Category: marketing

The Olympian quest for control

The control freakery of the Olympics marks an organisation struggling with threats.

“Blogs or tweets must be in a first-person, diary-type format and should not be in the role of a journalist,” state the International Olympic Committee’s social media guidelines.

The London Olympics Committee betrays how their ignorance of how the Internet works with an unrealistic and unenforceable linking policy.

More worryingly, an army of ‘brand police’ are scouring Britain for renegade cake decorators or knitting clubs breaching Olympic copyrights. Council trading inspectors have been redeployed from their main role of protecting the community to guarding the sponsorship values of the IOC and the world’s biggest corporations.

All of this is about control – a country that bids to host the Olympics agrees to draconian rules and regulations on free speech and commerce. Athletes too find themselves subject to harsh, and sometimes arbitrary, controls.

The purpose of these controls is to enhance the commercial value of sponsorships – this is why only McDonalds can serve fries, except with fish, at Olympic venues and only Visa credit cards can be used to buy a souvenir t-shirt.

Like all major sporting organizations, the value of Olympic rights exploded with the growth of advertising and broadcasting rights from the 1960s onwards.

We’ve reached the logical end of that growth as broadcasters struggle under the load of funding massive rights payments and advertisers find campaigns based on what worked in the 1960s or 1980s have less resonance with the debt addled consumers of the 2010s.

None of this will stop the IOC and other sports administrators from enacting iron fisted controls on participants, sponsors, spectators and any one else they can bully, but their power is waning.

Just like the Soviet Union tried to control fax machines as their economy crumbled around them, the same thing is happening with the Olympics and other big ticket sports.

Top level sports administrators are very good at currying favours from the corporate Bourbons and political princelings who love to spend other people’s money to build their own egos which will allow the facade to continue for a few more years.

Eventually though the money will run out as shareholders question the value of billion dollar sponsorships coupled with executive gold passes to the VIP marquee and taxpayers will ask why governments have money to spend on stadiums or elite sports programs when their local school, hospital and police stations are being closed.

History shows that threatened leaders tighten controls when they are threatened. We can expect the next couple of Olympics to have even more draconian rules than London’s.

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You’re doing it wrong

Earlier this week Smartcompany released the results of their 2012 business technology survey. One of the things that stood out was less than 30% of businesses are happy with their online results.

Almost certainly this is because most businesses diving into social media are doing it for marketing or advertising reasons – so they expect to make sales shortly after they start posting updates.

While social media can be a good marketing tool, it’s almost always time intensive and often it doesn’t work at all.

For most businesses social media is much more useful as a market intelligence tool or a communications channel.

Talking to your customers and helping them with their problems is probably the thing social media does best.

While it can be argued that good customer support is the best way to build a brand and market a business, that’s a major change in thinking for many organisations.

If you think social media is all about marketing – or customer support isn’t about your business brand – then you’re doing it wrong.

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The Free Myth

Free services often come at a cost of your time.

One of the biggest dangers to businesses is the belief that something is “free”.

As we all know, there is no such thing as a free lunch. When another business gives you something for free it’s safe to say there is a cost somewhere.

One of the speakers at the City of Sydney’s Let’s Talk Business social media event stated this when talking about social media saying “I can’t believe all businesses aren’t on Facebook – it’s free.”

Social media isn’t free. We all know the value services like Facebook are mining are the tastes, habits and opinions of their users.

For businesses, engaging heavily in Facebook or any other social media service hands over far more information about their customers to a third party than they themselves would be able to collect.

All of that information handed over to a service like Google or Facebook can come back to bite the business, particularly if a well cashed up competitor decides to advertise at the demographic the business caters to.

The core fallacy though is that these service are “free”. They aren’t.

Every single service comes with a time cost. Every social media expert advises the same thing, businesses have to post to their preferred service of choice at least three times a week and those posts should be strategically thought out.

That advice is right, but it costs time.

For a business owner, freelancer or entrepreneur time is their scarcest asset. You can always rebuild your bank account but you can never recover time.

Big businesses face the same problem, but they overcome this with money by hiring people for their time. In smaller businesses, this time comes out of the proprietor’s twenty-four crowded hours each day.

The computer and internet industries are good at giving away stuff for free, in doing so they burn investors’ money and the time of their users. The social media business model hopes to pay a return to investors by trading the data users contribute in their time.

While businesses can benefit from using social media services, they have to be careful they aren’t wasting too much of their valuable time while giving away their customers to a third party.

Often when somebody looks back on their life they say “I wish I had more time.” They’ve learned too late that asset has been wasted.

Wasting that unreplaceable asset on building someone else’s database would be a tragedy.

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Killing credibility

One dumb campaign can hurt a brand

Microsoft’s Smoked by Windows Phone Challenge aims to show their mobile phones are the fastest on the market.

Unfortunately if you beat them, it appears you might not win the prize as Sahas Katta discovered.

Going back on a prize in a competition that already looks somewhat biased doesn’t just hurt Windows Phone’s credibility but it hurts the whole company’s – it looks cheap, lame and petty.

Realising the damage this does Microsoft’s brand, evangelist Ben Randolph offered Sahas a laptop and phone, although already the botched promotion has probably already hurt the product.

Windows Phone is a “must succeed” for Microsoft and that company would stage poorly thought out stunts with high chance of backfiring is disappointing given what is at stake for them.

Trust and reputation and the hardest things to earn and the easiest to squander, Microsoft’s management needs to be careful with this.

Hopefully Microsoft will show us some compelling reasons to buy an alternative to an iPhone or Android handset beyond dodgy marketing stunts.

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A website can’t save a dying business

Online tools can’t fix an organisation’s structural problems

The last week has seen some interesting changes in the local online business community.

Embattled department store David Jones’ announced they are following Harvey Norman into an “omni channel strategy”.

Harvey Norman chief executive in turn appeared on national television to state the “internet drives no sales.”

In the political field, it was reported the Australian Labor Party are looking at using Blue State Digital tools to counter voter and member apathy.

Each one in it’s own way illustrates how organisations can be distracted by shiny new technology while ignoring much deeper problems.

In the case of David Jones, the department store ignored their core competencies and tried to ape their down market competitors in milking the financial services cow.

This worked fine while they could offer 24 and 36 month interest free deals and as soon as their partners American Express started charging a monthly “Administration Fee” that business evaporated.

One of DJ’s down market competitors is Harvey Norman, co-founder Gerry Harvey has spent his life building a fortune based upon providing cheap credit to consumers.

It was always going to be a mistake for DJs to compete with Harvey’s as Gerry is far better at the business than the well connected, genteel board of David Jones and their snappily dressed friends in the store’s executive suite.

Worse for DJs, the whole strategy alienated their core markets and while management focused on financial services customers went elsewhere to find the quality goods and services that the upmarket department store should be providing.

For both though, the financial services business model is now fading as the 20th Century debt supercycle comes to an end; consumers no longer want to load up on “buy now, pay later” schemes.

So all the talk of “omni-channel strategies” really doesn’t address the underlying weaknesses in both business.

This disconnect with reality is true in politics as well where the ALP is reported to be considering using the Red State Digital tools that Barak Obama used so well in his 2008 US Presidential campaign.

While the tools are impressive, they don’t address the problem that the electorate – and the member bases of the major political parties – have become rightly disillusioned and disconnected from the political processes that exclude everyone except an increasingly smaller circle of cronies and insiders.

The only good thing that will come of using US political communications tools in the spectacular eruption the first time one of the ALP’s factional warlords encounters a grass roots online campaign like The Great Schlep.

Heck, the resulting furore might even see some of the apparatchiks distracted from partying and whoring on their union credit cards for a day or two.

All the frivolity aside, the reality for the Australian Labor Party, David Jones and Harvey Norman is their problems are far deeper than a well designed website and impeccably executed social media strategy can fix. These organisations need major rethinks about how and why they exist.

It doesn’t matter how much money you throw at the web or how effective your social media strategy is – if the foundations of a business are shaky then a nice “omni-channel strategy” aren’t going to fix things.

For some of organisations, a failure to embrace the online world may be one of the causes for their problems, for many though there are far more basic issues they need to address.

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Overselling technology

Do technologists promise too much?

“We’d like to allow remote band members – say a violinist in the Australian outback – be able to participate in an orchestra as if they were there. We hope the NBN will be able to do this.”

When the band organiser said this at a business roundtable all the technologists, myself included, choked.

There are many things the Australian National Broadband Network will deliver but the ability to teleport a violinist from the outback to downtown Sydney or Melbourne isn’t one of them.

One of the problems with technology is we tend to oversell the immediate effects; as Bill Gates famously said “The impact of all new technologies is overestimated in the short term but under estimated in the long term.”

Because we tend to sell the immediate sizzle, customers are disappointed when our promises don’t eventuate. In the decade it takes to win them back, those initial benefits we didn’t deliver in six months have become commonplace.

This is probably one of the reasons why businesses are reluctant to invest in new technology or online services; they’ve heard the promises before and they don’t trust what they can hear.

In the late 1990s businesses spent tens of thousands – sometimes millions – establishing websites that didn’t work. Those financial scars still hurt when they hear talk, some of them are still paying off those sites. So it’s barely surprising they are reluctant to return to a sector that has now matured.

Perhaps it’s best to underpromise; instead of cloud computer vendors committing themselves to 80% savings and social media experts promising millions of customers from their new viral video, it may be better to be more realistic with the expectations.

Customers have become deaf to wonderful promises, they are expecting us to deliver. Promising the world is no longer a business strategy.

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The limits of SEO

Having a nice web site is only part of a winning business

On their busiest day of the year, the florist site Ready Flowers had a shocker. With dozens of customers upset their Valentines Day flowers didn’t arrive.

Their reaction was to stop answering their calls, as one Ready Flowers angry customer on the Whirlpoool website said;

Calling through to their 24/7 hotline was no good, all it told me (after 30 mins on hold) was a automated message saying it was valentine’s day (duh), that they were busy and that I should leave a message.

So on their one key day of the year, they didn’t have enough staff to meet demand.

Ready Flowers has been a success story expanding to 17 countries since being founded in 2005. The service is a modern version of the Interflora model where the company takes the order which they pass onto a local florist who creates the flower arrangement to Ready Flowers’ or Interflora’s specifications.

The risk for Ready Flowers is that the local florist isn’t very good and that’s where customer support and tight supplier management comes into place.

Which is clearly where they fell over on Valentines Day.

In a 2009 interview with the Financial Review that’s quoted in the Sydney Morning Herald, Ready Flowers’ founder Thomas Hegarty claimed his success was due to good search-engine optimisation, online advertising, and landing pages for every delivery location.

Missing is the term “customer service” – in that interview Thomas went onto say, “We saw that we could add value by applying more efficient technology without needing a large number of people to run the business”.

This is the flaw in the web 2.0 business model. In the real world, businesses don’t run on remote control – mistakes are made, deadline missed and people do dumb things which the algorithm can’t handle.

Over the last thirty years, customer service has been seen as an unnecessary cost centre. This was fine in a world where automated, low margin and fast moving goods were seen as the business model to emulate.

If you can’t compete on price, it’s service that matters and this is where you’ll need more than a lost cost call centre and a well optimised website.

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