Ecosystems, experiments and experience

Earlier this year, Microsoft briefly joined the likes of Amazon and Apple as a member of a very select group of businesses – ones who have cracked the trillion-dollar milestone. Yes, all 3 are technology businesses, but, aside from valuation, what else have they got in common?

In short, they also operate as ecosystems with at least as much more effort focused on the experience of existing customers as is invested into acquiring new ones. An approach which flies in the face of Byron Sharp’s “How Brands Grow”.

Jeff Bezos summarises Amazon’s successful model by saying: ““In the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts.”

How do they act like an ecosystem? They’re constantly testing new things, learning from customers, striving to improve and adding to their breadth to their proposition to make it even stickier.

According to Tren Griffin at Microsoft, "The balance of power is shifting toward customers and away from companies. The right way to respond to this is to put the vast majority of your energy, attention and dollars into building a great product or service. The very best businesses acquire customers ‘organically’... word of mouth drives sales at these companies.”

Despite his private equity fund background, Griffin has a simple but risky point of view: “If you double the number of experiments you do per year, you’re going to double your inventiveness. If you decide that you’re going to do only the things you know are going to work, you’re going to leave a lot of opportunity on the table."

Experiments, by definition, can fail. You can reduce your exposure to failure by cutting down on the number of experiments. However, if you are taking inspiration from these trillion-dollar companies, you might consider that a bigger problem might be to fail to experiment, rather than to experiment and experience failure.

To quote Griffin once again, “you must adopt a non-consensus view and be right about that view to beat competitors."

BEHAVIOURAL SCIENCE TERMS USED IN EVERYDAY MARKETING CONTEXTS

Every day we read in the marketing press about brands seeking influencers to help promote their products or see friends making irrational choices or, perhaps, ads working subliminally to shape our own behaviour. However, we rarely take a step back and look at the underlying mechanisms that make creative work actually work.

Though it might not be your first instinct to put clunky sounding psych principles like “cognitive dissonance” into a document, incorporating these concepts into your marketing toolbox could help with the challenge of influencing your customers.

Behavioural Science investigates the drivers of human behaviour and processes involved in decision-making. Here are 3 behavioural science terms you may have heard mentioned recently:-

1. Cognitive Dissonance

This phenomenon partially explains why the tobacco industry is still alive and, relatively, well. Despite the stark health warnings on packets of cigarettes, people still smoke. ‘Cognitive Dissonance’ refers to our tendency to strive for consistency between our behaviours and attitudes. When confronted with information that doesn’t align with our behaviours, we experience unease and are motivated to engage in certain activities to restore ‘consonance’. For example, when a chain-smoker sees an anti-smoking ad, they acknowledge the potentially fatal effects of their behaviour and recognise the need to quit. However, if they are addicted, changing this deep-rooted behaviour requires immense effort and discomfort. Therefore, they would internally rationalise their smoking by asserting, “smoking is unlikely to kill me because I know plenty of elderly smokers”. Customers are most likely to encounter cognitive dissonance when making high-stakes purchases, such as cars, homes or holidays. In order to ease feelings of anxiety and regret, we can can use customer testimonials to affirm and justify a purchase decision.

2. Heuristics

Heuristics are the mental short-cuts that facilitate simple decision-making. During the purchase process, heuristics reduce a customer’s ‘cognitive load’ (see below) by reverting to a familiar brand or product preference.

3. Cognitive Load

Do you make smart purchasing decisions when you’re stressed out or distracted? No, me neither. Studies have shown that a customer’s cognitive load, or the amount mental effort being used by the cognitive processing, impacts how information is evaluated (Dewitte et al., 2005). Those with heavy cognitive loads (e.g. a new mother shopping with a screaming baby), process information in a very shallow way. They are more likely to revert to quick choices or heuristics that require little cognitive effort. However, when customer is in a state of cognitive ease, they are more likely to consciously mull over product information and pay attention to rational marketing messages.

“Everyone has a plan until they get punched in the mouth”

At the height of his career, Mike Tyson was the most dominating boxer the world had ever seen. Until he wasn’t. Eventually he got cocky, cut corners in his training and, in a championship fight against Buster Douglas, he got repeated punched in the mouth. After Douglas defeated him, Tyson was never quite the same. Potential opponents were no longer afraid of him and realised he could be beaten. He knew it too.

The interesting thing about Tyson’s mis-quote of Sun Tzu is that it suggests even he (renowned for not being the sharpest knife in the drawer intellectually) is that it suggests he’d taken part in a discussion on the important of planning and difference between Strategy and Tactics.

Another famous military quote (author unknown) is that the “perfect tactical plan is like a unicorn because anyone can tell you what it looks like, but no one has ever seen one”. Eisenhower built on this premise when he said 'in my experience plans are almost always useless, but planning is essential.' The upfront effort enables a more informed approach to be taken when your plan needs to adapt to the situation, rather than a reaction being forced upon you.

If your approach to 2020 planning will mainly comprise collecting tactical requests from stakeholders across the business, here are some thoughts on how to take a more informed approach in the absence of an overarching strategy:-

·         Ask what impact each of these initiatives will have and then explore how much time and budget each is likely to consumer

·         Is there an internal governance forum where a framework could be agreed for projects that won’t be supported? For example, where the contribution towards business objectives cannot be measured

·         Are there agreed priorities or ‘brand jobs to be done’ for marketing? If so, would these initiatives contribute towards them?

·         Are there priority segments? If so, would these initiatives engage them?

If you’re unclear on the difference between Strategy and Tactics, here are a couple of quick ‘rules of thumb’:-

·         They operate on different schedules - strategy is an occasional activity whereas tactical planning is ongoing

·         Strategy focuses on the problem you’re trying to solve and the best possible direction of travel to solve it

·         Strategy also focuses on who you’re talking to (your priority audiences) and what you need to say to influence them (how their needs compare to the product you’re selling)

·         Tactics are much more focused on how you’ll engage your audience and also when & where

Planning and the race to the bottom

In 1911, British explorer Robert Falcon Scott and Norwegian explorer Roald Amundsen went head to head for the honour of being the first man to reach the South Pole. It proved to be a dramatic journey for both of them – ending in victory for Amundsen and tragedy for Scott.

They set off within days of each other. Scott with experience on his side – he’d attempted to reach the South Pole before but had been forced to turn back due to the sub-zero conditions. It was always Scott’s intention to return and, with the support of the British Admiralty and the government, he secured a grant of £20,000. Scott recruited men from his previous voyage and from Ernest Shackleton’s ship Nimrod, which had recently returned from the Antarctic.

Amundsen was a respected explorer and was determined to beat the Brits. He had been preparing for years and kept his plans secret. Amundsen had undergone an intensive and long-term fitness regime, including travelling from Norway to Spain by bicycle. He planned for extreme scenarios and his studies of the Inuit people yielded actionable insights, such as the need to move slowly in cold conditions so sweat wouldn’t form inside your clothing and turn to ice.

Amundsen had also learned that dogs can thrive in sub-zero conditions and spent time with the Inuits in northern Canada learning to dogsled. Meanwhile, Scott travelled with a team of ponies, which were entirely unsuited to the sub-zero conditions, and also motor sledges, which were untested and quickly failed. The Amundsen party ran their teams of dogs to the pole and back, while Scott’s team pulled their sledges themselves – the Brits faced the tortuous journey with stoicism and dignity, but moved far more slowly and exhausted themselves in the process.

Amundsen laid down emergency supply caches along the route and marked them with highly-visible black flags. The Norwegians stored three tons of supplies for five men. In contrast, Scott stored one ton for 17 men. Amundsen insisted on carrying extra supplies in case they missed every one of his supply caches, so that they could still complete the journey.

Amundsen also brought four thermometers. Scott brought just the one, which soon broke. While both men knew there was no way to mitigate all of the risks involved, the Norwegian stress-tested his plans and prepared for the worst. In contrast, Scott appears to have been more reliant on good fortune and one of his final diary entries complains about bad luck.

On 15 December 1911, Amundsen and his team planted the Norwegian flag at the South Pole having reached it reached it on the day they’d planned. At that time, Scott’s expedition was still 360 miles away. Weak from exhaustion, hunger and extreme cold, Scott’s last diary entry is dated 29 March 1912. Sadly, he died in his tent along with two of his men.

It’s a tragic tale, but also a cautionary one especially for those of us starting to consider what next year’s plan looks like. We must remember to start with the problem we’re trying to solve and exploring the best direction of travel before prioritising tactical activities and allocating budgets.  

Are B2B and B2C really so different?

Are B2B and B2C really so different? Here are some commonalities:-

1.     Both need an effective sales process

B2B lead conversion may take much longer due to an extended procurement / due diligence process and so leads may require more nurturing. Ultimately, like B2C, you need a good understanding of the customer, the competition, likely weak points in your purchase funnel, etc.

2.     Both require a good grasp of the market and how your product stacks up 

While there’s a lot of ‘chest-beating’ in B2B and probably more marcomms clichés, you need to know what need your product meets in order to cut through the clutter. Volkswagen Commercial Vehicles in the UK have shifted focus away from category norms (shiny vans parked in front of rugged looking cranes) towards the audience need their product fulfils and have an IPA Effectiveness Award to show for it.

3.     Emotional vs. Rational

Yes, B2B sales are evaluated and potentially planned ahead of time, it’s a myth to suggest emotional messaging is only appropriate for B2C campaigns. In their 2013 “From Promotion to Emotion: Connecting B2B Customers to Brands” study, Google and CEB (now Gartner) worked with marketing research firm Motista to survey 3,000 purchasers of 36 B2B brands across multiple industries. The study found that, on average, B2B customers are significantly more emotionally connected to their vendors and service providers than B2C consumers.

4.     B2B sales are relationship driven & B2C sales are more impulsive, right?

In B2C, you’re likely to get more impulse purchases. However, it’s another myth to suggest that in B2B a long-term relationship plays a vital role. The process of sales includes the same and is strived to maintain the relation. PWC researched the B2B insurance market and saw that personal insurance buying behaviour is the biggest predictor of business buying behaviour (with the founder being responsible for sorting it out in most small businesses). 

In summary, both B2C and B2B disciplines involve the important task of influencing behaviour, driving consideration of one brand over another and a holistic approach to optimising both marcomms activity and the customer journey.

Lessons learned

Last week marked my 21st wedding anniversary and also 21 years since I got my first ‘proper’ job in marketing. As I respond to congratulatory messages from friends and family on Facebook, I couldn’t help but reflect on the things that have changed and things I’ve learned over the last 21 years. Facebook didn’t exist but is now credited with influencing the outcome of a referendum and Presidential election.

So, here are the thoughts that came to mind on what I’ve learned during my career as a marketeer and they’re in no particular order...

1. Brands are built holistically

It might constitute modern day heresy, but I disagree with one of the central tennets of ‘How Brands Grow’. You need more than just a distinctive product and big media budget. You need to consider all your touchpoints – including how you treat your staff and how, in turn, they treat customers. As Trendwatching highlighted in their ‘Glass Box’ piece soon after ‘that’ United Airlines video (of an employee dragging a passenger from the plane) went viral, your internal culture is also your brand. For that reason, generalists should be more sought after than (digital) specialists as can’t join the dots as readily or work collaboratively with colleagues in Product, Sales or Operations. 

2. The brief is the first ad in any campaign

Its role is to engage and inspire. Ultimately, you’re selling the business challenge. If you don’t write a brief or take responsibility for getting it approved before you commission your agency, then you are going to create unnecessary cost and squander away your budget. After moving agency side and a few years freelancing, it still surprises me how few clients actually write a brief. My advice for any new Marketing Director is don’t call a pitch. A much quicker win is to simply start reviewing the briefs coming out of your team. Only then will you see what your existing agencies are capable of and ensure they’re effectively utilised.

3. The long-game trumps short-termism

Short-term results might help justify your existence in the face of regular restructures but they don’t necessarily build a sustainable brand into the long-term. Efficiency requires numeracy & timely results and can effectively be delegated to agencies via a PBR contract. In contrast, effectiveness requires both actionable insight, compelling ideas and a holistic, balanced evaluation agenda.

4. You are not representative of your target audience

The longer you spend in any organisation, the less your capable of representing your customer. Strategies need to be written for the real world. If you’re not comfortable with something your agency has recommended, don’t run the thinking past a friend or family member with no context or frame of reference. Many great ideas have died that way. It's much better to ask for more reassurance or perhaps a pertinent case study from another category or market.

5. Buzzwords come & go, but the fundamentals don’t change

When I joined a large marketing department in 1997, one of the largest lines of our plan was our directory advertising programme. We even sponsored the outside back cover of the Thomsons Local Directory. Google didn’t exist but is now the biggest media owner on most brands’ annual plans. While many things have changed, the fundamentals of marketing remain the same.

6. The landscape is changing and traditional agencies face fierce competition 

Big consultancies are acquiring creative shops. Media agencies are competing with creative agencies over who owns the out of scope services line ‘content’. Google and Facebook offer their own creative services. Ultimately, agencies offering rinse and repeat strategies have the most to fear.

7. Tactics and strategy are frequently confused, but not the same

This one pushes my button and is one of the main reasons why I avoid The Apprentice. Strategy defines your long-term goals and how you're planning to achieve them, so should be fixed. While a tactic is a shorter-term action designed to achieve a specific end, so can be flexible. When everyone understands the strategy, then all oars are pointing the boat in the same direction and everyday tactical activity connects with the strategy.

8. Change is the only constant

Job ads that ask for ‘classically trained X, Y or Z’ are likely avoided by talented employees. Smart people recognise that you need to learn each and every day. The ad suggests the employer is striving to maintain the status quo and effectively living in the past, therefore, unlikely to provoke to response from the most talented candidates.

9. B2B & B2C marketing aren't actually that different

In B2B, there are more cliches and its easier to be distinctive. However, PWC have shown that (when it comes to insurance) consumer behaviour is one of the biggest determinants of business buying behaviour. People don't suddenly become rational robots when they get to work. In 2013, Google found that B2B buyers are actually significantly more emotionally connected to vendors than their B2C counterparts. That makes sense when you consider trust is an emotional consideration. Ultimately, both B2C and B2B disciplines involve the important task of influencing behaviour, consideration of one brand over another and a holistic approach to optimising marcomms activity and the customer journey.

Oprah's advice works for brands too

Like many people I’ve woken up this morning and checked out the new stories following the Golden Globes. The tectonic shift in Hollywood is a truly wonder to behold and Oprah’s speech was clearly one of the more memorable ones from the evening.

The images of Oprah already circulating on social media got me wondering how many times the one above will appear in presentations from agencies to clients in a diplomatic effort to try and convince them to start writing briefs.

I’ve been lucky enough to work both sides of the fence and so have seen the importance of the upfront brief from both sides. I’ve also encountered a surprising number of people who’ve refused to write one with some even taking a delusional pride in it.

I now think of the client brief as the first ad in the campaign. It gives agency colleagues a strong mental picture of the challenge the extended team is faced with. It’s core role is to inspire the best possible solution to the business problem.

On the other side of the fence, the quality of the client brief will determine how long the project stays in a creative department - typically where staff not covered by a client’s retainer will begin working on the project. Often times, non-brief writing clients will only be clear on their requirements once work has been presented to them. 

The time taken for creative team(s) to develop all those options and the associated costs incurred will need to be covered by somebody. 

In short, side stepping the brief will end costing you one way or another.