc.)

I'll never say that what they're doing is illegal but I really don't like companies that make their money because people are irresponsible.  Should they be allowed to continue what they're doing?  Absolutely, it's a free country.  But they should also be viewed as just as bad (if not worse) then the cigarette companies in their worst days.

Radio Ads

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I know this has been talked about a lot in marketing circles but I need to say it myself.

Is there anything more annoying on this planet that radio advertisements? Anything?

I was just down the street at the coffee shop and they were tuned into some hip hop station. They went to commercial and, WOW, did they start playing some annoying ads. I almost got up and left. Literally, one ad was nothing more than a man snoring really loud and a woman screaming at him. I don't know what they were selling -- mattresses I think -- but just on principal I would never buy anything from that company. They almost ruined my day.

It's not too hard to understand why they have to be so annoying; radio is an interruption-based marketing channel that, unlike TV and email, doesn't have access to your eyes. To compensate, they use intensity and volume which, when combined, can easily lead to bad things.

Think about your most profitable customers for a moment. Think back to before they knew who you were -- before they became loyal, before you loved and respected them. If you had 30 seconds to talk to them to them back then, what would you say? What would it sound like?

Candidate Marketing

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The other night on 60 Minutes Hilary was asked how she stays healthy.

She said that she washes her hands as much as possible or uses a hand sanitizer like Purell and eats hot peppers. I wonder if Purell will see a spike in sales this week. I'm also curious if candidates deliberately try not to mention brand name products that they use; i.e. she might have lost votes from a lot of employees at Purell's competitors. Sounds silly but I'll bet they think about these things.

Super Bowl Advertisers' Stock Prices

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Here a list of Friday's stock prices for the top Super Bowl advertisers as well as the S&P.  As I've written before, because these companies are still embracing broadcast marketing, I'm convinced that, on average, their prices will fall (though I'm not sure about the timing of this -- Super Bowl ads aren't a bad short term strategy.).  Let's start with one year from the game. Pepsi Co. - $69.81 E-Trade - $5.71 Anheuser Busch - $46.83 Coca Cola - $59.25 Bridgestone - 5108 (TYO) FedEx - $144.70 S&P 500 - 1,331.29

Note that these were the public companies responsible for the top 10 most popular advertisements.  See the list here.