Category Archive: Marketing Strategy
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Social Media: Don’t let the Bubble Burst
I am beginning to feel a little nervous about Social Media. I am beginning to get a little skeptical of all the Social Media initiatives around me.
But then I also read that a little anxiety and nervousness can be a good thing. A little increase in the heartbeat before you meet that someone special or before that important presentation is helpful. It just means that you care about what you are doing and want to be successful.
I read this on David Spinks‘ blog
There’s a problem, and deep down, we’re all aware of it…but to do something about it would make many feel hypocritical and so they push it aside whenever it’s brought up.
The Social Media Growth if allowed unchecked will be the next bubble to burst. There, I said it. The cat is out of the bag.
An important lesson from the dot-com bust (should be a lesson from common sense actually!!) was that companies that don’t make money cannot survive. Advertising, no matter how clever, cannot save you. Consider online pet-supply store Pets.com. Its talking sock puppet mascot became so popular that it appeared in a multimillion-dollar Super Bowl commercial and as a balloon in the Macy’s Thanksgiving Day Parade. But Pets.com was never able to give pet owners a compelling reason to buy supplies online. After they ordered kitty litter, a customer had to wait a few days to actually get it. And let’s face it, when you need kitty litter, you need kitty litter. The company lost money on most of the items it sold. Amazon.com-backed Pets.com raised $82.5 million in an IPO in February 2000 before collapsing nine months later.
Companies chased eyeballs, saying “don’t worry, revenues will follow”. People had business plans that had no mention of revenue. Web agencies popped up all over the place: building websites without a goal. You only needed “Web Programmer” or “Java” written on your resume to charge $200/hr for your services.
Fast forward to 2007. Similar story but same result. They said,
Buy the biggest house you can. Don’t worry about the downpayment. Don’t worry about the principal. Flip the house. Cash out. Live the “American Dream”.
We are still feeling the effects of the last one.
Fast forward again to the “Now” Network and we again see signs of the Social Bubble
- A search for “Social Media Consultant” on LinkedIn yields 46,069 results. “Social Media Expert” gives 12,426 results, “Social Media Evangelist” yields 1749 results and “Social Media Guru” gives 1477 results. For an industry that is 2-3 years old, that is a really large number. [Lesson: better to choose "guru" than "expert"
] - At most of the digital conferences, the theme is “social”.
- VC money being poured into social networks, microblogs, real time search engines and other cool SM startups that have no clear revenue models. “We will eventually get there”. There is so much free in the industry that advertising alone couldn’t possibly sustain it.
- Each company and their mother is jumping into Social Media, rushing to build a Facebook fan page or Twitter following. According to Bertrand Russell, “Collective fear stimulates herd instinct, and tends to produce ferocity towards those that are not regarded as members of the herd.” It is the fear of being “left out” or not being part of the herd that is driving a lot of companies into Social Media. The prime ingredient for a bubble is the desire to do something because everyone else is doing it.
Adam Sarner, an analyst with market research firm Gartner, projected that close to 40% of social networking initiatives at Fortune 1000 companies with Web sites will will be classified as failures.
I Love Social Media: Don’t get me wrong. I do believe Social Media has gone mainstream. I do believe that the SM tools when used in the right manner can increase both personal and business productivity, improve customer engagement levels, make innovation faster & cheaper and build new relationships.
2010 is supposedly the year when Social Media will be tested. Investors will start demanding some visibility into returns and cash flows.
To keep the Social Media Wave going, it is our responsibility as Social Media Leaders/Experts/Consultants/Evangelists/Gurus/Advocates (whatever fancy term you want to use) to ask the right questions:
- QUESTION 1: HOW IS IT GOING TO BENEFIT THY COMPANY?
- Engagement, loyalty, brand building are all good things. But they are all warm and fuzzy words that others in the firm may not understand. Start thinking and talking in a language that your CFO/CEO understands. Will customer engagement and brand loyalty result in increased sales or lower costs? List down all the potential benefits and see if/how they can translate into $$$. Any marketing initiative can only be sustained if it has the support of the folks who control the dollars.
And PLEASE, stop chasing followers. Don’t fall into the trap of “How to build 10,000 followers in 10 days”. Success in Social Media is not measured by the number of followers you have. This is not a competition on “My brand has more followers than your brand”. Social Media is for the long haul. It takes time to build the relationships and start seeing ROI. If it hurts to hear that, don’t do it.
- QUESTION 2: HOW IS IT GOING TO BENEFIT THY CUSTOMERS?
Social Media is not a channel for self promotion. It is frustrating to see so many corporate Facebook pages, blogs, Twitter feeds ONLY talk about the firm. They are in a broadcast mode. They are not engaged with the customer. They are not listening to the customer. They are not solving customer problems. They are not building loyalty.
You need to think how you can make the customer experience better or simplify their life or add more value.
The Unspoken Barrier to Social Media
My recent posts talked about Social Media reaching the tipping point and the factors leading to mass adoption of Social Media. But what is the one thing that will separate out the Social Media successes from the failures?
If you are thinking ROI and Metrics: yes, they are important and very good answers. The others listed in the Equation Research study are important as well. But I think the biggest contributing factor to the Social Media success story will be COMPANY CULTURE. Social Media is about building a culture of collaboration, authenticity, trust, openness and innovation. Companies that are able to build such a vibrant culture will grow and thrive and create value for their shareholders.
When you think of Social Media successes, the first company that comes to mind is Zappos. Customer Service is in Zappos’ culture, its DNA. Zappos built a real culture that puts the customer first, rather than lip service and mission statements. The story of the Zappos rep who sent flowers to the lady whose husband had died in a car accident is mind blowing. The first week of training at Zappos is not about Social Media tools and technology, but about Zappos’ culture and core values (Number 1 value is Deliver WoW through Service).
But culture is also the hardest to change. The following comment by Andy Sernowitz, author of Word of Mouth Marketing, sums it well.
Don’t underestimate the amount of bravery it takes. You find yourself almost immediately in a two-front war, fighting both an entrenched bureaucracy and a skeptical audience.
It is about fear of letting go, fear of losing control.
It is also harder because social media touches almost all parts of your organization.
- With your employees available on Facebook, Twitter or LinkedIn, customers don’t rely on the 800 or the PO BOX number to get in touch with you. They can get in touch with who they want and when they want. An awful amount of power in the hands of the customer, right?
- Point 1 combined with the increasing and changing customer demands puts a lot more pressure on your research, customer service, operations, technology, PR, distribution, marketing and legal departments to function more efficiently and respond to customer needs/problems more quickly.
Does this mean you should give up on Social Media? Hell, no. Social Media is here to stay. But that doesn’t mean that you should start sending gifts or flowers to all your customers. Not every company needs to or should become Zappos. Companies need to think hard about their overall organization structure and strategy before they say “yes” to Social Media.
And if you are looking to change your culture for better social media adoption, here are a few things you can do:
- Hire the right people, empower them and encourage them to take risks
- Create the policies and guidelines so that people don’t go overboard and overexpose the firm
- Have a CEO and senior management who is open to new ideas and embracing change
- And finally, reward the risk takers and celebrate their failures
Some other interesting read on this subject
- Social Media is part of Corporate Innovation Strategy
- HBR: Creating a Culture of Innovation
- Designing the Social Business
- 7 Things to Think About Before Jumping In
Socialism is the New World Order – How Will Marketers Survive?
The New World Order is Socialism: I mean the digital world! Successful brands of tomorrow will be the ones that are comfortable letting go of so called “control” and work with the customers in creating the brand image.
According to Dunkin’ Donuts Brand Marketing Officer Frances Allen: “Customers will decide what our brand is about. And there is nothing we can do about it. And that is a very liberating thing. In the end, you can’t control it. And that’s the beauty of social media. And that means marketers have to let go – a little”
Listening to some of the panelists at the recently concluded OMMA Global, I realized that some of the brands get it. Companies like Ford, NY Times and Dunkin’ Donuts have leveraged the power of Social Media to build brand awareness, customer loyalty and increase sales.
Martin Nisenholtz, SVP Digital Operations at the New York Times Company says the Times loves Twitter. Twitter has become extremely important distribution feeder for the NY Times. Times has over 200 Twitter feeds and adding 15,000 followers a week. And talking about ROI, Twitter now drives 10% of NYT digital distribution, up from 0 a year ago.
From Facebook pages, to blogging and Twitter accounts, Ford has gone crazy for social networking. And there are no limits, according to Scott Monty (Twitter @ScottMonty), Global Digital & Multimedia Communications Manager at Ford Motor Company. Ford is presently in its eighth month of its Fiesta Movement social-media program to promote the eponymous car from Europe by letting 100 young social-media-savvy Americans drive the vehicles for several months. Each month, Ford has been assigning tasks to the “Agents” involving lots of driving and just as much blogging, Twittering, YouTubing and Flickring. “People are finding out about the Fiesta from people like them,” said Scott.
So what do companies and marketers do to adapt to a world where
- there are plenty more choices available to the consumer
- media is fragmented
- attention span has reduced dramatically
- audience is not listening anymore
What do they need to do different in order to survive and grow?
Marketers have to move away from the ‘broadcast” mode where they would just create information and then do a mass publish to the consumers. Marketers need to establish trust and authenticity. Marketers need to LIE in order to be successful.
L: LISTEN: Trust is built by understanding and acting upon the needs of the customer. To understand the needs, you need to listen in. Grow Bigger Ears. You need to make yourself accessible via Twitter, email, phone, whatever tool you use to answer a question, provide information. People trust people like themselves. Again, to cite @ScottMonty at Ford: “Your brand is not my friend. I don’t want a cup of coffee or car or piece of clothing to “friend” me on Facebook. I want the brand manager, designer or engineer. I want someone who can talk to me/listen to me.”
I: INFLUENCE: After Listening and Learning about the customer needs, you need to act on it in an authentic manner. Transparency and Authenticity are key in creating a degree of influence. Deborah Schultz, Partner Innovation Practice, Altimeter Group cautions: “Always be truthful on social media…Google is the long tail of lies.”
E: ENGAGE: If you constantly listen and learn from the customer AND influence her by acting in a transparent and authentic manner, you will enter the engagement phase with the customer. Engagement is where the customer becomes a brand ambassador/advocate. Customers in this phase are the most profitable. They provide you feedback and suggestions for improvement. They bring in other customers. They are willing to pay a higher price for your product compared to that being charged by the competition.
It will be interesting to see how companies adapt to the new Socialist order and how many are willing to partner with the customers to develop what the brand should stand for. What do you think will be some of the challenges?
How can airlines make money?
I was running a little late trying to catch my Delta flight from NY to Richmond. With about 40 minutes left for my flight time, I tried the self service kiosk to check in but was unsuccessful as the cutoff time is 45 minutes prior to flight departure. Nevermind, I thought that since I have no bags to check in, the airline counter staff will be able to help me. The response I got was plain and simple, “sorry, you have missed your flight and we cannot do anything”. They didn’t even try to help me. I had to approach the customer service manager who got me a boarding pass. He was a little surprised as well that the counter staff were not able to help.
To cut a long story short, I did make my flight but updated my Facebook page expressing my frustration with the airlines. The following comment from a friend got me thinking:
“As customers, we have driven the industry to the lowest cost – negative profit and hence no service. Hence you get what you pay for“
While the above is true, the industry hasn’t done any innovation to generate additional revenue streams. All they have done is charge customers a range of annoying fees for checked baggage, food & beverage, making flight changes and cancellation penalties.
Here are 4 turnaround techniques that any CEO/CMO of UA/US Air/Delta should be listening to:
- Digital tray tables: Jetblue offers free DirectTV on all its domestic and international flights. All international flights have a range of programming to choose from as well. But I see very few ads (if any) along with the programming. While that is good news for the customer, the cash strapped airlines have an available source of revenue that they can tap into. Based on the customer profile, the airlines can show advertisements for partner products or services or other brands the customer may be interested in.
- Car, Hotel, Golf and other partnerships: Either on the website, at the airport or in-flight, airlines can pitch an array of products and services to its customers. Allegiant has become a big promoter of Alamo rental cars and Sin City hotels, selling 395,000 rooms last year (The airline gets a percentage). On its Web site it also sells tickets to performances of Blue Man Group—whose logos adorn Allegiant cups, napkins, overhead bins, and crew uniforms—and tee times at dozens of golf courses. You can book tickets for other Las Vegas shows, helicopter tours, kayak trips, and tours of the Grand Canyon on Allegiant’s site.
This strategy, dubbed “unbundling” in the airline industry, has been mined most audaciously by Ryan air Holdings (RYAAY), the 23-year-old Irish airline that features fares as low as 5 euros ($7.73) and a seemingly endless array of revenue streams. Home or auto insurance? Foreign currency? Villa rentals? Credit cards? Ryanair pitches it—and has become one of the largest intra-European airlines in the process.
The crew members and airport staff can be trained and incentivized to sell such products. Some of the offers can be printed on the customer’s copy of the boarding pass. - Identify the people who love or hate your brand: It is important to identify people who have strong feelings about your brand, either positive or negative. Brand Lovers choose you more often than your competitors. For many companies, the best customers drive over 80 percent of the business’s profitability and yet, the business generally knows very little about them. Companies like Apple, Harley Davidson and Bose are firms that have taken their brand to a cult status and charge a premium for their products. Similarly, brand haters will not only not buy your product BUT will tell 10 other people about their negative experience with your brand.
Once you understand why your best customers enjoy doing business with you, you will be better prepared to serve them. Reward them for their patronage so they have a continued positive experience. Similarly, talk to the haters to neutralize their negative feelings.
- Improve customer service by listening to the customers: Airlines need to grow bigger ears. They need to listen in to customers feedback, comments and complaints to improve the customer experience. If a particular flight has been delayed, a quick email from customer service apologizing for the inconvenience caused and explaining the delay can go a long way.
Furthermore, the airline can offer a $10 off coupon redeemable towards future travel.
Do you think airlines can innovate to generate more revenue streams? What would you do if you were the CMO of United?