Monday, June 27, 2016

The Relationship Marketing Scam

It’s been well over a decade since the idea of “relationship marketing” became fashionable with the Fortune 500, and the time has come to switch perspectives on this concept from optimism to skepticism – as for most firms, there has been little more than lip-service and hype.   They say they wish to be a relationship company, but what they have done shows little change from the traditional practice of taking their customers for granted.

The concept of relationship marketing became pressing when it was realized that markets have become highly competitive – for most products, there is no longer just one vendor at a given price point, but several whose offerings are commoditized, and there was no practical reason to choose one over another – and customers routinely switched providers to whomever had the lowest price.  Around the same time, it was noticed that smaller companies tend to have much more loyal customers who support them even when their product was not the lowest price.   Larger firms were covetous of these close relationships, wanted very much to have the kind of loyalty that smaller firms received, and recognized that there was a sense of relationship between buyers and sellers who did business regularly.

But while they adopted the rhetoric of relationship marketing, they never quite got around to adopting the practices.   To this day, there are few industries and fewer firms who treat customers who have been doing business with them for decades any differently than a new customer who’s made their first purchase – and in fact firms remain more attentive to the new customer than the old customer, figuring that repeat business from the “old” customer could be taken for granted and no special attention was needed on their part.   They remain very much transactional companies who consider each sale to be an isolated event, and the established customer to be no more valuable or important than the first-time buyer.

There is no firm of which I am aware that offers any additional benefits to veteran customers.   Nowhere have I ever seen published a table indicating what perks are offered for customers who have been giving business to a firm for five, ten, twenty, or more years.   The only formal instance I am aware of in which loyalty is rewarded is in the insurance industry, where firms provide a small discount to customers who do not switch very often – but this is not a reward to their veteran customers because any new customer who has been with their current insurer for a sufficient period of time will be granted the same discount immediately.

So it is perhaps time to view firms that claim to be “relationship” companies and that mouth slogans about their appreciation of their existing first with a degree of skepticism – to look at what they do as a way to validate whether what they say is really true.   My sense is that in the vast majority of instances, it simply is not.

Wednesday, June 22, 2016

8 Steps to Creativity

Defining the creative process is difficult.  Even people who are considered to be “creative” have a very difficult time pinning down quite how they manage to do it and generally end up confabulating and speculating about their own process and suggesting a process that seems entirely sensible, but is not something they actually do.   Most creative people go about the process intuitively, bumbling into a solution to a problem and then attempting to make a happy accident seem like a deliberate process.  

So to avoid falling into that trap, I’m going to avoid specific activities and instead consider the eight basic steps in the process: recognition, diagnosis, incubation, insight, elaboration, assessment, articulation, and production.   It is my sense that any successful act of creation requires all eight steps, though some of them are often shortcut or skipped and the outcome may be as accidentally positive as the process.

  1. Recognition involves recognizing the existence of a problem that needs a solution (or an opportunity that needs a method of achievement).  Though it is not optimal, it is entirely possible to have a solution in search of a problem, but the real work of creativity does not begin until a problem is recognized.
  2. Diagnosis is a quest for understanding the problem.  This step is most often skipped when people latch upon the first idea that seems to be a solution, a mistake that generally ends in catastrophe when significant resources are expended in implementation without sufficient diagnosis.
  3. Incubation is a period of reflection in which the problem, in all its complexity, is considered and one or more possible solutions are discovered.   The problem with incubation is that it often occurs below the threshold of consciousness – an idea seems to arise out of the blue, without really thinking about it – but this mischaracterizes the nature of “thinking” because most thoughts are nonverbal and the process of discovery is nonlinear.   Moreover, attempting to verbalize and streamline incubation often prevents real thinking from taking place.
  4. Insight is the “eureka” moment when a connection is found and a potential solution is discovered.  It is at this point that nonverbal and unconscious thoughts take a shape that can be described, that the connection that seemed intuitive becomes articulate, and that the idea can be taken from the mind of one person and communicated to others.
  5. Elaboration involves the work that is necessary to translate a rough idea into a practicable plan of execution.   It is the 99% perspiration” of which Einstein spoke.  This can be the most difficult part of the process, and the point at which many would-be creative drop off and leave their ideas on the workbench because coming up with novel ideas is exciting and fun, whereas elaborating and detailing them is hard work.
  6. Assessment considers whether the insight is worth pursuing: does it solve the problem and is it worth the effort to undertake?   To pursue an idea that doesn’t solve the problem is pointless, and to pursue a cure that is worse than the disease is counterproductive and destructive (and destruction is the opposite of creation).
  7. Articulation is a process of communication: the idea must be described and illustrated in sufficient detail so that others who are necessary to its achievement can understand it and are motivated to support its creation.  This step is optional in processes where an idea can be produced by the work of a single person, but that describes very few instances in the present day.
  8. Production is the task of bringing the idea into reality.  It is often considered to be a separate matter from creativity, but it should not be: in order to be “creative” something must be created – and the kind of “idea men” who come up with brilliant solutions but lack the interest and discipline to deliver them to the world typically fail to create anything.
Of course, this “process” of creativity often folds back upon itself.   For example, during the period of assessment, a new insight may arise and the creator will need to step backward in the process and chase a different thread.   This does not mean the process is not linear – it is a matter of abandoning one line and changing to another, or going back to a previous step to address a problem – as the creator then moves through the following steps sequentially.

Ultimately, I feel this is a pretty good high level working model of the creative process.   But “pretty good,” “high level” and ”working model” are all caveats – as this is merely the latest iteration of attempting to define the process.  I expect it will happen again, and when it does my understanding will have changed.   But for now, there it is, such as it is.

Friday, June 17, 2016

User-Centered Design

The phrase “user-centered design” (UCD) is showing up in the industry press these days – and as usual, the original concept that the phrase was intended to communicate is being diffused, misrepresented, and undermined so that firms can appear to be following the trend while continuing to maintain business as usual.   I don’t expect anyone can prevent the perversion and dismissal of a good idea, as it happens with distressing regularity, but it’s worth pausing to reflect on what it means in hopes that it might have some small impact.

There’s nothing particularly cryptic about the concept and its name is quite straightforward: user-centered design is about crafting products and their associated interactions (acquisition and servicing) to focus on the needs and interests of the individual who will eventually benefit from using it.   This is what often occurs when a company is created to serve a need, and it is often lost along the way as the firm becomes focused on other things, such as its competitive posture, internal procedures, and financial performance.

UCD begins with the notion that people are failing to accomplish something, either through lack of a method to accomplish it or through the use of methods that are ineffective and/or inefficient.   A project that discovers a new solution generally begins with studying the users to discover what problems they have, and one that improves and existing product generally begins with a problem and seeks to find users who are experiencing it.  

Whatever the case, the UCD process begins when there is a “who” (the user) and a “what” (their goal).   From there, the next step is generally to consider how they are currently attempting to accomplish this goal (or to substantiate the idea that they are not accomplishing it at all) to identify deficiencies and areas of improvement.    And finally, the process proposes and tests an alternative solution to discover whether it will be successful at accomplishing the goal in a manner that is more efficient and effective than the present one.

All of this is quite elementary, and very different from the problem-solving process that focuses more on the product, the market, or the financial  consequences to the firm – which is the trap into which many established firms (and even some start-ups) tend to fall.   And ultimately, UCD is the path to success and growth: customers do not purchase a product because of the process by which it is manufactured or the degree to which it generates a profit for the firm that provides it.  They purchase products because they efficiently and effectively deliver value in solving their problems or achieving their goals.

The innovation-squelching problem with an established firm is that it seems to forget the basic principle that revenue is earned by helping people solve their problems.  Profitability is grown by making existing operations more efficient without improving the product or its associated interactions.  The market is grown by making the product seem more appealing that it is so that people who will not get value from it will purchase it anyway.   There are an innumerable array of bad, counterproductive, and unethical ideas for increasing profit without increasing service.   None of these come from a process of user-centered design, and a process of user-centered design that is practiced as intended will not yield such ideas.

And the core problem is that firms seek to pursue projects that are not user-centered, and which are obviously ill-conceived, but to do so while claiming to be doing UCD in hopes that their proposals will be accepted without further inquiry.   This muddies the term and causes it to be maligned, as others see the activities being done under the label of UCD that are not UCD at all – but because it is called that, they assume that it is.

The litmus test to identify impostors is simply to ask those follow-up questions:
  • Who are the users?
  • What problem are they trying to solve?
  • How does this proposal help the users to solve that problem?

Where there are no answers to these questions, or where the answers are twisted and contrived, it is clear that the undertaking has nothing to do with user-centered design.   It may be marketing, or efficiency improvement, or some other manner of task that, while possibly worth pursuing, is not really a user-centered approach.

My hope is that those who attempt to leverage the faddishness of UCD in order to disguise the true nature of their projects will find another term.  But my expectation is that they will not, and that UCD will become just another meaningless buzzword, like so many others before it.   But one can always hope.

Monday, June 13, 2016

Engaged to Bored in Seven Seconds

Advertisers lament the limited attention span of audiences, often complaining that it’s difficult to impossible to get people to pay attention.   They tend to blame the audience, citing that most people have only a seven-second attention span, implying that people are just too stupid to pay attention.    It’s not that people are stupid, though they sometimes seem that way – it’s that advertising is boring.

Studies in television commercial studies support the notion that people do not pay attention: over half the audience is “lost” during the first fifteen seconds of a video commercial.   20% of them drop out within the first ten, and 33% more drop out in the next five.   But at the same time, people are capable of being fully engrossed and engaged by a two-hour movie.   This suggests that it is not the mental capacity of the audience, but the ability of the message to maintain their attention, and the blame for audience attrition lays squarely on those who have crafted a poor message.

Consider the formula for commercial messages – start with a bang to grab their attention, then provide support information, then tell them how to behave if they want to obtain the promised value.   It is generally believed that the anticipation of something interesting will cause the audience to suffer through the boring information, and this does bear out.  But if “bang” is followed by information that is not relevant, then the audience’s attention will drift away.  Sometimes, even if the information is relevant, the audience will be lost because they become impatient, then annoyed, and then offended that what they had been led to expect is not being delivered quickly enough.

Physiologically and psychologically, the human brain is tuned to give attention to threats and opportunities – things that have the potential to do harm or to improve their situation.   Anything that is neither a threat nor an opportunity is ignored so that attention may be given to something more important.    Neurologically, the brain activity that results from an intense emotion fades very quickly – within a few seconds – and interest goes with it unless it is sustained.  This is the basis of the myth of the seven-second attention span: if the bang is not relevant to them or the supporting information is not germane, their attention will be lost very quickly.  

In terms of crafting the message, emotion is more important than information – if the emotions are engaged, logic will be engaged; but if the emotions are not engaged, then neither will logic be.   An advertisement, like any speech, is an emotional journey for the audience – and where emotion fades, the path is lost, no matter the logical soundness and rational structure of the message.

In the world of advertising, attention is the coin with which audiences pay – but if they don’t feel that they’re getting anything in return for their payment (and it’s “feel” rather than “think”), then they stop giving payment.   So consider the emotional economics of any engagement – what is the audience getting in return for paying attention?   If you cannot provide an answer to that question, or if your answer is contrived and weak, then you have identified the core problem of your commercial messaging.

Tuesday, June 7, 2016

Crafting Brand Stories

There is a basic format for brand stories: they begin with a character (the customer) who has a problem, introduce a hero (the brand) who can solve their problem, then tell the story of how the hero solves the character’s problem, leading up to an ending where happiness is restored. 

It’s a fairly common plot, told by virtually every brand – and what’s more, it’s the kind of story a brand must tell to win the customer.  It’s hackneyed, but necessary – psychologically, people recognize and know what to expect when the story follows a pattern.  When an advertiser attempts to break from the pattern, customers don’t understand, and they are confused by commercial messaging that deviates from the expected pattern.

The basic elements of the story must therefore follow in the tradition: there must be characters, a situation, a plot, a sequence of events, and a resolution.   However, not all stories are good stories, nor are they interesting and compelling.    To gain attention and credibility, the story must have a few additional qualities:
  1. Relevant – The customer is able to identify with the character, to feel that “this is something that could happen to me.”
  2. Significant – The bigger the problem, the greater the impact.  The hero slays a dragon, he does not step on an ant.
  3. Credible – The story must be realistic.  It must be story about which the customer thinks “this could really happen to me.”
  4. Empowering – The story must seem achievable.   The customer must believe that it is something they are capable of doing.

The degree to which the brand story demonstrates these qualities is the degree to which the customer will be interested in engaging with the brand.   They are convinced that the brand offers them something of value, and that they are able to obtain that value by engaging with the brand.

Once a customer is convinced of the story, it becomes difficult to dissuade him.   People cling to their beliefs and defend them – so if someone else comes along and tells the customer that there is a better solution, he will view that alternative with a jaundiced eye because it is a threat to his beliefs.  In that way, a good brand story forms a strong connection.

It does not, however, mean that the customer feels the need to take action.  The story may be interesting and credible, but this does not give the customer the desire to act on it immediately.   He may be interested in acting on it eventually, but there is no sense of urgency, which is a much trickier problem, and which has been considered elsewhere.