Marketing Magic

Marketing Research - Cool?

As far as I know, this was the first time in recorded history anyone used the words, marketing research" and "cool" in the same sentence. There apparently is a move afoot to make marketing research "cool" within the agency world, a  world that for years have given only grudging acknowledgment that research is something other than a profound pain in their creative arses.

How do you make something cool? Either it is or it isn't. "Cool" cannot be conferred by agency creatives upon research wonks anymore than college jocks can confer "cool" upon chemistry geeks. As anyone who is cool will tell you, "cool" comes from within, not without. And people who are cool absolutely never worry about being perceived that way.

And marketing research is cool.

• It is absolutely cool to discover what jazzes and what frustrates buyers of your product, and then make changes that give customers more of what they like and less of what they dislike.
• It is cool to hear the way your company is described in the real marketplace, and to discover relevant ways of influencing that conversation.
• It is profoundly cool to hear the excitement as customers and prospects discuss a new product they believe will have a positive influence on their lives - especially if it's YOUR new product.
• It is undeniably cool to provide the underpinning of understanding that agencies use to build creative that connects consumers to a product.

So if marketing research is cool, why aren't marketing researchers?

• Because we bicker about which methodology is best
• Because we turn simple projects into convoluted, expensive ones
• Because we write about research in ways that would put an insomniac to sleep
• Because we think that making marketing research abstruse makes us look smart
• Because we get caught up in approaches and forget the real reason for doing marketing research is to provide insight - to help clients make informed decisions.
• Because we do not build research plans to address the marketing objectives
• Because we are more concerned with getting the project than in providing real value

So if we marketing researchers are ever going to make it to the exalted state of "cool" - we are going to have to do it ourselves - not wait for the Agency creatives to vouchsafe it upon us.

And we'll do it by facilitating the connection between communicators and customers better than anyone else. By providing the better understanding that leads to better marketing.

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Marketing Research is Easy - Really

Marketing Research is simple, really.

I did my first marketing research project when I was in the 7th grade. You probably did too.

There was this terminally cute new chick named Rebecca in my class, and I knew nothing about her, other than that she made my 13 year-old knees knock together with an audible clacking. I really wanted to ask her to the school dance, so with the desperation of the painfully bereft, I went on an information quest:

• I found out where she lived. Where she had gone to school before 7th grade.

• Did she have a boyfriend? How big was he? Hmmm...

• What were her favorite subjects? What did she do after school?

• What did my friends think? Should I ask her? Was anybody else thinking of asking someone?

• Who did Rebecca hang out with, and what did they think? Did she even know who I was? Would any of them run interference for me? If I paid them?



I could have just walked up to her and mumbled an invitation, but if I was going to put my precious and meager supply of ego capital on the line, I was going to be pretty damn sure what the answer was going to be before doing it.

Welcome to the world of marketing research.

Simply and unprofessionally put (which is something researchers hardly ever do) marketing research is the process of learning as much as you possibly can about your target audience in order to reduce the risk of making decisions that will come back and bite you in the ass. Decisions that cost you ego capital. Or a lot of money.

Despite attempts by marketing researchers to make the subject so abstruse that you believe only they can understand it, most marketing research falls into one of three camps:

1. Quantitative: Broad not deep. A LOT of interviews. What detergent do you use? Whom would you vote for? Predictive. 

Obama will get 48% of the vote, plus or minus 3%.

2. Qualitative: Small number of interviews. Deep not broad. NOT predictive, but connective. What does buying that detergent suggest about you as a mother? Tell me what you think will be the basic differences between an Obama presidency and a HRC presidency, and how you think that might affect you?

3. Secondary: demographic. How many people live within a mile of this location, and what is the average value of their homes?

Which of these three is the most important?

None. It depends totally on the decision and the stakes. A bank President considering a new branch location will have a different set of information needs than a tired brand looking to reconnect with customers and become relevant again. How much information do you need to become comfortable that your decision will be an informed and profitable one?

So while the basics of marketing research may be easy, what's hard is knowing where to start and when to stop. There are a million different types of projects: Political polls, advertising research, ethnographic research, new product development, and so on... Which one, or which combination, is best for you and your decision?

The trick? Finding the balance - the comfort zone on the continuum between the points of “no information at all” and way too much information”. Consider what is essential to your decision, and what falls merely into the category of “nice to know”.

Everyone thinks research (or knowledge) is important. But not everyone is willing to pay for it.

Even if your budget is nil, do something. Get out into the stores and ask questions.

Learn to ask “why”, then “why” again, just like a 5 year-old. Be endlessly curious, and don’t be afraid to look stupid. Don't assume you understand, ask. You never know what might turn out to be important. Talk to the people in your organization who speak with customers daily. Get online and look at a competitor’s website. Try to put yourself in your customer’s place - to look at your business and the purchase decision as they do.

You’ll notice that people in your organization start turning to you when they’re wondering what your customers are thinking - when they want the voice of the customer. You'll notice that you start making marketing decisions from a different perspective, one that reflects what is important to your audience as opposed to what is important to your agency.

So what happened with Rebecca? After a thorough investigation of what I thought were all the relevant questions, I finally summoned enough courage, called Rebecca and asked her to the dance. Despite my research, I was still terrified - but she said “yes”. We went and had a great time.

She dumped me later for a Lyle Alzado lookalike who was playing varsity football and shaving at the age of 14. 



Hmph. Should have done more competitor research! 


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Earth Day - How Can You Show Your Love?

Jacquelyn Ottman is another one of my marketing heroes. When she first started preaching "Green Marketing", everyone thought she was a little touched. Now, I believe we understand better the importance of her vision of sustainability and responsible ecological practices in production, but also the importance of being "green" with respect to our marketing and advertising practices. Many companies have found out that responsible marketing practices can result in increased customer loyalty, a broader sense of community, and ultimately profitability.

Today is Earth Day, and I think it is appropriate that we take a moment to relect upon our blessings and the beauty of this planet, and think about ways we can decrease our ecological footprint and preserve the earth for future generations.

In a TwitterCall, I posed the question to my nearly 800 followers, asking what was one thing they could start doing today to honor our earth. Here is what they came up with:

And these tips are from one of the great ones: Laura Fitton, also known as Pistachio. You will see her website in my blogroll to the right.

Do what you can to commemorate Earth Day. More than that, find ways to re-cycle in your business, to use less energy, to be more efficient. Be sure you let your customers know you are leading the way, and encourage them to do the same. They will appreciate more than you know that you are making an extra effort to improve the part of the world that you touch, the world we all share.

And take the time today, and tomorrow and every day, to marvel in the beauty and blessings of our earth.

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36 Ways Marketing is Like Sex - And Vice Versa

Why Marketing is Like Sex - and Vice Versa

Sex. And marketing. Two areas in which everyone pretty much believes they are expert.

Think about it. Both areas have fairly low barriers to entry. Both areas have a plethora of articles and books available to teach us the "secrets" of success. You could walk up to your uncle right now, and he could talk for hours on either subject.

When is the last time you ever heard someone say, "I really don't know that much about marketing/sex"? Never. People who know, know. Those who don't, think they know

But come to think of it, sex and marketing have similar rules and lessons of interaction. Both can teach us about the other.

What can sex teach us about marketing - and what can marketing teach us about sex?

Rather than running from the question, let's run WITH it! Following are 36 observations or recommendations that could apply equally well to both subjects.

1. The keys to synergy and a long term relationship are trust, passion and respect:

2. Passion is everything - seek ways to live it and create it. Passion begets passion - it’s better if both parties are passionate about each other. And you know passion when you see it. Or feel it.

3. Trust is a necessary foundation for any relationship. Without it, the relationship will erode. Trust takes time to create, and mere seconds to destroy.

4. Respect your market before, during and after the transaction.

5. Communication is vital. Two way.

6. Ask your market what they like - then try to give that to them better than they have ever gotten it before.

7. After the transaction, don’t assume you were awesome. Ask your market how much they liked it and what could have been better. Seek continuous improvement. Oh yeah, you better pay attention to body language; it speaks WAY louder than words.

8. Investigate success as well as failure. If you develop a strategy that appears to have worked really well, find out why. Ask the right questions.

9. The same thing, day after day, night after night, is boring. People will start looking elsewhere for excitement.

10. Serial and varied interactions may seem exciting, but the best long-term results are developed by a deep understanding of your market and what makes them tick. It’s the development of repeat business, and profound mutual loyalty and partnership.

11. Never lose sight of the fact that if the relationship is not mutually beneficial, it will be short term.

12. You don’t position your product - your market positions your product.

13. The right positioning strategy can only be developed once you have a thorough understanding of your market and what it needs/wants, and how you might best address those.

14. You better keep an eye on the competition: what your market is looking at and finding attractive.

15. First impressions are vital. It had better be a good one. And real.

16. If you come across as being in it for you, your market won’t be back.

17. Once the sale is closed, the marketing starts all over again. Don’t fall asleep.

18. There had better be consistency in the brand message and the users’ experience.

19. Perception is reality - you better be listening to what people think.

20. Being louder will not make up for a poor strategy.

21. Making it fun and entertaining will always win more points and create more interest than foolish consistency.

22. It’s a courtship that begins, but never ends.

23. You can’t spin your way out of trouble you behave your way into.

24. Knowing your market is vital. And not all markets are the same. Each has a different set of needs and wants, and will respond differently to marketing messages.

25. Complacency will get you ditched for someone more interesting and/or responsive.

26. Long term commitment is preferred to a series of short term, temporary interactions.

27. There will be misfires - ask about it, learn from it and move on. But don’t be afraid to try something new.

28. The best results will be achieved by listening first - and by listening more than talking.

29. Be real. Don’t try to be something you are not. You’ll have to give up some of your market, but the ones you attract will be there because they want YOU.

30. There will always be people who love reading about it more than they love doing it.

31. Reading every book on the subject will not make one an expert. You must practice and experiment. And fail.

32. Failure, and learning from failure is crucial to long term success.

33. If you haven’t ever failed then you haven’t tried enough new things.

34. Two people engaged in the same transaction can have entirely different experiences. Communication afterward is key.

35. Enthusiasm can attract business sometimes when there is a glaring lack of experience.

36. Winning the head is less important than winning the heart.

OK - I know there are also many ways in which marketing and sex do NOT have similarities - such as say having a goal of winning as many customers as possible. But that's the subject of another blog!

So what other lessons can be applied to both subject areas? I hope readers will feel inspired to weigh in with their own ideas on the subject. After all, everyone is an expert, right? :-)

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Are You Listening?

Marketing starts by listening to customers.

Take a look at these questions, then check out the YouTube video posted below.

• Can you quote your latest customer satisfaction numbers? Do you know what percentage of your customers would recommend you to a friend, and what makes that percentage grow or shrink?

• Do you regularly do focus groups with customers to ask them how you could serve them better? To find out which of your competitors they also use, and how you compare in key satisfaction areas?

• Are you regularly spending time in stores talking to customers? Looking in their carts and asking about choices?

• Do you have a web site and/or blog that offers the opportunity for customers to post suggestions  and ideas and criticism without censorship?

• Do you know the top ten questions customers have about your product or service? And do you have an answer for each one that addresses the needs and wants behind the question, not just the basic question itself?

• Do you have regular conversations with your line employees to discuss the questions, complaints and feedback they get from their customers?

• Do you seek out customers you have not heard from in awhile to ask them why?

• Do you make it a regular practice to interview customers of category competitors? To ask them why they buy from the competition? What the competition is doing better than you? Or what the competition is doing that is new?

• Do you know what basic needs your product satisfies? What psychic needs and wants? What descriptors affect those evaluations?

• Do you know how your customers make money? How you help them make (or save) money so that they get to keep more of it?

• Do you know what keeps your best customers awake at night? What new opportunities excite them?

• Do you know what your customers are reading? Watching?

• Do you know what key words customers use when describing your products, or when searching for them on the web?

• Do you know what you are doing that make it more difficult for your customers to spend money with you? What hurdles you could eliminate to make it easier to do MORE business with you?

The Break UP

There are a LOT of marketers who are way too caught up in themselves and their own messages now. You don't need to get fancy, or to spend hundreds of thousands of dollars. We're talking basic human interaction. And with all of the opportunities to listen, it seems many organizations are wanting to talk more and listen less.

Are YOU listening?

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What if Seth Godin is NOT Seth Godin?

Seth Godin is one of my marketing heroes. He’s a thoughtful marketer and frequently on the vanguard of various new media applications. I read all of his books, and never fail to learn something from them. I subscribe to his blog, and have read many of them several times.

But in one of his more recent blogs, "Drip-Drip-Drip", I saw an inconsistency so glaring it deserved investigation.

In "Drip Drip Drip goes the Twit", Seth makes the terrific point that trust is built over a period of time - it happens over a long period as you get to know someone and come to understand who they are and what they stand for - and he drives the point home that the time to begin developing that trust is before you need it. So true. Publish NOW, he says, either in blogs or in little “twits on twitter”.

Odd, I thought. Seth has a twitter account, and I’ve never seen him there. I looked him up.

And there it was. The numbers jumped out at me.

He has updated 448 times
He has 3285 followers
He follows no one. Zero.

Huh? I was surprised and more than a little disappointed. Seth’s using Twitter only to pimp his blog. How is this leveraging the power of new media? Isn’t this exactly what he says NOT to do in Meatball Sundae? To use New Media as a one way conversation that's all about me me me? No way!



Incredulous, I asked the question on Twitter, and one of my better informed colleagues pointed me to this article by Darren Rowse, better known as ProBlogger. And look at what Darren found out about Seth as his Twitter Account:

When Seth isn't Seth

Ironic, huh? Some anonymous person is on Twitter, posing as Seth Godin. He's posting Seth’s blogs under Seth’s name. Even though all this presumed fan does is post links to Seth’s blog, it still is damaging to Seth’s carefully nurtured brand:

• People think Seth is using Twitter solely to flog his blog, and have “unfollowed” him as a result. Web 2.0 is two way - not one way.

• People think Seth is using Twitter as a one-way marketing tool, which is in direct contradiction to his own advice.  This undermines his credibility as a teacher.

• People think Seth is ignoring them, which gives him a none too desirable aura of contemptuousness. This looks especially bad next to fellow A-lister Guy Kawasaki - who is following 9456 on Twitter, and being followed by 8713. Guy is active on Twitter, and has built a great core following through commentary and participation.

So instead of building trust a tweet at a time, trust is being eroded. But not by Seth. By someone who has hijacked his name. 

And I think we can all imagine the disastrous possibilities were this fan malicious, or possibly looking to profit from the exploitation of Seth’s name and enormous following.

Readers: PROTECT YOUR BRAND.

• Secure your domain names

• Secure your brand and/or name on social media sites

• Google yourself regularly; set up Google alerts for your name

• Defend your reputation and your name and your place

If this can happen to Seth Godin, it can happen to you as well. Don’t let it.

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Plight of the CMO

Ah, the plight of the CMO. We have all heard heard the statistics. They’re lasting in their jobs now about as long as Ashley Alexandra Dupre’s singing career. Following are the latest statistics from the Executive Search firm, Spencer Stuart.

http://feeds.feedburner.com/FrankBlogsAboutResearchAndMarketing2006 - average job tenure 23.2 months
2007 - average job tenure 26.8 months

It may be getting a little better, but there were twice as many CMO vacancies in 2007 as a year earlier.

CFO’s and CIO’s on the other hand keep their jobs right around 3 years. (This still seems short but it’s still 50% longer than CMO’s)

Articles on the subject have suggested job security tactics for the CMO’s - strategies they hope will lead to more secure positions and longer tenures. They won’t help because the focus of those articles is all wrong.

It is unadulterated horse manure that CMO’s need to “do a better job of communicating what marketing can and can’t do”, or need to do a better job of “establishing realistic expectations”. All this will do is make the rest of the C-suite think the CMO is hedging her bets or soft pedaling her effort - which is not going to inspire confidence that she can be entrusted with the advancement of the brand.

Marketing is about dreaming big and tenaciously pursuing those dreams. Sometimes you get it right, sometimes wrong. The smart marketers take stock, learn and move on fast, eyes forward on the goals.

Instead of making suggestions to the CMO that would put a band-aid over the issue at best, the writers ought to be addressing the REAL source of the problem:

The CEO.

Think about it! When is the last time you ever heard of a CEO dropping by the CIO’s office and wanting to discuss the organization of the wireframes for the web site? Or engaged in a debate on risk theory with the CFO?

Everyone has an opinion on marketing. Board members. Employees. Customers. Elevator operators and custodial staff. Everyone thinks they know either what does or what will work. Usually, the CEO is the worst of all, because he’s the one with the budget clout and final word. But just because he is at the top of the corporate food chain does not mean his ideas or judgments are best for marketing the organization.

In fact, if he is a good CEO, he is not likely to have the time to be a good marketer. The CEO is, or should be, too busy leading the organization to do justice to the quotidian minutiae of running marketing. Show me an organization where the CEO (or the CEO’s offspring) is running marketing, and I’ll show you one that is WAY underperforming. Yet most CEO’s love marketing, and want to have an active hand in its creation.

Who can blame them, really? What would YOU rather do, go to an Audit Meeting or meet with the Agency and watch old Robin Williams out-takes from Mork and Mindy?

CEO's are like that too - they would rather listen to the agency pitches; brainstorm taglines, cogitate the implications of the brand promise. Many have a very hard time leaving all this merriment (and publicity) to someone else. But the best marketing is never going to be done by a CEO - at least by a CEO who is doing a competent job of leading his organization.

Instead of jealously holding onto the marketing reins, here’s what the CEO SHOULD be doing:

1. hire a professional CMO
2. allow her to take an active roll in the planning process: the vision development and strategy formulation
3. give her the budget to get the job done
4. Hold the CMO accountable for the vision, but stand aside and give the freedom to execute without arbitrary second-guessing, or making them justify every expenditure.
5. be absolutely clear about expectations: agree in advance on the metrics to quantify success
6. provide the expected time time frame to show results.

It would be really cool too if the CEO understood that in marketing as in finance sometimes the short term is sacrificed for the long term good.

It would also be terrific if the CEO understood that marketing cannot make a shitty company a good one. All good marketing will do is increase awareness of how shitty the company is.

OK, but what happen if the cow doesn’t jump over that moon?

Are you thinking about joining an organization as a CMO? Here are some of the warning signs that it would be a safer bet for you to take an 8 second ride on a bull named Bone Grinder:

Warning Signs

• The organization does not give the CMO a seat on the Executive Committee, or give her access to the Board. Again, is this because they think marketing is not important enough? Or because the CEO speaks on behalf of marketing? Or because deep down they believe marekting is fluff?

• CMO’s aren’t allowed to take part in planning processes, or provided with the vision and 5 year plan. This ensures that all of the marketing decisions are only as forward-thinking as tomorrow. How can the CMO make cogent marketing decisions if they are not provided with a semblance of direction regarding where the ship is supposed to go from the CEO?

• Marketing has no budget or control over its budget. It’s recommendations, decisions and actions are therefore always subject to budget cutbacks and second-guessing. The CEO then has the final word.


• The CMO is expected to provide consulting “input”, but has no decision making authority. He loses face and credibility with the rest of the staff, who rightly surmise they are wasting time with him since he has no real power. This undermines both the leader and the team.

• The marketing is still done in 2008 the same way it has been done for the past several years. Same ads in same publications. The CEO, or the CEO’s kin has been handling the marketing function.

• The marketing department is all about execution of top-down directives rather than strategy development. Marketing used used more to put out fires and take care of promotional emergencies than it is to support the strategy or move the organization closer to the vision.

• The CEO must approve all ad copy prior to its publication. He has marketing books in his office, but the most recent ones are written by Ted Levitt and David Ogilvy.

• There have been several CMO’s over the past few years, and you are told they a) weren’t a good fit with the corporate culture, or b) just didn’t work out.

• The corporate web site is treated like an online brochure, and features models with 80’s hair styles. No one in the organization understands SEM or SEO.

• Blogging is one-way and is treated as an attempt to toot the marketing horn even more. Comments of course, are NOT allowed.

• Little marketing research is done, or it’s done for the wrong reasons. When you ask to talk with the Chief Insight Officer or to see the latest customer satisfaction results, you are met with far-off stares.

Under these conditions, marketing will fail - absolutely fail - to meet expectations. Never mind that the expectations are unrealistic, somebody has to belly up to the chopping block. And who do you think it’s going to be, you or the CEO?

What can CMO’s do?

Suppose you are already the CMO of an organization, and you are frustrated with your organization’s reluctance to accept your brilliance. Following are some recommendations for bolstering your credibility and making yourself indispensable to the management team.

• Know where you are, where you are going (vision) and the strategy for getting there. Let this knowledge drive your decisions, questions, tests

• Become the voice of the customer. Consume all of the current marketing research that you have on hand, and argue for doing more. Do focus groups, asking questions about satisfaction drivers, reasons for buying, and advertising tactics. Quote liberally from the groups in your memos and meetings, and send streams to the C suite to bolster your points.

• Realize that a huge part of your job is providing insight. Do it. Spend one day a week in the stores, or talking with customers. Look in shopping carts, ask direct questions about the customer experience. Go beyond the basic purchase to explore the needs your organization satisfies. Try to experience your business, at least once a week, from your customers’ point of view.

• Talk to your front line employees and ask them about the customer experience. Front line employees are nearly always an underutilized resource for marketing and market intelligence. They interact with customers every day, which gives them a solid basis for recommendations regarding changes or programs that will make the organization stand out way ahead of the competition.

• Take charge of your organization’s marketing partner ecosystem, and realize that YOU are the guardian of the brand. It’s up to you to ensure the imagery and content is consistent, and consistent with the vision.

• Never, ever mislead or lie to your market. Hold your organization accountable to the truth. (Duh!)

• Be the gadfly - the person with the questions, not with the answers. When the CEO or any other marketing expert in the organization tells you what you should be doing, question their assumptions and conclusions. This doesn’t mean you won’t be a team player, it just means you will make sure many different options are considered before a decision is made.

• Be the Change Agent - embrace and advocate change, especially that which is driven by and for the customers and prospects. Keep your colleagues on their toes, by pushing them to embrace change as well.

• Embrace innovation - Business model innovation. Business design innovation. Infrastructure innovation - all of these are going to draw heavily upon your experience talking with customers and prospects.

• Look for ways to reinvent marketing - embrace Web 2.0 and all of its amazing opportunities. Collaborate in wikis, build Google docs, bring in some experts in SEO and SEM. Put a video on You Tube. Blog and invite customer ideas and commentary. Do NOT censor the criticism. Learn from it and respond to it. Web 2.0 means two-way; learn to love it!

• Become highly skilled in analytics, using new technologies and metrics to demonstrate the full value marketing represents to the company. Be able to fully integrate with sales and other functions of the organization.

• Agitate for a seat at the planning table. The customers deserve to be heard during this process, and you are the one with their voice. You want to be a part of the assessment of where things currently are, the development of the vision, and the creation of strategies designed to take your organization to the vision.

Stay focused and on goal

If you want a career in marketing, you are going to have to become comfortable with the fact that the best marketers will make other people in the organization nervous (especially the pseudo “marketing experts”) who will waste no opportunity to criticize or advise. But they’ll shut up eventually when they realize you know a lot more than they do about the customers and what motivates them to buy.

Or maybe they won’t! It’s always a good idea to keep the resume polished! But never fear - the one thing about marketing jobs is that we know new ones are always available!

And if you can bring experience and expertise in the above areas along with a passion for innovation and the customer, you’ll always be able to find a terrific marketing job.

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101 Dumbest Moments in Business

Check out this terrific compilation from Fortune Magazine. It highlights some of the hilarious, pissy, alarming, audacious, bigoted, ridiculous, avaricious and infuriating idiocy committed by businesses in 2007.

You're read many of them, but others will surprise you - to think that these companies are led by some of the brightest minds that business schools have to put forward. Scary!

Can we learn from these egregious blunders? You bet.

Cultivate an environment that allows people to speak freely. One that rewards candor and discourages silent disagreement.

Every organization needs people who will stop and say:

• Wait a minute.
• How is this going to look?
• How might this decision affect our brand?
• Is this decision REALLY the right thing to do?
• Are there bigger things at play here than a few bucks?
• What does this decision suggest about our corporate character?

More important: BE that person in your organization. Hold your company accountable to YOUR values.

Are You Rewarding the Right Customers?

Andy Sernovitz is a good writer and and a very creative thinker. He wrote the book "Word of Mouth Marketing", and he has a blog that I enjoy immensely entitled "Damn, I wish I'd thought of that!" Thanks Andy, for the idea for this blog.

Andy's Question: Why do we reward the shoppers with small baskets rather than the shoppers with large ones?

OK. We know this is so people won't have to wait in line for days when all they want is a gallon of milk and bread for sandwiches tomorrow. Long lines and the inconvenience of a grocery store are the reasons we have "convenience" stores now. Express lanes get people in and out of the store - quickly. Without this option, many customers will leave mad. Or not come at all.

I believe we ought to look for ways to reward - or to make feel extra special - the shoppers with overflowing baskets of goods. Two VIP lanes with the fastest cashiers and baggers and help getting the goods to the car. Maybe a place for the weary Mom to have a seat where she can still keep an eye on the register, and little treats for the kids that are wired from being in the store so long.

How do you reward the people who spend the most money with you?

 

 

Starbucks and 2.0

What will Web 2.0 do for Starbucks?

Starbucks has been in a bit of a rough spot recently. Sure, the company is doing OK financially. As of March of 2008, it has nearly 16,000 stores in 44 countries, and is opening stores at a pace of about 6 a day. Income is still positive, and the company is not overloaded with debt.

But there are storm clouds: operating margin is down to a paltry 12%, and growth of same store sales has shrunk to a flat 1% as of the first quarter of 2008. Incredibly, this reflects a 2% value increase and a 1% transaction decline.

And it’s not going to get easier. The dust cloud on the horizon? That’s McDonald’s, and it is coming after the lucrative coffee market. McDonald's has brand, and it has convenience. And it’s selling a new “Premium Brew” that Consumer Reports taste-tested and pronounced “better than Starbucks”. Huh? McDonald's? GTFOH!

And, oh yeah, McDonald's has hot breakfast items. All Starbucks has is carbohydrate-intensive fare that make us tremble even to think about the impending bathing suit season. Muffins that conjure images of muffin-tops. Love handles.

Eeyow. Not only that, the buzz in the blogosphere is negative verging on nasty - disappointed people are asking WTF is going on at Starbucks? People are sharing tales of belligerent baristas, stale, crumbly food, filthy bathrooms, and worst of all, bad coffee.

Bad coffee? At Starbucks?

But wait a minute. Starbucks has always been about much more than just the coffee. It re-defined the whole idea of the coffee shop. Starbucks features a shared coffee experience, and a community of intelligent, connected coffee drinkers who are passionate about their brew and about their lives and about their world. They like the way Starbucks and its coffee makes them feel. Not only that, the joe is damn good. Or was.

Earnings flat. Margins squeezed. Quality of questionable consistency. Recession looming. Food fattening. Competitors circling.

What’s a brand to do?

Here’s what: Starbucks is going to unleash the power of Web 2.0. OK...a very small part of 2.0. But it's a start.

On March 21, 2008, Starbucks announced the creation of an online Starbucks community at MyStarbucksIdea.com. The big idea is to extend the community from the coffee shop to the world. To leverage the power and goodwill of the brand to induce passionate Starbucks customers to conceive ideas for the improvement of the product, the experience and the community (world). The ideas will be shared within the community, voted on by members, and presumably acted upon by Starbucks.

If Starbucks can pull this off, it will be a huge victory for the organization and for 2.0. All of a sudden, Web 2.0 will move from the abstract to the concrete for a great many organizations whose only nod to 2.0 is to have a MySpace page. Needless to point out, this could have ramifications throughout the global economy for people who make a living on the web. This is a pretty major attempt, by a company that has a stellar brand, to use Web 2.0 an interactive tool to understand and improve the entire customer experience. We should all watch, listen and learn.

Let’s take a look at what Starbucks is doing right and wrong so far.

Starbucks is doing several things right:

• First, Starbucks recognized it had a problem. Then it acted. Some companies never even do the first part. Maybe Starbucks should have been soliciting and listening to customer feedback all along, but at least they are doing it now.

• Starbucks appears to be listening. Really. Listening for more than just the words, listening for real meaning - trying to intuit something about the needs of its customers so the stores can connect with them in a more profound way. Moderators (noted by the sbx tag) are responding to suggestions and comments with questions designed to obtain clarification - to get real understanding. And this understanding is always going to be the best foundation for profitable marketing decisions.

• There is immediate gratification. Site members vote on ideas, and watch the overall score increase with their vote. They see how all ideas rank relative to all of the other ones. Ideas are “sorted” into the categories of Products, Experience and Involvement. Each of the categories has hot linked sub-categories that take the reader to all of the ideas concerning that topic. It’s logical and easy to follow. 

• It's highly interactive. Members are allowed to “comment” upon the ideas of others, which can be a very instructive way to observe how the market of customers may react to the idea were it to be implemented. Too many of the comments are of the “dude...w00t” variety, which takes up a lot of space without contributing to the discussion, but that’s still better than censoring any of the comments. The site also provides readers with a sense for the popularity and/or controversy of the suggestion, since it gives the number of comments.

• They are NOT censoring ideas or responses. They’re putting all criticism up there for the world to see, which is painful but confers credibility. One writer excoriated Starbucks for putting the same number of “shots” in the Grande and Venti Espresso drinks - apparently the .55 price difference is for milk, not for one more shot like a lot of people surmised!  This sort of thing terrifies the denizens of the C-suite, who want to maintain “control” over the conversation, just as they have tried to control advertising and PR messages over the years. Giving it up is hard, and I’m betting somebody at Starbucks has gambled his job that this is going to work out well for the company.

• They are practicing UPR (Unconditional Positive Regard) and suspending judgment on ideas at first. This prevents shallow, defensive thinking and brings even more ideas, even the “outlandish” ideas that sometimes are the the breakthrough ones. Sometimes, leaving up the cheesy ideas leads commenters to come up with stellar ones.

• It’s taking real action - telling customers which ideas are going to be implemented, and the time-frame for implementation. For instance, they have decided to offer “free AT&T wi-fi in the stores for 2 hours following a purchase that has been made with a Starbucks card. It’s not perfect, but it’s a step in the right direction. They note which ideas will be implemented and which are actively under consideration. For one suggestion - that of a separate line for Drip-coffee drinkers as opposed to Espresso based drinks, they offered the results of a test they had done on that very issue, and gave the reasons its implementation would be  a challenge in their stores.

This is in essence, an online creative brainstorming session with thousands of participants. It will be unwieldy, difficult to follow but probably very fruitful. The challenge will be keeping the enthusiasm level high, and keeping the output organized in a way that does not suggest manipulation. So far so good.

What they’re doing wrong, or could be doing but aren’t.

That said, there are some opportunities Starbucks is missing - it is not addressing some of the areas that have come under fire recently, areas that people desperately want to see addressed.

• Face the ugly truth - quality is in question. It’s costing Starbucks customers. Tell us what Starbucks is going to DO about it. Now. Whenever I ask the question on Twitter, “What Should Starbucks be doing?”, the quickest answer is “make better coffee”. There is very little mention of the quality issue on the website. Why? This issue has not been addressed and should be. If the company is buying cheaper coffee in a move to save money and improve earnings, tell us about it and tell us what you’re going to DO about it.

• The number two suggestion so far, with 29,220 points (or 2922 votes) has been “free wi-fi”. Not free wi-fi for AT&T customers. Not free wi-fi for those who pay with a Starbucks card. From the ideas in action page, they have announced that customers who make a purchase with their Starbucks card will have free wi-fi for two hours (reasonable), but they have to have an AT&T wi-fi account and be subject to “limited marketing” by AT&T. Huh? Free wi-fi is NOT a difficult concept to grasp. Panera does it, as do Mom and Pop shops across the country. Don’t tell us Starbucks is going to implement an idea, and then fetter it with regulations and exceptions. People will go away.

• It's showing the "best" ideas, but should also have a way to showcase the newest ideas, so that people returning to the site will be able to respond to new suggestions without having to scroll over several pages.

• It has tearoff "post-it" pages in the shops, but is doing nothing there to drive store traffic to the idea site. Why not? Put the address on the cups or on the recyclable pad or maybe even the bulletin board.

• To fully harness the power of 2.0, Starbucks needs to make the site even more interactive. Why not have one of the sbx “partners” recruit original idea posters and creative commenters to an online discussion board, and moderate an online discussion designed to flesh out and understand the original intent of an idea and the needs it would be addressing.

• Why not have a weekly online focus group (that can be observed by other members) to focus on an “idea of the week”. Essentially, this would move the discussion into the realm of “real-time”, which will give it more weight.

• If they aren’t, Starbucks also should be doing research and study offline. Starbucks will end up with the names and email addresses of thousands of passionate coffee drinkers. They should be doing online focus groups and online surveys with this group, testing and ranking ideas as they emerge, then putting fleshed-out ideas back up for more feedback. Listening, probing and listening some more.

Even though Starbucks is about more than just coffee, Starbucks needs to remember that coffee is the linchpin of their value proposition - and they have been losing taste-tests to McDonald's. That's like losing an ambiance contest to Wal-Mart. Free wi-fi will not make any difference if the coffee sucks - we can get both at Panera. I wouldn’t be worried about this except for the fact that I have noted a couple times recently when the coffee was a little over-extracted and bitter and tasted like the bottom of my home coffee pot - not my usual experience. If Starbucks coffee does not improve, it won’t matter what else they are doing right, they will lose their customers. And they will deserve to!

Starbucks has put itself out on a limb with the launch of www.mystarbucksidea.com, and it is going to be very interesting to see what happens from here. If they build a large following for the site, generate a lot of enthusiasm and ideas, and then do very little, or spend a lot of time rationalizing the corporate position or blogging about why they can’t implement this or that idea, they will fall like Icarus before the blazing sun of public disdain. And that will be a loss for the 2.0 community, as well.

But if they get it right, it could be a great victory for 2.0, one that points the way for many other organizations to do more than simply put up a MySpace page and posts blogs about their commitment to  total quality improvement and maximizing the stakeholder return. They will begin to suspect that the best business application of 2.0 is in discourse - not monologues. In listening to your customers and giving them what they want.

Finally!