Disruption: Be the Protagonist, not the Victim

Managing a business is challenging enough- balancing customers’ needs with organizational priorities in the pursuit of profitability. The day-to-day tasks tend to put the focus on the short-term. All the while, winds of change are swirling outside the walls of the organization. Change is inevitable, and many firms that are successful today will encounter turbulent times ahead because they were not prepared for disruptions to their business models.

Marketing expert Martin Lindstrom raises this issue in a recent Fast Company article. He points to two companies as examples of how disruptions can blindside an unprepared company: Polaroid and Blockbuster. Polaroid was riding high in the 1970s and 1980s with its instant camera. Of course, digital imaging technology has rendered Polaroid irrelevant in meeting that particular customer need. More recently, Blockbuster went from the dominant movie rental retailer to a bankrupt entity that was acquired this week by Dish Network for slightly more than $300 million. That figure is more than 90% off of Blockbuster’s market value in 2002.

Polaroid and Blockbuster were taken down by disruptions- changes from outside the organization for which they were unprepared to adapt. Like death and taxes, change is a certainty. Whether it is new competitors, emerging technologies, or shifts in customer desires, change will happen. Having foresight to sense potential disruptions to the business model is a trait that sets apart successful firms from struggling ones.

Sometimes disruptions blindside a company; in other cases the disruption is observed but resistance in the form of maintaining status quo prevents adapting to the disruption. I have observed the latter in higher education. Greater interest in online education and intense competition from for-profit institutions has propelled many traditional colleges and universities to debate the need to adapt to the disruptions. As the debate continues, the disruptions further threaten the competitiveness of traditional institutions.

While managing the here and now, keep an eye toward the future to spot the next disruption that will impact your business. Be out front and turn the disruption into an opportunity. The alternative is to follow in the footsteps of Polaroid and Blockbuster, companies that did not adapt to disruptions and became victims of change.

Fast Company – “The Anti-Blockbuster Way: Disrupt Your Business Rituals Before Someone Else Does”

The Upset is a Winner in Social Media Marketing

March Madness is winding down, with the Final Four set for this weekend in Houston. The drama that unfolds during NCAA tournament games can be breathtaking, and storylines develop that make household names out of relatively obscure teams and players. This year is no different as VCU had to play its way into the tournament and made a remarkable run to the Final Four. Along the way, VCU beat higher seeded teams in the Southwest Region including Georgetown, Purdue, and Kansas.

VCU’s string of upsets in the NCAA basketball tournament has created buzz and excitement, two traits that any brand would desire. So, why not tap into the frenzy of interest generated by upsets during March Madness? According to Networked Insights, a social media marketing firm, that is exactly what some marketers are doing as an alternative to expensive TV advertising buys. A Networked Insights client made unpaid and paid content placements in social media and search engines related to upsets that generated almost 200 million paid impressions at an average CPM of just over $11. When the unpaid exposure received was factored in, CPM dropped to just over $2.

A strategy of brand message placement in the context of upsets in the NCAA basketball tournament is brilliant! It is a great example of marketing in the moment, deftly associating a brand with a popular cultural event. And, upsets tend to be feel good stories (unless your team is the one that was upset), creating desirable emotions to link to a brand. Marketing around upsets is effective because they are unexpected, newsworthy events. When upsets happen, basketball fans might seek out information about the game, and in the case of VCU, search to learn more about the coach, players, and institution.

The fact that there are no 1 or 2 seeds in the Final Four and two teams came in to the tournament as 8th (Butler) and 11th (VCU) seeds are evidence that this year’s NCAA basketball tournament has proven to be a bonanza for marketers looking for upsets to provide marketing opportunities. With the Butler-VCU winner playing either Connecticut or Kentucky in the championship game, is there one more upset in the cards for marketers? One can only hope!

Marketing Charts – “March Madness Upsets Ideal for Online Ad Content”

Being Better More Important than Being First

In my last post, the challenges of being late to market were discussed, with the demise of Microsoft’s Zune music player being the latest example of how failure to differentiate can doom a product. Now, another situation in which a well heeled brand is coming to market with a new product is examined; this time it is from the perspective of an entrenched competitor. Groupon is a social media success story, going from start-up to an estimated $3 billion in revenues in less than three years. In that time, Groupon has established itself as the dominant social couponing brand. Nothing will be able to derail Groupon given its position as the early-to-market king… right?

Should Groupon executives be losing sleep over Facebook’s push into the social couponing category? The social network giant is launching Facebook Deals, which resembles Groupon’s offering of discounts on local dining, services, and entertainment. Facebook Deals has been available in some foreign markets for several months, and it will debut in five U.S. cities soon (Atlanta, Austin, Dallas, San Diego, and San Francisco). With more than 500,000,000 users worldwide, Facebook is a ubiquitous distribution channel that holds appeal for businesses in markets large and small.

Facebook may be bigger than Groupon, but is it better? Market presence and success give a brand like Facebook an upper hand when introducing extensions but do not guarantee success. Other brands have struggled with breaking into new categories. For example, Google’s enormous market share in search and search engine advertising were not enough to make Google Buzz a viable product, nor has it exactly translated to success for its Chrome browser.

Facebook Deals may be a smash hit, but it will not be because Facebook has a large number of users. In order to be adopted, it will have to offer points of difference relative to Groupon. Are the deals more attractive? Are coupons easier to redeem? Is the interaction with retailers or service providers different in some way? Groupon can win the battle by being better; being first will be helpful but not as much as a providing a better experience for customers.

In the long run, being better will be more profitable than being first. To borrow an ad tag line from Nike, Groupon will have to show “My better is better than your better” when it comes to competing with Facebook or anyone else. If the customer experience is positive and enjoyable, almost any brand can compete.

Another Tale of "Differentiate or Die"

News that Microsoft may discontinue its Zune music player may be denied by the company, but it seems to be only a matter of time before it will happen. Launched in 2006 as a competitor to Apple’s iPod, Zune has done little to derail the iPod’s dominance. Microsoft faced an uphill battle given that iPod was established as the dominant music player in the market, but it is too easy to chalk the failure of Zune to being a late market entrant.

Portable music player is not the first category that Microsoft entered late; the company was far behind Nintendo and Sony entering the video game console category. It would seem that Microsoft faced a more daunting challenge taking on two entrenched brands, both with loyal customers. And, there were times when it looked like the Xbox could ultimately face a fate similar to the one Zune is staring at today.

However, Xbox has solidified itself as a force in video games. According to data from NPD Group for the period March 2010 to February 2011, Microsoft’s Xbox 360 had 38.3% share of the 18 million video game consoles sold. Microsoft’s share was just behind Nintendo Wii (38.6%) and Sony PlayStation 3 (23.1%). Microsoft’s market share jumped 12 percentage points in the past year, taking most of its gain from Nintendo (down 11.6 percentage points).

What is the difference between Zune and Xbox 360? Borrowing my favorite marketing book title, it is another case of “differentiate or die.” Zune has never successfully differentiated itself as being unique or superior to iPod. Granted, Microsoft faced an uphill battle given iPod’s icon status as a lifestyle brand. But, Apple successfully used marketing to get to that point. In contrast, marketing for Zune did not resonate with consumers.

Microsoft faced a similar uphill battle competing against Wii and PS3 yet has proven to be a formidable competitor in the video game category. The difference- Xbox has been able to differentiate itself from Wii and PS3. Its Kinect sensor, inspired by the motion-activated gaming experience of the Wii, has been popular with existing Xbox players and attracted new users. And, Xbox Live enhances the gaming experience by letting players connect with friends and fellow gaming enthusiasts online.

Being late to market is not a liability, it is an excuse. Failure to deliver a differentiated experience compared to the status quo is the real issue that dooms most failed products. “Differentiate or die” is not just a clever book title; it is a mantra by which marketers should live when it comes to developing product strategy.

Product Strategy: Keep it Simple, Be Great

Two of my favorite hobbies are eating and running, with the latter a pursuit that allows me to practice the former! So, I had an interest in checking out a new reality show on NBC, America’s Next Great Restaurant. The show will feature 10 aspiring restaurateurs who will compete to be selected for funding to open locations in New York, Minneapolis, and Los Angeles. The series debut narrowed an initial field of 21 hopefuls to the 10 contestants that will compete to secure investment capital. The judges/investors include celebrity chefs Bobby Flay and Curtis Stone, Chipotle founder Steve Ells, and Miami restaurateur Lorena Garcia.

A major marketing lesson, coming under the category of “What Not to Do” was delivered by the first person to present to the judges. Her idea was for a restaurant she called What’s Good, with a focus on organic and healthy dishes. The concept was interesting, but her description of the product offering doomed any chance of being considered for investment. A sample menu showed page after page of different items- it screamed of a nightmare to manage! Judges gave the contestant feedback about their concerns about the menu complexity, then gave her the bad news that they would not be investing in What’s Good.

Many of the great brands today succeed because of their simplicity in their product offerings. It is not unusual for a business to have an extensive product portfolio, but usually it evolves over a long period of time. Start on a small scale, gain acceptance and traction in the market, and expand what you can do for customers as they buy into your value proposition. Perhaps one reason Chipotle’s Steve Ells was critical of the elaborate menu ideas for What’s Good is that his restaurant thrives with a menu that features essentially two types of products: burritos and tacos. Are there other dishes and items Chipotle could offer within the category of Mexican food? Sure, but it has chosen to focus on being great at serving burritos and tacos.

The lesson is not new, but it is as relevant as ever- follow the edict of Jim Collins and be great at one thing, better than any competitor could ever hope to be.

Who’s Out Front for You?

Every interaction a person has with your brand has an impact on associations that make up brand image and ultimately, liking (or disliking). Face-to-face experiences customers have with your employees are a critical channel for shaping brand perceptions. An enjoyable experience reinforces one’s decision to be a customer; a bad encounter can call into question why to do business with a company whose service leaves something to be desired.

The above comments state the obvious- the importance of good customer service is understood. This issue comes to mind because I have noticed a stark contrast in the interactions that occur at the front desk at the recreation center on the campus where I work. I have been going to the rec center several days a week for almost 10 years now, and it does not take long to realize that its approach to service would put a for-profit fitness center out of business quickly. Most of the customer contact staff is made up of students, and whether it is inexperience, lack of training, or apathy, a service orientation is sorely lacking.

One exception to the unremarkable customer service is Ashley. I look forward to going to the rec center on Tuesdays and Thursdays because Ashley is at the front desk. She greets each person entering and leaving the facility and usually strikes up a conversation. I complimented Ashley on her performance, and she attributed her approach to the influence of her parents and a decision to have fun doing the job. Ashley represents the type of person a business needs to have on the front lines. Her smile and demeanor create a positive initial impression for rec center visitors. Unfortunately, there are not more Ashleys on staff, making her performance stand out even more.

Who’s out front for you? Do you have an Ashley that can warm up customers and even disarm them when they are unhappy? If not, it is time to make a change to improve the initial impression people form about your brand.

The Follow-Up: A Lost Art?

For the past six years, I have had the privilege of serving as a judge for an awards competition sponsored by a local business publication. In that time I have met many successful entrepreneurs who have inspired me to stretch my limits of professional and personal growth. It is a service commitment that takes time and has no extrinsic rewards, but the people I have met and lessons learned are payment enough.

A fellow judge and I observed a trend over the years we have judged the competition: the act of follow-up from contestants does not occur as frequently today. We visited with top executives at 12 companies this year, and only two of them followed up with a “thank you” message. Follow-up from a company is not a judging criterion nor are companies excluded from consideration because they did not follow up our meeting with an email, call, or postcard.

Our surprise is that more managers do not pursue the small task of following up with judges, just as a salesperson would follow up on a meeting with a prospective client or a key account. The acclaim that comes being named a winner in this competition can enhance a firm’s visibility in the community, not to mention potentially attract new clients that recognize the firm’s accomplishments. The two managers that took the step of following up our visit (one with a handwritten note, one with a phone call) stand out from the others simply by taking a few minutes to say “thank you.”

The intent of sharing this experience is not to indict the other 10 companies. The saying “when you point a finger at someone, you point three fingers at yourself” rings true for me. As I reflected on the trend we observed, I realized my follow-up communications do not always meet my personal expectations. So, rather than criticize anyone I am using this experience to become more consistent in my own practice of the art of the follow-up.

Investing a few minutes to thank a customer, prospect, mentor or someone else who has invested time with you is often perceived as an indicator of someone paying attention to details. A salesperson that regularly practices follow-up with clients can create confidence that he or she is on top of things. And, follow-up is good, old school customer relationship management.

L.O.V.E. Your Customers

Valentine’s Day is upon us; it’s one day that we tell that special someone how much we care for them. We show our affection with flowers, candy, gifts, and food. We give priority to making loved ones feel special that day. The love that we show on Valentine’s Day leads me to wonder why we do not shower those people with same attention the other 364 days of the year. And, it begs the question “Should businesses take a similar approach to our relationships with customers?”

The answer is an unequivocal “Yes.” A business should show LOVE for its customers just as we invest in important personal relationships. What is LOVE? I’m not referring to the 1983 song by Ho”font-style:italic;ward Jones, who asked that very question. LOVE is an acronym that can guide how a business manages its customer relationships. To LOVE is to:

Listen – Create a culture among customer contact employees to pay attention to customers’ wants and desires. How can your products make their lives better or easier? The answers to this question change frequently, but we have to be attuned to our customers to gain needed insights.

Observe – Be on the lookout for changes in customer behavior that could signal a shift in the relationship. Decreased order volume, placing orders less frequently, or delays in responding to communications can be tip-offs that your standing with a customer may not be as solid as you believe. Too often, these signals are not detected until after a relationship diminishes or ends altogether.

Give a Voice – Give your customers platforms to communicate with your company and other customers. Allowing user reviews of your products, building a community around your brand, and making email and phone contact a painless process are steps you can take to make customers feel valued.

Show Empathy – Encourage employees to put themselves in your customers’ shoes. More importantly, the concern they feel must be communicated and felt by customers, not just a script or canned responses delivered by employees.

As you can see, LOVE is not a special promotion, program of the month, or slick internal marketing campaign. LOVE represents customer-centered behaviors that transform marketing from promises to results for your customers. So, while we go all out to show love on Valentine’s Day, why not commit to showing LOVE everyday for the next year?

What’s Behind our Super Bowl Obsession?

Most Americans know that this Sunday brings the biggest football game of the year. Super Bowl XLV will feature two of the most storied franchises in NFL history, the Pittsburgh Steelers and the Green Bay Packers. The Super Bowl has become more than a game; it is a cultural event that has become an unofficial national holiday. A study done for the Retail Advertising and Marketing Association projects consumers will spend $10.1 on purchases related to the big game this year.

Among notable statistics from the NAMA survey:
• 171 million people are expected to watch the game (the largest audience ever)
• 61 million people plan to attend a party
• 35 million people plan to host a party (for the 61.2 million to attend!)
• 4.5 million people plan to purchase a new television
• 75% of persons surveyed said the commercials serve as entertainment
• 18% said commercials help to increase their awareness of the brands advertised

Wow! The Super Bowl’s attraction to a large majority of the population is undeniable. It is amazing in part because fans of 30 out of the NFL’s 32 teams will feel a sense of emptiness Sunday. Their teams will not be playing, yet many of them will be watching. And, many people who watch little or no football during the season will be tuned in Sunday (including 2 people in my home). How did we get to this point? The NFL helped build the Super Bowl brand, obviously, with a great on-field product, broadcasting partners that bring the drama into our living rooms, and transforming the game into a major entertainment event.

Before we give the NFL all of the credit for the popularity of the Super Bowl, we should acknowledge it is the beneficiary of human nature. We like to be part of communities of people, whether it is fellow football fans, friends, or family. The Super Bowl is an opportunity (if not an excuse) for us to come together with others with whom we share common interests.

Marketers seeking to build a great brand can learn from this characteristic of the Super Bowl and sports in general. For all of the talk about how the Internet isolates people, most of us want to belong to a community, be it face-to-face or virtual. What can you do to promote development of a brand community, a group of customers and friends that share an affinity for your brand and products?

As for Sunday’s game, we know that among the expected 171 million viewers will be fans of the Steelers and Packers. I am sure my friends Mark, Faye, and Mike will be decked out in black and gold; my former students Joshua and Katie will no doubt be cheering on the Packers. Regardless of which team you support, enjoy as you spend time engaged with your community whether it is at home with your family, at a party with friends, in a pub with strangers, or with your hashtag-wielding pals on Twitter.

Make Product Design a Fantasy

An often repeated saying in marketing is that “customers do not buy products; they buy benefits.” In other words, we are interested in a product not for what it does, but rather we are interested for what it can do for us. Yet, marketers often get bogged down in the design and production of products, and the desires of the customer often are overlooked. In their book Creating Breakthrough Products, Jonathan Cagan and Craig Vogel call for a different approach to product development when they say “form and function should follow fantasy.” This view requires a customer-centered approach to designing products.

Fantasy is an emotional state that can be felt through more satisfying experiences with a product. The question a marketer should ask is how well do products under his or her watch help customers fulfill their fantasies? Also, what tweaks can be made to make a product more capable of delivering a meaningful customer experience? These questions came to mind as the National Hockey League prepares for its All-Star Game weekend in Raleigh, North Carolina beginning tomorrow.

All-Star games in professional sports are exhibitions that feature top players but generally uninspiring play. And, there is little innovation in the design of the product as it is usually a game that pits all-star teams made up of players from a league’s two conferences (e.g., Eastern vs. Western Conference, American League vs. National League). The NHL sought to spark interest in this year’s All-Star Game by foregoing the East vs. West format in favor of selecting teams like a fan might draft a fantasy hockey team. A captain and two alternate captains for each team will draft from a pool of players selected to play in the game. Friday night’s player draft will perhaps be the highlight of the weekend, adding intrigue to the game itself on Sunday.

We must remember that doing things a certain way because that is how they have been done always is not a recipe for marketing success. Customers may prefer another way, one that adds more value to the products or service you offer. Invite your customers to share their fantasies, and then develop form and function to help them realize their fantasies.