In a sense, the entire industry is being repositioned.

The problem British Airways and others are facing is that they are letting one class of travel – indeed, one aspect of that class – define their entire brand. Since brand perceptions tend to linger, there’s a risk we will hear the barrage of negative messages about service slipping, without changing the belief they’re a little more expensive. For them, that’s the worst of all possible options.

Until recently, many airlines pretended that most of their passengers would be treated like royalty, and that the experience of flying with them would be like the golden era of Concorde. This is just not credible. Anyway, we all know the reality is different. There has to be a trade-off between price and service. So, with budget carriers covering the bottom end, traditional airlines made the mistake of thinking that meant they had to be the experience people. For years, they tried to persuade us that free drinks and assigned seats made it worth paying more to fly the flag.

That hasn’t really worked, at least not on short haul. Flying has got cheaper. People fly more. It’s not special. It’s no longer part of the holiday, just a means to an end. So, having tried and largely failed to persuade people the experience was worth paying more for, flagship carriers are cutting service corners to be more like the no-frills carriers.

This looks like a sensible response to a competitive marketplace – as long as they also use their biggest advantage. Unlike the budget carriers, the flagship airlines have a tiered offer within the plane – they can provide choices the no-frills guys can’t. If, like British Airways, the same route can be travelled in two, three or even four different classes, then they must use the entry level to compete with the budget airlines, and let higher fares and classes of travel offer the superior flying experience.

Businesses have to segment their offering, because not everyone wants to pay the same. Without a clearly tiered offer, we can’t choose between low price and indulgent experience. Airlines segment like mad through yield management, with all those different fare classes. But it’s an internal process – resulting in people paying different prices for the same product. Happy the business that segments its target market well, creates differentiated offers, suitably priced, and signals those propositions clearly so that customers can pay for what they care about most and make the right choices for them. Tesco, for all its woes, does this well. You know exactly where you are with its Value, Tesco and Finest ranges, each clear and unapologetic about what you get for what you pay. BA and its ilk should do the same. Cut even more in economy, and make it even better in business class. That’s giving the traveller a real choice.

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There are three options to protect margins.

1. Make it smaller. But don’t expect to get away with it. Recent casualties: Mr Kipling and Toblerone. It’s easier with categories like cereals, crisps, dry petfood, where the contents aren’t counted, and don’t have to fit the pack precisely. Someone always spots it though, and it never goes down well. I suspect the Toblerone move is driven by extreme pragmatism – downsizing the product without changing the pack dimensions, which would affect packaging, production lines, maybe distribution. The trouble is that it has changed the consumer experience for the worse. The internal voices of operations and finance seem to have trumped the voice of the consumer, creating not just a value problem but a change of product experience. Mr Kipling’s taking some media flack, but the chocolate slices are the same, just one less in the pack, as stated on the box. Sometimes the hidden price increase is a sensible option that minimises other costs. Be open about it. You won’t be alone this year, but if feels like a con if you don’t front it up.

2. Make it cheaper. Adjust recipes and formulas, put pressure on suppliers, find cheaper suppliers or cheaper ingredients. Sophisticated businesses do this anyway, so more gains are not easy to find. The more you know what really delivers the brand experience, the better chance of saving money without delivering less than the brand promises. Be careful of unintended consequences – for example, replacing a good quality food ingredient with something that makes the product less healthy, in consumers’ eyes. Or the salami-slicing effect of changing the product little by little over time. Eventually it just won’t be as good as it used to be. Remember the Pizza Express “shrinking pizza” controversy of 2002? It was never fully resolved, but at least the pizzas got bigger; appetite, if not curiosity, was satisfied.

3. Put the price up. This is going to happen a lot this year. Unilever got pushed back on Marmite by Tesco, who saw an opportunity to act as a consumer champion – but you can bet Tesco wasn’t sharing the pain of increased costs. Short term revenue may suffer, especially if competitors don’t follow. But it is honest, and people will understand why it’s happening. It has the virtue of maintaining both brand and product integrity, and won’t damage trust.

There is a fourth option, which is to suck it up. Don’t mess with the product or the price. Protect the consumer experience and value for money, not your margins. It’s not an option for everyone. Absorbing higher costs will hit the business in its pocket. But if competitors are messing about with an eye on the short term, as above, your brand could be the winner, in volume in the near term and loyalty in the longer term. Companies with a portfolio may hedge their bets with a range of responses across different brands. It’s a real test of short term vs long term orientation.

What about businesses where the pricing is not transparent – services, such as insurance, or anything subscription-based? The temptation there is to try to hold the line, and give in with secret discounts only to customers who threaten to leave. We all know this goes on – motor insurance, roadside rescue and pay TV services are notorious for it. It’s good for short term revenue, but can cause harm when it gets out. It also changes the customer interaction from a potential relationship to a game of cat and mouse. It’s an option, but don’t talk about loyalty or brand love.

Brands are supposed to help people make choices. If your brand takes advantage of the customers who trust it, or if it requires a lot of customer effort to get a fair deal, it may be time to think again. You have options. Just check you’re not messing up the customer experience through an inferior product or undermining their trust.

People scoffed when ticket inspectors on the train became revenue protection officers. But it’s honest. As you make difficult calls this year, make sure you’re still a brand manager and not just a revenue protection officer.

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There’s a host of reasons for low scores, from ad hoc operational failures through to structural factors that are slow or costly to change, or pricing models that customers dislike. These are totally different issues, and it’s madness to mix them up. Operational glitches are to be avoided, sure. Here the smiley face machine earns its keep. Moving customer feedback from an occasional survey to a continuous process gives granular data to manage and perfect routine processes. But structural causes of dissatisfaction are powerful sources of innovation, which can lead to competitive advantage if a firm is brave enough to acknowledge them. Marketers, especially, should be curious about the satisfaction gap. If it’s not there, you?re missing out.

But many firms use customer satisfaction ratings to monitor, reward and fire their sales and service people. That’s a problem. When I last bought a car, the sales person asked me to give her 5 out of 5 because, she explained, that’s what the company required of her. In some places Uber drivers have to maintain a rating of 4.6 out of 5 to stay on the roster. They’re forbidden from asking for good scores, so they wear themselves out trying to be uber-nice. Academic studies of this extra effort, this “emotional labour”, have shown that it places a significant strain on people, and can, over time, lead to burn-out. In both cases, by pushing for false positives, firms are losing one of their best sources of market information.

Most normal marketers also hope for good cust sat scores. Of course we do. So here’s a three-step programme to check your firm’s approach, in order to improve those ratings in the long term.

1. Are you getting useful, actionable feedback? Check how the system is being applied so you know whether you really have high satisfaction, or ho hum good enough performance, with pressure on customers not to ruin other people’s bonuses or risk costing them their jobs.

2. Is your best source of stimulus for maintaining competitive advantage being sanitised? It is not always culturally acceptable to focus on the negative. No one wants to be a misery-guts. OK, celebrate the satisfaction scores, then explore the gap. Paddy Barwise and Seán Meehan’s books, Simply Better and Beyond the Familiar, show that customer dissatisfaction provides more valuable and actionable feedback than customer satisfaction. They show how to use dissatisfaction across the organisation to make things better, and ultimately drive satisfaction up.

3. Are you missing opportunities for more radical innovation? Even if they are genuine ratings, getting top marks leaves you nowhere to go. Is it really perfection, or might there be ways it could be better? If your satisfaction ratings are too high, it’s time to revisit the questions you’re asking. Bookshops thought their wonderful range was close to perfect, until someone thought of saving you the bother of a trip into town. Airlines thought perfecting in-flight experience was the goal, until Virgin Atlantic realised the end to end journey mattered, and then South West Airlines in the US and Easyjet here realised people were willing to trade off a lot of comfort and privileges if it made flying cheaper.

All of this can only work if customer-facing people are not afraid of customer feedback, good or bad. Marketers can help by being curious and open to dissatisfaction, showing how the insights it yields are opportunities for change, and by appreciating those who bring them.

The post Getting five star ratings in customer satisfaction? You should be worried. appeared first on Clearhound.

Specsavers, the UK market leader with over 40% market share, was founded by Mary Perkins and her husband, qualified optometrists who met on their first day at university. I’ve heard it said that she was motivated by seeing family members not being able to afford decent glasses. Whether that’s true or not, the Perkins vision, made possible by industry deregulation, was to make stylish glasses affordable to all. This required a different business model. It has two key elements. First, the high street branches are franchisees of a sort – not so different from the partners of JL. As Dame Mary said, “We would have partners in every shop we started who invest their money with us on a real 50/50 basis. If the shop was a success then we would all prosper.” The second key element is vertical integration – glasses factories in eastern Europe – which creates economies of scale.

This makes a great story, and the ownership model delivers superb service. I asked the chief marketing officer why they don’t tell people about their great customer service scores. Simply because the “Should have gone to Specsavers” and the “Two for one” message work so well. They flirted with changing it and realised there was no need. Besides, the price message matches their core reason for being: to make good glasses affordable.

Quality Solicitors is another professional service on the high street which uses vertical integration and a sort-of franchise model. Their business model looks a lot like Specsavers. It’s about achieving economies of scale through buying as a group, created by bringing independents together under a single brand, the inspiringly-named Quality Solicitors. (We’ll assume they mean good quality.) They launched with a big expensive bang on TV in 2012-13 and then went quiet. On the face of it, Quality Solicitors and Specsavers have much in common, but there’s a fundamental difference. One is driven by the opportunity to generate operational efficiencies. That benefits business owners but doesn’t necessarily offer anything to their customers. The other created those efficiencies out of a drive to make glasses more affordable, a benefit directed entirely and explicitly at the end customer and to which they committed fully. Result: a huge business with very high customer recommendation scores, profit for franchisees and a billion pound fortune for the Perkins family. Meanwhile Quality Solicitors growth seems to have stuttered to a halt. Motivation matters.

Motivation should be reflected in a company’s statement of purpose. Virgin Money’s purpose, “to make Everyone Better Off”, stands out in its simplicity and clarity. Virgin Money’s chief executive, Jayne-Anne Ghadia, encourages people in the business to ask themselves, when considering proposals and decisions, “Is it EBO?” This reminds me of Tesco in its heyday, where it was habitual to start every meeting by thinking about the needs of the customer, and where one of the simple rules to guide decision-making was: if in doubt, let the customer have the benefit.

It is perhaps surprising that the John Lewis Partnership?s stated purpose is about the happiness of its employees through giving them meaningful work – not about the customer at all. Yet we know the motivation of those partners is to do the right thing for us as customers in the short term, knowing it will work out best for them in the long term. The thing about purpose is, it’s not about whether you trumpet it, it’s whether you live by it.

JL’s purpose means they only enter sectors that partners want to work in. John Lewis Opticians will probably do well. But I’d love them more if they’d go where we really need them.

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There are, though, plenty of ads out there with nothing much to say. This is usually because what’s on offer in the category is all much the same. When directory services were deregulated, a lot of money was spent on TV advertising by competing providers. There was no pretence that the offers were any different, just a scrum to get their numbers into our heads. 118 118 was the clear winner.

But now free online listings have undermined the whole directory services business model. Classical marketers would see this as proof that lack of differentiation is the road to ruin. Since brand management began, the search has been on for unique selling propositions, differentiation via the offer and/or the brand, in the firm conviction that it is the only way to create lasting customer relationships and long term value for the business. It’s received wisdom in marketing that brands need to stand out from the crowd. Certainly it’s better to be distinctive and memorable than bland and forgettable. But we don’t live in a perfect world, and sometimes, especially when under competitive pressure, getting a new offer into the market fast is more important than making it different. In a new category, to teach us all a new habit, the first mover has to establish the generic category benefit. This is certainly true for a real pioneer, Skype for example. In an emerging category with several competitors, where it’s a landgrab, businesses just want their name to be known. Price comparison sites exemplify this. We all know it’s a mad push to get scale, and all their messaging is simply to establish name awareness and drive traffic. Hence Compare the Market, perhaps feeling they had nothing different to offer, created a very distinctive advertising property instead.

Marketers in search of a USP risk treating their marketing communications as primarily a rational process, a way of giving potential customers useful information to inform their rational choices. This is true, but it’s only half of the story. Human emotion is the other half. Imagery, music, familiar faces, can all be used to trigger positive emotions, which we then associate with the brand. This approach is informed by the work of academic Robert Heath, with his “low involvement processing”, which holds that emotion not cognition shapes our responses to advertising. I believe there can be both conscious and subliminal engagement, and that we can have both rational and emotional responses. The challenge is to make sure we pay attention to both.

As marketers, it is right to push ourselves and our colleagues in the organisation to make the offering better for customers, in a material way, whether through innovation, service, price, or anything else. I’m all for differentiation, especially when it means better for customers. But it’s also valid to think about how our offer makes people feel – the ultimate measure of a brand – and to recognise that great advertising also makes people feel good.

More posts on brand communications:

Breaking bad news

Let me entertain you

Yes there?s a crisis in brand trust but please, don?t try to be nice.

Let?s hear it for the ads we love to hate

The post How to advertise successfully when there’s not much to say appeared first on Clearhound.

In technology development, European businesses could usually garner plenty of good, progressive ideas for their markets by studying the USA and Japan. But something strange is happening in industry sectors and product categories where technology can make a difference – which is quite a few. It’s no longer enough to look at developed markets. Real innovation is happening in developing markets which could be said to be behind Europe in that they have not yet adopted some of our technologies, and yet they are leapfrogging us, and bypassing those technologies. Much of this is driven by telecommunications.

For a long time, development in many of the world’s poorest countries was inhibited not only by lack of natural resources, and/or corruption, but also by a lack of transport and communications infrastructure. Even those countries rich in natural resources found it difficult to build a national communications network. The information age seemed beyond the reach of the vast African countries in particular. Impossible to imagine installing the millions of miles of cable it would take to provide national connectivity. Then wireless comms came along.

For us in Europe, there was a natural progression. First we had wired telephony, then wireless telephony, then wired internet connectivity, then wireless everything. But who needs wired anything when you have wireless comms? Better still, wireless everything without the drag factor of having invested in other, more old-fashioned infrastructure. It gives the ability to create and promote new services without having to change consumer habits and behaviour from the old ways. Suddenly, the term “legacy systems” has a whole new meaning. Fixed line telephony and internet are simply not needed. Bank branches are legacy systems. Maybe, with remote learning, university campuses are too. In countries where these infrastructure assets are scarce, it’s no longer a barrier to progress. It may even be an enabler.

We tend to think of African use of tech as affordable or sustainable tech – low cost mobile phones, for example, with batteries rechargeable from the sun. This view suggests we can look there for inspiration for “bottom of the pyramid” ideas, ways to bring tech to the masses. I think that’s not even the half of it. The rapid spread of mobile comms, without the assumptions or costs that come with legacy infrastructure, is creating whole new ways to get things done. Retail banking is a prime example. It’s said that there are only six bank branches in Nairobi, a city of over 3 million people, as big as Manchester and Liverpool combined. The main reason is M-PESA, a mobile-phone based money transfer service run by the dominant mobile network operator, Safaricom, and now used by about two thirds of Kenya’s adult population.

Low tech businesses like farming can also benefit. WeFarm is a communication platform that runs on plain mobile phones, not smartphones, and enables farmers to find out the market price for their crops in different locations, so they can quickly sell their produce at the best price. It’s a simple idea that doesn’t need fancy hardware or software, and creates the classical economist?’s ideal situation for a free market: perfect information, available to all.

African mobile phone owners are also inspiring innovation in marketing services. Brandtone, for example, is helping Unilever, SAB Miller, and others, engage directly with a growing database of their consumers. Their use of SMS is much more subtle and rewarding for consumers than the spam we’ve grown used to in the UK. It’s making one-to-one marketing possible for fmcg brands, at scale.

So it’s true, the future is already here, but not always where you expect.

Previous posts on inspiration for innovation:

Keep dreaming

Desperately seeking dissatisfied customers

Getting customers to do it your way

Why be different when you could just be better?

What coat hangers teach us about business-to-business marketing

The post Your nearest exit may be behind you appeared first on Clearhound.

Travel agents and estate agents in particular were the businesses that were expected to be disintermediated out of business through the web. Seen as adding little value, described as mere aggregators of inventory, logic said they’d disappear. The web created a new shop window where buyers and sellers – of flights, accommodation, or of houses – could find each other easily and cheaply. So why would anyone other than the very rich or very time-poor pay an agency?

There was a good deal of consolidation and hard times in both industries, for sure, but new intermediaries have emerged. In both cases, it’s as much to do with the needs of the seller as the buyer. The harbingers of doom forgot that in these cases it’s the seller who pays the agent, not the buyer. It turns out most of us prefer to have someone else name a price and then show people round our homes. Usually they’re still the estate agents of old, operating with a new shop window on everyone’s desk, and now in our hands. For travel, there is so much inventory that it’s inefficient for the sellers to have only a single channel to market. It’s equally inefficient for buyers to search for a holiday by visiting the website of every airline or hotel – that’s even if you know what to search for.

Now these markets are being re-intermediated, in new ways, online. There are sites which consolidate information on property values, for example, to help buyers and sellers alike. In travel, sites like Skyscanner scrape information from other businesses to present a single view from multiple competitors. This online reintermediation seems to have no limits. Skyscanner scans other aggregators like Expedia and Flights.com. Trivago scans other hotel aggregators like Booking.com and LateRooms. I’m told Secret Escapes is making good money – but it’s little more than a portal and some web scraping, together with a very attractive, upmarket woman as the face of the business on TV. There is a consumer benefit but little differentiation in an increasingly crowded market.

Perhaps the ones we didn’t see coming were those which crowd-source information to help us make choices. Trip Advisor is genius, is it not? Soundcloud has changed how talent spotting in the music business works. Getting noticed on Soundcloud is just another form of crowdsourcing, which means the labels know what’s popular before they sign the talent. Both are adding value, not just using clever technology to repackage information that’s already out there. It would be easier – and more fun – to write the value propositions and brand narratives for these two than for any of the travel-related sites, which I suspect would all be much the same.

So, even in this world of clever technology, there’s still a need for the fundamentals of marketing: motivating value propositions, woven into an attractive, relevant brand. Strong brands are the final frontier in building a compelling business that customers warm to, and flock to. This is different from a flashy advertising campaign to build awareness and generate leads. Hotels4U? Not 4 me, thanks.

It feels like we are due for a new wave of consolidation, to shake out those businesses which aren’t doing anything distinctive, or which add value only through the same mechanical process as many others. The ones which have bothered to create a true brand will surely fare better when this comes.

You might also like these posts about technology-based start-ups:

Hot Chip: the UK tech start-up scene

Hot Chip 2: David, say hello to Goliath

Hot Chip 3 : can you pick a winner?

The post The force that the internet was supposed to free us from is back – and this time it’s online appeared first on Clearhound.

Why don’t the service staff have access to the same helpful information about this novel spicy paté-style sausage, so they can tell customers at the moment of truth, and not when we’ve just had breakfast? I suspect it’s not for want of trying by the marketers, or because they’ve not seen the need, but because of how the business is set up and managed. It’s simply that it can be hard for marketing people to influence the agenda and the activity of other functions, even when those functions clearly represent the best route to customer engagement available.

In service businesses like restaurants, managing front line staff is both critical and challenging. High staff turnover, typically 30-40% per annum, means that maintaining the essentials is a Forth Road Bridge-type task. Naturally, hygiene standards and regulatory compliance must be the top priority, together with making sure staff know the basics of the job, and that they turn up when needed. A marketer sees the front line staff as the most critical point of contact with customers, the face of the brand. But they’re part of the operations team, not the plaything of marketing.

This is what the third pillar of the Marketing Society’s manifesto refers to – marketers have to find ways to mobilise the organisation to deliver the proposition. It’s so much easier in fast moving consumer goods, where it’s all defined and controlled by what goes through the factory, manufactured to an agreed specification, with lasers and filters that spot and dump an off-colour crisp or a misshapen biscuit. Customer service usually takes the form of a centralised team who become expert in the category and who willingly engage with customers, and with brand managers.

What can you do? One rather daring approach is to overpromise, through marketing communications, to prompt the operations team to raise their game. This was supposedly the aim of the British Airways TV campaign post privatisation in the late 1980s and early 90s, and it seemed to work. Expensive, though, and risky, to blow the budget advertising to your own people, and to customers with a promise that probably won’t stack up with their experience.

“Living the brand” programmes are another widely-used approach, helping people understand the desired customer experience, and their role in it. These are expensive too, in that they take a lot of employee time, and of course staff turnover means the job is never done.

There could be another way, one that relies on the very thing that makes it hard to deliver a controlled brand promise through the people: their humanity. A recent academic experiment, reported in HBR November 2014, has shown that in restaurants when the chefs can see the customers, they deliver better food, faster. That’s a little counter-intuitive, isn’t it? When the customers can see the chefs doing their work, they think they are getting better food, sure, and that also was demonstrated in the study. But the best results were when both sides could see the other. It seems that seeing your customers is motivating. People feel more appreciated, more satisfied with their jobs, and are more willing to exert effort. It wasn’t just an effect of being watched, or the novelty of being part of an experiment. After the study was over, some chefs wanted to keep the two-way cameras in place. One said. “When the customers can see the work, they appreciate it, and it makes me want to improve.”

This is great news for marketers in service businesses. Finding ways to make the customer real for employees, wherever they are in the business and whatever part they play in delivering the proposition, is perhaps more important than trying to define and govern a consistent brand experience. It’s a whole new way for marketers to make a difference, one that is good for employees and for customers.

More posts on brand and customer experience:

The trouble with brand love

You trust your favourite brand – but does it trust you?

What gets measured gets done – make sure it’s what you really want

Chief customer officer? No thanks.

The post A breakthrough in managing brand experience? appeared first on Clearhound.

A couple of years ago I was incensed when Compare the Market narrowly won a vote among Marketing Society members to be brand of the year, beating Waitrose by one vote. Why my outrage? Because the much-loved (back then) Meerkats campaign was a witty, memorable trick that covered the total absence of a differentiated proposition. Full marks to the advertising agency, but surely no more than a C for the marketing director. This may be harsh as I have not seen hard data on its business performance, but I’m told that the Meerkats campaign has helped shift Compare the Market from a little-known minor player in its sector to a well-known minor player in its sector. This may still change, because, luckily for them, in the scrum of comparison websites, all shrieking to be heard, their competitors mostly have nothing much to say either, other than their names. That’s not great marketing, even if it is good clear communication. So I am reluctantly grateful that TopCashback not only tells you what they do and how it benefits you, the customer, but even covers the main differentiating points as well (no fees etc.) – all in a traditional thirty second TV ad. Full marks.

Meanwhile Nikon is airing a couple of lovely feel-good ads full of wonderful memorable moments, with something for everyone, and a great soundtrack. I wonder why. From a viewer’s point of view, it’s a much nicer experience than any I’ve mentioned so far, and no doubt they scored well in consumer research. Advertising research models, like Brainjuicer’s, increasingly correlate positive emotional responses with advertising effectiveness. This is a sound approach in many big categories like fmcg and retail, where brand communication is judged by its ability to drive consumer preference for one brand over another, the assumption being that people are in the category, and the challenge is to be the chosen brand. This campaign may well create a warm glow around Nikon, and may even make it people’s preferred camera brand (or, one we can name, at least). But from a business point of view, what can it do for them? It doesn’t say much about Nikon. Although it does subtly show different models through different executions, you have to be really interested to spot that. The ads are constructed around different moments worth capturing, not different features of the cameras. To the averagely attentive viewer, it feels like a generic ad for photography, providing a basic reminder that cameras exist. Yes that may be necessary – who remembers to bring a camera nowadays when your phone does the job? – but will reminding us really improve their fortunes?

Of course I know Christmas is a critical time for them, and they must seize the gifting moment while it’s here. It?s also possible that they’ve negotiated retailer promotions on the back of their TV campaign, or even that TV advertising was a requirement to gain shelf space in the major outlets at Christmas. They may feel they have no option but to advertise, just to stay on the shelves. No doubt about it, being the marketing director of a camera company right now is not for the faint-hearted. Along with alarm clocks, fax machines and camera film, there’s a market for them but their best days are behind them. Sadly, lovely advertising can’t save them if the product is obsolete, or if they don’t give us good reasons to choose it.

So what’s next for our neon-clad dancing friend from TopCashback? Well, there’s lots of evidence that consistency helps a brand to be recalled, which helps generate business. Oh dear. If TopCashback keep up the good work, we’ll all be singing that wretched jingle for a long time.

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