Thursday, August 16, 2018

Brand Unawareness

A fellow shopping for auto insurance asked an unusual question: what repair shop would we use in his location for body work.   Some years ago, he had an accident and was sent to a shop that did rather a poor job, leaving him so displeased that he changed insurance companies.   And then, when he had another claim, the new insurance company sent his car to the very same body shop for repairs, and he was again disappointed.  He wanted to change insurers again, but wanted to make sure that the new company would not send him back to the same shop.

In the years I spent in the insurance business, I had listened in on many phone calls – a few hundred or so – and this is the only one I can recall in which a shopper took this level of interest in our suppliers.   Everyone cared about the price, and to a lesser degree about the kinds of coverage that price included, but nobody seemed particularly curious about exactly how the benefit of the product would be delivered: what company is really going to do the work that they are paying for in advance?

There are many buying situations in which consumers are unaware of the brands they are purchasing when the company with which they are directly transacting is merely passing on the product of another firm.   No insurance company, to my knowledge, has a nationwide network of repair centers that it owns and controls, but sends claimants to a local provider.   And where the product is a good rather than a service, the invisibility of its providers is clear: you have no idea what brands you are consuming when you order a meal in a restaurant, nor what company refined the copper in your computer.  You are only aware of the brand of the seller, not the maker.

And in the present day, where most firms are vertically dis-integrated and business operations are outsourced, chances are that when you consume any product, you are consuming dozens or hundreds of brands that you are not aware of.   The more complex the product, the more hidden brands you are consuming without being aware.  I would venture a guess that no-one, ever, has investigated the full supply chain of every product they use – there simply isn’t enough time in the day.

That’s not to say that the brand of a supplier is of no value – it is of great value to their direct customer, the reseller, though invisible to the ultimate consumer.  And in this space, the values of the reseller are significantly different: is the supplier reliable, will delivery be timely, is the quality of goods consistent, and so on.   These are entirely different to the values that customers espouse, or pretend to espouse, in evaluating the brand of the reseller.   They are generally concerned only with the last link in the supply chain.

Thursday, August 2, 2018

Targeting the Gullible Market

A brand is trusted by its existing customers because of its past behavior: if the brand kept the promises it made, then it is trusted to repeat the same behavior in the future, and this trust extends to any new promises that the brand makes to the customer that has already experienced its reliability.  But when approaching a prospect, who has not interacted with the brand, earning trust is difficult – the brand has not had the opportunity to keep its promises to the prospect, and the promise itself is not trustworthy because it comes from an unknown brand.

Granted, some level of trust depends upon the trustor – whether or not the prospect has a trusting nature.   In general, a brand that approaches any market can depend upon the trust of the most gullible members of that segment – but a more measured approach would consider the qualities of an individual who will trust without experience and seek to define a target market in which gullibility is baked in.

The inherent problem is that gullible people are not respected people – their peers and acquaintances know them to be exceptionally gullible and do not put much credit in their endorsements.    In that way, a brand that targets the gullible may have some success in gaining the initial trust of people whose recommendation carries little weight with the rest of the market.   Hence the short-term and unsustainable success of many new products.

And even the gullible market segment is not sustainable: the most gullible individuals can be fooled once into putting trust in a brand – but if the brand fails to keep its promise to them, then it will be difficult to make a second sale even to the same individual.   They are likely to extend credit to brands once, but not a second time once their trust has been violated.

One notable exception are individuals in whom there is an unfortunate coincidence of gullibility and narcissism: the person who has been tricked, but whose ego will not allow them to admit that they have been tricked.  These individuals will give rave reviews of horrible products, pretending to be satisfied so as to avoid admitting having made a mistake.  Going by the number of five-start product reviews on websites, there are quite a few of them, who feel compelled to repurchase and advocated for a bad product to maintain their self-esteem.

But, again, this leads to the problem of second-hand trustworthiness: it is not only the brand, but its users and advocates, that must be regarded as trustworthy in order for the brand  to gain acceptance in the broader market.  The testimony of dupes and fools is no more convincing that first-hand promises made by a brand, and it may in fact be more damaging to have the wrong kind of brand advocates.

Thursday, July 26, 2018

Generational Marketing Mistakes

Being as it’s about halfway through 2018, it seems that market researchers have suddenly become aware that the next generation is entering their adulthood.  They haven’t figured out what to call them yet (centennials, generation Z, iGen or whatnot) and there’s not a lot of agreement on when, exactly, the generation began (somewhere between 1990 and 2000, depending on what they’re trying to prove) … but apparently, they are understudied and there’s money to be made by being the first to market with a study that defines what this new generation is all about.   Even if it’s completely premature and wrong.

The same thing happened with the Millennial generation: studies came out describing their attitudes and habits when the generation itself was prepubescent and hadn’t had time to form attitudes and habits.  And sadly, the “findings” that were published in the early days tended to form a cognitive filter.  So the profile of the Millennial today – pushing forty, paying a mortgage, advancing in their career, and otherwise doing the “adulating” thing – has changed little from the time when they were teenagers still living at home and working part-time jobs.   

And though I would happily be proven wrong by time, I strongly suspect the same is happening with the market research on Generation Z: they are talking to teenagers about their spending and financial habits, about their tastes as consumers, about their attitudes toward the workplace – well before they have had any experience leading an adult life.   

I’d feel a bit less panicked about it if I were to see a present-day study of the Millennial generation – and better, to see it done by one of the experts who studied them prematurely, who admits to having jumped the gun and come to the wrong conclusion.  But sadly, these are the same “experts” who see the new opportunity in misrepresenting the next generation – to admit they were wrong in the past would be to discredit their present work.

And their clients are little better.   Rather than recognizing their folly and straightening themselves out, updating their research in order to better serve the Millennial market, they are simply moving along. They are writing off the last generation and pursuing the next, gearing up to make exactly the same mistake.  Lather, rinse, and repeat - and watch as history repeats.

Thursday, July 19, 2018

Chewy: Pooching Customer Recovery

Recently, a colleague of mine had an issue with an online pet store – which would be one of those unremarkable “yeah, these things happen” incidents except for how poorly the company handled the attempted service recovery.  

A bit of background: the colleague in question adopted a shelter dog that had a number of serious health issues – it’s an ongoing saga – and she ordered some medications from Chewy, an online pet supply store that has only recently opened its pharmacy business.   And here’s how they attempted to recover after bungling the order:



The lame humor in the message, bad puns that elicit more of a groan than a laugh, might be understandable and perhaps mildly amusing in the course of routine correspondence.    In the wake of a botched order, being cheeky with the customer is probably not a good choice.   And when the botched order prolongs the suffering of someone’s pet because it was a pharmacy order, it’s definitely not a good idea to kid around.

The second problem is that what is being described in the message, an inability to merge orders, has nothing to do with what Chewy had done wrong.   They had mishandled a prescription, initiating a game of phone-tag with themselves and the veterinarian to straighten things out, and causing further confusion as to whether the problem had been addressed.

The third problem is that the offer of a refund, which generally a nice gesture, is not something that helps recover from the problem: it is not that they caused the customer a loss of money, but a loss of time by mishandling the order.   A more appropriate action would be to expedite processing and provide free overnight delivery to help minimize further delay.

And the fourth problem is the missing fourth step of the basic apology model: to provide some reassurance that the problem will not recur in the future, so that the customer won’t be as hesitant to engage with the brand again.   To omit that step seems either arrogant (believing future business can be taken for granted in spite of the problem) or dismissive (not really caring if the customer does business with the brand in future).

In all, none of these things constitutes an egregious error – but it is the combined effect of a lot of small problems that makes this a model for poor customer service in a critical situation.

Thursday, July 12, 2018

Bad Ambassadors

The desire of brands to win advocacy is a generally good thing – it causes firms to think beyond the one-time sale, to providing a product that leaves customers so satisfied that they will not only repurchase but also advocate to other prospects in favor of the brand.   However, like any good thing, it can be done to excess – and at some point pursuing advocacy for the sake of having advocates becomes harmful to the brand.

The consumption of a product is for its functional benefits – but the consumption of a brand is often for non-functional benefits.   I add “often” because some brands are valued for their reputation for quality in terms of functional benefits, but in most cases products are commoditized: the offering of one brand is no better or worse than the next in terms of its functional qualities, such that the only difference is psychological.  This is generally true of most crowded markets where product offerings have become commoditized.

One of the chief psychological benefits is social recognition: Brand X and Brand Y are functionally indistinct, but are associated with certain social groups.  “We” use Brand X and “they” use Brand Y.   So the distinction between the brands is social identity – belonging to one group rather than another.   Hence a person chooses the brand that aligns with the identity to a group to which they wish to belong, and shuns the brand that aligns with any group whose membership is mutually exclusive to the desired group.

And therein lies the problem: when a brand is selected by a group that is considered undesirable by its existing consumers, the alignment of the brand becomes unclear: is it still aligned with “us” or is it now aligned with “them”?  And if it is no longer “our” band, then there is no longer any value to being associated with it – and possibly value in distancing from it because it is no longer in line with the identity of the desired social group (and is in line with the identity of an undesirable social group).

Where the undesirable group has selected the product of its own accord, there is very little that a brand can do to regain its esteem: brand exists in the mind of the customer.   If the brand decides to go with the flow, to embrace the new breed of customers it has attracted, it can remain viable, though the character of the brand and the qualities of the market it serves will undergo a dramatic transformation – in effect, the brand will have changed markets.    If the brand resists the flow, rejects the new breed of customers and attempts to retain its loyal market, it may find that it is fighting an uphill battle.   Success at this will be very difficult.

However, it is very often the case that the brand initiated this selection: it marketed to the undesirables in an attempt to grow its market, foolishly believing that its loyal customers would remain loyal even when the brand became adopted by the undesirable new customers.  It seems to be counting ambassadors, failing to recognize that not all ambassadors are good ones.  This is suicide.