Tuesday, June 20, 2017

Hierarchy of Influence: Need, Action, Product, Brand

When approaching the task of influencing a prospect, a fundamental task that is often ignored is to assess the prospect’s status quo in terms of the level of persuasion that will be needed to convince them to purchase a specific brand.  To begin at the wrong level undermines the efficiency and effectiveness of the campaign, leading to various degrees of waste and failure.

This level of persuasion can be schematized as a hierarchy, in which the requirements of each level
must be met before the next level can be addressed:
  1. Need – The foundation of all other levels, the prospect must recognize that he has a need, and be motivated to address it
  2. Action – A prospect who wishes to satisfy a need must consider that a given course of action is necessary to do so.
  3. Product – A prospect who is committed to an action must identify a product requisite to the successful completion of the action.
  4. Brand – A prospect who recognizes his need for a product must select a brand of product to purchase

The task of influencing the prospect must be performed from the bottom (or the level at which he already exists) upward to the top: to attempt to convince a prospect of the value of a brand when he does not perceive the need to own the product is fruitless – no matter how good the brand, he does not desire the product.

The lower on the hierarchy, the more prospects exist. The many people who feel the same need may identify several different actions that they believe would be effective in serving that need – so there are fewer prospects with whom you can begin at the “action” level than the “need” level.  Those who feel that actions that do not require your brand are the best method of serving their need must not only be shown that your brand is effective, but that it is better than something that they are already convinced will serve the need.

The lower on the hierarchy, the more difficult the task of persuasion.  It is fairly simple to convince a prospect to try your brand if he already desires the very product you are trying to sell him – or said another way, he is already sold on the product (as well as the action and need) and just has to be convinced of the brand.    But to attempt to convince the same prospect that he needs to reconsider his plans and take an entirely different action is more difficult (as you must overcome his commitment) – and even if you can do that, you must then convince him of the need for the product and the need for the brand.

Tuesday, June 13, 2017

How Temporary Customers Kill Brands

A conversation about cuisine has got me thinking about brands that experience a brief surge in popularity that drives short-term revenue but do damage to the core customers and ultimately to the sustainability of the brand.  

The conversation was at a local culinary institute among a group of gourmands, who have a genuine interest in cuisine, as opposed to the “foodie” crowd who are disdained for having no palate and mindlessly following culinary fashion.   It’s the foodies who have made sriracha sauce so commonplace these days – it’s being slathered on hot dogs and cheesecake and many other things on which it does not belong, simply because it’s being mentioned in various media by celebrity “chefs” who have no real culinary credentials.

The most popular brand of sriracha is produced by Huy Fong Foods in California, which has been around for about forty years, and which originally produced small quantities of high-quality product for ethnic groceries and restaurants.   Because the foodies have taken to it, their product is in mass-market groceries, and the gourmands generally agreed that it has suffered significant loss of quality, and they are seeking other brands – small shops that produce the original high-quality product similar to what they used to get from Huy Fong.

From there, the conversation turned to sourcing of ingredients, but the question stuck in my mind: what are the long-term prospects for Huy Fong?   The present popularity of their product will not last, as the foodies will eventually turn their interest to some other ingredient, leaving the brand high and dry.   And because it diluted its quality to produce in such high quantities, its original customers will have left it for other suppliers.  In plainer terms, the brand has a sacrificed its long-term sustainability by abandoning its core market to pursue short-term profitability in the mass market.

There are tactics such a firm can use for recovery: to pursue other product lines that are more sustainable, to be prepared to scale back operations as demand wanes, and to attempt to predict the next foodie fad.   None of these seem promising or sustainable – it is merely prolonging the decline of the firm as it spends out its present surplus attempting to remain solvent once the mania has passed.

More troubling is the question of how a brand can sustain its core customers, those who have been loyal from the start and would remain loyal after the fashionistas have lost interest.  Fashion is, after all, an environmental factor over which a firm has no control and can only react: but can it react in the right way to sustain itself?

I suppose that time will tell, though my expectation is that within ten years, the Huy Fong company will collapse from having ramped up its operations to serve a temporary surge in popularity.   Even if it is able to scale back production facilities in a timely manner once the fad passes, it has already lost its core customers and will need to explore a different market – perhaps those who cling to a fashion once its heyday has passed, but even they have a limited lifespan.

And perhaps it is just the nature of things: there are very few quality brands that have sustained themselves for a century or longer.  It can be argued that the true luxury brands have shunned the mass market and abstained from the temptation to vulgarize themselves for easy money when threatened with popularity from the wrong kind of customer, but these tend to be very few.

Tuesday, June 6, 2017

Sowing Discontent

Marketers largely depend on the discontent of the public: it is only because a person is unhappy that the marketer finds an opportunity to offer him something that will make him happy, or at least dispel that particular cause of unhappiness – whether it is a problem that disrupts and otherwise happy status quo or an opportunity to elevate the status quo to a happier state.

It is in this respect that marketers are accused of creating “false needs,” though that is a general aspersion that assumes that all products serve no purpose.  This is not necessarily the case, and it is not usually the case: most products that have any sort of longevity provide a valid solution to a valid need, and those who make such accusations generally presume themselves to be qualified to asses what other people ought to have.

But in some instances, the accusation does seem to hold merit: the vast majority of goods sold in developed markets are not necessities that serve basic survival needs, but conveniences and luxuries that serve more abstract and psychological needs.   To say that a need is psychological rather than physical does not invalidate it, but merely relegates it to a class of need that most would agree is of less importance than physical survival needs.

A person who is completely content with their status quo is not a prospect with a great deal of potential.   They are not in a buying mood right now, and are not likely to be in a buying mood until they deplete their stock of some product that contributes to their contentment.   Their purchasing behavior is limited to restocking existing products, generally with existing brands, so long as they continue to be contented with the results.

So contentment is the state of being in which a man is free of all cares and does not feel compelled to do anything.  Unless something external causes conditions to change in an unsatisfactory manner, or unless he imagines conditions that would suit him better, he remains entirely inert.

And so it follows that only a discontented person is susceptible to marketing: his discontent is the motivational factor that generates with him an interest in taking some action to restore or achieve contentment – and where the action requires the consumption of a good or service, he is a prospective buyer of that good or service.

The discontented are easy targets for marketing – but discontentment is available in limited supply.   It is for that reason that marketers seek to sow discontentment – to present to otherwise contented individuals the prospect that they should not be so complacent about their current situation – or at the very least should feel discontent because there exists an opportunity to achieve greater contentment.   Whether this is ethical depends on the validity if the argument.

In the end, any commercial enterprise (or for that matter, nonprofits and governmental organizations) succeeds by providing a product that alleviates discontent – and where discontent does not exist, it must be created in order to the organization to have a purpose.

Wednesday, May 31, 2017

Brand Maintenance

The following are notes from a presentation about the decline of quality in the brick-and-mortar service industry – while the speech was about restaurant management, the content seems to have direct application to customer experience in any channel or industry.

The speaker cautioned about four warning signs of a company in decline:

  1. Employees no longer care about the customers.  When a customer identifies a problem, the employee refuses to acknowledge it or take any action outside of their routine duties to solve it.
  2. Maintenance is poor.   There is basic and obvious neglect in the physical environment: peeling wallpaper, a thick coat of dust, dirty or broken furniture, worn-out tableware.  All of this seems superficial, but is significant as a symptom.
  3. Commitments are not made or honored.  The company’s basic promises to customers are not being kept.  Customers are stalled or brushed off in hopes they will go away and simply accept that their expectations will not be met.
  4. Employees show no initiative and merely follow orders.   Rather than going above and beyond the call of duty to ensure customer satisfaction, employees take a not-my-job attitude and do nothing to address the problems they see.

Each of these are immediately visible to customers, and many of them exasperate or disgust them.  The customers who feel a strong affinity to the brand will complain, in hopes that their experience is an unusual incident, and in hopes that management will take steps to remedy the problem and recover.

Customers who do not feel an affinity for the brand will not complain, but they will also not return to do business with the firm.   Because they do not have experience with the brand, they do not see these minor deficiencies as exceptions to otherwise excellent service quality because they have never experienced excellent service from the brand.   The service, as deficient and unacceptable as it is, is what can be expected of the brand.

The concept of the ”brand halo” suggests that customers will be forgiving, but only for a time.  The halo dims, and the customers forget the way things used to be, or accept that the deficiencies they experience are the new way of things and that is what they can expect from the brand going forward.   So experienced customers become disillusioned customers, and eventually former customers of the brand.

Customer advocacy is briefly mentioned: any customer who advocated for the brand is personally disgraced when a friend or acquaintance takes their recommendation and has a disappointing experience.  If the problem is not amended, the advocate no longer advocates for the brand – and even if the problem is amended, there is reluctance to advocate.  In this way, the poor experience of new customers diminishes the brand equity with established regulars.

When the level of service falls to such a poor level, this creates opportunity for competition to move in and take away customers simply by doing the basic things that your firm should have been doing all along.   This is often the very method by which newcomers and upstarts topple industry giants who have become inattentive and apathetic.

In the end, it’s about maintenance – and maintenance may be unglamorous, but it is critical because the reputation of a brand is not permanent: all the work and money that has been poured into establishing a reputation is wasted if nothing is done to maintain that reputation.

And it is simply a matter of being inattentive: the management of a firm must not be so focused on the new that they neglect to maintain the old.   They must not be so focused on the big things that they let the little things slide.   In the end, a brand can only remain strong by being attentive to the little old things that customers have come to expect of it.

Wednesday, May 24, 2017

Looking for Good People

Like most LinkedIn users, I periodically get a wave of overtures from recruiters when firms are seeking to fill position with experienced candidates – it’s validating and gives me a sense that I’m in a growing profession – but this recent round I have become sensitized to the words “looking for.”   It’s a fairly standard and entirely sensible in a recruitment letter to say a firm is “looking for” experienced candidates, “looking for” certain skills, “looking for” those who are capable of accomplishing specific things.   But for whatever reason, those two words are beginning to get under my skin.

A company looks outside its own operations to obtain from the outside world the things it is unable to do for itself, or is unable to do as effectively as other firms – services that must be outsourced or contracted because the company does not have the core competence to do these things for itself.  A firm must look for a vendor to provide payroll accounting or social marketing because it simply isn’t any good at those tasks, and hasn’t the first idea how to develop that capacity internally.

Considered in that light, a firm that is “looking for” good people is implicitly admitting that it doesn’t know how to make its own – and must lure away workers who were trained in other companies, those who presumably have the competence to not merely hire and use talent, but to grow talent internally.  In a broad sense, it’s the tragedy of the commons – with every firm assuming that other companies are able to train and develop talent so that they can hire it away.

So the question arises: what firms are capable of making good people to fill the need of other firms that do not?  A partial answer might come from my recent experience in rebuilding a department after all their experienced employees departed within a period of months.  This firm is the hands-down leader in customer experience, with customer satisfaction ratings that left the second-place firms far behind – but when it sought to grow the discipline within the organization, it filled all the top slots with outsiders (people from firms who were second- or third-rate) and the experienced people, feeling unrecognized and unrewarded, sought positions in other departments or outside the firm.   This company grew good people, but failed to retain them.

And thus begins the downward spiral: a company does not invest in developing talent because it also does not invest in retaining talent.   Such a firm can only lose its best people, into whose professional development it has invested a considerable amount of time and money.  It then comes to the conclusion that it is not worthwhile to develop talent because some other firm will simply hire its good people away (which is a kind of psychological denial of its own inability to retain them).  And so it stops developing good people and starts to hire them from outside.   (But in this case, if you are the leader in a given field, the personnel of other companies are not as good as the ones you have, and have lost.)

And in the same situation, I was faced with a significant problem: if experienced people had left, then experienced people had to be hired to replace them.   There wasn’t time to hire a flock of recent graduates and bring them up in the profession – or at least, that was the response I got when I made that suggestion.  It was the same response I had received when I made the same observation years before: that there weren’t many greenhorns in the ranks to replace the old salts when they matriculated or left their positions.  So the net result is that the senior staff was all hired from firms that were not as good, and these second-rate individuals would be the new leadership to train the junior staff.   The prognosis in such a situation is not good.

I expect this situation is far from unique: a firm seeks to develop talent internally, then fails to reward and retain the talent they have developed, and their most talented individuals are lured away by other companies who lack the ability to develop their own talent, who are “looking for” and willing to adequately compensate people who developed skills at other companies that fail to retain them.  The folly of this is clear, but folly is perennial.

And so, I despair there is not a firm who sustainably grows and retains its talent – that through a brief period of crisis or a sustained degradation of culture, even a firm that has the capability to make good people out of raw recruits will cease to do so, and join the many who are “looking for” talent that it cannot (or will not) produce internally.   It’s perhaps a healthy thing that the giants of industry should crumble and make way for the next generation, perpetuating the cycle of life and death in the corporate jungle.