Strategy

Is it time we fired our shareholders?

The Problem:
Peppers & Rogers call it Short-termism. (Rules to Break and Laws to Follow)
A condition so dire they rank it as their #1 rule to break for a company to succeed. It speaks to the pressure the stock market places on meeting short-term profits and expectations - sometimes culminating in truly tragic consequences as evidenced by; Enron and Arthur Anderson, the $300+Billion US sub-prime mortgage crisis and even reaching into allegations of fraud:

"SEC Commission charges that Adelphia, at the direction of the individual defendants: (1) fraudulently excluded billions of dollars in liabilities from its consolidated financial statements by hiding them in off-balance sheet affiliates; (2) falsified operations statistics and inflated Adelphia's earnings to meet Wall Street's expectations"

Ironically, the quest for trying to meet the short-term profit goals of the stock market (perhaps also spurred on by a desire to merit contracted bonus targets) actually wiped out more shareholder ‘value’ than ever would have happened otherwise had but a modicum of fiduciary responsibility prevailed.

“…But along with the goal of accountability, there’s an unintended consequence since it effectively tells CEOs that their continued employment depends on meeting short-term goals. That’s because Sarbanes-Oxley has made boards less hesitant to dismiss CEOs, and the boards themselves serve at the pleasure of shareholders and their institutional fund managers, who are increasingly looking at short-term results.” according to Jagdish Seth, Professor of Marketing at Emory University: Are U.S. Companies Doomed to Keep Planning for the Short Term?

While dramatic and extreme, these aren’t isolated cases. Consider Southwest Airlines, often sited as a leading customer-centric organization (Ranked #2 on Fortune’s 2003 Top 10 Most Admired Companies in America) and their fall from grace in 2007 as reported by CNN:

“Discount air carrier Southwest Airlines flew thousands of passengers on aircraft that federal inspectors said were "unsafe" as recently as last March, according to detailed congressional documents obtained by CNN.”

While the airline claimed flight safety was never an issue that message was not heard judging by responses to the story from readers.

“…..Once trust is broken, it is hard to hand over the lives of my family to a company that does not have our best interest and safety at heart.” Phil - March 10, 2008

“I'm a retired airplane mechanic.…Thank de-regulation for your cheap tickets, but the excessive competition in the industry means cost controls eventually get a stranglehold on every part of an airline, except executive compensation…The next time you buckle in, remember that you are only getting as much airline safety as you were willing to pay for, and have a nice flight.” JC March 7, 2008

There’s a sizable concern that things just aren’t right. When Bain completed their 2007 global survey they found a ratio approaching 2:1 of managers (43 percent agreed while 25 percent disagreed) who felt their companies would have better long-term results if privately owned.

Some companies have intentionally avoided a stock exchange listing for that very reason.

"Certainly one of the advantages is being able to manage for the long term without having to become obsessed with quarterly results. When a company like ours (Bechtel) is taking on major projects with long-term risks, it is certainly advantageous to have that longer-term perspective." Jonathan Marshall - Bechtel Source

Others purposely engineer their ownership structures to protect their ability to thrive in the long term. Google’s IPO submission read in part:

“The standard structure of public ownership may jeopardize the independence and focused objectivity that have been most important in Google's past success and that we consider most fundamental for its future. Therefore, we have designed a corporate structure that will protect Google's ability to innovate and retain its most distinctive characteristics." Source:

Some point out the short-termism problem is "contained" to certain stock markets.

“…Other than London, the European stock exchanges and especially their Asian counterparts tend to have limited liquidity because of family ownership and bank holdings. … So the biggest stock owners don’t see their shares as commodity items. Instead they’re something to be developed and passed on to the next generation.”
Source: Professor J. Seth, Are U.S. Companies Doomed to Keep Planning for the Short Term?

Others still, may feel the current situation simply requires better risk management practices, management oversight and/or a realignment of compensation practices (see Rotman’s “The Risk Issue” Spring 2007 for an excellent overview). Perhaps they're right, but I think we need to consider that these are all symptoms of the same underlying short-termism problem. For those who agree the short-term focus is “wrong” – shouldn’t we do something about it?

An alternate view of the purpose of an enterprise:
The prevailing view (for many) that customers exist to create profit for the enterprise’s shareholders is in contrast to an emerging alternate vision which notes that the purpose, indeed the very existence of the enterprise is to profitably serve its customers. Without them, there is no enterprise….there are no shareholders. In this new paradigm we come to see that the ultimate stakeholders that define the success of the enterprise and to whom the enterprise is ultimately “accountable” to are its customers... not the shareholders.

So if we come to recognize that:

1. having a short-term focus does not have a privileged profit generating status
2. the enterprise’s profits are created by the will of customers, and
3. profit streams typically require some investment to ensure their continuation,

then we need to ask ourselves the final question...

IF we have shareholders demanding short term profits that will come at the expense of the long-term value of its customers, shouldn’t the enterprise seek to “fire” those shareholders?
Just as surely as it would fire an employee or supplier that was working at cross purposes . Just as surely as it ‘fires’ customers that aren’t profitable by minimizing interaction expenses and/or realigning fees.

If the pressure for delivering near-term profits puts the brand on a path that exposes the enterprise to greater risk, then surely the C-suite and the Board of Directors must take a stand and uphold their fiduciary responsibility. As noted earlier Boards may be afraid of being exposed to lawsuits from shareholders for not maximizing profits – but with this emerging viewpoint, they may face a similar legal threat from the other side (although I am not a lawyer). Shareholders after all, are free to select other enterprises or financial instruments benefiting as they do from their capital liquidity if they wish to maximize their short-term profitability objectives. Shareholders with a short-term investment horizon ……are not stakeholders.

This doesn’t mean the enterprise isn’t held accountable for meeting profit and other objectives. Quite the contrary, it places an even greater premium on identifying, developing and implementing sustainable value. Short term profits and time to market pressures don't have to win out over the long term investment decisions since it is not any less profitable if it is done right (if over the slightly longer term).

Collins & Porras (See: Built to Last) spoke of the need to have a BHAG (Big Hairy Audacious Goal), a long-term vision that is supposed to be so daring in scope that is seems almost out of reach. What is needed is a willingness to pursue this path led by the CEO adopting the mantle of responsibility of the Chief Brand Officer. (see Ted Matthews) The resulting realignment of systems, people, skills, program implementations and performance compensation will provide a stronger balance of what is good/better/best for the maximum accumulation and retention of profitable customers and the realization that retention is in fact the new acquisition.

Firing one’s shareholders just might be the most important BHAG the enterprise can embark on.
I look forward to the discussion.

Successful Ageing for Baby Boomers

Successful ageing is not an oxymoron, according to Sherry Cooper, Chief Economist at BMO Capital Markets and author of The New Retirement. Boomers can learn to age well through a growing body of scientific research that now suggests a number of predictive elements and learned behaviours can add healthy productive years to our lives.

Healthy older brains are better at dealing with complex situations that you have dealt with for many years, having the benefit of so much experience. Research also suggests certain predictors of how well an individual in mid-life is likely to age. These include no substance abuse; a good stable marriage; education and ongoing reading; brain work; exercise, normal body weight; and a positive attitude towards life. Mid-lifers who exhibit these characteristics have a greater likelihood of ageing well.

Education trumps money and social prestige as a route to happiness and health. Education is more than one or two university degrees earned ages ago. It is an ongoing interest in the world around you, reading newspapers, books, and other sources of information and awareness.

Continued brain work - be it through reading or writing, attending lectures or taking classes, playing bridge or chess, or doing crossword puzzles - exercises the brain and makes it more resilient. It also strengthens the immune system. Also, mental and physical exercise increases feel-good hormones.

We are never too old to learn, and under normal circumstances, we can continue to learn nearly as long as we live.

The Art of the Elevator Pitch

One of the most important goals marketers have is be able to influence others – to convince peers or senior managers that our approach makes sense in solving the problem of the day. So, the more eloquent and effective we are at communicating our idea, the better the chance it has at being understood and embraced in the workgroup.

Going Up?
Say hello to the elevator speech—once a tool used primarily by sales managers to communicate key facts about their product or service to a half listening audience, the ‘ES’ is aptly named because it lasts no longer than the time it takes to be lifted from lobby to the 5th floor (about 30 seconds). In our fast paced business world where we literally have to book time in our calendars to eat lunch, we don’t have time (or the patience) to listen to a long winded explanation – of anything. Everyone should have ‘an elevator speech’ ready to go describing key projects, competitive activity or sales issues.

Before you start – prepare.
Know what you’re trying to achieve and know your target audience. And like any good message, tailor your information to the audience it’s being delivered to. Understand their key motivators or position and viewpoint of the discussion at hand.

The magic of threes
Like any presentation skills workshop will teach you, if you communicate ideas in three parts, we’re programmed to recall the content more easily. It’s also easier to remember and repeat to others and maintain the idea’s original components.

1. Describe the fundamental marketing issue in one sentence: bring up the top problem, not a lot of small or insignificant challenges. Remember that you only have 30 seconds to get and maintain your boss’s attention, so start with what’s most important.

2. Articulate a specific solution in the context of its desired result: Communicate how you expect the approach to solve the issue, reach your customer, or blunt competitive activity.

3. Communicate how you are going to achieve the goal: Detail the top three tactics you need to put the plan into action.

Preparation is the key to confidence, so don't ever wing it. A first impression only happens once. Respect your audience enough to prepare well; that includes arming yourself with succinct answers to the toughest questions that might follow your pitch. Be flexible enough to be guided by your listener and their reaction to what you're saying. If he or she interrupts with questions, make sure you answer them.

Taking an 'elevator pitch' approach to communicating your best ideas will ensure your perspectives are not only heard but shared on every floor of the organization.

The underdog makes a move

It's not often we hear about Microsoft being the underdog. Microsoft dominates with a 95% share of the operating system market, a 75% share of internet browser use and somewhere around a 95% share of the "Office Suite" market.

Of course, the big area that Microsoft does not dominate is in the paid search business. Google has a 69% share, Yahoo is at 15% and Microsoft is at 10%. We all know about Microsoft trying to buy Yahoo over the past 2 months. Microsoft saw an opportunity to increase their market share of this very profitable business to more than 25%. Still a far cry from Google's 69% share.

One of the biggest criticisms of Google's paid search is that you pay Google for every "click" regardless of whether the consumer buys or not. Ultimately it doesn't matter since Google is so dominant. You have to work with them whether you like it or not.

Microsoft recently announced a new paid search opportunity for consumers. Currently only available in the US, Microsoft will now be paying consumers to use their Live Search engine to buy products. When you search a product, you will have the choice of seeing online stores that have partnered with Microsoft. When you click on the link, you will see price comparisons as well as a percentage off of the price by purchasing through Live Search. In my test, discounts ranged from 3% to 9% for a Canon Digital Camera.

Will it work? Some think Microsoft's Live Search is far superior to Google's when it comes to products. Online retailers will like the idea of paying for purchases, not just for clicks.

Perhaps this will give a boost to the underdog in the online paid search war...

What relationship do your customers want with your brand?

For quite some time now, marketers the world over have been fighting increasingly tougher battles to win over and keep their customers. Most observers seem to lay blame on:
a) the rising standard of products
b) the growing cadre of ‘good enough’ competitors and
c) the negligible risk of technical product failure
rendering sustainable product/performance based differentiation moot for all but the most focused world class product innovators and market disruptors who are able to redefine and establish advantageous segment barriers.

What about the rest? Many are coming to the viewpoint that their ability to compete and differentiate will lie in two arenas. The first being situational ‘relevancy’, the second -branded experiences.

While the branded experience arena leads to emotion based strategies, that approach will only be successful against those customers who are open to having an emotional relationship with the brand. Furthermore marketers must remember that emotion is but ONE brand relationship dimension - that others may have a transactional, logical or mature/external/we-centric brand relationship instead. This simply acknowledges that not all brands have legions of emotionally charged customers so why try to push strings? Instead by knowing the type of relationship customers want to have with the brand, marketers take an important first step in being able to communicate effectively with their customer in the ‘language’ they will be more receptive to.

Let’s take shoes laces as an extreme example. Most will have little affinity for brands in the category and gravitate toward expediency or value at the Moment of Truth. However consider a mountain climber who is likely more interested in product performance or perhaps even swayed by a testimonial from Sir Edmund Hillary. How about a teenager - probably ambivalent – unless the brand manager develops some ‘hip shoelaces’ for that group. Or perhaps another constituency that will look favorably upon the shoelace company for its good works, greenness etc…

So smarter marketers will not expend resources trying to accomplish the less effective/expensive/impossible and play the cards they are dealt – at least in the near term while giving their relationship-migration programs a chance to take root.

The next part of this puzzle is to track the mix of Communication, Experience and Overture (CEO) events being directed to the different customer segments that result in a purchase. The intent being to document the sequence of (campaign) elements associated with a purchase. And by identifying balanced programs, the manager minimizes the risk of becoming unduly price focused, commoditizing the brand in pursuit of short-term results.

Anyone interested in a greater elaboration of this view point and model are kindly directed to this link (Anatomy of a Brand Purchase).

P&G Increases its Internet Ante

At the CMA's 2nd Annual Business of Ideas Forum, Tim Penner (President of Procter & Gamble Canada) reportedly announced that his company was increasing it's online marketing spending from about 3% to 20% in the next year.

You may ask what could have triggered such a large shift? Below are some observations that I gathered through articles, conferences and monitoring P&G's marketing over the last 4 years.

Step 1: Global CMO Criticises Media Stakeholders

P&G's transformation started in 2004 when Jim Stengel (Global Marketing Officer) challenged US advertising executives at a conference and told them that core problems of media cost inflation and declining efficiencies was hurting marketing clients. Stengel assessed the Media industry was providing "C-" services. His message was...find another model and prove it's effectiveness through better measurement (better industry standards and more robust testing methods). According to the Wall Street Journal, P&G subsequently shifted 8% out of television and into alternative media.

Step 2: Testing DM & Emerging Media

So P&G started to test different forms of direct marketing and it dipped it's toe into mail, banner advertising, online contests and other interactive web elements. Direct Marketing was easier to measure and was seen as a natural "consumer involvement" lever.

P&G's mailing activity increased and there were a number of mail tests with brands. In Canada, some of these tests were with retailers (Shopper Drug Mart) and other mailers directly with brands.

In the US, P&G began experimenting with two separate viral groups of influential consumers: teens and mothers. Starting in 1999, P&G created a group of teenagers called "Tremor" (it took over 2 years to build a critical mass of 280k). Similarly, "Vocal Points" is panel of 650k engaged mothers who provide their feedback on products and who also help spread the "word of mouse" for new product launches. P&G finds that the one-to-one approach is especially effective when marketing sensitive products such as dandruff or tampons.

In 2006 at various trade shows I attended in the US and Canada, I noticed that a number of contacts mentioned that they were called by P&G for roundtable table discussions on internet marketing. The discussions were open ended listening sessions where the brand marketers tried to understand each online medium and key success factors.

P&G has significant experience with banners but is also using paid search.

Step 3: Aggressively Growing their Email Permission Base

With a critical mass of consumer opt-ins gathered through contests, P&G underwent a major email acquisition strategy to grow their Canadian permission lists to 1 million consumers. (Cdn DM News 02/01/06).

P&G's core email property is a newsletter called "Everyday Solutions". P&G have been an Epsilon/Doubleclick email customer since 2004 and has been consistently testing the email medium. P&G has one of the better approaches of relational newsletters and transactional alerts in their CPG sector.

Step 4: Focusing on Measurement

P&G used measurement through each of the previous steps and online measurement is becoming one of it's core competencies. At the end of the day, the new marketing is about measurement. Online marketing is perfect for sequential A/B tests, multivariate tests and a scalable/fast rollout.

Given their marketing discipline, I suspect that P&G examines both "above the line" and "below the line" impact. A quote from a senior US P&G exec confirms this…" Procter measures everything. We are a very data driven company, and every time we ran a program, we did a control group...and the results were significant". Leaders in online marketing have the formula and are quietly widening the gap.

Conclusion

So why is P&G upping the ante in online marketing?

This was all part of a multi-year strategy and shift to find a new optimal mix of mass media and targeted media that will drive profitability. While other CPG marketers hesitate about online, P&G is upping the ante. Now is the time for all eleaders to find their formula and stake their cyberturf.

Online marketing is effective for many marketing scenarios; it is measurable, has a high ROI and creates a Sustainable Competitive Advantage (SCA).

Geoff Linton is VP at Inbox Marketer and a Professor at Conestoga College in Kitchener-Waterloo.

To AJAX or not to AJAX: A Cambodian’s Perspective

Did you know that Canada is a Top 10 leader in global usage of broadband internet access? We are.

Did you know that Canada is in the Top 25 in terms of global internet penetration? We are.

Did you know that Cambodia has approximately 44,000 internet users (in total) translating to less than 1% of their population?
They do.

For a country with almost 14 million people (Cambodia), internet adoption, historically, has not been high.

For a country with over 33 million people (Canada), internet adoption, historically, has been very high.

According to Wikipedia and the CIA World Facts Book, in 2005, oil and natural gas deposits were found beneath Cambodia's territorial water, and once commercial extraction begins in 2011, the oil revenues could profoundly affect Cambodia's economy.

For now, they are still a developing nation.

Yet more often that not, when I am completing an online form with my mailing or contact information, the “Country” dropdown menu seems to think I live in Cambodia. It’s the first country that pre-populates the field when I type in “C” and the next country on the list after Burundi.

In this case, alphabetical listings decrease usability.

There are several solutions to this:

1. Sophisticated eCommerce sites know their customer base and they will pre-sort their dropdown menus to include, for example, the USA and Canada, at the top of the list.

2. IP Location software can pre-populate forms for users who have basic, visible data points. Take the simple example of a user login from Canada. The purchase form may be quite complex as some businesses need more information to prevent fraud and to ship and bill accurately. Certain dropdown information such as country of origin, postal code, IP and domain name can be identified and pre-loaded in to the fields using tools such as: http://www.ip2location.com/

3. Ajax (Asynchronous JavaScript and XML), is a group of inter-related web development techniques used for creating interactive web applications. A primary characteristic is the increased responsiveness and interactivity of web pages achieved by exchanging small amounts of data with the server "behind the scenes" so that entire web pages do not have to be reloaded each time there is a need to fetch data from the server. This is intended to increase the web page's interactivity, speed, functionality and usability. Type recognition also allows real-time intelligence with the database / lookup tables which can significantly increase speed and ease of use, such that a user would be able to type “CAN…” to get “Canada” rather than Cambodia, Cameroon or Cape Verde.

Milliseconds of time are saved for the user. And I need my milliseconds.

Joy Boyson is Director, Business Development, Technical Marketing at The Marketing Store in Toronto, ON Canada and a member of the CMA Digital Marketing Council. She can be reached at joy.boyson@tmsw.com

How to Create a "Seeing Culture".

The mission of innovative marketers today is to open up a continuous dialogue with customers. For them, focus groups and quantitative research are outdated methodologies. They have begun to add "idea partners” who act as catalysts for discussions about new ideas. These are the people at a dinner party who make sure everyone is having a good time.

Is the time ripe to create your panel of experts and idea partners? I look forward to your feedback on the value of deeper customer engagement.

Research by Arcus shows that on average, only 27% of customers are advocates for a company's products and services. The link between higher customer satisfaction and higher revenue growth is clear. To that end, companies need to develop customer engagement processes to measure the revenue at risk for a company based on the levels of satisfaction across customer clusters and whether its products and services excite customers.

Engaging customers to share ideas on how to improve the business is critical to today’s leaders in innovation. An example is Starbucks. According to Starbucks chief Howard Schultz, the company’s customer engagement processes have resulted in surprising ideas. One customer wants Starbucks to make ice cubes out of coffee so when they melt they won't dilute cold drinks; 7,660 fellow customers agree. Another wants the chain to install shelves in restrooms—where else can you put your drink when you've drunk too much? Although some customers are repelled by that suggestion, Starbucks thinks it's a "sleeper idea" worth considering. More than 10,000 Starbucks fans wish for something to plug the hole in lids to prevent sloshing. Starbucks listened and just introduced reusable "splash sticks" to do that.

Why a Customer Advisory Board makes sense

A customer advisory board is like a think tank and sounding board for initiatives that could impact your customer base. Marketers need to pioneer the concept of a customer advisory board to senior management at their companies. Increasingly, it has become important for managers to have an in-depth understanding of issues related to products, services, sustainability practices and customer support. A customer advisory board acts like a board of directors. In this case they provide feedback on broader issues at a high level. This is corporate democracy in action. At the month-old MyStarbucksIdea.com, customers can make suggestions, other customers can vote on and discuss them, and Starbucks can see which ideas gain popular support.

The process has been implemented by several Fortune 500 companies. Several others have set up "panels of experts" or "Think Tanks" for specific initiatives such as sustainability practices, engaging boomers, and retirement plans etc. For example, Bank of Montreal has set up an advisory board to advice managers on retirement related business initiatives.

The idea partners also act as advocates for customers' suggestions back at their departments, so that customers would have a seat at the table when product and brand strategy decisions are being made. To close that loop in an authentic way, a company must make a commitment to building those ideas together with customers. They need to adopt the ideas into their business process, into product development, experience development, and store design.

It's key to plans of innovative companies to invigorate their marketing. Another example is an initiative pioneered by Michael Dell, who returned to Dell Inc., a year earlier and launched IdeaStorm.com to gather and act on customers' ideas. Dell has implemented a score of suggestions, including the introduction of computers running Linux instead of Windows.

How would you achieve deeper customer engagement? Let me know.

The Age of Entitlement

According to a recent issue of The Financial Times, it was Yankelovich - the market research company - that claimed to have invented the term 'baby boomer". Generation Ageless, a book written by the research company's senior partners, explored the way today's grown-up baby boomers differ from previous generations: their refusal to grow old gracefully and, indeed, their conviction that they are not growing old at all.

They certainly have no plans to make way for anyone else. As the book says, these are people who, their entire lives, have "revelled in the attention like babies at bath-time". Generation X, those born between 1965 and 1978, can wait.

In the heat of the U.S. Presidential elections, we need to remember that the two Democratic Party Candidates vying for the Democratic ticket are both baby boomers. Barack Obama is a trailing-edge boomer while Hillary Clinton is a leading-edge one. Bill and Hillary Clinton were, in fact, the White House's first baby-boomer couple. As the oldest of the baby boomers enter their sixties, their values, disputes and, above all, sheer numbers are still with us. The Clintons represent much of what the baby boomers stood for, and still stand for.

Former broadcaster Tom Brokaw's book - Boom! Voices of the Sixties - Personal Reflections on the 60s and Today - looks at baby boomers then and now reminds us what a time it was. The 1960s have led to today's advances for black Americans and for women. The current showdown between Hillary Clinton and Barack Obama would have been unthinkable without the 1960s. Women now account for half or more of the students in American medical and law schools.

Although we're not Americans, the 1960's touched us all. Companies everywhere in the world now need to know what and how to sell to baby boomers. The Financial Times suggested that the answer to this is:
home offices and multi-generational cruises (for the ‘sandwiched’ boomers); easy-grip cooking utensils, higher chairs in shoe shops and cars with bigger dashboard displays. I've also blogged about fashionable hearing aids and 'tall' books. Baby boomers are getting older, whatever we think - just don't remind us!

Online video isn't the future, it's the present

Google Canada hosted a showcase last week in Toronto, complete with recent case studies and numbers from YouTube.

The following stats had several jaws hitting the floor:

• 10 hours of content is uploaded to YouTube every 60 seconds
• YouTube contributors produce 3000x more output than Hollywood
• Hollywood would need to premier 57,230 feature films a week just to keep up
• YouTube currently boasts 200M+ worldwide unique visits a month
• 25% of surveyed registered YouTube viewers watch more video content online than they do on TV

YouTube Demographics


• 55% suburban, 26% urban, 19% rural
• 71% employed, 15% students
• 47% married
• 69% college educated
(source)

Several case studies were featured, including a YouTube, HP and Fox Searchlight program called “Project Direct”.

Other highlights;
Mark Nicholson from ING Direct presented the Canadian Superstar Saver Search,
Paul McGrath from CBC presented some digital strategy including “The Hour” channel on YouTube

Here’s a little Advertising on YouTube primer to get you started:

The House that Toronto FC Fans Built

If you live in the Toronto area you may have heard the roar coming from BMO field. That would be the roar from 15,000+ brand advocates and influencers. Recently I attended the ‘Live Case Study: How Marketing Made the Toronto Football Club the Talk of the Town’ hosted by the CMA’s Integrated Marketing & Customer Experience Council. Full disclosure-- I am the vice-chair of the council and I was NOT a big soccer fan, sorry I mean football… until now!! The event was held at BMO field (hence the concept of a ‘Live Case Study’) and the presenter was Paul Beirne, Director of Business Operations for the Toronto FC. His presentation focused on how the club engages their fans to sell out season tickets. After this event, I am looking for seasons tickets … anyone have a pair?

Paul, in his relaxed ‘story telling’ approach, outlined their brand attributes, positioning, strategy, objectives, communication planning and yes … their marketing tactics. This was very informative. However, one of the most interesting points Paul made during his presentation was around the importance of timing and the role it played in their success so far. Paul even stated that he does not think they would have had the same level of success 10 or 15 years ago. Why? Paul touched briefly on the research they conducted before the launch and pointed out that market demand was high. People yearned for a professional soccer team in Toronto and Canada. Toss in Toronto’s cultural diversity, an increase in youth participating in local soccer programs and finally my personal favourite, online and digital communications coming of age. From my perspective it was like the perfect storm for any marketer.

Paul pointed out in his presentation that aside from timing, there were a number of other ‘keys to successes’ at work here:
- Transparency (our club and our fans are one and the same)
- Happy mistakes (things you could not plan for)
- Connect with die-hard fans (grassroots tactics like pub crawls)
- Listen (engage the fans in the process)

Mixed into these ‘keys to successes’ was a growing movement of fans online. Even before BMO field was finished construction fans were becoming self organized via online communities like Flickr, Facebook and personal blogs. Meeting with each other online and spreading the brand long before the team ever hit the field. The club embraced and supported these brand advocates by making them part of the process and by linking to their community sites. Which by doing this, connected these communities together. Paul said the club also made a strategic decision early on to only communicate to ticket holders via electronic communications (e.g.: email, website, etc…). Not just for the cost savings … but, for the speed in which the club could ask for feedback and quickly adapt or turn around changes to their program.

And the results from the 2007 season? 15 sold out games, 95% season seat renewal, 16,000 season seat holders, and a waiting list of 7,000+. Not to mention other Major League Soccer clubs are meeting with the Toronto FC to possibly adapt some of their strategies. Also, 2008 appears to be off to a great start. Their season opening game in Columbus saw 2,400+ Toronto FC fans make their way to Columbus via bus. And most recently they defeated the Los Angeles Galaxy 3-2 and Real Salt Lake 1-0.

Although Toronto FC had timing and market demand on their side, the club is a shining example of embracing their customers (fans) from day one in a dialogue. They followed up by building brand loyalty through listening, quickly reacting and supporting them. Yankee stadium’s nick name is ‘The House that Ruth Built’ … would argue that BMO field is ‘The House that FC Fans Built’.

Recession-Proof Your Business: Focus on Current Customers

Every CEO, President and Senior VP that I speak to emphasizes building processes, technologies and expertise for acquiring new customers. And yet, common marketing wisdom tells us that customer retention is where longevity and profitability truly lies. Because of the emphasis on customer acquisition, it makes sense that many companies spend less time and effort on truly maintaining their customer relationships. That could be a serious challenge in the months ahead.

Whether or not we accept the doom and gloom predictions of the severity of the impending recession, one thing is certain: for most businesses, things are going to get a lot tougher. Customers – across industries and across segments – are going to have fewer discretionary funds and that means the competition for every dollar is going to heat up. As a result, now is the time to focus on building retention infrastructure. But, to do this effectively requires elevating the value of retention in each company’s day-to-day practices. Senior VPs of Marketing & Sales can accomplish that by taking the following four steps:

1) Recognize publicly the important contributions that retention makes. For instance, retaining customers demonstrates:

• The ability to overcome the day-to-day challenges – project and interpersonal – associated with working with existing clients;

• The ability to adapt to clients’ unique corporate cultures, evolving demands and changes in personnel;

• The ability to build trusted and valued relationships.

2) Attribute the same high status to client retention usually accorded to securing new customers. For example, customer acquisition typically:

• Is held out as a significant accomplishment – and rewarded at bonus time; and
• Serves as an exciting or unifying rallying point for a team.

3) Establish and track specific retention targets. Just as with customer acquisition, build customer retention into all sales forecasts. Regularly monitor retention targets and provide appropriate skills training.

4) Identify valued customers who are consistently demonstrating signs of disengagement. For example, customers who:

• Are spending less on your product/service than they have in the past
• Have stopped referring business to you
• Don’t pay their bills
• Have gone to tender for business that they would normally bring to you

Reach out to these important customers to determine why they have attributed less value to your product or service.

While few companies will escape the impact of a deep recession, taking these steps now can help any senior marketer and sales professional better weather the impending economic downturn.

I welcome hearing any suggestions that you have for ways to help companies recession-proof themselves. Send your insights to president@thindata.com or share with us here on the CMA Blog.

The Lump Left Over

A little while back Paul Tyndall (See: Why don't the same rules apply) asked the question about ROI calculations/justifications for new media, and by extension, marketing investments in general.

I think another question needing to be asked is how do we go about measuring the ROI of goodwill. Accounts don't do a good job of measuring goodwill . Its usually the balancing figure reflecting the difference between assets and liabilities on a balance sheet - not something with actual metrics behind it.

Walter Schuetze (former SEC Chief Accountant and FASB member) derisively characterizes reported goodwill as "the lump left over", at least according to this accounting blogger.

FASB:Summary of Statement No. 142
Goodwill and Other Intangible Assets (Issued 6/01)
"Analysts and other users of financial statements, as well as company managements, noted that intangible assets are an increasingly important economic resource for many entities and are an increasing proportion of the assets acquired in many transactions. As a result, better information about intangible assets was needed. Financial statement users also indicated that they did not regard goodwill amortization expense as being useful information in analyzing investments."

Leaving the accountants alone for a minute, it seems to me that whenever there is a customer acquisition program - the enterprise is more willing/prepared to invest in what it hopes will be the start of a long-ish profit stream than it is in re-investing in its brand. I say hopes - because there are no guarantees the brand overtures will yield any results and I also exclude the activities the brand engages in to solicit a sale..

Most brands face their problems later in life - when retention efforts require investment to bolster the brand for self supportive brand evolution reasons, for customer win-backs, to offset the competition's acquisition drives etc...

There are many different ways to come to terms with this issue - as it mostly resides in the realm of executive definition making. Having a precise enterprise-wide definition of what constitutes a goodwill investment is not in the final analysis important. What is important is taking the time to understand the desired impact the goodwill will have on your brand - but measuring the status quo is like counting angels on the head of a pin..

To determine the value of your goodwill investment - look to the forgone profit stream, and any traditional win-back costs as an upper end of the investment it is willing to make, or look at your average customer tenure and then value those who exceed that threshold. The point is you need to make the effort - if you believe there is value in retaining "that lump left over".

The real challenge comes with acting on those convictions - of using that investment as part of your brand retention program. I'm not talking about upsell/cross sell - but rather at those programs that help your customers FEEL your thanks for their patronage.See Rule # 13

By way of example I point out how one of the Telco's launched a holiday season email program inviting customers to play a game - where everyone had a chance to win some sort of prize.
(I ran a similar type of program back in my Lysol days - as part of a clean and win sweepstakes
Customers had to clean a dirt spot on the instore ad pad - which in most cases revealed a coupon value (remember everyone likes to win)

While I naturally don't have the Telco's results - I know from my experience - these types of thank you events are exceptionally powerful business and goodwill generators.

But they went a step further and sought to measure their impact - as I was recently asked to participate in an online survey - probing me with all sorts of questions regarding my brand affinities, likes/dislikes etc... .

Seems to me that goodwill is much more than just "the lump left over". Come to think of it - doesn't that description also apply to profit?

"Profit is the applause of your customers." Ken Blanchard

5 Ideas that Pack a Punch

I attended the 2nd Annual Business of Ideas Forum on Tuesday, February 12th. I may be biased, but I felt the day was packed with inspiration and incredible examples of successful innovation at work. Just goes to prove that you are never through with learning and accepting the status quo just isn’t acceptable.

Here are the 5 morsels of wisdom that I’ve etched in my psyche courtesy of great Canadian leaders and the brands they manage:

1) Giving back to your community not only helps others thrive and feeds your soul but can also contribute to the economic prosperity of a city. Tony Gagliano (Executive Chairman and CEO, St. Joseph Communications), shared his vision of a world-class Toronto and in the process put this great city on the global map as a leader in arts and creativity.

2) Maybe strategy isn’t king. Jim Little of RBC encouraged us to think less, do more, be brave, challenge convention and sometimes, listen to the those crazy voices that tell you something is ‘right’. His own testament to this belief is Frank and Gordon – Canada’s favourite beavers. Love ‘em or hate ‘em….they are proof that Jim is a man following his own vision.

3) Leaders create the smell of the place. Brilliant. Nothing else needs to be said. I personally thank Tim Penner, president of Procter & Gamble Inc, for encouraging a room full of senior executives to act upon what they expect of their own staff.

4) Listen to your consumers. Nothing new here except a channel that makes this an immediate reality and the technology to bring it forward. Kudos to power brands such as Home Depot and Walmart for being brave enough to do what not enough of their peers are doing. They are the evangelists for consumer generated content.

5) The time is always right for great storytelling. Proof positive: Galen G. Weston In his charming, articulate and motivating way, he shared how getting back to the roots of Loblaws by telling the stories behind the products they sell – is what will position this chain as a future leader. And I’d bet that there isn’t a Canadian among us who couldn’t recite a personal memory about the Dave Nichol’s days, introduction of Green Environmental Bags or even the Decadent Chocolate Chip Cookie.

Great day - thoughtful conversation, an opportunity to network and even some amusing banter about brands we thought we knew. I, for one, will be taking advantage of the early bird offer for the 3rd Annual Business of Ideas Forum. Where do I sign up?

Social Media Fatigue, Open Social/Data Portability, Facebook, Clan marketing

The question on many people’s minds is whether the users are getting tired – supporting their activity on multiple social web portals. And worse still – if they tire – will they turn away?

This chart from Compete , a web analytics/measurement company with a panel of 2Million US web users, highlights member overlap within 11 social networks. For example, looking down the MySpace user column we see that 64% of them also have a profile on Facebook, 32% on Linked In, etc. By adding the column percentages (and remembering to add 1 for the home site) we see that within this study the average My Space user avails themselves of 5.1* different social media, Facebook users are less proliferate – availing themselves of only 4 of the social media.
*(1.0+.64+.65+.49+..+.34+.27)

That’s still 4-5 sites that the average user will spend time creating, commenting or just reading. And if we go by the Forrester data (see link) that represents anywhere from 5-37% of users creating some level of input and 19-59% who are reading/watching social content. So it is not a big surprise that sooner or later we would see user fatigue – perhaps even now as these unofficial US market comScore numbers for Oct-Dec'07 would suggest.
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The industry has been mindful of the possibility of this development and have begun working out new shared open source standards that will make it easier for users and developers to continue to evolve and monetize the social web.

It all came to a higher profile boil when Google introduced Open Social (November’07). Throughout the year, Google watched Facebook go from 19 Million unique visitors per month to 33 Million – when Facebook opened its network to non-students, professionals and third party developers. These developers created new apps ‘enriching’ the experience for Facebook users and with it sought to generate some revenue for themselves. And the strategy worked - focusing the attention of the marketing/advertising world onto the Facebook platform which sought to lay the groundwork for an eventual/hopeful $15 Billion IPO perhaps as early as 2008.

Google strove to take the wind out of Facebook’s sails by becoming even more open. They wanted to outflank Facebook by making it even easier, quicker and less costly for developers to create open source app’s - which could be readily adopted across multiple participating social web sites. Their gambit paid off as one site after another came onto the chessboard – with the new growing collective now significantly outnumbering Facebook’s user base.

And so going forward application developers will ask themselves a simple question: where do I put my effort? Do I build something that has potential monetary value in a big multi-site pool and then rollout to Facebook if it’s a success? Or do I expend my resources initially on a smaller single pool?

Users/advertisers will ask themselves: if Facebook tends to get the second crack at new applications – what does that do to the innovation experience at Facebook? Will that erode the fickle youth that is the foundation of the site?
In one masterful move, Facebook saw its sails begin to luff.

An umbrella group was formed (DataPortability.org) to help seize on the Google and other open source initiatives already in motion (Open Id, Higgins Project, OSIS etc…) One of its more vocal evangelists:

“At Plaxo, we believe strongly that users should have ownership, control, and portability of their profiles and friends list. No service you use should claim your data as their own and keep it trapped in their "walled garden"… ....An important aspect of the open social graph is being able to declare the different sites you use and tie them together. That way, your friends can keep in touch with you across multiple services, and you won't have to tell each new site what other tools you're already using.”

Leaving the intrigue aside, lets get back to the poor tired user. A number of important developments are underway and some already implemented:

Going forward sites will begin to enable users to better define their “friends” list (Social Graph) into at least 3 categories: Family vs Friends Vs Business associates. Increasingly sites will also allow users to stitch together feeds from several sources and control how much of that information is pushed and pulled. For example – I will be able to turn off one friend’s Twitter feed while allowing another’s to continue – or turn on (off) selective or even all feeds at any time. I am in control of what comes through my filters - and my ‘friends’ can do the same to the feeds I choose to push out to them.

Plaxo Pulse is perhaps the most advanced enabler at this moment but others will be catching up soon.
What does any of this mean for marketers?

Part of the data portability initiative is giving users the ability to better manage their online identities. The enhanced “circle of friends” segmentation will likely lead to more widespread use of Word of Mouth as it becomes easier to send one’s inner circle ‘heads up’ notices on key brand experience events. And while this was happening before via email, phone conversations or over a few beers – the difference now is that everyone in the inner circle will be able to receive messages. (I am not including the outer circles in this because these notices will carry less weight without the deeper shared history between sender and receiver. Chances are user filter feeds will likely choke off these kinds of blasts.)

So welcome to the social media world - your brand experience has just been leveraged (again)– the good and the bad. As marketers – it places a greater premium on brand consistency but it also opens the door to clan marketing. I’m not talking about Beacon type programs – where the consumer’s selected brand activity is ‘shared with friends’- “Hey I just bought a Brand “X”, thought you would be interested” – but something more open and organic. This is about brand reinforcing programs designed from a clan-centric perspective such that if a traceable brand purchase is transacted – the clan gains access to additional benefits.

FI’s for example could increase stickiness with family/clan benefits not unlike the family 'points' pooling capability from the old GM Visa program. MMOG is a natural clan environment – Pepsi, Coke and other leading beverage brands can readily fold in their point schemes to create cumulative clan benefits in the game space. Retailers can benefit as well. Ditto for travel, entertainment, life insurance...

Once the clan has self identified itself via registration – you have the beginnings of your own ROI based group marketing platform that builds on the important inner circle of relationships to help the brand develop deeper shared roots.