What does a retailer do?

Are you in retail? Get out now!
It can be a very harsh world at times. The retail world has always been massively competitive and difficult. The profit margins in retail are extremely modest compared to some professional services and manufacturing indutsries. Now, the massive force of globalisation (which was the goose for major retailers for the last 20-25 years) is now chewing away their profits and moving the game into territory where these dinosaurs are looking at the big comet falling from the sky. Retailers are struggling to add any real value to customer experience, and when they do they tend to get exploited.
Current situation

• Customers have access to more information and more purchasing channels.
  It wasn't so long ago that you would walk into a major retailer and be fairly sure that the price being presented was just about the best you could get. And even if you went to the trouble of comparing you would be wasting your time as the big boys had all the good deals. Even if you were savvy enough to look on the internet you would be faced with long waits and expensive shipping. Manufacturers weren't very well equipped to distribute to individuals and actively avoided cutting their distributors out of the supply chain.
  
  Now websites are popping up all over that do all the price comparisons for you. The television you buy in your own country or abroad is the same product, the only difference is the price – so why not go for the cheapest! Even if there is a wait involved due to shipping the massive (50-80%) price differential quickly eases the pain of waiting.
  
• Customers are exploiting retailers
  This is the scary one for retailers. They get the customers into the shop, they do the sales pitch, the customer actually wants the product! But they go and buy it from somewhere. This is absolutely heartbreaking. Great service, value adding service, going unrewarded.
  
• Retailers are giving less to customers
  Having said that, many retailers are actually providing poorer service than in previous years. Product faults, complaints and enquiries are often being transferred directly to the manufacturer. Furniture retailers are trying to reduce stock holdings so will wait until they have orders for a full container load before importing the goods, meaning one main advantage of buying locally is removed: there is now a 6-8 week on your new couch! This reduces the retailer to nothing more than an order taking centre. Why would a customer want to pay a higher price for the same product, with a long wait?
  Floor staff at most retailers are young, inexperienced and poorly paid. Many companies have moved away from career plans and cut costs in training and education. The younger generation is also fairly well known for not lacking loyalty to their employees. This little combination of events has led to a severe drop in the service given to customers. In other words a poor or negative customer experience.
• Taking a margin, exploiting economies of scale
  Most large retailers became large due to exploiting economies of scale. They sourced cheap product from overseas, shipped it across, slapped on a big margin and sold for just under local prices. This was a good deal for customers and they rushed in. Now the good deal exists by going straight to the source. And that is how it all came to this.

What are retailers doing to stem the tide?

• Increasing online presence
  It is probably too late for this, but the retailers are finally beginning to move into cutting edge territory with their websites. Being user friendly, customer focused, including order tracking, etc. are all standard elements of an e-business sites. Some major retailers are even pursuing social media channels to gather feedback and provide customer service to the clientele.
• Commissioning governments over taxs and laws
  This is a white flag move. Approaching governments to reduce taxes that give major retailers a cost disadvantage is a very short term approach that is unlikely to fix the problem: the outdated business model that creates overpriced offerings.
  
• Becoming finance departments
  Debt loyalty is an ugly practice that seems to be falling out of favour these days. For high dollar items, retailers have been offering up to 5 years interest free on financing. The longer the debt is held for the better it is for the ongoing income of the retailer. The customer gets the product immediately without the sting of shelling out all the cash for it. Unfortunately it still needs to be paid for and these individuals are left resenting the chain, even if the individual has handled his/her own finances poorly.
  
• Relying on branding
  With all of this – how is it possible that these retailers are still in business? They are not closing stores and they still receive a lot of traffic. It is simply the power of brands. The impression still exists that these companies are large, reliable, offer superior service, and offer a competitive price. Some are looking to extend their branding. They are asking manufacturers to rebrand products or are simply sourcing products directly, and becoming a manufacturer themselves.

What could they be doing?

• Close the stores!
  Retail as we know it is dead. It is so dead there is very little purpose in trying to rescue it. Shopfronts have to start closing. The rental on floor space and costs of floor staff is entirely prohibitive to competing with online retailers. If you can't beat them, joing them! But do something additional. Service them better. Leverage that existing brand loyalty by surprising the customer.
• Or, increase the service!
  Some things simply can't be bought overseas, or at least they can't be bought easily and advice is one of these. If you sell household goods, why not help the customer choose what suits their home? Offer cooking classes, etc. These are things that a website can't do. It needs local people interacting with local people. It needs to be commercialised, as simple product advice is being exploited by customers as they purchase online. Product installations, or delivery services at times that suit the customer (wouldn't that be nice!). There are many avenues to explore, but they all involve moving away from the brinks and mortar.
  
• DO NOT try to compete on price.
  It is a waste of time. It is a fight that a traditional retailer can't win. It is as simple as that.

It will be fascinating to watch the major retailers across the world. Soon enough one of them will take the plunge into redesigning a business model. Once it happens the others will scramble to follow. If the change is profound enough then e-tailers will also be fighting to follow suit. Meanwhile, the first company to do so (successfully) will sit back, rub their hands together and enjoy the good times.

5 Marketing Mistakes I KNOW You’re Making

1. You think you have a strong brand
   Where do I start with branding? God, everyone talks about it but very few people get it.
   I was talking to a banker who said his bank's brand was one of its biggest strengths. Interesting point when you realise that his bank is ranked 3^rd or 4^th on just about every measure of market share in just about every segment. Smart guy, really smart, but this was a really dumb comment. This banker could not even tell me what made his brand different to the others, apart from the fact it was blue and the other major banks weren't. THIS BRAND IS NOT A STRENGTH – IT IS A WEAKNESS. A prominent brand does not mean a strong brand. It needs to differentiate from the competition and it needs to represent your company properly! If you are directly competing with three other major industry players, and they all have superior market share and your brand does not represent any type of advantage over them, your brand is a weak one.
   
    Boost Juice is one of the best brands I know of. It takes an everyday product (fruit juice) and slaps a brand on it that makes the drink worth more and draws in additional customers that didn't even think of buying fruit juice before they saw people walking around with Boost cups. Boost present themselves as high energy, fit, healthy and young. And you know what? It is a great representation of the company because they hire fit, healthy, young people with great upbeat personalities. The brand is a perfect reflection and is very strong. Compare this to just about any insurance company that claims to make the life easy for you, or the Optus slogan "Joy without Limits" and animals plastered all over the place. If you have ever had to call up Optus, especially if you're trying to bundle more than one service with another, you'll quickly realise there is a very real limit to the available Joy from this company. And the animals are supposed to make it all cool and fun, but with pathetic customer service the animal branding just looks like a gimmick, because it is. Forget your damn animals and give me some service!
   
    
2. You know your own company better than you know your customers and competitors
   That's right, knowing your company better than you know customers and competitors is a fundamental weakness. Most industries are in a state of maturity or increased competition which means the customer has the power of choice and the competition is doing whatever it can to chew you out of the profits you are working towards. Use every single piece of market sensing ability your entire company has to get a feel for what is happening out there.
   
    You need to know your customers, how old they are, what they like to do with their time, why they like your product, why they don't like it, what they eat for lunch, what position they hold in their respective companies, their geographic location, their level of education, what cars they drive, what movies they like, EVERYTHING. This should be a starting point in any marketing plan. You need to get to know the people who make it an industry, the people who demand the products and service..
   
    And the same goes for competitors, you need to know their campaigns, you need to know what they are working on next, what they have worked on, what is happening in their corporate structure, which ad agencies they use, which business functions are outsourced, how they employ their staff (they might be trying to take people from your company!) and most importantly: the customer experience that they provide. All of this information is fundamentally important to making good marketing decisions and putting your time and effort towards appropriate activities. People think chess is a strategic game but that is crap because your opponent is making all his moves right in front of your face, it's got nothing on the real world. There is a reason why only the socially retarded excel at this game.
   
    
3. You don't amaze me
   I actually used this line to break-up with a girl once. It wasn't my finest moment, and sure, she was hurt, but what am I supposed to do? Wait for it to improve? Kill time and hope that the experience I want comes along? I wasn't prepared to do that and I can guarantee that your customer aren't either. It is pretty simple, really. If you don't make me say 'wow' then why should I bother with you? Are you actually trying to win my money with your product and your service? Or are you just trying to lure me in with false-hope intro offers that then lead to the same thing that everyone else is providing. Note – the suggestion here isn't that you need to redesign your entire product range. Service is a great divider in an industry. There are not many companies out there that make you sit back and go "wow, that was great service!" Singapore airlines is a standout in this area for me. They do have superior planes as well but the service they provide has always made me sit back and say "wow, why would I even bother with anyone else?".
   
    
4. You Don't Really Know Why You are Doing it
   It used to be all about getting a website. Everyone was in a mad rush to put one up, but nobody really thought about what a website was for. The same thing is now happening with social media, iPhone apps and no doubt there will be another wave of crap that everyone else jumps onto. The reality is that these forms of communication represent a new product. Some do it well, some don't, but you always need to know WHY you're doing it! If the answer is any of the following:

• Our competitor is doing it
• We've always done it that way
• The boss said we need one so let's get to it

Then you're being pathetic. If ALL of your competitors are doing it and it is costing you customers,then that is a good reason. If you've always done it that way and you can show that it helps retain customers or get new ones, then that is a good reason. If you don't have the balls to question the boss or at least understand his/her motives then your career has just about peaked. The great advances in websites were the following: the ability to order online, the ability to gather useful market information, the ability to communicate regularly with customers. Note, advertising revenue is NOT a great advancement of websites. It was the online application of an offline practice and it has never been done well.

iPhone apps are still a very new thing and nobody seems to know what to make of it. They are basically text dumps or GPS units, or a combination of the two at the moment. Oh yeah, and the games, let's not forget those. Dominos Pizza led the pack in terms of creating an app in which you can order pizza and have it delivered. They did it to increase convenience for their customers. They could have just "made an app" which was a list of pizzas and toppings. They could have made a game where you've got limited time to make pizzas before angry customers die of hunger, but they actually did something useful which had a strong purpose. See the difference!!! To see what I'm talking about get a load of the Save the Children iPhone app. Keep in mind that Save the Children is a non-profit that aims to increase awareness of human (children's)rights and raise cash. This app is a cheap gimmick that does neither, and anyone who has downloaded it has most likely deleted it or forgotten about it by now. The same mindset is required for product development, service offerings, trade shows (do you REALLY think they help?), advertising campaigns, restaffing, outsourcing – YOU NEED TO KNOW WHY YOU ARE DOING IT.

5. You are letting the Marketing department do all the marketing. This is perhaps the biggest mistake. The best thing in the world is momentum. If the marketing department is working against other departments (and most companies have sales and marketing diametrically opposed to each other) then there is a hell of a lot of wasted energy and effort, and where does that get you? Your accounts team, your warehouse guys, your engineers, IT staff, customer service and of course, your sales and marketing teams are all capable of marketing. You don't want everyone trying to be a salesman, that can be embarrassing, so forget about delivering incentives to all corners of the business on the basis of sales. Just make sure everyone is educated on how to treat customers and make sure everyone understands the products and services to a level where they can have a reasonable discussion with a potential customer.

McDonalds Law Suit for Advertising to Kids! Who is right?

Are you lovin' it?

The people of LA aren't.

Correction: a mother that takes her kids to McDonalds once a month is not lovin' it, she's downright mad! (click here for full story in the LA times)
The LA times is reporting that the woman considers the offering of Shrek toys to her kids a form of parental circumvention of her parenting control.

This is a very sensitive issue where marketing and morality (and legality) being to cross swords.
Here in Australia it is illegal to advertise fast food at particular hours, or on particular channels. Why? Because we don't want our children being communicated to by these skilful advertisers! Clearly, in the US this isn't the case.

The parent in this law suit is someone that takes her children to McDonalds once per month, or thereabouts. This is an existing customer that we are talking about that is suing the company for advertising to her children. The problem? The advertising is making her kids want the food more often that what she is willing to give her kids. The problem isn't so much that the toys are provided with the happy meals, it is more the fact that to collect the entire set she would have to go McDonalds much more frequently than she currently does.

The Role and Responsibility of Children:
Children are the consumers. They have influence over the purchase of food but very really do they have the means to buy it themselves. They need a purchasing agent, which usually comes in the form of parents, or a babysitter/uncle/other that has been forced into taking care of the children. Children, by nature of their lack of perspective and cognitive skills (namely cause and effect in a long-term sense) are hedonists. They live for pleasure, and if that food looks to be pleasurably they will ask their parents to have some. They can be skilful and persistent negotiators, and at the peak of their powers they may play the high ace: the public tantrum. There is no more highly influential act upon a parents' behaviour than the public tantrum. It causes huge embarrassment to the parent, and this embarrassment is something parents will go to great lengths to avoid. Children seem to become aware of this at a very young age.
Luckily for the child he or she has no responsibilities. They are kids, and they are learning the ways of the world. They are innocent.  

The Role and Responsibility of Parents:In terms of consumer purchasing models, parents are considered the ultimate buyer. They are the ones that control the money and have final say in how that money is spent. By virtue of the public tantrum, what the neighbours think, the cost of food and the amount of time it takes to care and prepare for meals the purchasing decisions for food are amazingly pressured. Parents have often been known to do or buy things for the sake of relieving pressure. I think every parent has done this at one stage or another, whether it's allowing the children to watch TV all, allowing them to eat chocolate all day (note – chocolate companies are not being sued) or simply letting the little brats jump all over the furniture – there are countless examples of parents giving in to this pressure. The crazy part? These acts of pressure relief usually work in the opposite direction of what the parents think of as right or good parenting. Why? Because, as all marketers should know, emotion influences more (purchasing) decisions that logic does, especially in the consumer space. The parents feel the responsibility to feed their children healthy food, to take them to the part and to spend cash responsibly – but the reality is that this repsobility often gives way to pressure. Personally I don't think this makes large companies like McDonalds immoral, but if this tension is deliberately increased for the benefit of the company's bottom line, there may be an issue.

 The Role and Responsibility of the Company:
In true marketing speak, the company is there to provide profitable value. That is, they need to provide something valuable to the population so that some members of that population will part with a portion of their income in order to obtain it. Most marketers will suggest methods of increasing customer share of wallet, customer lifetime value and customer frequency of purchase. If your product is one that is a 'sometimes' product (e.g. Alcohol, music concerts, unhealthy food, caffeine drinks) you need to be careful. Your product may be fun (hence, value adding) but damaging to your customer if over-consumed (value-taking). A company will always try to increase sales and profitability, but Governments (such as the Australian one) will begin to step in when they see people in their jurisdiction being adversely affected. Even tobacco, the tax cash cow of the last century, is now being regulated in terms of advertising and packaging.
So it is up to companies that sell these products to avoid presenting them as everyday items. What is the alternative? Present them as fun! Present them as cool, present them as a special treat. However, these products should never be presented as unrealistically common. (e.g. Supermodels eating hamburgers and saying to each other "I can't believe we eat this everyday and can still be this thin!)
The alternative is to create new products! McDonalds actually did this with their new Healthy Choices menu. Great! What a great idea! A company with the brand strength of Maccas selling salad as a lunch option! Cynics will say they're only doing it for the money and to save a PR disaster. That is most likely their motive – but I don't see any other fast food chains releasing healthy options.! Well done McDonalds – I hope they begin to rival Subway as the 'healthy' fast food provider. (I said hope, not expect.)

Public health studies are a massive eye-opener in the realm of passive effects.
In this world of increasing selfishness and individuality it seems to be a strange side effect that when things go wrong consumers start to blame companies. But there are certain patterns of health that show areas that have higher densities of fast food have higher rates of obesity (and lower rates of gyms and personal trainers). Until I get my hands on detailed statistics I will refrain from pushing any argument drawn from this, but it is hard to ignore the fact that EVERYTHING influences purchasing decisions. EVERYTHING.

So…..Advertising to kids: right or wrong?
I might get shot down in flames for this – but I think it is absolutely fine to advertise to children. Each company has the right to try and build its sales with audiences to which its products are suited. Each parenting team has gateway control over what their kids consume until the kids re given money to make purchases of their own. Whilst advertising sends a message promoting fast food, parents need to be sending an equivalent message to their children about moderation, or the cons of eating fast food. In a broader sense, governments need to observe the overall health of the population. If obesity rates are up (or other negative health outcomes) then certain influences or access to the cause of obesity need to be regulated and legislated. For this I congratulate the Australian government. And my suggestion to the lady quoted in the LA Times article is to send her protests to the regulatory advertising body, not the individual company of whom she is already a customer.


So what do you think?

Oovie – Good or Bad Marketing?

I feel sorry for the guys at my old Video Ezy store. It was a really nice family business and they went beyond the standard, soulless nerd at the counter laughing at you for not knowing the intricacies of the subplots of Ironman/Batman/Transformers, etc. These guys were great but they were on a sinking ship. Piracy has killed the video rental trade, which is really tragic for my old friends. Not sure where they're headed now, hopefully they've found some other way to earn some cash. That's business.
But enough of that sob story, the fact is they were selling something nobody wanted. To lay it out straight, here is why the DVD industry is doomed:

1. You can get movies FOR FREE on the internet. Very hard to overcome this.
2. You don't have to leave home to get these movies.
3. Downloads aren't usually scratched, or out on hire by other users.
4. You don't get fined (although you are supposed to) for downloading pirated movies.

So these are four really good reasons for people to not bother hiring movies from your local video store – the alternatives are most likely within four clicks of where you are right now. The video rental market is an extremely unattractive market – one you would not enter if your life depended on it. Apart from having no demand, you've got the following costs:

1. Store rental, site costs
2. Disposal/sale of old titles
3. License fees
4. Staff costs

Great. That's eight extremely good reasons to stay away from this market.
But wait!
What's that?
It's an Oovie?
What's an Oovie?
It's a new brand (Owned by Hoyts, the cinema people.) and a very nicely constructed brand I might add.

The new Oovie logo - very nice!

But WHAT does an Oovie Do?
It is the replacement for video stores. It is a vending machine for videos (see pic below). It really is a neat little system – the unit is full of probably 240 or so DVDs (including multiple copies of more popular titles, I presume) and you select one and swipe your credit card. $3 per night.
I hope you're asking yourself the question "why can't you just run off with the video forever after paying for just one night?" The answer is because they have a very clever payment system.

An Oovie Unit

The payment system
They take your credit card details and charge you for the first night (single charge of $3). Then, when you return the video you are charged a second time, an extra three dollars for each additional night you've had the video. The interesting bit is that if you don't return it after 12 days it's yours to keep!
I think it's great because it means people no longer have to decide between hiring or buying the DVD. If it's for the kids then they can watch it a few times, get hooked on it and bang, you've bought it. Otherwise, it might be one that they hate and you can return it instead of paying the full amount. Great!
The reason they can implement a hiring/owning system like this is because the consumer cost of hiring and owning movies is so similar. Compare this to car rental: a car that is valued at $20,000 can be rented for about $80 per day. Under the Oovie rent or keep pricing you would be allowed to keep the car if you failed to return it after 250 days. A very unlikely scenario. So as clever as this little pricing deal is, at this stage I can't think of any other industry that it could be applied to. (Imagine this for consultants! If you clocked up $100k of fees you got to keep the consultant!)

Industry replacement
So Oovie has come along and replaced the dwindling DVD store industry. Almost overnight these vending machines have popped up everywhere. But I just can't tell if it's a good idea. There are approximately 100 of these units in my home town of Melbourne. Let us assume the vending machines cost approximately $5,000 each, then the outlay is half a million dollars.

Doing the sums
From my estimates (no data here, just my view based on how many titles are unavailable each time I go to use one) each unit would receive 12 rentals per day, with an average rental period of 4 days (another total guess).
This would mean daily revenue across the entire city of about $15,000. This really isn't a very exciting figure for an operation of this size. A problem with these vending machines is there is a diminishing demand situation. That is, the more popular the machine is, the less people will actually want to use it because the availability of DVDs goes right down. This is a dilemma for Oovie. Do they simply pump up the number of units? Perhaps, but if each one has a cost associated there may be an issue here. Increase the capacity of these units? That is probably a very expensive option.
The break even on these units would be somewhere in the range of 1000-1800 night's hire. Even in a highly optimistic estimation of demand that is a fairly unappealing prospect. I have not even factored in the cost of refilling the machines, processing payments, advertising etc. Counteracting this, however, is that they may be charging rental to the stores that have the vending machines. There is no doubt that, when placed in a supermarket, additional revenue for that supermarket is achieved. The cash exchange here is near impossible for an outsider to estimate.

A matter of perspective
My entire take on whether this is a good operation or not is really based on who has put it together. Hoyts is a massive organisation. They have developed a new venture with a pretty modest financial outcome. It isn't really a branding exercise because they understate the Hoyts brand in favour of the new Oovie brand.
It could be an attempt to dip the toe in the water of the home consumer market, in which case it does have some merit and final judgement would have to be reserved for when the next step of the plan is revealed.
However, for a large organisation this shows short-sightedness, as it is an investment in technology that is in its final day and the short term cash hit is not lucrative enough to justify the effort that has been put in.
Alternatively – if a friend of mine, an entrepreneur had come up with this idea and a way to earn between $15,000 - $20,000 per day I would offer congratulations. The difference being that this is a significant operation for a small scale operator who most likely thrives on short-term opportunities.

The Verdict
So yes, I appear to be fence sitting but my overall take on this is a thumbs down for Oovie. And make that two thumbs down for their auto-adding of your email address to their mailing list (which you need to provide in order to hire a video.)

Telstra Really Satisfies…..some?

7 out of 10 Australians are satisfied with their mobile phone provider.
More specifically, a recent Roy Morgan poll has shown 71% of Australians are satisfied with their mobile phone company.
Phone companies make up some of Australia's most complained about companies. Telstra has long been our favourite whipping boy. The big promise of privitisation all those years ago was that prices would come down, service would go up and even better, we as private citizens could invest in the company and share the profits..
The government also made the bold move of introducing some competition. SingTel's Optus came in and were supposed to keep Telstra honest, and best of all keep prices down.
This paints a pretty good picture for the consumer, you would think. Enter new players in Vodafone, Virgin (aligned with Optus), 3 and a few others here and there and you've got increased consumer power and hopefully increased satisfaction.
So this poll tells us that the industry average for satisfaction is 71%, with Virgin Mobile right up there at 84%, and the dog that is Telstra down around 65%. Sounds about right?

Source: http://www.roymorgan.com.au/ (please visit this site – it is very informative!)

The thing that amazes me about Telstra is that one third of their customers are unsatisfied. How does a company of that size continue to GROW despite having one third of its customers unsatisfied? Now, I'm assuming that there was survey attached to this that included the service itself (are you satisfied with call quality, range of reception etc) as well as customer service and billing. Even so, this is an amazing statistic. If you spoke to any small business and told them that they would grow year on year on the back of satisfying only two thirds of the people that walked in the door you would be laughed at. And rightly so.
So how the hell does this big beast get away with this?
Whilst I'm really looking forward to the 2011 annual report for some more relevant finance information the fact remains that the graph above shows a company that has a satisfaction score of 61% in June 2010 whilst showing a revenue increase of almost half a billion dollars for that financial year.
To put it in perspective, Vodafone has a class action lawsuit being thrown at it and their overall customer satisfaction score is higher than Telstra's.
Wow.
So what's happening here? Possible explanations:

1. The satisfied customers are spending more. This can happen with increased fees or charges, or increased usage.
2. The customers that are leaving were spending less than the ones the company is gaining.
3. The market is growing in such a way that poor performers with fewer customers are still growing.

The other thing to note about satisfaction is that there is a big tie in to expectation. To put it simply, if you expect something very poor, and receive something good you will be extremely satisfied. Conversely if you expect something amazing and receive something that is merely 'good' then you will be very unsatisfied. The management of expectations is important because customers are a demanding pack and their wants constantly change. The old rule of under-promise and over-deliver is great in theory, but your competitors get all the newcomers if your offering looks meagre compared to theirs. The other problem for an organisation of Telstra's size is that it has the turning circle of a Mack Truck. Smaller organisations are much more adept at turning their organisation around.
The old rule of thumb about a one percent increase in satisfaction can result in a five per cent increase in sales is about to be tested, with Telstra's satisfaction rating going up 5% so far – we should therefore see Telstra hit some huge numbers in June. The reality is more likely to be that Telstra's mobile revenue will increase somewhere in the realm of 5-8%.
However much this telco giant frustrates me, credit is deserved for increasing the satisfaction rate across this period. It is a difficult thing for a company of that size. Well done.

Yes, it’s a Disaster! Part Two

I'm doing some interesting work with charities and NGOs at the moment.

All in all I think the people that work for these organisations are amazing people, usually willing to take a bit of a pay cut compared to the corporate stream in favour of doing meaningful work. This usually shines through in just about every way. Sure, there is the usual office politics and competitiveness, issues with inter-departmental red tape (perhaps more so than profit-oriented organisations) but overall they are full of GOOD PEOPLE that are there to do GOOD THINGS.

So imagine my surprise when I had this conversation with a project manager from a fairly prominent charity yesterday:

ME: So it's been a difficult month, with the Queensland floods and now the Victorian floods, you guys must be flat out trying to work out the best way to get your people around the country.

PROJECT MANAGER: Oh yeah it's been really good! We've had some amazing exposure!

 

I could go on but I'll maintain the professional respect of not naming the charity or giving details that would make it obvious who they are. This line spoke volumes to me – to me it said I was talking to an opportunist that had forgotten what she was there for. It was actually quite sickening to see the broad smile across her face as I thought of the countless reels of news footage I'd seen over the last week of people's homes being destroyed and the pure carnage of many towns and suburbs up north. A charity definitely wants to increase exposure and, by extension the funds that come through on account of this exposure. But EXPOSURE isn't the goal. FUNDRAISING isn't even the goal – these charities need to keep in mind that they are trying to raise money to do great things.

If the focus is on the great things, on the expansion plans, on the real help that these organisations give to real people, then every single encounter (such as the one with me earlier) will come across as sincere and honest.

You always, ALWAYS need to keep in mind what you're trying to achieve, and where you fit into the larger scheme of things.

Trapster Shame

So here I am with this brand new iPhone, a magnificent piece of technology that appears to be nothing more than a glorified games machine? Oh that's right, it has GPS and a web browser, and the ability to store text in the form of calendars, note pads or contact lists.
As we all do when we first become a little inquisitive, we speak to those close to us, and in unanimous applause this app was pointed out to me:

Oh wow! An application that you can have turned on while you're driving, which tells you when you're approaching a speed camera. THAT IS SO COOL! I CAN DRIVE LIKE ABSOLUTE MANIAC AND SLOW DOWN JUST IN TIME TO NOT GET CAUGHT!
Seriously – what is it with people? Great, this app will save people who like to speed a few dollars here and there due to avoiding speeding fines. So what's the problem? They're missing the point! That's what the problem is! Speeding is a dangerous activity. Yes, I know you've done it a thousand times and you're fine and you can tell yourself that if you ever hit someone. Even worse is the fact that this application picks up booze busses. That's right people, if you're too smashed to drive legally, but still sober enough to switch on this app and use it you can get home drunk and still keep your licence – GUARANTEED!
What's that I hear you say? The cops are just revenue raising with all those speed cameras? Well don't speed! If you want to teach those boys in blue a lesson just don't speed! It is just so so easy! There is nothing more pathetic than people who do the wrong thing and then crack it when they get caught. If you have ever known anyone that works in the police force, the CFA or in an emergency ward you'll see that revenue-raising is not the aim here.
This is the worst form of marketing – addressing a disgusting need of people: to avoid rules that actually benefit society overall. Anyone involved in this should be ashamed. This app would have my full support if it had audible speed limit warnings so that you would never accidently drive faster than the limit – that would improve safety, not just help you avoid getting caught.
So yes, there is a need being addressed. Yes, the creators are probably earning a tidy little income off it, but no, this is not the kind of marketing and product development Orphan Marketing condones.

Yes! It’s a Disaster!

The media loves a disaster.

They love it so much that it takes over entire TV networks (all of them) the airwaves, the newspapers, EVERYTHING. Never before have I been able to get such up to date figures of the death toll of whichever large scale disaster.

(This is obviously a shopped pic, that is probably a little unfair on these two as they've been solid, sincere performers).


This general media thirst for trauma makes me sick. The whole "if people didn't watch it they wouldn't show it" crap wears a bit thin with me. But that's my personal gripe. If your aim is to sell newspapers then you're probably quite satisfied with the result. I guess the question is: what makes channel 10's coverage better than channel 9's? The story is the same so if you want to find out more you need to decide which one you'll watch. Chances are your decision will be based on the personalities of the newsreaders (likability ratings are a very common thing in TV circles, overall it seems to be the determining factor in ratings). This is a really lazy level of differentiation, in fact it is downright pathetic.



But moving on to real marketing for real people: I was asked recently on my thoughts on disaster fundraisers. More specifically the type of promotions that go along the lines of company X donating amount Y to charity every time product Z is purchased. You can call this incidental contribution. The companies that commit to a drive such as this are not diving into their own funds, which means the donation can be achieved without the pain of a lump sum exit.



Personally, I think the strategy is a good thing. It is usually driven by sentiment within the organisation rather than profit seeking. This is a important because customers are becoming increasingly cynical and they seem to have a real eye for being atrificially leveraged for sentiment.



Are you likely to get a huge spike in sales and/or profits because of this? It depends on your product, but the answer is most likely 'no'. What you do get is an increase in the perception of your corporate responsibility.

Just remember – if your customers (or potential customers) get the feeling that you're rubbing your hands together with excitement at the hands of a massive tragedy you will be inflicting untold harm to your brand (unless you're a media outlet!).

The Social Media Myth

You need a social media strategy.
 
That is the myth.
 
Simple as that – it's a damn myth that you need a social media strategy. What you need a customer relations strategy that answers these questions.

1. How will you find out what your customers want?
   
2. How can you communicate with your customers more often?
   
3. How can you get feedback on existing practices?
   
4. How do you increase brand awareness?

Keep the result in mind as much as the process!

Social media can be used for each of these things but when you describe the strategy in terms of the vehicle rather than the ultimate goal you've already lost the game. Do you call it a magazine strategy or a communications strategy? Unless you're a complete marketing hack you'll refer to any magazine advertising as part of your comms strategy, because it makes up a subset – just like social media does. So many companies are popping up on facebook, twitter, youtube, you name it! But do any of them actually know WHY they're doing it?
 
I love social media, I really do, because you get to connect with your customers. But every single social media activity I've taken part in: the goal is to give and receive information. You invite customers to follow you, you offer them sales incentives or tips, hints and information on your products and events. You might even give advice on related activities or companies you're involved with. In exchange you get feedback, knowledge and if the experience for all is pleasant enough, a boost in brand equity and loyalty. You also do this alongside your e-mail marketing, your old-school advertising (if you still do it) and tie it in with your PR goals.
 
Another myth:

Social media is free.

Nope, it definitely is it. Why is it that people never factor in time as a cost? Time = money, especially if employees are spending it on social media. You need to consider the benefit of social media and weigh it up against the other activities you're doing. Think about your customer demographic – are they suited to social media or should you stick to more traditional styles? Can you get valuable feedback on social sites or is your marketing team lacking someone who knows how to drive it efficiently?


  You can get so much out of social media if it's done properly, but you'll be spinning your wheels in the mud unless you know what you're trying to achieve.

 

Starbucks, and some thoughts on Branding.

Starbucks, despite its spectacular failure in Melbourne Australia is still a really strong brand and a fascinating one to watch.

They have now made the decision to join other megabrands Nike, Shell, McDonalds and Apple by removing all text from their logo.





Bad:

Personally, I think this is a bad move. Sure, they want to use their brand to enter into non-coffee products, but they still need the brand name on there. The reason is simple: there are literally millions of people that are not Starbucks enthusiasts. Yes, this company is huge, but one of the reasons their brand name is so well known is because it is placed next to the logo that is on so many coffee cups being carried by angry, hurried business types every single workday morning. If you want your brand spoken about by people who don't necessarily use the product (but you hope they will) you need text included.



Good:

I thought I would take the opportunity to commend Starbucks on their choice of logo. The two-tailed weird green mermaid is brilliant. Personally, I don't know WHY they chose that mermaid, or why she has two tails, or even what her name is, but I love that it is DIFFERENT! Compare to the other major coffee chains: Gloria Jeans and Hudsons, and what do you notice?



They've both got dark brown as their colouring. Boring, ho-hum, predictable, and because I'm not super-dedicated to any brand I get them all mixed up. Even The Coffee Club is too conservative with its black background and serious white font.

There are some smaller chains that are starting to differentiate a little. While in Perth recently I was told the most popular coffee in town was from a place called Muzz Buzz. (http://www.muzzbuzz.com.au/) Even better they offer it as Drive through! The brand doesn't appeal to me personally, I'm a Melbournite that has a local café that enjoys my entire share of wallet when it comes to coffee. But I like what Muzz Buzz is doing. They're starting to grow – 3 sites open in Melbourne, and well away from the snooty inner-city crowd (I guess I can include myself there).

Notice how Muzz Buzz has the word COFFEE in their logo which is exactly what you need to do when you are starting up. (unlike Google, which doesn't need SEARCH ENGINE, Holden doesn't need CAR, Hewlett Packard doesn't need PRINTERS and Gilette doesn't need RAZOR). Once your brand is well and truly established, which is a difficult thing to measure, you are free to remove the name of the product - just make sure you keep the name of your brand highly visible!

Australia is the 2nd Best Country Brand in the World!

Futurebrand has ranked the brand of all the countries in the (1^st ?) world on several measures such:


Makes People's Lives Better

Creates Emotional Desire & Demand

Consistent Across All Touchpoints

Point of View on the Future

Drives the World Forward

Economic Performance and Power.



Well done Aussies! We are second best at something! Not quite sure what it is but we sure as hell are better than the US. That's a good thing isn't it? Well if it's a methodologically sound study then it is. Measuring the strength of a country's brand is a really difficult thing, the room for error is immense as individual experience varies wildly from one person to another. It all depends on who they asked. A review of Futurebrand's methodology gives little away but it seems like they've done their best to measure a fairly abstract concept. However, there is one line in their summary that stands out above all others:


"But above all, a strong country brand is more than the sum of its attributes: it makes peoples' lives better."



See this is the kind of crap that gives marketers a really bad name. A brand does not, and will not EVER make peoples' lives better. This is true marketing wankery at its finest. The brand of a country is more difficult to measure than any organisational brand because it doesn't have a graphical representation. In effect you're asking about the emotional and cognitive response to the mention of that nation, which is based on experiences with that nation. You're talking about an attitude based on experience. It's the experience that makes people's lives better, the brand is just a reminder.



The Country Brand Index (CBI) is a massive market research undertaking. Can you imagine the cost in surveying 3,400 people in 13 different countries? "In depth focus groups in 14 metropolitan centres" to come to the conclusion that a country brand can actually make lives better? Big bucks for a bucket of crap.


Sure, I've picked out one line in the entire executive summary, but read it carefully, it's Futurebrand that precedes this statement with the words "above all".


Shame.

  For those interested, the top five are: (last year's ranking in brackets)
1. Canada (2)
2. Australia (4)
3. New Zealand (3) 
4. United States (1)
5. Switzerland (11)

 

What is Orphan Marketing?

It’s the best way to do your marketing.

It’s also more than that – it’s about succeeding.

The mission is to rid the world of marketing waste, stupid decisions, loss of perspective and promote personal success. You need help? You got it.
And how are we going to do it? For free. That's right - I am giving out the highly profitable commodity of marketing advice for free. Why? Because I like helping people and I love having a good problem to solve. You could actually be charging me a fee for this!

For years now I’ve seen people completely miss the point when it comes to marketing. Looking too closely at the unimportant things, missing the really important things (like customer interaction), controlling minute details (Like the font size on an advertising flyer) while going in completely the wrong direction (like promoting products that have diminishing demand – but at least the ad is perfect!) – these are things that orphan marketing is not.

I am so sick of seeing  lame iPhone apps, lazy marketing, wasted cash, frustrated people with talent, highly paid people without talent and worst of all things that don’t make sense. I’m sick of professional people missing the point! I absolutely hate marketing that is too safe, but even worse, marketing that is risky in a vague hope of just being noticed.

There is a lot of pretence out there. Everyone is trying to be like yesterday’s hero. Everyone is trying to run before they can walk. University degrees (more on that later) load people up with structures and theories but very few teach a person how to think. Marketing degrees load people up with examples of the world’s best companies with very little reference to how they got there, or more to the point, how they got into the position to launch into prominence.

Decision making is being replaced by reporting and research. Courage is leaking out of the business world as everyone moves towards self-protective crap. Believe it or not you can use market research in conjunction with creativity and experience. Fear and greed are the two most powerful forces in business, and it disgusts me.

So here are the principles Orphan Marketing promotes:

Making money without wrecking the joint:

Most companies are money making enterprises. Charities and NGOs are there to increase awareness and raise money. There are some non-financial measures of success but usually it's about money. Overall, cash is a way of measuring performance and it also helps employ people and run programs. But I will never promote ideas of making cash for the sake of greed at the expense of the greater good. Greed (give me more) is fine, theft (give me more and give him less) makes me sick.

Getting to the point

Make a plan, get to the point, stick to it, make progress and kick ass. That’s what it’s all about! Distractions are the enemy. Do whatever you like in your professional life as long as it helps you get to the point. Anything else is waste. Cut the waste out of your marketing and working life and you’ll be doing it the right way.

Skilful Human interaction

Such an underrated set of skills! Again, universities arm people with theories but not life skills. Why can’t you do a Masters of Sales at any accredited university? Every single business has salesmen and business developers, but they all make a long long list of mistakes before they’re any good. To succeed in marketing, to succeed in sales, to succeed in life you have to understand PEOPLE. I’ve got a psych degree and I can tell you, 95% of what I know about human interaction has nothing to do with my behaviour studies. I study people, I watch human interactions, and that's how I know how it all works.


Every situation is different:
Each company is different: the customers, the competitors, etc - it's all unique. Some marketing principles are universal, but these are few and far between. "That's what Nike do with their marketing" is not an acceptable line for anyone in small business, or a B2B industry, etc.


Not everyone is in a position of immense power:
This is where orphan marketing is different. We will answer questions and advice about your situation, whether you're the cleaner or the CEO. Our focus is on helping you in your current situation do good things. So if you're stuck, or even just a little unsure on anything to do with marketing (or your marketing career.)

So what’s with the orphan moniker?

Orphans start out lost, directionless and underprivileged. They are forced to attend the School of Life and become adaptable, cunning and creative. The few orphans I know are brilliant people that have been through some horrible life experiences and taught me a lot. This blog is a tribute to them. 



So if you want some advice from an expert, give me a yell on orphanmarketing@gmail.com

Why I want my Money Back

I’m a highly qualified individual.

Ten years of full time university has given me four different tertiary qualifications.

I want my money back. And this is why:

1.       I taught myself most of what I know 
                 Sure, the universities put together some great subjects and courses, but the reality for me was    that I was given a book list and very, very limited tuition time with the people I was supposed to have on my side as a learning resource. I also did a post graduate certificate by correspondence and across four subjects I think I received a total of two hours attention from lecturers and tutors. Pathetic. I could have read four text books and learned just as much, without the $2500 fee per subject.

2.       You don’t get a degree based on how much you know
         This is perhaps the biggest shock when you finally realise it, and I want everyone out there to realise this very early on. The game of degree attainment is one of playing a game – it’s about getting a criteria list, sticking to it with as little creativity as possible, learning how to reference correctly (usually contributes 20% of the mark on assignments!) and making sure you get your assignments in on time. Actually, you don’t have to get your assignments in on time, lecturers don’t want to be seen to have a high failure rate, so they will ‘work with you’ to ensure those pesky deadlines aren’t as killer as you think they are
     
        A good friend of mine, one of the best marketers I know, recently failed a subject. This is in no way due to a lack of knowledge, this was due to him trying to fit every piece of knowledge he has into every question on an exam. “You didn’t answer the question that was asked” explained his subject coordinator. Fine, that’s a valid criticism and my friend has to learn to get to the point, but the problem for me is all the fucking  ill-equipped, text book regurgitators out there that pass exams knowing EXTREMELY LITTLE. If I see a marketing degree on someone’s resume I test them in the interview. I never take a university qualification as evidence of knowing anything. I would love the opportunity to interview 30 random graduates from a marketing course and rank them. My ranking would be based on marketing effectiveness and communication skills, and the ranking would be completely different to that of those that win the uni games.

3.        Marketing degrees are built around easy examples that lack relevance.
          If you get into an argument with a budding marketer around the topic of branding they will throw up the following examples: Coke, Apple and the most prominent car brand in the local industry. These are the examples that get smashed into you throughout the course of a marketing degree, but seriously, how many of us are in the position on influencing brand decisions on these major global companies? What’s that? You think these are great brands and should therefore be held in high esteem and treated as the goal for any brand manager/marketer? That would be a good point if these brands shot to prominence overnight, but they didn’t. Apple was the hey diddle diddle second fiddle to Microsoft for 20 long years before the product and brand was recut. Anyone out there looking to become a brand manager for the same company for 20 years? No? Well don’t use Apple as your pinup boy.