Don't Persuade Customers -- Just Change Their Behavior

Most businesses underestimate how hard it is to change people’s behavior.  There is an assumption built into most marketing and advertising campaigns that if a business can just get your attention, give you a crucial piece of information about their brand, tell you about new features, or associate their brand with warm and fuzzy emotions, that they will be able to convince you to buy.

 

On the basis of this assumption, most marketing departments focus too much on persuasion.  Each interaction with a potential customer is designed to change their beliefs and preferences.  Once the customer is convinced of the superiority of a product, they will naturally make a purchase. And once they’ve made a purchase, then that should lead to repeat purchases in the future.

This all seems quite intuitive until you stop thinking about customers as an abstract mass and start thinking about them as individuals.  In fact, start by thinking about your own behavior.  How easy is it for you to change?

It's very hard to change behavior.  Given to their own devices, individuals will continue to behave a certain way unless nudged in the right direction.  I often refer to this concept as proactive vs reactive marketing.  In proactive marketing, the business is using direct marketing to communicate in an effort to change behavior.  This often takes the form of an offer or incentive to  incite the behavior change.  In reactive marketing, money is spent to gain awareness and then it is left up to the customer to interact with the business by clicking on the ad that has been served up multiple times.  Both of these models are important for the overall marketing strategy, but one is much more cost effective than the other.

First, you have to optimize your goals

For marketers, this means focusing on how to get consumers to interact with products rather than just thinking about them.  As an example, our local Sunday newspaper often comes in a bag with a sample product attached that encourages potential consumers to engage with products.

Interaction is the most important part of proactive marketing.  Be sure to measure the results on the behavior you are trying to change.  Remember, the biggest thing to watch when analyzing behavior change is did you change enough behavior to compensate for any increases in offer to entice the change?  Inevitably there are many customers that won't change behavior, but will take you up on your increased offer, so you just reduced margins for the same behavior.   

I try to instill into my team to focus on the individual and try to understand the mindset of our customer.  Are the incentives we are giving going to change their behavior?  Try to ask, "if it were me, would this offer convince me to engage with this communication?"  Always put yourself in the shoes of your customer and focus on their experience to achieve the desired behavior change.

Source: http://blogs.hbr.org/2014/02/dont-persuade...

The First Question to Ask of Any Strategy

A great article by Roger L. Martin regarding Strategy.  

Sadly, like the majority of strategies that I read, this firm’s strategy failed my sniff test and for that reason I would bet overwhelmingly that it will fail in the market as well. The test I apply is quite simple. I look at the core strategy choices and ask myself if I could make the opposite choice without looking stupid. For my wealth managers, the opposite of their “where” choice was to target poor individuals who don’t want and aren’t willing to pay for comprehensive wealth management services. The opposite of their “how” is to provide crappy customer service.

The point is this: If the opposite of your core strategy choices looks stupid, then every competitor is going to have more or less the exact same strategy as you. That means that you are likely to be indistinguishable from your competitors and the only way you will make a decent return is if the industry currently happens to be highly attractive structurally. The wealth management company was targeting the exact same clients as every single global competitor and, like every other global competitor, they planned on giving them “great service.”

I recently wrote about the differences between strategies and tactics, this gets to the heart of defining a good strategy.  It is a really interesting take on the definition of the strategy itself.  I am a big fan of differentiation of the a strategy.  Unless your business is the market leader, following the same strategy as your competition is a recipe for disaster.  You will never overtake the leader.  This is an entirely different take on competing with a strategy that is opposite of a winning strategy.  

Most market leaders and successful companies have good strategies.  They make a lot of money and have a lot of customers.  Sometimes as a business you have to take a strategy that is opposite of what those competitors are doing.  For instance, Apple looked at the smartphone landscape and determined their competitors were tailoring their products to business minded individuals, but Apple decided their strategy was not to go after that market, they decided to make a phone for consumers.  Yes this was in their wheelhouse, but it is an example of not following the competition.  Only later in the iPhone's life did it add features to compete in business, but that was secondary. 

Source: https://hbr.org/2015/05/the-first-question...

What to Do When People Draw Different Conclusions From the Same Data

Walter Frick writes for HBR:

That famous line from statistician William Edwards Deming has become a mantra for data-driven companies, because it points to the promise of finding objective answers. But in practice, as every analyst knows, interpreting data is a messy, subjective business. Ask two data scientists to look into the same question, and you’re liable to get two completely different answers, even if they’re both working with the same dataset.
So much for objectivity.
But several academics argue there is a better way. What if data analysis were crowdsourced, with multiple analysts working on the same problem and with the same data? Sure, the result might be a range of answers, rather than just one. But it would also mean more confidence that the results weren’t being influenced by any single analyst’s biases. Raphael Silberzahn of IESE Business School, Eric Luis Uhlmann of INSEAD, Dan Martin of the University of Virginia, and Brian Nosek of the University of Virginia and Center for Open Science are pursuing several research projects that explore this idea. And a paper released earlier this year gives an indication of how it might work.

I believe it is best practice to have multiple analysts look at a problem to at least devise what their methodology would be for a certain problem.  In fact, I always like to take a crack myself when the problem is particularly difficult, just so I have an idea of what the data looks like and how certain variables are influencing the results.  

I think too many executives are unwilling to dig into the data and work with a problem.  I believe it is very important to have a deep understanding of the data issues so, as an executive, you can make better decisions on how to guide the team.  Many times the answer is not a deployable model, but a data mining exercise that will glean some testable hypothesis.  

Though most companies don’t have 60 analysts to throw at every problem, the same general approach to analysis could be used in smaller teams. For instance, rather than working together from the beginning of a project, two analysts could each propose a method or multiple methods, then compare notes. Then each one could go off and do her own analysis, and compare her results with her partner’s. In some cases, this could lead to the decision to trust one method over the other; in others, it could lead to the decision to average the results together when reporting back to the rest of the company.
“What this may help [to do] is to identify blind spots from management,” said Raphael Silberzahn, one of the initiators of the research. “By engaging in crowdsourcing inside the company we may balance the influence of different groups.”

I do believe in internal "crowdsourcing".  The minute tough problems start to be outsourced, the company loses the great insight their analysts and business owners have that can bring insight tot he data that many analysts outside of the company could never understand.  I truly believe analytics is art and science, but too many times the art is under appreciated.  

Source: https://hbr.org/2015/03/what-to-do-when-pe...

Your Digital Strategy Shouldn’t Be About Attention

I really like this article.  Digital has the potential to be one-to-one in real-time, but so many marketers use it as a commercial.  I have been working with Adobe and their marketing cloud for a couple of years now and their vision is very compelling.  Right now it is just that, a vision, but it is getting closer to reality.  

To make such a vision a reality, marketers have to push companies with great visions.  The tools can't push the vision, they have to enable the vision.  If marketers continue to use these tools to push brands and not relationships, the vision will be wasted.  

It’s easy to win “clicks” by titillating people with Kim Kardashian’s naked behind or a list of the world’s cutest human-cat baby unicorn fairies. And it might lend a dreary day a moment of relieved escapism. But it won’t help anyone. To do that, you must educate. Not in the awful, misused corporate sense of the term: dully lecturing them about “product benefits.” But helping them develop the capabilities and skills they’re going to need to live better lives. What will your “digital strategy” help them become better at? Does it have a point? Skiing, dating, cooking, coding, creating, building? If the answer is no, you don’t have a strategy. You have a vaudeville show.
Source: https://hbr.org/2015/01/your-digital-strat...

The Real Leadership Lessons from Steve Jobs part 2

I decided to break up this post into 2 parts because there were so many lessons and I liked most of them.  So here are the remainder of the lessons from the Walter Isaacson HBR article.

Don’t Be a Slave To Focus Groups
When Jobs took his original Macintosh team on its first retreat, one member asked whether they should do some market research to see what customers wanted. “No,” Jobs replied, “because customers don’t know what they want until we’ve shown them.” He invoked Henry Ford’s line “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!’”
Caring deeply about what customers want is much different from continually asking them what they want; it requires intuition and instinct about desires that have not yet formed. “Our task is to read things that are not yet on the page,” Jobs explained. Instead of relying on market research, he honed his version of empathy—an intimate intuition about the desires of his customers. He developed his appreciation for intuition—feelings that are based on accumulated experiential wisdom—while he was studying Buddhism in India as a college dropout. “The people in the Indian countryside don’t use their intellect like we do; they use their intuition instead,” he recalled. “Intuition is a very powerful thing—more powerful than intellect, in my opinion.”

When I was a product manager for a software company that catered to database marketers and analysts, customers would always speak in terms of features.  "I want the product to do this" was a common request.  I quickly learned that putting features into the product just made the product more complex.  The true genius is in solving the problem the customer is having in the most elegant and simple way possible.  Customers mostly focus on what they can see and what they already know.  To be great you have to translate what your customer is asking for and then really solve their problem, because adding features can spaghetti your product before you know it.

Bend Reality
Jobs’s (in)famous ability to push people to do the impossible was dubbed by colleagues his Reality Distortion Field, after an episode of Star Trek in which aliens create a convincing alternative reality through sheer mental force. An early example was when Jobs was on the night shift at Atari and pushed Steve Wozniak to create a game called Breakout. Woz said it would take months, but Jobs stared at him and insisted he could do it in four days. Woz knew that was impossible, but he ended up doing it.

I believe that people want to be great at what they do, but when left to their own devices will let the fear of failure get in their way.  Failure is a much bigger enemy of greatness than the lack of talent for the individual.  The fear of failure gets in the way of taking risks and leapfrogging yourself.  If you can put your team in an environment where failure is viewed as a success or a learning opportunity on the way to greatness, your team will succeed in greatness.

Impute
Jobs’s early mentor Mike Markkula wrote him a memo in 1979 that urged three principles. The first two were “empathy” and “focus.” The third was an awkward word, “impute,” but it became one of Jobs’s key doctrines. He knew that people form an opinion about a product or a company on the basis of how it is presented and packaged. “Mike taught me that people dojudge a book by its cover,” he told me.

First impressions make all the difference.  The product, experience or the deliverable have to focus on delivering an experience worth returning to in order to succeed.

Push for Perfection
During the development of almost every product he ever created, Jobs at a certain point “hit the pause button” and went back to the drawing board because he felt it wasn’t perfect. That happened even with the movie Toy Story. After Jeff Katzenberg and the team at Disney, which had bought the rights to the movie, pushed the Pixar team to make it edgier and darker, Jobs and the director, John Lasseter, finally stopped production and rewrote the story to make it friendlier. When he was about to launch Apple Stores, he and his store guru, Ron Johnson, suddenly decided to delay everything a few months so that the stores’ layouts could be reorganized around activities and not just product categories.

In the world of database marketing there is always a push for perfection.  The mantra I use is "The campaigns are a living, breathing entity".  A good database marketer is always looking for ways to improve the performance of a campaign.  It is never complete, it will never be perfect, but one should always strive for perfection. 

Tolerate Only “A” Players
Jobs was famously impatient, petulant, and tough with the people around him. But his treatment of people, though not laudable, emanated from his passion for perfection and his desire to work with only the best. It was his way of preventing what he called “the bozo explosion,” in which managers are so polite that mediocre people feel comfortable sticking around. “I don’t think I run roughshod over people,” he said, “but if something sucks, I tell people to their face. It’s my job to be honest.” When I pressed him on whether he could have gotten the same results while being nicer, he said perhaps so. “But it’s not who I am,” he said. “Maybe there’s a better way—a gentlemen’s club where we all wear ties and speak in this Brahmin language and velvet code words—but I don’t know that way, because I am middle-class from California.”
It’s important to appreciate that Jobs’s rudeness and roughness were accompanied by an ability to be inspirational. He infused Apple employees with an abiding passion to create groundbreaking products and a belief that they could accomplish what seemed impossible. And we have to judge him by the outcome. Jobs had a close-knit family, and so it was at Apple: His top players tended to stick around longer and be more loyal than those at other companies, including ones led by bosses who were kinder and gentler. CEOs who study Jobs and decide to emulate his roughness without understanding his ability to generate loyalty make a dangerous mistake.

Find great people and then get our of their way.  Great "A" players will be great without you telling them what to do.  Set the expectations, guide them when needed and then be hard on their results.  If their results are subpar, let them know.  You don't have to go Steve Jobs on them, but an "A" player will be harder on themselves then you could ever be.

Engage Face-to-Face
Despite being a denizen of the digital world, or maybe because he knew all too well its potential to be isolating, Jobs was a strong believer in face-to-face meetings. “There’s a temptation in our networked age to think that ideas can be developed by e-mail and iChat,” he told me. “That’s crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, you say ‘Wow,’ and soon you’re cooking up all sorts of ideas.”
Jobs hated formal presentations, but he loved freewheeling face-to-face meetings. He gathered his executive team every week to kick around ideas without a formal agenda, and he spent every Wednesday afternoon doing the same with his marketing and advertising team. Slide shows were banned. “I hate the way people use slide presentations instead of thinking,” Jobs recalled. “People would confront a problem by creating a presentation. I wanted them to engage, to hash things out at the table, rather than show a bunch of slides. People who know what they’re talking about don’t need PowerPoint.”

Greatness happens with spontaneous collaboration between individuals who trust each other.  Meetings with different groups who are not accustomed to working together and are forced to collaborate never work.  Grabbing a few individuals from their work space, bringing them into a meeting room, getting into the issues at hand can encourage an atmosphere where greatness can evolve.  Great ideas do not happen on a timetable.  They happen spur of the moment and they can be lost if left to fester.

Know Both the Big Picture and the Details
Jobs’s passion was applied to issues both large and minuscule. Some CEOs are great at vision; others are managers who know that God is in the details. Jobs was both. Time Warner CEO Jeff Bewkes says that one of Jobs’s salient traits was his ability and desire to envision overarching strategy while also focusing on the tiniest aspects of design.

Probably the biggest issue with leaders is they are one dimensional.  It's great to have a vision and be able to articulate that vision, but if the leader is so detached from the execution of the vision, they lose respect from the team.  Beyond just losing the respect, the team may build or execute on something that is in an entirely different direction once complete.  The leader needs to be involved with the team on the details to ensure the vision is executed to perfection.  Being both visionary and implementer is key.

Combine the Humanities with the Sciences 
He connected the humanities to the sciences, creativity to technology, arts to engineering. There were greater technologists (Wozniak, Gates), and certainly better designers and artists. But no one else in our era could better firewire together poetry and processors in a way that jolted innovation. And he did it with an intuitive feel for business strategy. At almost every product launch over the past decade, Jobs ended with a slide that showed a sign at the intersection of Liberal Arts and Technology Streets.

Combining two disparate disciplines into one creates bridges for teams to collaborate in one distinct language.  This ability os very rare in individuals.  The passion that an individual has usually overtakes one discipline for another.  When doing analytics, I often articulate to the team it is a combination of art and science.  The science part can give you an answer, but without the art side, the articulation and strategy coming from the data will get lost in interpretation.  The nuggets of information cannot be articulated in pure scientific form for a strategy to unveil itself to the business side.  

Stay Hungry, Stay Foolish
Steve Jobs was a product of the two great social movements that emanated from the San Francisco Bay Area in the late 1960s. The first was the counterculture of hippies and antiwar activists, which was marked by psychedelic drugs, rock music, and antiauthoritarianism. The second was the high-tech and hacker culture of Silicon Valley, filled with engineers, geeks, wireheads, phreakers, cyberpunks, hobbyists, and garage entrepreneurs. Overlying both were various paths to personal enlightenment—Zen and Hinduism, meditation and yoga, primal scream therapy and sensory deprivation, Esalen and est.
An admixture of these cultures was found in publications such as Stewart Brand’s Whole Earth Catalog. On its first cover was the famous picture of Earth taken from space, and its subtitle was “access to tools.” The underlying philosophy was that technology could be our friend. Jobs—who became a hippie, a rebel, a spiritual seeker, a phone phreaker, and an electronic hobbyist all wrapped into one—was a fan. He was particularly taken by the final issue, which came out in 1971, when he was still in high school. He took it with him to college and then to the apple farm commune where he lived after dropping out. He later recalled: “On the back cover of their final issue was a photograph of an early morning country road, the kind you might find yourself hitchhiking on if you were so adventurous. Beneath it were the words: ‘Stay Hungry. Stay Foolish.’” Jobs stayed hungry and foolish throughout his career by making sure that the business and engineering aspect of his personality was always complemented by a hippie nonconformist side from his days as an artistic, acid-dropping, enlightenment-seeking rebel. In every aspect of his life—the women he dated, the way he dealt with his cancer diagnosis, the way he ran his business—his behavior reflected the contradictions, confluence, and eventual synthesis of all these varying strands.
Even as Apple became corporate, Jobs asserted his rebel and counterculture streak in its ads, as if to proclaim that he was still a hacker and a hippie at heart. The famous “1984” ad showed a renegade woman outrunning the thought police to sling a sledgehammer at the screen of an Orwellian Big Brother. And when he returned to Apple, Jobs helped write the text for the “Think Different” ads: “Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes…” If there was any doubt that, consciously or not, he was describing himself, he dispelled it with the last lines: “While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world are the ones who do.”

The world will miss out on all the great things Steve Jobs would have done over the years he lost.  

Source: https://hbr.org/2012/04/the-real-leadershi...

The Strategic Mistake Almost Everybody Makes

Every business and business model has a finite life. Products come and go. Customer preferences change. As Rita Gunther McGrath notes, competitive advantage is increasingly a transient notion. The companies that last over long periods of time do so by creating new products, services, and business models to replace yesterday’s powerhouses.

Scott Anthony makes some great points in this piece.  I stated in a previous blog how much focus is put on "churn" percentages.  In most industries it is very important to watch churn, however to keep customers as a defensive move will always result in long-term demise.  

Your customers will churn, this is a proven fact.  At what rate and when is always the biggest question.  The key is to have customers churn to your next innovation.  Apple didn't try to prevent churn in their iPod line as a defensive move, they were always on the offense.  Creating new form factors, adding color and video.  At some point they were so much on the offense, they destroyed this business with the iPhone, but I would imagine the positive churn of Apple customers is many times greater than if they would have played defense with the iPod line.  Compare this to Microsoft which has been playing defense with Windows for many years.  They are starting to see that negative churn by only playing defense, which has put them at a distinct disadvantage in mobile.  They played defense so much, their mobile strategy is Windows.  

Portfolio theory has its naysayers, but few argue with the fundamental idea that diversification decreases risks and increases a portfolio’s potential. Do you remember the most efficient buggy whip manufacturer or the most profitable distributor of packaged ice? Of course not.

I don't fully agree with what Anthony has to say here.  Where I disagree is with the size of the portfolio of the business.  Diversification is good if it remains within the core competency of the business.  Too many times businesses diversify into areas where they have little expertise just to increase the portfolio, which causes a loss of focus on the strength of the business.  The best companies diversify within the core, like Apple.  I think the proper strategy is to be the company that causes your customers to churn, this way you keep the customers loyal to your brand and you are always trying to be the next product in your industry.

Source: http://blogs.hbr.org/2014/02/the-strategic...

The Art of Crafting a 15-Word Strategy Statement

Focus: What you want to offer to the target customer and what you don’t; Difference: Why your value proposition is divergent from competitive alternatives.

I don't know about 15 words, but succinct and to the point is the best way to articulate a strategy.  So much time is built constructing long strategy documents that sit on a shelf and are never read again.  A mantra or a short strategic statement become rallying cries of the organization.

I had the pleasure of watching a keynote by Guy Kawasaki where he stated that every organization needed a mantra.  It is something that has changed my way of thinking since hearing the logic behind his statements.  It takes so much inertia to move an organization that having a simple mantra can rally the entire organization around a single statement.  

The focus and difference in the strategy statement proposed by Alessandro Di Fiore are wonderful points.  So many times the target customer is forgotten in an organization.  In an age of growing earnings every quarter and constant pressure on short-term financial results, the target customer gets lost in the shuffle, replaced by revenue opportunities that alienate the target.  The difference piece is key for the organization to understand what they need to deliver to that target customer.  Once the organization understands why it's different, it becomes easier for everyone to deliver on the promise.   

Source: http://blogs.hbr.org/2014/02/the-art-of-cr...

How to Find, Assess, and Hire the Modern Marketer

Who is the modern marketer?

Regardless of the role in marketing, the expectations related to data and analytics need to be consistent. While there will always be more advanced analytical and technical positions, there is a new baseline for all marketers. The skill set includes a knowledge of data management principles and analytical strategies, and an understanding of the role of data quality, the importance of data governance, and the value of data in marketing disciplines. Today’s marketer needs to go well beyond reporting and metrics, and be more proficient in a full range of analytics, which may include optimization, text, sentiment, scoring, modeling, visualization, forecasting, and attribution.

Marketers need to have experience with the technology, tools, and design approaches that leverage data and analytics. Campaign design, multi-channel integration, content performance, personalization, and digital marketing can all be driven by fact-based decision-making, ideally with direct accountability to results and the ability to very quickly react and adjust to the demands of the customer and the market. The marketers I am referring to have a distinct blend of creativity and reasoning talents; they are inquisitive, inventive, and enthused by a culture that is advanced and agile.

Great article that really describes what marketers are becoming.  I believe this change in what a marketer is has been happening for quite a few years now.  A a marketer It is so important to understand the tools, data and how to analyze the data.  

Source: http://blogs.hbr.org/2014/01/how-to-find-a...

Ideas Are Easy

Companies trying to innovate tend to spend a lot of time generating ideas: Brainstorming sessions. Contests. Jams. This can be a huge waste of resources. In fact, most companies have no trouble generating great ideas. But very few are adept at the other steps in the innovation process: picking the right idea, expressing enthusiasm, and executing. So these post-idea stages are what companies should focus on. If they do, their success rates should improve as a result.

 

Source: http://www.instapaper.com/read/429506855