Six Perils of Partnership

Partnerships among brands are seldom a pairing of equals: they are most often parasitic.   Large, successful, and established brands seldom seek out partnerships with small, unknown upstarts – and when they do, it tends to be a tactical maneuver that is ultimately recognized as a strategic mistake. While partnering with a start-up can enable rapid development of products or expansion into new markets, there are a number of perils to the stronger brand.

The first peril is the denigration of the stronger brand.   It is inevitable that when an established brand is applied to new products or markets, its identity becomes split and diffused: the brand is compromised by partnering, and the short-term profit of the partnership is seldom worth the damage done to its perception by its established customer base.   The more incongruous the image of the weaker brand, the more damage will be done to the stronger one.

The second peril is loss of control over brand identity.  The weaker brand usually has a completely different culture and agenda, and seeks to feed on the equity of the stronger brand without maintaining or contributing to it.  Because the partnership, from the perspective of the weaker partner, constitutes growth, the brand equity of the stronger partner is of little consequence to the weaker partner – it will invariably seek to sacrifice the esteem of the stronger partner for its own benefit. 

A third peril is the damage done to quality control, as the weaker partner is weaker because it does not have the capability of maintaining the level of quality of the stronger one. Again, the compromise of partnership constitutes a step down for the stronger partner and a step up for the weaker, such that the quality of both the product and experience of the stronger partner is not preserved when it is handled by the weaker partner.

A fourth peril is risk to the supply chain, particularly distribution control over the retail outlets at which the joint product will be sold and the touch points of customer contact where the weaker partner’s operations are concerned.   There is a significant difference in the way that a company manages its own brand experience and the way in which a retailer manages the brand experience of the products it stocks – and the same difference exists when the weaker partner is in custody of the stronger partner’s brand.

A fifth peril is fragmentation and discord in the representation of the stronger brand. Consider that brand equity is not built by accident, but by careful management of the brand and its related experiences.    Where the weaker partner represents the stronger partner’s brand, less care is taken in the maintenance of the brand identity.  Because the weaker partner has made no investment and holds no stake in the establishment and growth of the brand prior to the partnership, it feels no commitment to represent the stronger brand appropriately.   This conflict will not only diminish the equity of the brand, but dilute its very identity.

A sixth peril is the risk to customer experience.   A strong brand is defined by its experience, more so than the qualities of the good or service it provides.  A weak brand tends to be defined by more practical matters more directly related to the quality of its product, as its brand is not strong.  It if were capable of building a strong brand, even of understanding what is required to build a strong brand, chances are its brand would not be weak.

There are likely other factors that jeopardize the value of the stronger brand, and certainly many more practical concerns that represent more functional detriments to the stronger partner in terms of tactical and operational factors.

The Problem of Urgency

One of the most common problems in motivating customers to make a purchase is the absence of urgency.  They may recognize that they will need something in the future, but do not feel a sense that they need to act upon it right now.   They have plenty of time, more pressing problems to deal with, and have the sense that they don’t need to purchase right away because it’s something they can do later.   Without some form of pressure to take immediate action, they procrastinate.

As an example, it’s very difficult to get people in their twenties to save for retirement – even when a company offers matching funds for their retirement plans, young employees do not contribute.   You can do the math for them, and demonstrate how the money they save will grow substantially over time – but this doesn’t phase them.   They are struggling to pay the bills this month, whereas retirement is decades away and they can begin to save for it later.   And so they remain nonchalant until they are in their forties, realize that they have nothing saved for retirement, and go into a panic.

What this example demonstrates is that, for many consumers, the sense of urgency is not based on reasoning – because they may recognize the value of taking action and still refuse to do it – but instead, it is based on the emotion of fear.  Specifically, urgency is based on the fear of loss, whether it is a loss that will diminish their status quo or the loss of an opportunity to improve it.  And in the hierarchy of needs, things that threaten a person’s well-being take priority over things that might improve their situation.

And so it follows that the way to motivate customers to take immediate action is to play upon their fears – to tell them that they will suffer harm or miss out on an opportunity forever if they do not take immediate action.   This tactic is often leveraged by cheesy hard-sell marketing tactics such as “limited time offer” and “while supplies last,” but it is also leveraged in soft-sell marketing tactics in more subtle ways.

However, that does not mean that fear alone is an effective and sustainable selling tactic – the emotional center of the brain kicks in immediately, but then the reasoning mind takes over to ask the question of whether that fear is really warranted – and when it is not, the seller loses credibility with the market.   Consider the retailers who have weekly “sale” events to drum up business: any customer of reasonable intelligence recognizes that there is no reason to panic because if they miss the opportunity to save money this week, the every same item will be discounted next week.

And therein lies the problem: fear tactics have been grossly overused, to the point that customers recognize when a seller is attempting to scare them into making an unnecessary purchase.   This has been done so often that an appeal to urgency is no longer an effective method of motivating them, but instead tends to discourage them because they immediately become suspicious when they recognize the fear tactic and associate it with dishonest merchants who have duped them in the past.  In essence, an appeal to urgency is a warning flag.

That’s not to say that scare tactics are not effective – merely that they have to be issued from a reliable source.   People are naturally suspicious of a fast-talking stranger, but will give more attention to a warning from someone they already know and trust, particularly if that source is not constantly issuing false alarms.   Second, scare tactics have to be valid: the rational part of the brain engages after three milliseconds, and it must validate the emotional reaction.

All of this underscores the importance of relationship marketing – the need to establish a trusting relationship with a customer before applying any kind of sales pressure, and the need to be reserved and prudent in its application.

Strategy and Tactics

In casual speech, the terms "strategy" and "tactics" are used almost interchangeably - but the two concepts must remain distinct and well separated in the minds of those who do strategic work.  Too often, they are not, and the consequences are disastrous.

The similarity between the two terms is that the both have to do with planning.   They define a desired outcome and a plan of action that is believed to be likely to achieve it.   When properly conceived, each defines a desired state and suggests what actions will be taken in order to achieve that state.

The difference between the two is in their scale.  A strategy paints in very broad strokes - "we will become the industry leader by underpricing our competition" - and it seems a very good idea, but lacks sufficient detail to suggest a specific course of action.   Tactics derive from the strategy and suggest more specific activities:  "in order to underprice our competition, we must reduce our cost of manufacturing by automating our assembly line."

Both strategy and tactics are necessary for success.   A strategy without tactics is merely a daydream.   We know what we want but have only a vague sense of how we're going to achieve it.   Meanwhile, tactics without a strategy can be very successful in accomplishing objectives that do not support any goal.   We will substitute aluminum for wood in all of our products is a tactic - but what does this achieve?

A disjunction between strategy and tactics naturally leads to failure.   To declare that "in order to underprice our competition we will use the most expensive materials available" is clearly not viable because the two statements are at odds.   However, the more common problem is that tactics are non sequiturs. "In order to underprice our competition we will improve our customer service" is not obviously flawed, but the connection between the activity and the objective is vague.   (It could be that better service reduces returns, and the reduction in expenses enables the firm to lower its prices, thereby underpricing the competition - but the connection is not made in the tactical statement.)

On the lowest levels of an organization, you will find people who are very good at sticking to a plan.   They do what they are told, heedless of whether the outcome of their actions will be supportive of the organization's goals.   It's not usually their fault - the management style and organizational culture strongly discourage doing anything else.  The only way that they will help the organization succeed is if the tactics are flawless and clearly communicated (which is the presumption of management who provided them) or they must have the latitude to deviate from procedures in order to support the strategic goals of the organization (a notion that receives a lot of verbal agreement, but very little implementation in practice).

In the present day, with complex markets and constant change, rigid tactics cannot be maintained.   Situations change rapidly, and continuing to implement a tactic designed for success in specific conditions leads to failure when the conditions change.  That is not to say that the strategy is no longer valid, but the tactics must adjust.  Properly executing a doomed tactic is not a path to success on the strategic level.

Ultimately, this goes back to the struggle between the tower and the trenches - those who devise tactics are out of touch with the front lines, yet still wish to exert granular control.  Or in the terms of the present meditation, those who devise strategy also presume to dictate tactics, which is exceedingly unwise.

Ideas from Nouvelle Cuisine

To avoid commoditization of customer experience, I periodically make a point of reading topics from other fields that are relevant but not focused exclusively on the subject.   This is a good way to take a broader perspective, and escape the feedback loop of people doing the same work passing the same ideas around until they become shopworn and stale.

This week, I did some reading in a primer on the topic of nouvelle cuisine, the “modern style” of cooking – figuring that a chef attempting to please a diner likely has some parallels to a customer service professional attempting to please a prospect or customer.   And, indeed, I found a number of tidbits worth bringing back to my own field:

Reject excessively elaborate preparation and presentation methods, and shun the use of rich and heavy sauces that overpower the taste of the main ingredient.

In terms of cuisine, the modern style focuses on choosing good ingredients and preparing them skillfully, not by doing things that are labor-intensive or unusual, but getting the basics right.  A proper entree needs only a few basic seasonings and careful preparation – and when it hits the plate it should still look and taste like exactly what it is.

Relating this to customer experience: there are a lot of bizarre ideas that are tried in order to put a “fresh” spin on a product or a transaction, which are done simply because they are unusual and are expected to amaze and delight the customer.   None of this buffoonery substitutes for getting the basics right, and an unobtrusive but competent service experience is always appreciated.

Reduce cooking time to serve food that is prepared on demand and served fresh.

In terms of cuisine, this principle focuses on the quality of the meal served to each individual diner, rather than the quantity of meals served to all diners.  Cafeterias and similar venues practice “utility cooking” that is meant to save time or effort and serve a mass of people poorly-prepared food, which is convenient for the kitchen but repulsive to the patrons it serves.

Relating this to customer experience: beware of making the efficiency of a business operation your primary concern.   Cutting costs to boost profits will always be an attractive option for the accountants who are concerned with expenses, but if it compromises the experience of the customer, they will be less willing to provide revenue from which those expenses are paid.

A second principle for customer experience is customized and just-in-time delivery.  In the present day customers are less prone to humbly accept a product that has been mass-produced and more likely to demand a product that has been tailored to their needs, and they are willing to pay more because customized products are more valuable and relevant to them.

Serve a smaller menu to a more limited clientele.

In terms of cuisine, nouvelle was not created as the cuisine for everyone – the majority of people would cling to traditional ways and were perfectly happy eating slops from a community caldron.   The nouvelle tradition did not lower itself to provide what the masses wanted cheaply, but catered to the wealthy and, over time, gained popularity with the masses without compromising its standards.

“Serving a smaller menu” translates into becoming more specialized and limited in your product lines as well as making products that are specifically designed to meet a small number of needs (perhaps to perform even a single task) in a competent and effective manner rather than offering so many products or so many features that you lose focus and expertise in doing any of them particularly well.

Relating to customer experience: beware of trying to be everything to everyone, as the low quality of experience that characterizes most industries is the result of attempting to do exactly that: to identify and conform to the lowest common denominator in order to attract as many customers as possible.   It can regularly be seen that new products begin with a small following and spread slowly over time – and it is necessary to be patient, rather than attempt to have broad appeal immediately.

Consider the dietary needs of your guests by avoiding red meats, frying, and the use of excessive amounts of salts and sugars.

In the culinary world, nouvelle cuisine addressed a new problem in the dietary habits of the modern age: people no longer suffered from lack of enough food, but suffered from the wrong kinds of foods.  And while red meats, fats, and salt were agreeable to the palate, they were harmful to the healthiness of the diner, which is ultimately in the long-term interests of the chef that serves them.

In terms of customer experience: beware of things that customers think are attractive, but which are ultimately contrary to their interests.   This requires sellers to avoid the “low hanging fruit” of things that customers think are good, and providing a product that serves their actual needs well – recognizing that things that are superficially attractive will secure a quick sale, but things that are actually valuable will secure greater long-term engagements and repeated sales.

Do not shun new techniques and devices, but leverage them for their value.

In the culinary world, cooks of the time were insistent upon using outdated techniques and took the attitude that anything that made a task faster or easier would result in an inferior product.   But the nouvelle school dismissed this irrational prejudice and maintained that new tools and methods were not to be automatically shunned – but embraced so long as quality was not compromised.   The customer will never know, and does not care, if his meal was heated in a convection oven or a regular one – and so long as taste and texture are preserved, there is no reason to shun this new device.

In terms of customer experience: beware of clinging to processes  and technologies simply because there is an insistence that “it’s the way we’ve always done it” but at the same time do not be too quick to adopt any new process or technology if it is detrimental to the quality of experience.  The customer does not know, nor should they care, what software package you use to pay your vendors, and so long as the package delivery service you use gets the item to their door as promised, they should not care about the partner you choose.

Innovation, creativity, and distinctiveness are to be valued over adherence to tradition.

Particularly when you are preparing a well-known and traditional cuisine, diners have a rigid and clearly defined set of standards by which they will assess what you serve, and expect it to conform exactly to tradition.   But nouvelle cuisine is about breaking from tradition and offering clients something they may never have experienced before, and may find pleasurable and even preferable to traditional standards.

In terms of customer experience: beware of giving people exactly what they expect because they have become accustomed to receiving it, particularly when you are adhering to traditions that have nothing to do with the value that the product delivers.   Just because people are used to waiting in line at a cash register doesn’t mean that they value this element of the experience, and it likely should not be preserved simply because it is expected.

Not everything old is bad, and not everything new is good.

I’ve heard seemingly well-informed people pontificate that nouvelle cuisine is a product of the twentieth century, when rapid transportation, refrigeration, and motorized kitchen appliances enabled preparations that had not been at all possible before these technologies existed.    Unfortunately, that perspective is dead wrong.

“Nouvelle” cuisine made its debut in the 1730s, nearly three hundred years ago, and many of the principles of nouvelle are as valid and valued by today’s diners as they were then.  Certainly, technology has made nouvelle cuisine available and affordable to far more people than it originally was, but the concepts it embraces are quite old and well established, and worth preserving.

Often, what people mistake for nouvelle cuisine is the school of molecular gastronomy, which uses chemical preparations and laboratory equipment to do very bizarre things with food, such that it is not recognized as something edible and delivers an experience more of fear and wonder than culinary delight.   In the hands of a skilled practitioner, molecular gastronomy can be quite good and enjoyable as a novelty, though it may be decades or centuries before it becomes common practice in the home kitchen – but in the hands of a novice, it can be quite disgusting and produce a meal that qualifies as “food” merely by the fact that it is not poisonous.

And at the risk of being tedious, the same is true for customer experience: people still seek to fulfill the same needs with today’s products as they have been seeking to fulfill for as long as the species existed, and many of the “old” principles of customer service are not to be discarded simply because of the date they were discovered.  Neither should any “new” principle or practice be automatically adopted on the assumption that novelty has greater value.

The Trouble With Nagging

I read an interesting but specious remark about selling: each time a salesman asks a customer to purchase and the customer refuses, it is 24% less likely the customer will ever buy.   The person who offered that up didn’t cite a source, and I won’t cite them because I strongly suspect it was a totally made-up number in an off-the-cuff remark – and more’s the pity because I have a sense that there’s some truth to that assertion that’s worth considering.

Old-school sales tactics suggest you should “always be closing” and that persistence means asking the same question over and over until you wear down resistance and the customer gives in.   But those tricks have never worked on me as a customer, and I have the distinct sense that I’m not alone in this because it runs contrary to a number of behavioral tendencies.

The first of these tendencies is priming: a person who refuses a salesman has set a precedent that it is OK to refuse them, making it easier to continue to refuse even after a convincing argument has been presented.   Asking them over and over merely gets them used to saying “no” to your advances, putting you in a position to overcome a level of obstinacy that you created.

Another tendency is to be suspicious of strangers: a salesman is essentially someone you don’t know who wants something of you, and there’s very little trust that they have your best interests at heart.   Especially when they seem eager to get you to commit to an agreement when you don’t know the details, that’s a danger sign that raises a level of suspicion about another person’s character.   So asking for a commitment too early creates a level of mistrust that you then have to overcome – and again, it’s your fault the customer is mistrustful.

Another tendency is to defend past decisions, even bad ones: a person who said “no” wants to feel that they made the right decision, and changing that answer to a “yes” means that they must admit to having been foolish to refuse the first time.   This can be avoided if the salesman has the patience to wait for a moment in which saying “yes” would build rather than undermine the self-image of the prospect.

Another tendency is the desire to have esteem: saying “no” to another person puts them beneath us, in terms of power and esteem.  The salesman who has made a customer refuse him has handed them the upper hand in the relationship by making them aware of their power to control the salesman merely by refusing his advances.  Admittedly, the customer always has that power and status, even from the very start, but making them acutely aware of it and eager to exercise it is a serious mistake.

There may be more to it than that – but those four tendencies come to mind immediately, and each of them causes the prospect to raise defenses that might not otherwise have been triggered, and each time a person says “no” they harden their position.

My sense is that the answer to all of this is simply to wait – work to establish trust with the prospect, convince them that purchasing your product is a smart decision, and put them in a position where saying “yes” is a demonstration of their power rather than a submission to your own.   I don’t have a sense there are any shortcuts to the goal, and while the degree to which prematurely and repeatedly pushing someone toward a commitment they are not ready to make might not be 24% exactly, I have the sense it’s not very far from the mark.

Infomercial Sales Tactics

This past weekend, I settled into one of my periodic bouts of melancholy and ennui and did what I suspect quite a few people do when they find themselves in the doldrums - deposited myself on the couch and watched mind-numbing junk on television for a couple of hours until disgust and self-loathing prompted me to find something else to do with my time (i.e., housework). In particular, I watched a series of infomercials for products I am wholly uninterested in buying and have a difficult time understanding why anyone would - while that kind of thing is candy to my inner cynic, it is also interesting to study the sales patter to understand how hammy sales tactics are intended to work.

The old-school hard selling tactics are contrived and obvious, following a four-step process:

1. Tell the mark that they have a problem
2. Show the mark how your product solves this alleged problem
3. Convince the mark that your product is cheap and easy to obtain
4. Usher the mark to the register 

In a commercial or infomercial, this sequence is repeated multiple times.   One of the infomercials I watched managed to do this seventeen times in thirty minutes - which is impressive, but hardly the theoretical maximum: I've seen thirty-second spots that run the process twice, so in theory a half-hour infomercial could repeat the sequence 120 times.

My sense is that once is likely enough - or more aptly, 0.25 times is likely enough for most prospects, because they can likely determine whether they are interested at the end of the first step: do you have trouble getting grass stains out of your umbrella?  Do you spend hour after tedious hour peeling hard-boiled eggs the old fashioned way?  Do you have trouble figuring out how to use a blanket?   If the answer is "no," everything else that follows isn't worth your time or attention.

As an aside, I have the sense that this is where the specious claims about the dwindling attention span of the American public comes from - the reason we tune out after seven seconds is we have already decided that it's not worth paying attention to the rest.  It's not a matter of diminishing capacity to pay attention, but improving abilities to decide whether it's worthwhile to pay attention to filter out the clutter in our environments.   But that's a different rant entirely.

What I was most stricken by is that even softer and more sophisticated sales tactics also fail at the first hurdle: they begin by assuming that the prospect has a given problem  and if they do not, then they stop paying attention: they ignore the sales patter, toss the direct mail piece in the trash unopened, or simply do not give attention to anything online that seems to have the appearance of being an advertisement.

This leads directly to the conclusion that advertising needs to be better targeted in order to be effective.   But even that is assumptive - in that it presumes that anyone at all would be interested in the product that is being sold ... that somewhere out there, there are a sufficient number of people who are mortified by the grass stains on their umbrellas, struggling to peel a crate hard-boiled eggs, and can't figure out how a blanket works.

It likely doesn't help my argument that some of them are entirely right about that, as products that solve these ridiculous problems sell by the millions and make their inventors very wealthy indeed.   But I would posit that these are the exceptional cases rather than the typical and that, these exceptions aside, the problem of selling in general is less to do with the tactics than the presumption of the needs of the prospect.

Using, Watching, and Surfing

I'm disappointed that notion persists among marketers that people "surf" the Internet - it's a term that never did set well with me, sloppily borrowed from another medium (television) at a time when the Internet was too new to understand, and largely inaccurate to the behavior of users in the wild. As such, a likely reason that advertising remains woefully ineffective on the Internet is that tactics are based on the premise that the person the marketer intends to reach is surfing the Internet rather than using it. To my way of thinking, the two are different behaviors and require different tactics.

Consider the medium from which the notion of "surfing" is borrowed; there are instances in which a person is channel surfing: they are bored, turn on the television, and switch from channel to channel watching bits and pieces of video out of context, in a state where an advertisement is no different to a program - it's just a scrap that might be interesting.

I don't dispute that television is used in this manner at some times. But most often, a person watches television - a distinctly different thing from channel-surfing. They turn on the television at a certain time with the intent of giving their attention to a specific program (or turn on the DVR to watch something they have recorded) and, for the duration of the program, they focus their attention on the program. In this state of mind, advertisements are an unwanted distraction: the viewer may chat with others of the room, or even wander out of the room to refill their drink or recycle the last one. For DVR, they fast-forward past advertising to return to the program they intended to watch (though I understand there is some evidence that users who FF commercials on DVR are actually giving attention to them, if only to know when the program has resumed).

And in "watching" mode, advertising is far less likely to get attention. No matter how interesting, clever, or even relevant a commercial message might be, the user is not interested in it - it's a distraction from what they are intending to give attention to at the moment.

Regarding the Internet medium, my sense is that the behaviors are equivalent. In some instance, a person is merely bored and clicks about from site to site, looking for momentary distractions, and is as susceptible to advertising messages as they are to editorial content. Even in that state, it's not entirely analogous to channel-surfing on television, as it involves more decision-making than pressing the "next channel" button to jump from one site to another.

However, in many instances - possibly "most" instances - there is an entirely different user behavior, and I expect it is far more likely for the Internet than for television. The user is intent on giving their attention to a specific task or consuming specific content, which galvanizes them against distractions. People go onto the Internet to check the weather, balance their checkbook, exchange messages with friends, etc. There are breaks between tasks, but when a user is in pursuit of a specific goal, advertising is less likely to get attention.

In both surveys and observational studies, the "surfing" behavior is extremely rare. There are a few exceptions, studies that indicate people spend the majority of their time "just surfing," but I tend to wonder about the methodology (if you interrupt someone in a shopping mall, they will give a convenient answer that is most likely to end the encounter) and instrumentation (a poorly-worded question leads to inaccurate results). I don't entirely discount the possibility, but remain incredulous where details are withheld. Given that the most common uses of the Internet involve task-flows rather than listlessly clicking about to chance upon something interesting, I expect surfing to be a rare behavior.

And to the point: the dismal response rates of online advertising seem entirely justified, all the more so when a particular format or message is geared to "surfing" behavior rather than "using" or "watching" behavior - and so long as marketers and advertisers continue to formulate tactics based on a state of mind and behavior that is not accurate or factual, their tactics will continue to fail.