Paul Wallbank – Communications Professional
Comms, journalism and writing
Is Madrid renaming a metro line as part of a sponsorship deal a good idea?
Madrid have renamed a subway station to Vodafone Sol and plan to rename an entire metro line as part of a corporate sponsorship deal.
Personally I think renaming places changes the culture of place; something well understood by dictators but possibly not so well by corporate marketing people.
Do you think this is a good idea?
Picture of Madrid Sol station courtesy of Zaqarbal through Wikimedia
How real is the lipstick effect? The Irish experience says it’s complex.
During the recession much was made about the ‘lipstick effect’ – the idea some businesses and products would survive because they’re little luxuries that cash strapped consumers will spend on while scrimping and saving in other areas.
Some of those areas are ladies’ cosmetics (lipstick), chocolate, movies and coffee shops. All of them offering small pleasures for a few dollars.
It’s a theory I’ve always been sceptical of and an episode of the BBC’s World Of Business where Peter Day travels to Cork to see how Ireland’s second city is recovering from the great recession illustrates the reality is a lot more complex than the theory suggests.
“We really struggled to keep alive,” Claire Nash of Nash 19 restaurant says in her interview with Day on her business experience during the recession.
“My turnover just absolutely took a spiralling tumble and it wasn’t that the customer weren’t coming in – those that had lost their jobs weren’t coming in – but those that hadn’t lost their jobs were really hurting and they were very careful with their spend.
“So they started using us as a treat, which was a model I never wanted to enter into but we weathered the storm.”
It can be argued that Claire survived because of the lipstick effect – she kept enough customers to survive – but it was tough and had she taken out the loans offered to her during the boom it’s unlikely her restaurant would have survived.
The key point though is the lipstick effect turned out to be a very different, and much less lucrative business, for Claire and other businesses in Cork.
So assuming a business will remained unscathed because of the assumption the lipstick effect is a big risk, if that’s the plan then Sequoia Capital’s infamous Powerpoint of Doom comes to mind.
While the presentation was aimed at tech companies and investors, it’s a good overview of how the Global Financial Crisis happened and Slide 49 – Survival of the Quickest – is probably the best lesson for any business: Act fast to adapt.
The lipstick theory is a nice way to justify unsustainable business models, particularly those that rely on consumer spending, in the face of a recession but the assumption spending will remain the same as customers will seek little luxuries is deeply flawed.
A business that doesn’t respond quickly to changed circumstances and reduced spending is one that might not survive a downturn.
Peter Day’s Cork story is a good listen on how Ireland and Cork have weathered the global financial crisis, the main question from the piece is how much have the Irish and the rest of the world learned from the mistakes of the boom years at the start of the 21st Century.
The next few years promise to be interesting for everyone in the social media industry, particularly Facebook’s shareholders and advertisers.
Facebook is further restricting the reach of brands on their social media platform reports industry news site Ad Age.
It’s not surprising that Facebook is doing this seeing their stock is currently trading at 120 times current earnings and sixty times estimated revenue. The income has to come from somewhere to justify those prices.
The social media service is quite blunt about it’s objectives in making brands pay more to get their message out on Facebook as Ad Age reports;
“We expect organic distribution of an individual page’s posts to gradually decline over time as we continually work to make sure people have a meaningful experience on the site.”
Facebook’s idea of a meaningful experience though might be very different from its users, who are showing their irritation with the service messing around with their news feed. It remains to be seen just how interested those posting on the site are in clicking on sponsored or promoted posts as opposed to finding updates from those they care about.
For smaller businesses, Facebook’s moves make it harder to use the service as an effective marketing or engagement platform as it means stumping up substantial amounts of money to get your messages in front of your customers and friends.
It’s going to be interesting to see how this pans out for Facebook and the social media marketing community. It may mean that social advertising is monopolised by big brands while small and local business finds other channels to get their message out.
One thing is for sure though, the idea that social media would replace the news media is beginning to look shaky as people’s feeds start to be dominated by messages they don’t want.
The next few years promise to be interesting for everyone in the social media industry, particularly Facebook’s shareholders and advertisers.
For smaller businesses, it’s clear that Facebook is no longer a cheap marketing platform.
As seen on TV was a great way to sell in the 1960s, is it still valid fifty years later?
In a local shopping centre over the weekend this business was selling massage tables using the fact they’d been mentioned on TV to enhance their reputation.
Citing an appearance on TV in the hope of improving your credibility is very much a mid-20th Century way of doing things. In the 1960s or 70s an enthusiastic mention from a TV host was the way to get the punters beating a path to your door.
Today, things aren’t quite the same. TV was on a decline as a trusted medium – despite the successes of talk show hosts like Oprah Winfrey – long before the internet arrived. The web bought social media and now buyers can consult their friends and peers before deciding to buy.
What was interesting about the sign was there was no indication of a social media presence or web page and that in itself showed how old school this business’ advertising was.
For the business owner, it would have been hard work getting a mention on TV. Space isn’t cheap to buy and getting a mention on a current affairs show requires either the services of an expensive PR agency or many hours of bugging producers and not a small degree of luck.
Then again, maybe a complete lack of online engagement didn’t matter. The shopping centre I was in would have an average customer age well over forty and, most of the market the business was aiming probably comes from the sizeable retirement village across the road.
How this business ignores modern communication channels is instructive about the generational change in business and society, particularly on how different age groups find their trusted sources.
Peter Coffee, Salesforce Vice President for Strategic Research discusses the new business normal where mobile services, collaboration, community and understanding your data are essential tasks for every manager.
Salesforce’s Executive Vice President of Strategic Reserach, Peter Coffee joined the Decoding The New Economy channel at last week’s Dreamforce conference to discuss the new normal — delighting the customer.
Coffee’s role at Salesforce is to help the company’s potential clients understand the new normals of business life. “It’s a lot of listening,” he says.
In describing the new normal, Coffee is in tune with Salesforce’s CEO Marc Benioff in seeing mobile services as being one of the key parts of how business will look in the near future.
“The fundamental statement is your mobile device is no longer an accessory,” says Coffee. “It’s the first thing you reach for in the morning and it’s the last thing you touch at night.”
“Fundamentally people are mobile centric so we need to rethink our operations.”
It’s not just mobile services that are changing the way we do, social media continues to be companies’ weak points in Coffee’s opinion.
“There’s research that’s come out of places like MIT that shows traditional print and broadcast media are still valuable for creating awareness of your brand but the final step of turning someone from knowing who you are into deciding to do business with you is now made today only when a trusted network confirms it.”
“People don’t make that final step of buying from you until they’ve consulted their trusted advisors.”
“Another fundamental change that’s happened is that the connectivity of the customer is such that if you have a customer that’s unhappy with you for even five or ten minutes there’s a tweet or a Facebook post or a LinkedIn update just begging to leak out and damage your brand,” says Coffee.
“The closer you can get to instantaneous resolution to the issue, the better.”
With the internet of machines, the ability to resolve customers’ problems instantaneously becomes more more achievable in Coffee’s opinion.
“Connecting devices is an extraordinary thing,” says Coffee. “It takes things that we used to think we understood and turns them inside out.”
“If you are working with connected products you can identify behaviours across the entire population of those productslong before they become gross enough to bother the customer.”
“You can proactively reach out to a customer and say ‘you probably haven’t noticed anything but we’d like to come around and do a little calibration on your device any time in the next three days at your convenience.'”
“Wow! That’s not service, that’s customer care. That’s positive brand equity creation.”
All of these mobile, social and internet of things technologies will give businesses the tools to delight their customers and Coffee sees that as the great challenge in the new business normal.
While many businesses will meet the challenges presented by mobile customers and their connected machines Coffee warns those who don’t are in for a painful time.
“If you do not have delighted customers you have no market.” States Coffee, “the way that you delight customers is by making sure every interaction with you leaves them happier than they were before.”
“Traditional silos of sales, service, support and marketing must be dissolved into one new entity which is proactive customer connection.”
“Companies that neglect to adopt it will discover they have customers who are sensitive to nothing but price,” warns Coffee.
Paul travelled to Dreamforce in San Francisco as a guest of Salesforce.
Businesses have the opportunity to build global brands and dominate their industries with the online tools we have available.
Industrial designers and engineers are probably the last thing most of us think of when discussing online communities.
Last week two very different events illustrated just how successful businesses benefit from building communities around their products and services.
Over lunch at a nice restaurant overlooking Sydney Harbour Dassault Systemes launched their their latest Solidworks 3D design software where they described the two million members of their global user community as being key competitive advantage in the industrial design market.
In the business sector, having that ecosystem of users is the key success as shown by businesses ranging from AutoCAD to Photoshop. Almost every industry has some software package that dominates the sector because ‘everyone uses it’.
At the other end of the scale earlier in the day PayPal Australia launched their latest Driving Business Online campaign showcasing online commerce tools for the small to medium business sector.
One of the companies they profiled was Brisbane fashion company Black Milk Clothing, a Brisbane based business that has grown from a startup to employing 150 staff in four years entirely through its 560,000 strong Facebook community and 655,000 Instagram followers.
While there’s risks with relying on social media platforms as a primary marketing channel, Black Milk is a good example of what a retail business can do with building an online community.
None of this is really new, Apple are probably the best example of a tech community with millions of adoring fans prepared to queue around the block for the latest iPhone.
Microsoft’s continued profitability despite being in a declining market comes from its army of developers, system admins and IT support services who are deeply committed to the company’s products.
At it’s most basic, every business needs a core of dedicated customers, committed staff and enthusiastic evangelists — with today’s tools companies like Black Milk are able to build a global brand.
Not every business can build a global brand out of their communities of enthusiastic customers and dedicated employees but the goodwill in those groups are quite possibly the biggest asset any organisation has.
With today’s online collaborative tools and social media services there’s no excuse for a business not be nurturing and growing their communities.
Every tech product demonstration is theatre and Steve Jobs showed how it was done with the iPhone launch
“Today Apple reinvents the smartphone.” Steve Jobs announced at the 2007 Macworld Conference when he showed off the new Apple iPhone.
As with most of Jobs’ speeches, the iPhone launch was an impressive display combining the man’s talents, vision and technology to rally Apple’s adoring masses.
Last week the New York Times magazine had an excellent feature on the story behind the landmark launch of the iPhone. It’s worthwhile reading to understand the theatre that goes behind a major tech company’s launch event.
In the case of the iPhone, a myriad of tricks had to be performed to make sure the still being developed device didn’t fail in Steve Jobs’ hands during the launch – one can be sure the Apple founder wouldn’t have been as relaxed as Bill Gates when a Windows 98 system crashed onstage a decade earlier.
A key part of Jobs’ presentation was the ‘Golden Path’, a script that would showcase the iPhone’s features while avoiding known problems.
Hours of trial and error had helped the iPhone team develop what engineers called “the golden path,” a specific set of tasks, performed in a specific way and order, that made the phone look as if it worked.
Much to the relief of Jobs’ staff, the demonstration worked flawlessly and Jobs’ polished presentation showed why he was one of the most admired, if flawed, business leaders of his generation.
While most tech CEOs could never dream of emulating Steve Jobs, almost every one has a ‘golden path’ to show off their product in a new light.
Something we should remember when watching these demonstrations and the press coverage that follows is that most of them are carefully staged theatre and we should hang onto our wallets until well after these devices are on the shop shelves.
As it turned out, the iPhone was a spectacular success and did re-invent the smartphone industry. Along with being able to deliver a killer presentation, Steve Jobs was also good at driving teams to deliver his vision.
The evolution of Roamz into Local Measure tells us a lot about how businesses can use social media and online local services.
What do you do when paying customers tell you they would rather your product be different to what you were offering? This is the predicament that faced Jonathan Barouch when he discovered the real market for his Roamz service was in social media business intelligence.
How Jonathan dealt with this was the classic business pivot, where the original idea of Roamz evolved into Local Measure.
Originally Roamz was set up to consolidate social services like Twitter, Foursquare and Facebook. If you wanted to find a restaurant, bar or hotel in your neighbourhood, Roamz would pick the most relevant reviews from the various services to show you what was in your neighbourhood.
The idea for Roamz came from when Jonathan was looking for places to take his new baby, jugging several different location services to find local cafes, shops or playground is hard work when you have a little one to deal with.
A notable feature of Roamz was the use of geotags to determine relevance. Even if the social media user doesn’t mention the business, Roamz would use the attached location information to determine what outlet was being discussed.
While Roamz was doing well it wasn’t making money and, in Jonathan’s words, it was a “slower burn, longer term play”. On the other hand businesses were telling him and his sales team that they would pay immediately to use the service to monitor what people were saying about them on social media.
“People said, ‘hey this is cool, we want to pay for this.” Jonathan said of the decision to pivot Roamz into Local Measure.
“I want to say it was a really difficult decision but it wasn’t because we had people saying ‘we want to pay you if you continue with this product.’”
Local Measure is built on the Roamz platform but instead of helping consumers find local venues, the service now gives businesses a tool to monitor what people are saying about them on social media services.
The difference with the larger social media monitoring tools like Radian6 is Local Measure gives an intimate view of individual posts and users. The idea being a business can directly monitor what people are saying are saying about a store or a product.
For dispersed companies, particularly franchise chains and service businesses, it gives local managers and franchisees the ability to know what’s happening with their outlet rather than having to rely on a social media team at head office.
The most immediate benefit of Local Measure is in identifying loyal users and influencers. Managers can see who is tweeting, checking in or updating their status in their store.
Armed with that intelligence, the local store owner, franchisee or manager can engage with the shop’s most enthusiastic customers.
Customer service is one of the big undervalued areas of social media and Jonathan believes Local Measure can help businesses improve how they help customers.
“It makes invisible customers visibile to management,” says Jonathan.
An example Jonathan gives is of a cinema where the concession’s frozen drink machine wasn’t set currently. While the staff were oblivious to the issue, customers were complaining on various social media channels. Once the theatre manager saw the feedback he was able to quickly fix the problem.
Employee behaviour online is also an important concern for modern managers, if employees are posting inappropriate material on social media then the risks to a business are substantial.
“From an operational point perspective we’ve picked up really weird and wonderful things that the business doesn’t know,” says Jonathon. “Staff putting things in the public domain that is really damaging to brands.”
“We’ve had two or three cases of behaviour that you shudder at. I’ve been presenting and it has popped up and the clients have said ‘delete that, we don’t want that up’ and I say ‘that’s the whole point – it’s out there.’”
That’s a lesson that Domino’s Pizza learned in the US when staff posted YouTube videos of each other putting toppings up their noses. Once unruly employees post these things, it’s hard work undoing the brand damage and for smaller businesses or franchise outlets the bad publicity could be fatal.
Local Measure is a good example of a business pivot, it’s also shows how concepts like Big Data, social media and geolocation come together to help businesses.
Being able to listen to customers also shows how marketing and customer service are merging in an age where the punters are no longer happy to be seen and not heard.
It’s the business who grab tools like Local Measure who are going to be the success stories of the next decade, the older businesses who ignore the changes in customer service, marketing and communications are going to be a memory.
Qantas Airlines learns the hard way that social media doesn’t sleep, unlike its marketing department.
One of the truths of social media is it gives idiots an opportunity to expose themselves for what they are.
For businesses using social media idiots posting stupid or offensive content on the company’s site or Facebook page can do a lot of damage to their brand and reputation.
This is the problem Australian airline Qantas faced last week when some fool posted a pornographic image to one of the company’s promotions pages.
As the Sydney Morning Herald reports, the father of an eight year old reported an inappropriate post to the airline after his son found the image while visiting the Qantas Wallabies page. He was allegedly told by the company’s social media staff “there was nothing we can do about it.”
The father points out correctly that both the airline and Facebook are 24 hour operations so claiming a post that is put up at midnight – one assumes Eastern Australian time – is out of hours seems to be disingenuous.
Until recently, businesses had given social media responsibilities over to the intern or the youngest person in the office. While organisations like Qantas have moved on from that, they largely leave these tasks with the marketing department.
While marketing is a valid place for social media responsibility – it’s probably the most obvious area to establish a return on the functions – it leaves organisations vulnerable to out of hours customer service and public relations problems.
Social media doesn’t knock off at 5pm and spend the evening a bar like the marketing department, it’s on all the time and customers are using it to complain about problems while twits and trolls are gleefully posting things to embarrass businesses.
For those businesses who do operate on a 24 hour basis, and probably all big corporations, it’s no longer good enough for the social media team to just operate during office hours.
Smaller businesses have a different problem – most don’t have the resources to keep a 24 hour watch on their Facebook page but the effects of a social media disaster could be proportionally far greater – so they shouldn’t be overlooking regular checks on what people have posted to their business sites.
What’s happening in social media is part of a broader trend in the global economy that’s been going on for thirty years as the pace of business has accelerated. It’s something that all managers, entrepreneurs and company owners need to understand.
3DTV was seen as the great hope of the consumer electronics industry, it’s failure proves hype doesn’t always beat substance.
The news that ESPN is closing down its 3D sports channel is the beginning of the end for an innovation that nobody really wanted.
In the 1980s, telephone companies rolled out digital services under the name ISDN – Integrated Services Digital Networks – which were expensive and appealed to few businesses, gaving them the nickname Innovations Subscribers Don’t Need.
3D TV fits that description of an innovation which customers never wanted. While the technology was seen being the great hope of stimulating sales in a moribund consumer electronics market, consumers were never really convinced.
The 3D TV push of the last two years is typical of many technology products in that there isn’t an immediate need for them but manufacturers and retailers hope that they can hype a market into existence.
Usually that model fails, but not always.
Sometimes though, these technologies are subject to their own hype cycle and over time they come back in ways we don’t quite expect.
It’s difficult to see how 3D TVs can make a comeback but who knows? What we do know though is they were expensive toys for the few who bought the hype.
The State Of The Internet report reveals the twenty billion dollar advertising opportunity that still hasn’t been taken.
It’s been a big week of reports with three major sets of findings being published; Cisco’s Visual Networking Index, IBM’s Retail Therapy and, the biggest one of all, Mary Meeker’s annual State Of The Internet.
With a PowerPoint overview weighing in a 117 slides, this year’s state of the internet is a meaty tome with some fascinating observations that compliment Cisco and IBM’s findings which hopefully I’ll have time to write about on the weekend.
On slide five of the State Of The Internet is what hasn’t changed Meeker describes the $20 billion internet opportunity being missed.
Basically online advertising is not keeping up with the audience, the time spent on media versus advertising spend is lagging.
What’s notable is that this is the third year that Meeker has flagged this disconnect, yet advertisers still aren’t moving onto the web in the way audiences are.
The print media industry though seems to be dodging a bullet with a disproportionate amount of advertising continuing to spent on traditional advertising – 23% for only a 6% share of consumers’ time which implies there’s still a lot of pain ahead for newspapers and magazines.
For the online media, it shows there’s a great opportunity for those who can get the model right.
What that one graph shows is that the disruption to the mass media publishing model is a long way from being over.
How short term management thinking caught energy suppliers and telecommunications providers short.
The news that energy companies have decided to drop direct door to door selling in the face of prosecution is the latest example of poor thought out performance metrics and managers unsuccessfully trying to shift risks out of their business.
Electricity and gas distributors Energy Australia and AGL embarked on a door-to-door sales campaign to gain more customers. Like most modern corporations, they don’t do this stuff themselves and engaged outsourcing companies who in turn took on commission salespeople to do the ground level selling selling.
It didn’t work well and in face of complaints, both companies had to back away from their campaigns after suffering legal and reputational damage.
The sad thing this has happened before, at the time of telecoms deregulation in the 1990s telcos did the same thing to grow their market share. Door to door sales teams fanned out across the suburbs to sign households up to telephone plans.
In one example, a company hired dozens of backpackers, bussed them to outlying suburbs and sent them out on the streets to sign up as many households as possible.
Initially the campaigns were a success with providers reporting increased signups, greater market share, fat executive bonuses and happy commission earning salespeople.
Then the complaints began.
Customers discovered they’d been lied to, or in some cases falsely signed up, as hungry salespeople did everything they could to get a commission.
At first the telcos thought they could throw the problem over the fence so they blamed the contractors. Eventually the damage became so great the telcos had to back down on their door to door selling as problems multiplied and consumer protection agencies expressed their irritation.
At the heart of the problems with this type of door to door selling is the mismatch of incentives – for managers, contractors and the teams going door to door in the suburbs.
At the coalface are the salesteams trudging around suburbs. In the 1990s telco boom they were largely made up of backpackers whose interests were to sign up as many customers as possible in order to fund the next stage of their travels.
Often, the telco or its contractor would only discover a sign up was the family dog or toddler long after the traveller was sunning themselves at Koh Phi Phi.
Using Indian students as the energy contractors were doing largely fixed some of the worst excesses of the 1990s but it didn’t address all of the problems
Driving the rush for sign ups are usually poorly designed management Key Perfomance Indicators – a dumb set of executive benchmarks rewards poor behaviour and creates unforeseen risks. Particularly when those KPIs are focused on short term metrics.
Very quickly the risks in the short term focus become apparent and managers back off from these programs.
In this case it appears Energy Australia’s managers heeded the early warnings and backed off before the problem became too great, unlike the telcos who let the sales teams run rampant before reigning them.
What’s saddening about Energy Australia’s and AGL’s problems is they were totally forseeable and those who warned of the risks in a door-to-door customers acquisition strategy – and there were almost certainly some in these organisations – were overuled by enthusiastic executives aiming to bust their sales and market share metrics.
Sometimes we are condemned to repeat history repeatedly in business.
