Dispatches from the New World of Work

True Loyalty in Tough Times

The first notice most of us got of the current economic crisis came from TV and newspapers. Now, as the ripple effects of softening business move through the marketplace, just about everyone I talk to is seeing some sort of softening effect on their business. We are all vulnerable.

We can't afford to be sloppy right now, in anything we do. We can't waste resources. We can't let customers, in whose acquisition we have invested considerable sales and marketing resources, slip away, believing that new customers will show up to take their places.

In this economy, customer loyalty is one of the most important variables that will affect our success. It will be increasingly difficult to find new customers who can become big customers, so we have to get the most benefit out of what we already have. But ... we also can't afford to be sloppy with our concept of customer loyalty.

In so many cases, companies mistake promotional bribes for loyalty. But the kind of loyalty created by this type of approach is fleeting, and defenseless against a better offer from your competitor. (And you can bet that your competitors will be offering richer deals in the near future.) This type of loyalty, which I call transactional loyalty, can temporarily steer transactions in your direction, but keeps you very vulnerable in tough times.

The kind of loyalty you want to create in these times is what I call True Loyalty. When a customer is truly loyal, she is not loyal to your latest promotional offer, or to filling out her punch card to get her 10th smoothie for free. When True Loyalty happens, the customer is loyal to you. More specifically, she is loyal to her relationship with you.

This is a big difference. If a customer believes she is in a "We" relationship with you, her frame of reference is not the latest transaction, but the entire history of her relationship with you.

Soon, here at tompeters.com and at yastrow.com, I will share my thoughts on how to create True Loyalty. For now, what do you think? How do you avoid transactional loyalty, and create True Loyalty? Is True Loyalty a key to thriving in a tough economic climate?

A Bribe Is Not a Relationship

In the early '90s the word "interactive" got hijacked to mean any kind of marketing on the Internet. (How ironic since shopping on the Internet was not very interactive in those days.) Long before that, the word "brand" got misrepresented as something companies do to their customers, when in reality it is something customers do to companies.

Now I want to rant about how the word "loyalty" has been kidnapped. Loyalty has been dislocated from its true meaning and is now used to describe programs and promotions, usually supported by sophisticated software, that encourage customers to buy from a company multiple times.

Hey, there's nothing wrong with multiple purchases, but return visits don't necessarily correlate with true, meaningful loyalty. This kind of tit-for-tat transactional loyalty can be fleeting. Purchase intent one week doesn't automatically lead to purchase intent the next week, if a competitor offers a better sale price or promotion. This is the kind of loyalty that can evaporate quickly when another company offers better incentives.

The sturdiest, most indelible loyalty is that which is built from a relationship, and not from bribery. When a customer's frame of reference is her long-standing, ongoing conversation with a company, and not the gamesmanship of which company is offering the best rewards this month, she will not be easily seduced by a slightly better offer.

Can you use points programs, punch cards and repeat purchase incentives in your efforts to create true loyalty? Sure, but only if these promotions happen in the context of relationship-building encounters with those customers. And, what's most interesting, if you can build true "We" relationships with customers, you may not need to invest as many of your resources in these programs. Your customers will have more powerful reasons to keep coming back.

So, what's happening in your company? Are you creating solid, relationship-based loyalty, or are you continually wooing your customers with the latest new and improved, bigger and bolder, see-if- our-competitors-can-top-this promotion?

(Related question: Are loyalty promotions becoming a commodity?)

The Goal of a Sales Call

What is the goal of a sales call?
Close the sale?
Receive approval for your proposal?
Secure a meeting with the CEO?

Yes. These are all possible goals of sales meetings. But there is another goal that transcends all of these. The goal of every sales meeting—yes, every sales meeting—is to create a relationship-building encounter.

This is not what always happens in practice. Sales training has taught us the value of a solid, sequential sales process, where we have learned how each step in that process leads to the next step: The purpose of a cold call is to get a meeting, the purpose of the first meeting is to get a second meeting, and the purpose of the second meeting is to be invited to make a proposal, etc. Of course, these are natural steps in the sales process. But what happens frequently is that sales people are so focused on getting to the next step that they miss the chance to have a great encounter during the meeting they are in at the moment. (It's also very obvious to a customer if a salesperson is more focused on what they can "get" from this meeting than on having a good meeting at this time. They can see the salesperson thinking ahead.)

What great salespeople know is that the sequential sales process is subservient to the current meeting. They know that the best way to get to the next step in the process is to create a relationship-building encounter in the present. (I’ve got a free ebook, Encounters, available by subscription at my website, www.yastrow.com if you want to learn more about creating relationship-building encounters.)

When you focus on "now," the future will come of its own accord.

Stop Telling Stories

What does it feel like to be engaged in genuine dialogue?

I have asked this question in many workshops and speeches lately. Audience members have given very rich answers. "It's like a flow." "It's learning from each other." "What I say depends on what the other person says."

In his 1930 essay, "Dialogue," Martin Buber distinguished between genuine dialogue and "monologue disguised as dialogue," which he as "characterized ... solely by the desire to have one's own self-reliance confirmed by marking the impression that is made."

Monologue attempts to confirm, through pronouncement, what the speaker already knows and believes. Like a radio, it speaks but does not listen.

A true conversation, however, does not confirm. It explores. When two people open themselves up to genuine dialogue they do not presuppose the outcome of their conversation. It is as if they fly together into new, exciting, uncharted territory.

Dialogue is not only key to all human relationships, it is at the essence of successful marketing and sales. Advertising, elevator pitches, sales pitches, press releases, billboards, and brochures are, at times, necessary, but we have to recognize them for what they are: Monologues that make for very imperfect ways to connect with customers. If it is possible to be in dialogue with a customer, it's always preferable to speak with them than to talk at them.

Marketing and sales are not about telling stories. They are about engaging customers in shared stories. The biggest changes in marketing and sales are not about the Internet, expanded database capabilities, or Tivo. Yes, those things count (a lot), but only in the way they help us deal with the biggest change of all. Today's customers do not want to be told what to think. They are much more likely to become interested in doing business with you if you are able to engage them in dialogues that help you both learn how you can work together.

Stop telling stories. Start co-creating stories with your customers.

Please visit my website, also, to share ideas on other topics, at www.yastrow.com.

Steve Yastrow Rules!

Steve posted recently on dealing positively with the recession by doing better by your existing customers—and thus getting more of their business. Well, here's some nice support for Steve's view (and a useful quote). Horst Schulze is the legendary former Ritz-Carlton chief—father of "ladies and gentlemen serving ladies and gentlemen." He's come out of retirement to launch a luxury brand of small hotels. Here in Macau, I came across an interview with Horst in Prestige magazine (06.08). He directly addressed, with aplomb, the issue of starting a new business during a recession: "I [will] not accept the explanation of a recession negatively affecting the [new] business. There are still people traveling. We just have to get them to stay in our hotel."

More or less took the words out of Steve Yastrow's mouth. (And words with which I agree heartily.)

The Downturn Is a Rounding Error

The U.S. economy is in bad shape. If, by chance, you haven't heard about this yet, just turn on cable TV news for 30 seconds.

What does this mean to your business? It could be terrible, but it doesn't have to be.

How can I say that?

For the last few months, I have been asking workshop audiences the following questions:

1. What percent of your customers are giving you all the business they reasonably could?

2. What percent of your referral sources are giving you all the referrals they reasonably could?

The answers to these questions have stunned me, because they have been so low. I knew they would be quite a bit lower than 100%, but I've found that most executives estimate that only somewhere between 0 and 25% of customers are giving them all the business they could. The numbers are even lower for referral sources.

So, let's say that the economic downturn has softened the market for your products or services by 10—20%. Yes, that's a lot. But it pales in comparison to the 75% of the business you are missing if your current customers are only giving you 25% of their potential business.

Here's the cold, hard (but potential-laden) truth: For most companies, the untapped latent profit in their existing customer relationships is much greater than the magnitude of our current economic problems.

The downturn is real. But so is the amount of business you are missing from your current customer relationships. How do you develop this potential with your existing customers?

Customers who believe they are in "We" relationships with you will give you a larger share of their business. They are willing to pay more, and they are less likely to leave you for a competitor. On the other hand, customers who are in "Us & Them" relationships with you are more likely to spread the business around among your competitors, and will also be more likely to bolt to the competition for a lower price. If you create "We" relationships with your customers, one relationship-building encounter at a time, you will go a long way towards making up for—and maybe even surpassing—the effects of the soft economy.

Yes, You Are in Sales!

No matter your job title, no matter your function within an organization, no matter your skills, you must also be a salesperson. Tom gives as an example a successful Hollywood producer who taught himself sales to pave his own path to big success. He continues on to say that if you want to get anything done [and implementaion is paramount to Tom], then you are in sales. Watch the video (3 minutes, 17 seconds) to hear the whole story from Tom himself.

Tom Peters on Yes, You Are in Sales! from Tom Peters on Vimeo.

[If you'd like a transcript of Tom's message, you can download a PDF here.]

Connected Without Banners

Got an email through the website pointing me to this blog at ideasonideas.com that attacked an ad agency exec for being clueless about banner ads. I had to admit that if not clicking on banner ads makes one clueless, then I must be counted among the clueless as well.

But, before my sentencing ...

I do an insane amount of shopping on the Web (I'd bet I go online 30-50 times a day if I'm not speechifying), so does my wife, for any damn thing-category you can name, from clothes to food to books-DVDs-song downloads to trips to used stoves, etc, etc. Moreover, her home furnishings company does 50% of its sales on the Web, and the share is growing. For me, tompeters.com, ad-free incidentally (I'll explain if you'd like), has become my best marketing tool ever, ever, ever.

But neither my wife nor I is a banner-ad user, and I admit to harboring suspicions that Google is over-priced. I am at work on a Japanese garden at home (or will be when the weather allows, a jillion Vermont days from now). Among other things, I-we want a little bridge over a wee stream, the sort I saw a picture of somewhere, Web, mag, whatever. Now what? Susan's and my "now what" is 100% Web, but 0% banner ad. And, indeed, God bless Google. I simply typed in the search box "build or buy little bridge to traverse narrow stream," or some such. As I recall I had 87,000 choices, a surprise, but no surprise, given the # of words I used. Obviously, most were useless-unrelated. But after 15 minutes, and digging waaaaaaaaaaaay down beneath the top 10 or 20 (I always look for stuff deep down just to see what's there), I had a nice starter list of perhaps 20 leads; better yet, my mind, re possibilities, had been stretched beyond recognition. Now to me (old, 65) and my wife (none of your business), that was truly wondrous—100% use of the Web, circa 2008. But not banner ads.

Snide Advertising

An article in the February 18th AdAge.com newsletter, titled "Snide Advertising is Bad for Business and Society," decries the trend toward "sarcastic" and "malicious" advertising.

With examples such as the FedEx "Dean, I need you to continue not living up to your résumé" ad, which you might have seen, author Richard Rapaport shows how pervasive this trend is. "Take the culture's most facile minds, challenge them to pry cash from an increasingly tapped-out audience, and what do you get?" Rapaport asks. "Commercials built on sadism, on derision, on one-upsmanship—in a word, 'snide.'"

Rapaport is right. This trend is bad for business. So why does it happen?

First of all, let's not credit ad agency creatives with being "the culture's most facile minds." The advertising that major agencies practice is still based on the flawed notion that "brute force" wins the hearts, minds, and wallets of consumers. Snide is used because agency creatives (and their complicit clients) mistakenly believe that their goal is to "cut through the clutter." No, the goal is to create ads that blend with all other contacts the customer has with the company doing the advertising, in order to create a connection that encourages the customer to be more involved with that company and its products.

If these minds were so facile, they wouldn't miss, so completely, the point of what they are doing. Or, in a more cynical vein, we could say they know what they are doing, but are more interested in creating clever advertising than in helping their clients' businesses.

Advertising is a sick business. And it isn't just for the oft-mentioned reason that "consumers are using so many more media outlets—the Internet, hundreds of TV stations, thousands of publications."

It is because people just don't buy this way anymore. Customers—your customers—are scrutinizing, savvy, discerning, and self-reliant. They look beyond your promises, and consider every interaction with your company as a chance to evaluate you.

Snide advertising isn't only snide. It is anachronistic.

Super Bowl Rant

Late January always brings, along with the cold weather, news stories about Super Bowl advertising. We hear how Super Bowl advertising is a "no-brainer" because of the audience size, and how advertisers will benefit from "all the buzz."

I disagree with just about all of this news. In this post I will answer the seven most common reasons people think Super Bowl advertising is a great marketing opportunity:

* It's the only time you can reach so many people at one time.
* A Super Bowl advertiser gets extra value because people are interested in being entertained by the commercials.
* But it worked for (insert company name here).
* They must know what they are doing if they are spending so much money.
* You have to be there if your competitors are.
* It's ok if you're a big enough brand and can afford it.
* It burnishes a company's image, and can even increase a stock price.

If you've purchase a 30-second spot for this year's game, prepare to be upset with me.

It's the only time you can reach so many people at one time.

My first question: Why is it better to reach more people at one time? As the size of an advertising audience increases, you are also reaching many people who are not interested in your product. One of the big Super Bowl advertising stories this year is that 45% of the 90 million-person audience is expected to be female. Because of this, brands like Tide (P&G) and Sunsilk (Unilever) are buying Super Bowl ads focused on female buyers. Ok ... but that means they will also be reaching about 50 million disinterested males, at about 3 cents each. That's a lot of pennies.

We live in an age of smart consumers who are not easily sold. A rule for this marketplace: The more people you try to talk to at one time, the less effectively you communicate with each individual person. If you spread your marketing communications a mile wide and an inch deep, you run the risk of creating only superficial connections with customers.

A Super Bowl advertiser gets extra value because people are interested in being entertained by the commercials.

What is this all about, the Academy Awards or investments in improving business performance? People rate the ads on their entertainment value, when the only real value, the one that should be sought, is how well they drive business results. And let's be clear about something: Just because you entertain me, doesn't mean I will buy your product. Listen to people talk Monday morning after the big game—someone will be talking about an ad he likes, laughing uncontrollably as he drinks his coffee, spilling it all over his tie. Then he will stop, and say, "I can't remember what the ad was for, but it was funny."

Entertainment and cleverness do not necessarily translate to purchase behavior, even if they create a smile.

But it worked for (insert company name here).

Yes, some Super Bowl ads work. Putting all your chips on Red 14 at the roulette table in Vegas works once in a while, too. But Super Bowl ads and long-shot gambling bets don't work most of the time. And there is no formula; Super Bowl ad success cannot be predicted, and it can't be duplicated. It is a Black Swan.

They must know what they are doing if they are spending so much money.

Don't suspect that there is a lot of science going on here. There may be some Excel spreadsheet-based pseudo-science, but you should not imagine that companies are analyzing these investments the way they analyze other multi-million dollar investments.

In reality, many Super Bowl ad placements are "vanity buys," to quote a long-time ad agency media department veteran whom I know. In place of thoughtful analysis there is a lot of groupthink and forced rationale taking place.

You have to be there if your competitors are.

One of the first rules of advertising is that you should never make a specific advertising decision because your competitors are doing it. I've given many CEOs this advice: If one of your people tries to rationalize an advertising effort by saying, "We need to be there because our competitors are there," you should not approve the advertising effort. It is almost surely a bad idea, and you should ask for a better reason.

It's ok if you're a big enough brand and can afford it.

Like any risky investment, it should only be made if it can be lost. If you have a big enough marketing budget, and the Super Bowl can be a small piece of your overall effort, complementing hundreds of other touchpoints with customers that blend to create brand harmony, and if you will not be hurt if you lose your total investment, than you may be able to get away with it.

But recognize that it is a risk—a huge risk you are taking with your company's capital, a risk that has a high chance of producing a negative return.

It burnishes a company's image, and can even increase a stock price.

I encourage any marketing executive who wants to make that argument to go to his company's board of directors and stockholders and make it. Shareholders are the least likely to win from Super Bowl advertising. In fact if we think about who wins with Super Bowl advertising, we see that the ad agencies win, the networks win, and the NFL wins. We viewers also win, because we get all this free entertainment in the form of 30 second movies; we will laugh, even if we don't buy. It's the shareholders of the companies paying for the ads who tend to lose, because their management has made a very risky investment, with a high chance of failure. But these investments have been done under the guise of a great opportunity.

The Future Is Now

It is 1973. You are at Disneyworld. You enter Tomorrowland, and after a whirl on Space Mountain you decide to check out the new exhibit on the future of marketing. You hear ...

"By the early 21st century companies won't need to deal directly with customers anymore. Robotic computers, called CRMs, will handle all customer relationships. And, in fact, two companies will be able to create relationships with each other without any human contact, as their computers court each other to build a lasting friendship."

In 1973, delegating customer relationships to computers would have seemed ludicrous. 1973 was also the year Woody Allen introduced us to the "Orgasmatron" in his movie Sleeper. The idea that computers would some day substitute for human interaction was the stuff of satire.

But ...

A few weeks ago, one of our commenters at tompeters.com included a link to the wikipedia.com entry for customer relationship management (CRM). I clicked on the link and saw that the entry did not talk about customer relationships. It talked about software.

A few Google clicks later I was at the whatis.com definition of customer relationship management, which described, "methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships ..."

Hmmm. If you read these definitions you'd think that businesses don't need to deal with the messy task of managing customer relationships on their own. Why bother, when you can delegate this task to a computer?

The November 2007 cover story in National Geographic is about memory. The article sheds some light on this problem, describing a, "vast superstructure of technological crutches that we've invented so that we don't have to store information in our brains. We've gone, you might say, from remembering everything to remembering awfully little. ... What have the implications of this outsourcing of memory been for ourselves and for our society? Has something been lost?"

Yes, something has been lost. The relationship itself has been lost.

Using technology to support collective corporate memory is not a bad thing. The bad thing is using the crutch of the computer to become brain-dead and impersonal.

We need to remember this: CRM systems don't manage customer relationships. People do.

My challenge: Will anyone suggest a definition of customer relationship management that doesn't include the words, "software," "application," "system" or "database?"

Transaction vs. Relationship

I've been a Hilton customer and a Hilton Honors member for years. You wouldn't have known it when I checked into Chicago's Palmer House Hilton last week.

As I left home in the north suburbs for day one of a two-day conference, I threw a change of clothes into the car. A late-afternoon snowstorm was forecast, and I wanted the option to opt out of a hellish commute home. At about 4:30 p.m., I exercised that option and booked the Palmer House on Hotwire.com for $93. That's a really low price for a great hotel. Unfortunately, they felt the need to remind me what a low price I paid.

At check-in, I asked if my Hilton Honors number was in my reservation record. The front desk agent said that I wasn't eligible for Hilton Honors points. "If you book on Hotwire or Priceline, you don't get points."

Hey, I know the price is low. But that's not my fault. That's the Palmer House's problem. In fact, it's not really their fault, it's their fortune. I wish I had such an efficient business faucet when I was in the hotel business—when I put up the first hotel company website in 1994 for Hyatt Resorts, selling rooms and managing inventory online seemed, literally, like 2001: A Space Odyssey.

If a company wants to sell distressed inventory at a low price to a long-time customer, I highly recommend that their frame of reference is the relationship with the customer, not the price of the immediate transaction. The Palmer House has to pay into a redemption liability fund for each Hilton Honors reservation, but, I believe, it is a percentage of the rate they receive, not an absolute number. (I'll try to verify that—if anyone knows for sure, please comment.) It's this simple: If they want my business at times when the market rate for a room is $250, they should really recognize that it's still the same "me" when I buy a room at the market rate of $93.

(And, notice that the front desk agent didn't say, "Mr. Yastrow, since you booked on Hotwire this time, we can't give you points." She said, "If you book on Hotwire or Priceline," which translates, "If you're one of those people who book cheap." Don't call your long-term customers "one of those people.")

Marketing Power!

Years ago I did some work with the Ford division of the Ford Motor Company. I distinctly remember division boss Ross Roberts saying [booming] to me, "Whoever said marketing programs were not powerful is nuts. We have brilliantly trained a generation of consumers not to come into the dealership unless we offer $3,000 off." Likewise, I heard on "Marketplace" this morning that one reason seasonal spending is lower than expected is that consumers won't shop until stores offer deep discounts—which they increasingly do, long before 12.26.

Something about reaping what ye sow, eh?

What Is a Customer Relationship? (Part Two)

Recently we have had some very good discussion about customer relationships—thank you for the comments. Last Friday I offered part one of a two-part definition of a customer relationship:

A relationship is an ongoing conversation with a customer ...

Here's the rest of the suggested definition:

A relationship is an ongoing conversation with a customer, in which the customer never thinks of you without thinking of the two of you.

Comments?

What is a customer relationship?

We've had a great conversation here over the last few days about customer relationships.

What is a customer relationship? I will suggest a two-part definition, but I would like to offer it one part at a time. Here's the first part:

A customer relationship is an ongoing conversation with your customer ...

Comments?

Relationships: A Competitive Advantage

I was eating lunch with an executive of a hotel company, in a restaurant located at one of his company's hotels. He was talking about competitive threats, describing how companies in his category are constantly copying each other's innovations. I said, "If I were your competitor, I could walk into this hotel and easily copy your physical product. I could study your service standards, and copy them too. What I could not copy are the personal relationships you have with your customers. Those relationships would be impenetrable to me."

In an age of interchangeable products and easily duplicated services, customer relationships have become one of the most powerful competitive advantages available to a business. Do you agree?

What about your business? Can your competitors copy your products and services? What about your private relationships with customers? Are those more difficult to duplicate?

We all want our customers to believe "I can't get it anywhere else" when they think of us. Relationships between you and a customer are often the best opportunity to create something unique and irreplaceable in your customer's mind.

Put your "customer hat" on. Aren't you the most enthralled with a business—or most upset—when the relationships you have with that business is either really good, or really bad?

Do you agree—are strong customer relationships one of the best ways to keep the competition away from your customers?

Who Woulda Thunk I:
For Shame On Waterman and Peters!

Bob and Tom are idiots! Neither of them, in 1982 in In Search of Excellence, predicted that in October 2007 there would be a Vanity Fair ad for Louis Vuitton featuring Mikhail Gorbachev sitting in the back of a limo with his Vuitton bag at his side.

Who Woulda Thunk II:
Built to ... Last?

Headline, Wall Street Journal, 3 October 2007: "Wal*Mart Era Wanes Amid Big Shifts In Retail: Rivals Find Strategies To Defeat Low Prices; World Has Changed"

Sentence #1: "The Wal*Mart Era, the retailer's time of overwhelming business and social influence in America, is drawing to a close."

(You know my biases ... I'm not surprised. "Lasting" is a chimera.)

Hi, My Name Is ...

Here is a postulate:

In a retail service business (store, hotel, restaurant, hair salon, etc.) it is always "better" when the customer learns the service employee's first name, either from a personal introduction or a name tag.

Is this true? Always?

If so, what can "better" mean?

The Aflac Duck Is a Black Swan

In a recent workshop of mine we were discussing the waning effectiveness of advertising. A participant asked, "Doesn't the success of the Aflac duck prove that advertising works?" I responded that of course some advertising works, but for every Aflac duck or GEICO gecko there are a million (billion?) ad campaigns that don't work. The success of one does not imply the success of any others.

Then I realized that the Aflac duck is actually a Black Swan.

Nassim Taleb describes Black Swans as "large-impact events with small but incomputable probabilities." Black Swans are often associated with 18th century British philosopher David Hume but, as Taleb points out, Hume never used the term. The similarity comes from Hume's "Problem of Induction" that says that we can't infer anything outside our own experience—I have only ever seen white swans, but that does not prove that there are no black swans.

Taleb is more interested in approaching the same induction problem from the other direction. His Black Swan concept would say one Aflac duck doesn't tell us anything about how likely it is that other similar advertising successes could happen. In fact, as Taleb would say, we are "fooled by randomness" and have a tendency to overestimate the likelihood that unlikely events will repeat themselves. The Aflac duck is an "outlier," a "surprise," not an indication that other companies should spend millions of dollars behind animal advertising mascots.

I will freely admit (possibly opening myself to criticism), that I have not read Bang! Getting Your Message Heard In A Noisy World, by Linda Kaplan Thaler, the creator of the Aflac duck. I'm told by mutual acquaintances that Kaplan Thaler is brilliant. But the idea that we can translate these Black Swans to good, productive marketing decisions for our own companies is completely antithetical to my beliefs. We have been fooled by the relatively infrequent successes of brute-force advertising and branding for too long. We must recognize that these visible successes don't give us any more reason to invest heavily in advertising than does George Clooney's success tell me I should move to Hollywood and try to make it in the movies.

Efficient Toast

There is an interesting article in this month's Harvard Business Review called "Breaking the Trade-off Between Efficiency and Service." The basic idea is that service businesses, unlike manufacturers, have the unfortunate challenge that customers come barging in and interfere with their operations, introducing significant variability. Most businesses think they face a black and white choice:—accommodate the variability, or reduce it. The author, Frances Frei, says there are better ways to address this challenge.

While reading this article, I came face to face with this problem as I tried to order toast.

I was in a local restaurant, waiting for a colleague to show up for a breakfast meeting. I was reading how Frei suggests that there are easy, creative ways to offer either low-cost accommodation or uncompromised reductions in service.

I wanted to order toast while I was waiting, so I wouldn't have to drink coffee on an empty stomach. The waitress described the available choices, and both the multi-grain and rye bread sounded good. I asked her to split the order and give me one piece of each. She said, "We're not allowed to do that." I laughed reflexively. I see all sorts of stupid service decisions in my work, but this one seemed lower than inane. She started telling me about all sorts of rules they have against substitutions, complaining that her boss was needlessly rigid. "Customers always get mad at me, but they don't realize that it's the owner's rules." I jokingly asked her if each loaf had an even number of slices, and maybe he was worried about what to do with odd slices that might be left over.

I told her I'd take the rye, unless she was able to bend the rules. She came back and quickly dropped the mixed order on the table, as if she were delivering some contraband. When she came back to fill the coffee, I thanked her. I said, "You made it happen." She said, "I asked my boss and he laughed, but he let me do it."

Ok, I couldn't resist—I had to say something to the owner. After all, I'm a public speaker always in search of a good story, and I smelled the scent of an anecdote wafting towards me from the kitchen. So, on the way out I saw the owner and asked him about his rule. "I told her you could have it, didn't I?" he said indignantly. "I was just curious," I responded. "It's strange. Why would anyone want two different kinds?" "Did he just say I'm strange?" I thought. "I told her you could have it, didn't I? We just want to keep things simple." He walked away from me, pissed off.

Frances Frei is right that there is often a tension between service accommodation and service reduction. But she tells us that we must understand that trade-off, and then we will find ways to make good choices. But if we don't think things through and try to build efficiency around modest gains, such as policies against Heterogeneous Toast Order Fulfillment (HTOF), we'll end up driving away customers for stupid reasons.

And then, to replace those customers, we'll have to do something much more inefficient than serve combo toast: Advertising.

[We edited this post. The author of the article is named Frances Frei, with an e, and she is female, so we fixed her name and changed the pronoun referring to her. You can see her bio here. We apologize to her for getting her name wrong, and we thank Ryan Buell, one of her students, for setting us straight.—CM]

"We are now allowed"

I was conducting a workshop yesterday with hotel industry salespeople. We were discussing how to have meaningful encounters with customers, and had arrived at a section of the workshop that focused on getting beyond the facade of business roles ("salesperson" and "customer") to see each other as unique, special people.

One participant commented: "We are now allowed to talk about things beyond business, to ask about our customers' personal lives, so we can get to know them as people."

I loved how she articulated that. Her belief—which I share—is that we have arrived at a point in time where genuine human encounter in business is more valued than ever. It is accepted and expected to go beyond the strict bounds of business to create meaningful business relationships.

And, of course, this means that it is not only appropriate to seek to know a customer as a real person, it is important for the person who is selling to reveal his or her humanity. Salespeople playing the role of salespeople is out. Salespeople being themselves is in.

Monologue disguised as ...

The great philosopher Martin Buber described three types of dialogue:

1. Genuine dialogue

2. Technical dialogue (explanations of things)

3. Monologue disguised as dialogue

I loved that description of "monologue disguised as dialogue," where conversation is only a pretense for making one's self heard.

Buber writes that monologue disguised as dialogue is where "two or more men, meeting in space, speak each with himself in strangely tortuous and circuitous ways." In other words, they are really only talking to themselves, and not with each other.

Bad sales pitches, bosses who pretend to listen but only talk, most marketing copy writing ... all of this can be called monologue disguised as dialogue. Have you spotted any of this lately?

Kevin and JCPenney

Kevin Roberts, CEO of Saatchi and Saatchi, and one of our Cool Friends, is going to have to put his money where his mouth is. He just landed a $430 million contract to take over JCPenney's advertising account, and he promises to turn it into a "lovemark" for middle American consumers.

Hmmmm ... let's see if the guy who wrote the book about it can do it. Kevin's really putting his reputation on the line. Anyone want to place bets?

Down with scripting

I see a trend going in the right direction ...

In companies where front-line employees have direct customer contact, it's common for there to be a "12-step process" or "19-point customer service checklist" that tells employees what they have to do when they meet a customer. Often, these companies hire people to pose as customers and rate employee compliance on these steps. I heard a story of a hotel front desk clerk who received an apology at check-out from one of these hired "blind" shoppers who said, "You were one of the best people I've seen in this company, but I'm going to have to give you a bad grade because you skipped a lot of steps."

Ugh. Not surprisingly, when I work with front-line employees at companies like this they tell me how silly the scripted processes are. One company I worked with had a 38-step process. Luckily, none of the employees I interviewed knew what the 38 steps were.

The good news ... I'm starting to see companies realize the folly of this rigid employee scripting. Recent comment from the operations V.P. of a client company: "We don't need a 16-step process. We need one step: Connect with the customer."

Is this a trend that is really happening? If so, is it all good, or am I missing something?

Sell in What Language?

New U.S. Census Bureau stats: Nationally, 1 in 5 Americans speaks a language other than English in the home. In California, it's 2 in 5, and for 2/3 of those California homes the other language is not Spanish.

Celebrity Scents

The Onion's satirical description of Derek Jeter's new fragrance line: "An oxymoron you can smell."

(The Onion must have a thing for Jeter these days. A headline in the same issue: "Expert: Derek Jeter probably didn't need to jump to throw that guy out.")

Short Lived CMOs

An article in today's adage.com discusses recruiting firm Spencer Stuart's latest survey on the longevity of chief marketing officers. The key result: The average CMO lasts in the job only 23.2 months, down from 23.6 just two years ago. More than 50% of CMOs surveyed had been in the job less than a year.

The causes? The implications? I have my thoughts, which I'll share in the comments. Your thoughts?

On Selling

Yesterday's post from Tom about selling has generated a lot of talk. It was chosen for the marketingprofs blog, and it's the topic of a post titled "Selling Stuff" on Clickz.com today. So, take a look, but if you want to comment, we'd of course prefer you do it on our website, not here, but at the original post: "My Schtick."

My Shtick

I'm on a new campaign. (Old campaign, really, but renewed vigor—and I single it out from the noise.) I am trying to put ... SALES ... back on the pedestal it deserves. In the process I suppose I'm down-grading marketing—and that's more than okay per me. Of course I think marketing is incredibly important, but I think it intellectually comes second after sales—and the like of MBA programs have mostly eliminated sales from the picture. Stupid! Hence one of my favorite quotes these days is from Robert Louis Stevenson: "Everyone lives by selling something."

This all came up in a presentation yesterday. I championed my Client's cause—the more intense and focused use of databases and analytics associated therewith in marketing. I said, fine—as long as you'll substitute the word "sales" for "marketing." I claimed—and I'm faithful to it in practice—that my two favorite "businessman's terms" are: Sales. Revenue. (Good stuff.) (Very good stuff.)

I also cautioned about the use of "integrated marketing." I said, "Fine, as long as we fully comprehend that said 'integrated marketing' is in service to 'selling more stuff.'" On a roll, I suggested that the extended use of data did not mean, as some said, that "marketing" was going "left brained" (more analytic). Data and analysis, by the front-end-loader-full? Fine! But ... all sales-marketing is in the end about the "Two Es"—Emotion and Experiences. And this is as true for commercial sales as for consumer transactions. The increasingly sophisticated and intense use of data and analytics is effective only to the extent that it supports emotion, experience, sales, and revenue. Period.

I'd acknowledge that's a little strong—but my point, as usual, is to correct what I see as incorrect biases.

Relationships

What are the characteristics of a great customer relationship?

"Side effects may include ..."

I don't think pharmaceutical advertisers should be required to include medical disclaimers in their television commercials.

You know what I'm talking about—"Side effects may include nausea, bloating and diarrhea ..." "Be sure to tell your doctor if ..."Do not take this medication if ..."

Requirements to include these warnings are based on the fallacy that the advertising will sell the product. The advertising is a small piece of the sell, and the doctors and product literature, which are also part of the sell, can fill in the warnings. Why should the rest of us have to listen to that unpleasant information? After all, a campaign might be successful and still have 99%+ of viewers not in the target audience. So don't make the rest of us listen to that stuff. The video of happy patients is insufferable enough.

I'm all for protecting patients. But let's not inflate the power of the ads—which don't function in a vacuum. Let the doctor do the dirty work when only the interested patient is listening. (If he can't be trusted to do that he shouldn't be trusted to prescribe the medication. TV commercials do not exist to protect us from doctors.)

Go Steve. Go Trevor.

Power. Simplicity. "Customer = Anyone whose actions affect your results." This keeps rolling around in my head. Profound. Profound in its implications. Way cool.

[Tom's referring to this blog entry by Steve Yastrow.—CM]

Strange Choice

A current commercial for Just For Men hair coloring features the music of this Jackson 5 song, which we've all heard thousands of times:

Ain't nothin' like the real thing, baby

Ah—the difference between saying something and being understood.

This was, most likely, the rationale Just For Men used to justify the choice of song: "Our product is so genuine and authentic that people will assume it's the real color of a person's hair."

But I'm sure I'm not the only one who hears, "This product ain't nothin' like the real thing."

Refine to Simplicity

I have, for the past few years, been using the following definition of a customer:

Anyone whose actions affect your results

I have found it to work in just about any situation. (It helps explain why vendors and employees are customers, too. Not to mention bankers and municipal authorities.)

Comments?

Display of self-confidence

Last line of voiceover in a commercial for Grape Nuts Trail Mix Crunch Cereal:

Tastes so good you won't believe it's Grape Nuts!

Message to Ad Execs

John Stratton, chief marketing officer at Verizon Wireless, spoke at a gathering of 400 ad agency and entertainment executives last week. His message: He is not happy about spending $1 billion a year on "overvalued, inefficient, rapidly eroding mass market advertising platforms that continue to under deliver."

He offered 8 points of warning to the audience, which are included in the extended entry. (Reprinted from adage.com) Do you agree?

John Stratton's 8 points of warning:

1. Your clients are absolutely in trouble and they are looking for you to save them.

2. What you've been selling for the last fifty years no longer works.

3. Major marketing money is going to be in motion in the next decade and no one really yet understands exactly where it will land, if it even will land, or if it will just disappear altogether.

4. Before they figure out where to put their money, your marketer clients will hire and fire agency after agency, seeking someone, anyone, who can tell them where they might go next.

5. CMO average tenure, already famously brief, will get even shorter as CEOs begin to recognize how much money they are blowing on antiquated media plans.

6. Your marketer clients are really seeking one thing and one thing only: An audience for the message they are trying to convey to the market place.

7. But your clients actually need more than just an audience. One of the consequences of the evolution of our media delivery systems over the last ten years is that the audience you do ultimately find is much less receptive to the message you're trying to send. They are absolutely armed and ready to get to the content they want while avoiding the message you are trying to implant within it.

8. They need much more than an audience. They need an audience that cares about what they have to say. They need their message to be relevant to the audience they are saying it to.

A Billion Is Not a Billion

Steve Rushin's column in Sports Illustrated this week is titled "A Billion People Can Be Wrong." He quotes a number of publications that claim the Super Bowl will be watched by 1 billion people in 225 countries. He then provides stats that show only 93 million people watched last year, with 98% of them in North America. As he points out, we're only 907 million people short of a billion.

Why is the Super Bowl such a hype magnet? Why are the advertising rates and the viewer stats so inflated? (Maybe this is where football's steroid use can be found). Yes, 93 million is an awful lot, but it sure isn't a billion.

Tulipmania & Football

With one week to go, Superbowl advertising is nearly sold out at $2.5 million for 30 seconds.

I'm in the middle of a great book, Michael Pollan's Botany of Desire, which gives us an interesting take on what might cause this kind of absurd spending. We've always looked at the domestication of plants and animals as a symbol of humanity's power over other species. Pollan turns this idea on its head, showing how four species of plants have exploited different human desires to help them thrive. The four plants and the related desires are the apple (sweetness), tulip (beauty), marijuana (intoxication), and potato (control). We have to ask, who is the domesticator, and who is the domesticated? Makes me think of Superbowl advertising. (Read on ...)

The Tulip chapter describes the Tulipmania craze in Holland during 1635-1637, where prices for tulip bulbs and futures contracts on these bulbs rose to unbelievable levels. In Pollan's world, this isn't only a story of human greed and the non-wisdom of crowds, but it's also a story of how the tulip was able to take advantage of a human need. The Dutch, constrained by Calvinist morals and living in a drab, monochromatic environment, were vulnerable to the tulip's brilliant beauty. This gave tulip genes an opportunity to replicate themselves in great numbers. Tulipmania was not only good for the speculators who were able to sell and collect, but was also really good for the tulip.

My contention: Although a few advertisers may benefit from Superbowl advertising, the only sure winner is the broadcaster. Let's not kid ourselves about the real value in Superbowl advertising. The broadcasters have cashed in on marketers' need for notoriety (notice I didn't write the word "sales").

The bursting of the Tulipmania bubble started small and exploded quickly. When one seller couldn't get his price, the word spread and the market went into a rapid collapse. Ultimately, this was very good for the economy in Amsterdam. One day, in the not too distant future, it's possible that the broadcaster of the Superbowl won't be able to get its price and that market could collapse also. That might be the best thing for Superbowl advertisers.

The Emperor's New Homepage

Last September college student Alex Tew launched a new business to fund his college education. It was called "The Million Dollar Homepage." His scheme was to sell advertising space on a 1 million pixel homepage to advertisers for $1 per pixel.

Believe it or not, The Million Dollar Homepage is sold out. Most of the ads are tiny (the minimum was a 100 pixel ad), so the result is a visual cacophony of banner ads like none you have ever seen. If it's true that the average American is exposed to 5000 advertising and promotional messages per day, you can get your minimum daily requirement just by going to The Million Dollar Homepage every morning.

I can easily imagine the thoughts and discussions people concocted to convince themselves to make this marketing investment. "Just think of the PR value." "We'll capture so many eyeballs." "It'll be so hot, we gotta be there."

How anyone could think this is great marketing is beyond me. It represents the worst of clutter culture, where the customer is so overwhelmed by noise that nobody (except Alex Tew) can possibly get something out of it.

And, of course, most of the ads it has attracted are pretty junky. Sure, the Times of London is an advertiser, but its ad is in the vicinity of one for "Busty Mousepads" and another one for "Revenge," where a mouseover reveals this copy: "Get revenge on ANYONE quickly—send them a (fake) poo today!" Great proximity for the Times. There are, of course, the obligatory ads that are nothing but a micro picture of an attractive woman. Put your cursor over one and it will reveal "STRANGE DISEASES—Bizarre Medical Pictures." Another female picture brings forth the copy "Medical writer/pharmaceutical and sales training." Wow, now that's effective advertising.

So Alex Tew seemed like the only winner, until some extortionists threatened to hack his site if he didn't pay them. He refused and they shut down his site for 5 days, and now he's being sued by advertisers whose ads weren't viewable during that time. Yes, these litigants are just looking for more "PR value."

"Remarkable" Is a Remarkable Idea!

"TV is not dead, but if you're going to do TV, you have to create stuff that people seek out. Just because you buy 30 seconds doesn't mean you'll have an impact. You have to do something remarkable with it."—David Lubars, Creative Director, BBDO (USA Today/12.19.2005

"Remarkable." Duh! (But invariably honored in the breach.)

Badvertising: Ameritrade

The Ameritrade TV spot opens with a 15 year old girl coming into the room to ask her dad for money for some new jeans. Dad asks about the jeans, and as he hears about them, his investment antennae go up. "What kind of jeans?" She tells him the name of the brand. "Are they designer jeans?" "Yes," answers the daughter. "Are they popular?" "Everybody's got them." "Everybody's got them?" "Yep."

Dad's brow furrows. He sits down on the couch and opens his laptop. Asks his daughter the name of the jeans again. Buys 100 shares. Sits back looking satisfied. She then, predictably, has to remind him to give her the money to buy a pair of the jeans. Cute.

Isn't this just the problem with amateur online investing, that by the time "everybody" has bought the jeans a ton of vigilant investors will have bought the stock, and the poor Ameritrade customer will have to buy high and sell low? Doesn't this look like it is advertising designed by an amateur investor?

Project Jalapeño

Yesterday's "Cubicle Culture" column in the Wall Street Journal discussed how frequently companies confuse employees with catchy slogans intended to motivate them. Empty names like "The Big Event" and "Dare to Be Different" sound great when execs make them up, but often don't mean anything to employees. The article describes an old IBM slogan, "A Quarter At A Time," which was designed to improve short-term results, but was interpreted by a manager in this way: "I have a $14 million quota. That's a lot of quarters."

We've all seen this kind of stuff. Why does it happen?

Here's my take: Internal marketing programs are critical. A company can't create internal or external brand harmony if its people have conflicting views about what the company is and what it intends to be.

But, most companies don't take the process very seriously. They create slogans with no underlying strategic "genealogy," and then use clumsy advertising-influenced methods for communicating with their own employees. Any wonder why employees are confused?

So, is the problem with the general idea of internal marketing, or with the way it is typically executed?

M Squared

Ed Cotton, over at Influx Insights (one of our favorite blogs), just gave us the low down on an upcoming conference about the future of marketing called M Squared. It's September 27th at the Presidio in San Francisco. Howard Rheingold, author of Smart Mobs and one of our Cool Friends, will be speaking. And so will Chris Anderson, editor of Wired Magazine (yes, he's the one who started the buzz about The Long Tail). That's enough to convince me to want to go. If you need more, check out the rest of the line up here.

Giving Nike A Run For Their Money

The announcement today that Adidas will buy Reebok is certainly going to shake things up in the world of sports marketing and merchandising.

Badvertising: Depend

A current television ad for Depend Undergarments talks about how convenient Depends are to take with you during a busy day, and there is an image of a woman popping a package into her briefcase. Before she closes the lid, you notice that the package is really easy to see, and the word "Depend" screams out at you. The image doesn't make sense—most people don't want to share their personal maladies at the boardroom table when they open their attaché to pull out another copy of the monthly reports. Then, at this point in the commercial, the voiceover says, "And our brand new package is designed to be easy to find on store shelves." Yeah, and easy to spot every time I reach into my briefcase for another Altoid.

Adult incontinence is, of course, nothing to be ashamed of. But the second most important reason people use Depends is so nobody else knows they have this problem. (Don't you dare ask, "What's reason number 1?") This is another instance of the advertiser being so proud of their accomplishment ("We have a new package!") that they have to tell everyone, even if it's the wrong message.

I took a look at the Depend website and the new package is promoted prominently at the top of the page. The copy says, "The discreet packages are designed to help you find the product quickly." Yeah, that's discreet—the number one name in incontinence protection is written in bold letters, with a picture of adult underwear right below it. If the strategy is discreet, then go discreet. But don't assume your customers will accept a dissonant message just because you say it.

Is mega-discounting good?

A recent article in the Christian Science Monitor's Ethical Investing section asks the question "Who benefits from rock-bottom pricing?"

Discount retailers are known to pay low wages and force local shops to close. But, they give people with limited means access to a broad range of products at low prices. On balance, are they good or bad for society?

The article points out that it's not easy to answer this question, saying that, "discount retail is a complex business with more winners, losers, and tough ethical tradeoffs than public debate routinely acknowledges." Although many workers and entrepreneurs are worse off, a much larger number of consumers are better off. What do you think?

Badvertising: Gibson Guitars

I have been a guitar player for 34 years. I love it. I know guitars. I can often tell what brand of guitar is being played when I hear it. I fell in love with Gibson guitars listening to Duane Allman & Dicky Betts on The Allman Brothers Live at Fillmore East back in my high school days.

The latest issue of Time magazine carries a Father's Day ad for Gibson Guitars, encouraging people to buy dad the gift of a guitar on Father's Day. Is this a good marketing idea?

Some of my friends play guitar. But most don't. In fact, even though guitar is one of the most popular musical instruments, the actual number of players is very small relative to the population. Can an ad in Time magazine be a good investment for Gibson? Or, is Gibson deluding themselves that "getting their name out" in Time will be good for their business?

Can't Buy Me Love

10 years ago, I moved into a new office and started using a travel agent across the street to book business travel. She never once tried to solicit my personal leisure travel, although I did have her book hotel rooms in Europe about 4 years after I'd begun to use her.

Her effort on my personal travel was, to say the least, lame. Didn't seem like she cared to be doing it, and I pretty much stopped using her for anything after that. About the same time their agency joined a travel agency consortium called Virtuoso, and I started receiving Virtuoso's quarterly glossy leisure travel brochures, overprinted with the local agency's name and address.

I've never received a personal call from them—over 10 years—to solicit my leisure travel, and the one time they did a trip for me they put in a weak effort. Yet, they're spending money 4x/year to send me leisure travel brochures that I'm not responding to.

Why do people think that the secret to marketing is to pay someone to do it for you? Great marketing isn't something you can buy. You have to do it.

FCC Worries

FCC commissioner Jonathon Adelstein spoke out this week about the increasing commercialization of media, decrying subtle advertising product placements and news "experts" who are really being paid by sponsors. He spoke of the need for clearer notice to consumers when news is "fake" or products show up on TV in exchange for payment.

What do you think? Should there be stricter guidelines revealing sponsorship? Or, should consumers make the call, by either watching (or not watching) the shows or buying (or not buying) the products being pitched?