Thursday, April 26, 2018

Common Practices Aren’t Best Practices

It pains me, still, that imitating the competition is still rampant even in innovation efforts.   Inevitably, someone says “let’s see what other companies are doing” as a means to generate “new” ideas, generally followed by the insistence that it’s “new to us” when someone points out the obvious.  And all too often asking if any other company is already doing something similar is the first sign that an innovative idea is headed for the scrap heap without any further consideration.

The same problems arise at most firms – their attempt to distinguish themselves leads instead to the practice of imitating one another, and doing so mindlessly.   As a consequence, the common practices in any industry are seldom based on an examination of the results they achieve, but merely on their being done by others, on the assumption that they wouldn’t be doing something if it weren’t getting good results.  

Not only are the common practices adopted without question, they also tend to be practiced without question.   There is no question of their foundations, no research into their soundness, and no testing of their performance.   They are adopted without inspection and perpetuated without validation, often in spite of evidence that they are unproductive or even harmful.  This is not merely egregiously unwise, but reckless.

Compounding the problem, many firms turn to agencies and design firms, who have even less knowledge of their industry or their customer, to show them the way.   There is a great deal of bluster and precious little knowledge in these firms, yet their opinions seem to be regarded as reliable advice from reliable professionals – until the numbers come in sour, and then the firm hires a different agency to repeat the same cycle.  And given the recent shortening in executive tenure, even the decision-maker who engaged the firm is long gone by the time the damage is done.

But back on topic, the common practices of an industry may not yield good results at all, and even if they happen to be based on sound reasoning, it doesn’t mean they are practicable or applicable given the unique nature of your firm, goals, and market segment.    No-one can say for certain what will work for a given firm, and often it is not questioned whether it had positive results elsewhere.  The result seems to be the death of innovation, while under the banner of innovation we see a frenzy of imitating with reckless abandon.

Thursday, April 19, 2018

The Customer as a Brand

Consider this: every customer is his own personal brand, and his non-functional purchasing criteria (those that pertain to the social and psychological aspects of consumption) may be understood as curating activities.    That is, the customer has a brand that he wishes to uphold, or one that he wishes to modify, and selects products as a means to associate himself to brands that correlate with the desired perception of his own personal brand.

This may be more or less true of any product – where consumption is conspicuous, it is assumed that nonfunctional qualities play a more significant role because they impact social esteem.   But even products consumed in private impact self-esteem, and in this regard the latter may be more significant.

Where brands attempt to go beyond consumption and convince individuals to advocate on their behalf, the alignment of the brand to personal brand becomes even more significant.  A person will carefully consider which brands align to the desired personal brand, and will not espouse any brand that does not satisfy both social and psychological criteria.

Wrongful promotion, like any unwanted social advance, results in a negative reaction – the more aggressive the assault, the more aggressive will be the defense.    Where a brand is seen as ill-fitting, promotion can only cause it to become undesirable, even repugnant, to an individual who feels the brand does not align with his own.

There are also no universal qualities of brand.  Even those that represent youth, wealthy, sophistication, or other qualities with widespread appeal do not necessarily correspond to personal brand.  Status-seekers may wish to “pose” with a brand that represents qualities they do not possess, but most people are not so narcissistic and instead seek brands that correlate with their own true brand, or a brand that is only slightly and plausibly elevated from their present station.

And finally, it’s worth remembering that the maker does not determine the qualities of his brand – it is the perception of the brand by the market that causes it to have those qualities.   The individual who seeks to align with a brand is not seeking a relationship with the maker, but with other individuals in his society, regardless of whether they are consumers of that same brand.

The customer chooses the brand of the product, and it is that individual’s personal brand that creates the perception of the product brand among other prospects.   A product that is used by or otherwise associated with the “wrong kind” of person is the wrong brand, regardless of what the maker wishes the brand to represent.

Thursday, April 12, 2018

Everything That Has a Beginning Has an End

It’s been observed that marketers put an inordinate amount of focus on acquiring new customers and are often neglectful of providing the service necessary to retain existing ones – but there is one part of the relationship that is altogether ignored.  There is virtually nothing in the literature about bringing a customer relationship to a graceful conclusion.

It could be argued that ending customer relationships gets so little attention because it is not profitable – but the profit motive is not applied consistently, vis the lower importance given to retention than acquisition where retention is considerably more profitable.  

And to suggest that ending a relationship well is of no value is to ignore the value of word-of-mouth: ending a relationship badly leaves a very bad last impression, one which may overshadow the merits a brand earned earlier in the relationship when the individual is asked by others about his experience with a brand.   The reluctance of customers to enter into service contracts likely does not arise from previous customers’ experience in signing the contract or using the service, but from the antics of firms that do not handle the end of the relationship well.

There is also the damage done to the customer himself, as termination of service is seldom forever.   A person may become irritated with a service provider, terminate the arrangement, and switch to a different provider – but when the new provider’s service is found to be inferior, the customer may return.  The manner in which termination of service is handled may significantly impact his willingness to return.

It is more likely a matter of arrogance and denial for a brand to assume the customer will always need it and that there will never come a time that the customer can do without the product.   I ran into that attitude repeatedly in the auto insurance industry – the refusal to acknowledge that there is any situation where the customer will no longer need the product (such as old age) or would wish to do without it even temporarily (such as moving to a city with excellent public transportation) led to a complete neglect of the termination experience.

And there is likewise too much emphasis placed on customer retention – the desperate scramble to avoid losing future business from a customer who wishes to terminate.    There seems to be the belief in the existence of some magic phrase that will make a customer who no longer needs a product think that he does, nor instantly dispel the series of offenses that caused them to wish to switch to a different brand.  

Where the customer has reached the natural end of their consumption, or where the behavior of a firm has been so egregious that the customer seeks to terminate the relationship, there need to be plans to say “goodbye” gracefully – in a manner that leaves a  positive last impression that will win referrals and cause the brand to be considered should the customer need it again.

Thursday, April 5, 2018

It's Just Breakfast

Theories of rational decision-making often focused on a very narrow and informed decision: an individual must choose between two options and has complete information about both – hence he makes a logical decision based on the likelihood of each option to achieve a desired outcome.

In an actual purchasing situation, the customer has a very complex decision and little information.    In a typical American supermarket, there may be 100 or more different options in the breakfast cereal aisle.   The customer is not an expert in breakfast cereal, and knows only a little bit about some of the options and nothing at all about most of them.   

And while the ostensible problem the product solves is nutrition, there are many other concerns: would a young adult male consume a cereal that is primarily marketed to elderly women?  What would his friends think of him if they saw it in his cupboard?

So in the cereal-buying situation, and virtually every consumer decision, the consumer is not able to act as the perfectly rational and perfectly informed individual that are presumed by the logical decision-making process.   

This is not to say it is not possible: one can study about nutrition, learn about all 100 breakfast cereals on the market, document the decision-making process to carefully exclude any subjective or nonsensical criteria, and so on – but it is not at all reasonable to expect anyone at all to put in that level of effort.   

It’s just breakfast, after all.