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
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.
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.
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.
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.