1. Expanded Span of Control: This is perhaps the most fundamental shift that marketers see happening.  Marketing’s primary role will no longer be marcomms or branding, but rather end-to-end experience management.  With fierce competition and more demanding consumers than ever before, Marketing needs to focus on providing real value – not just driving short-term sales. This shift requires greater cross-functional collaboration and ideally greater control over product/service innovation and non-Marketing touchpoints, such as call centers or retailers.  (IBM’s latest data suggests there’s still work to do here – currently, only half of CMOs have good influence over innovation or experience).

2. Marcomm Campaigns Designed to Produce Insights: Accurate insight is critical to boosting Marketing’s credibility and thus influence over non-traditional customer-facing activities.  As such, insight generation loomed large in marketers’ view of the future.  Marketers see themselves becoming producers of insight – not just users of insight produced by Market Research.  Indeed, many marketers already plan campaigns with the dual aims of attitude/behavior change AND data capture.

3. Data-Driven Decision Making: Marketers currently rely on their own judgment/intuition for about 50% of decisions, according to research by our sister program – the Market Research Executive Board. Judgment enables fast, principled decision making in many cases, but often results in biased decisions based on false assumptions.  In 2012, marketers plan to take advantage of newly available data to infuse more science into decision making.

4. Agile Planning: Instead of one-off planning sessions once or twice a year, marketing functions are shifting towards iterative, ongoing planning.  This relies on better use of real-time data and quick feedback.  Many leading companies now review marketing performance on a weekly basis and adjust as often – if needed.  Some companies (including P&G) also send out automated alerts as soon as key metrics hit a predetermined high/low threshold, enabling the project owner to learn and take quick action.

5. Hyper-Targeting: Marketers plan to target more than 50% (!) of messages based on context (time, place, local weather, likely mood etc.) as well as static demographics and pscychographics.  It’s a shift from “Jane, working mom” to “Jane, working mom, at the gas station on her way to work.”  Better tracking and automation will enable this.

The common thread through these trends?  Big data.  Easier, faster access to customer/market data is the enabler of pretty much every trend above.  Given this growing importance, MLC’s major research next year will explore marketing analytics best practices.  Email me to learn more about this research.

Below are six of the bigger and edgier hypotheses we’re testing.  If you have any other suggestions/thoughts, please email me soon and we’ll try to add them to the survey.

Consumers value personalized products and service more than personalized product recommendations and discounts. We’re pretty confident that consumers value personalization in some areas of the 4Ps more than others, but we’re not really sure which.  I won’t be surprised if the survey shows the opposite of the hypothesis above, but will be interested either way!  (We’re also comparing the impact of personalization in other areas, e.g., category-related advice and brand values).

Implication if true: Focus on measuring and optimizing parts of the experience that customers want to be more personalized.

Boosting loyalty and willingness to pay requires a step change in relevance, not just small increases. Take messaging as an example. Most brands’ currently personalize messages based on at least a few criteria (e.g., gender and region) and reach a reasonable level of relevance for a good portion of customers. As a result, increased investment in personalization (e.g., adding age and neighborhood to gender and region) may not result in noticeably more relevant messages for a good portion of customers, despite adding complexity internally.  As another example, we’ll compare the impact of product recommendations from a) any consumer, b) a consumer of your age/gender, c) a consumer with similar taste to you, d) a friend whose opinions/taste you trust.

Implication if true: Focus personalization efforts on elements of the experience in which small increases in relevance count most.

Consumers value decreased irrelevance (i.e., less irritation) more than increased relevance. We’re hoping to compare the impact of email frequency and email relevance. Instead of using data to send more relevant messages, the best first step may be to reduce low-relevance messages.

Implication if true: Stop trying to make your email subject line more eye-catching and start cutting the number of emails you send altogether.

Demographics are the least effective means of personalizing; aspirations are the most effective. We hypothesize that the easiest data to capture (demographics) is also the least valuable for personalization.  We also hypothesize that the hardest data to capture – aspirations – is the most effective.  We’d guess that contextual data (place, time of day/week) is in between in terms of both ease of capture and impact.

Implication if true: Beware of over-valuing data just because you have it and consider using unstructured social media data to understand aspirations.

Most consumers don’t realize how much data brands have on them, but those who know are more protective of their data. We’re going to test consumers’ “personal information IQ” and also ask about any steps they’ve taken to restrict brands’ access to their data. We expect that most consumers aren’t aware of how they’re data’s used (although it may turn out that many know when prompted, but forget).  We also expect a weak correlation between privacy understanding and privacy protection, but not a strong one (given what we know about ourselves from Facebook).

Implication if true: As privacy concerns get more press, more people will take steps to protect their information.  This could stymie brands’ personalization efforts.

Shoppers who like variety, but don’t have much time to shop will value personalization more than others and privacy less. We’ll be testing a range of demographic, behavioral, and psychographic factors to see what (if anything) correlates with lower concerns about privacy and higher demand for personalization.

Implication if true: Target data collection and personalization at certain segments that value it most.

Watch this space to find out which of these hypotheses prove true (results early next year!).

Despite several years of slowly shifting mindsets, Digital is too often still treated as its own stand-alone function, separate from Promotions, PR, Direct Marketing etc.  It should, by contrast, be treated as a part of all marcomm efforts.  Here are a few reasons why:

• To provide social proof from peers and validate brand messages (via social media)
• To offer real utility that helps prove campaign promises (e.g., via mobile apps, microsites)
• To create memorable experiences that bring brand benefits to life (e.g., via interactive games, virtual or live events promoted online etc.)
• To connect touchpoints together. Mobile and social can be the glue between all others touchpoints – and a means of accelerating consumers along the purchase path. For example, mobile enables consumers to purchase or learn more about a brand/product wherever they see an ad. This stops people forgetting about the ad and increases chances they’ll be just interested enough to take the next action then and there. Mobile plays a similar role in the store, i.e., it enables shoppers to check reviews online and saves them having to go home to do that due diligence before buying.

Now, we haven’t seen anyone who’s fully solved this one yet, but here are a few techniques that leading marketers have been using to integrate around digital:

Shift organizational and agency structures. Make your digital agency the lead agency (we’ve spoken to quite a few companies that have done this).

Appoint an ‘integration champion’ with a background in digital.  This person needs clout with multiple digital and non-digital teams/agencies as well as the power to enforce collaboration. MLC members, learn more about the role of an integration champion.

Assign a digital expert to each offline channel team ( e.g., TV, Promotions, Shopper Marketing, Direct Mail) to ensure each team considers digital extensions to their ideas and tests/optimizes ideas online before running with them is less flexible channels.

Start sourcing leaders (in any marketing position) from digital marketing roles to ensure a focus on digital comes from the top.

Make digital part of everyone’s job. Build a digital academy (as Intel has done) and require all marketers – even those in traditional channels – to pass at least the first module of lessons. Create more complex modules based on each individual’s requirements.

Encourage all marketers to participate in social media discussions with consumers (and thus learn more about it) by allocating badges/rewards for participation.

Get senior marketers to shadow junior marketers to learn about the new world of social media (some companies call this ‘reverse shadowing’).

Organize marcomm planning around digital. Start marcomm planning by coming up with a  ‘digital idea’ or an ‘experiential idea’ instead of any other kind of ‘big idea’ and then work out how it can play offline.  An ‘experiential idea’ should be an experience that conveys the brand benefit (and ideally breaks people out of their old ways of thinking).  Typically, these involve multiple digital elements, both to drive people to the experience and to enable the experience itself.

Make sure mobile and social media teams are included in campaign planning from the start. (See “Structure” tips above to help with this).

Optimize budgeting towards experimentation and rapid deployment. Save up to 20% of campaign budget for flexible deployment. Digital allows for faster detection of new opportunities and faster reaction to them, but this requires campaign budget to be reserved for later use in the campaign.

To stay on top of emerging digital platforms ensure a portion of the budget is always allocated to media experimentation.  Allocate 70% of budget to tried-and-tested touchpoints (to avoid excessive risk), 20% to emerging touchpoints that have shown promise, and 10% to totally new touchpoints with no expectation of in-year ROI. MLC members, learn more about the 70-20-10 approach.

Adapt relevant measurement methods and frames. Don’t rely too much on mix models that can underestimate the impact of emerging media (due to low spend and limited sales history). Consider using agent-based modeling and/or the Market Contact Audit to get a better sense of how mobile and social media influence sales.  Agent-based modeling also helps explain how digital and offline channels interact, which aids integrated planning as well as buy in.

Instead of only measuring the number of people reached, also measure the amount of media spend/impressions wasted on the wrong targets. This will encourage a shift away from inefficient offline channels. MLC members, see other ways to make this case.

MLC members, watch this space for more ideas on how to integrate around digital; it’s a topic we’re always interested in!  If anyone has any ideas or potential best practices to share, please let us know.

MLC is hosting a webinar on mapping the purchase path next week (Nov 15th).  Michael Allenson, Senior Director at Maritz Research, will be sharing advice on how to understand and improve the purchase process.

Marketers no longer understand how consumers buy.  New technologies (mobile commerce, price comparison apps, price trackers, social buying etc.) have transformed the decision making process.  The problem is – consumers don’t understand how to buy either.  Too often, new tools and information actually overwhelm consumers and make purchase decisions harder, not easier.  MLC’s 2011 research found that the average purchase decision now involves 12% more research than it did 2 years ago and a lot of anxiety too.

Brands that simplify the purchase process reap significant returns: higher chances of purchase, repurchase, and recommendation. Indeed, decision simplicity actually drives purchase and repurchase more than brand affinity or engagement.  The easier a decision, the less consumers comparison shop, and the less likely they are to change their minds.

To simplify purchase decisions, brands need to give consumers the right information at the right time on the right channel.  This requires detailed understanding of each step of the decision process.  Brands need to know:

• How consumers’ purchase criteria evolve across the decision process,
• Which touchpoints consumers consult in which order, and
• The impact of each touchpoint at each stage of the decision, i.e., higher or lower purchase intent.

Brands usually have a general understand of consumers’ purchase criteria and media habits, but without the time dimension.  Too few brands know how considerations and touchpoint use/impact vary over the course of the decision making process.  To get this level of understanding, leading brands combine social media insights, web analytics, and multi-touchpoint surveys.   The key here is stitching different pieces of research together.  One useful approach is to use intercept surveys – conducted on multiple touchpoints at multiple stages of the purchase process – as the basis of purchase mapping and then to layer other insights over that.  A number of vendors offer this service, including Maritz Research, who will be sharing tips on how to do this well on our webinar next week.

Understanding the purchase path in this way enables brands to streamline the purchase journey by:

1. Driving more customers to the most effective touchpoints
2. Improving less effective touchpoints
3. Better aligning messages to decision stage

MLC members, for more information on streamlining the purchase journey please see our members-only website.

However, some marketers underweight two key elements of trust:

Trust in product information is as important as trust in the brand itself.  Most companies invest significant resources in driving positive word of mouth about their brand, but many invest far less in driving positive word of mouth about specific products (though this is changing; many banks and insurers –USAA, Pemco, BBVA for instance – now have product reviews on their own sites).

Consumers don’t necessarily trust other consumers; they trust credible consumers. Consumers today are overwhelmed by product choice and information and thus need extra reassurance that a product is right for them. As such, they look to advice from consumers who are like them and can shed light on both pros and cons about a product as well as ideal context for use. We call those consumers “advisors” as opposed to “recommenders” (who provide no detail on why they like a product).

Indeed, one recent study found that seemingly positive reviews can actually lower product sales if they aren’t trustworthy.  Some short reviews, such as “best camera,” can significantly harm sales because a) they provide no extra information and b) they seem less objective/honest.  By contrast, seemingly negative reviews can actually boost product sales, for example: “Video problems with some sdhc cards. You may miss some good shots unless you use sandisk extreme III”.  This is because these reviews provide more detail about the products strengths/weaknesses and seem more honest.

Many brands have done a great job getting consumers to recommend their products (e.g., “great product”.  But most brands could to more to improve consumer advice on if and when to buy their products (e.g., great for those looking for an easy-to-use product, but less sophisticated in terms of capabilities.”).   We recently compiled a set of tips and case studies on targeting consumer advisors and helping them give the best advice.  Here’s a quick overview of the 5 steps to take:

Update social listening techniques to identify advisors (i.e., consumers who are respected as an authority in their field) not just brand loyals.  Learn what to track.

Teach consumers to give better advice by understanding the barriers to advice giving. Don’t just explore what kind of advice consumers need; also explore what kind of support your advisors need, e.g., Do they need more product information? Do they need more information on other consumers? See how to create a targeted advisor toolkit here.

Guide ambassador advice giving without telling them what to say. Brands struggle to shape/guide consumers’ advice without undermining their authenticity. See how Ford Fiesta did it.

Help consumers find relevant advice. Help consumers search/filter online reviews by key words or reviewer demographics (to find “people like them”). Learn how to help shoppers find the most relevant advice for them.

For low-involvement products, provide consumer advice on related issues (e.g., health for food products). Low-involvement brands can simplify consumers’ lives by aggregating consumer advice on more complex topics related to their products (e.g., environmental friendliness for cleaning products). See how.

MLC members, for more information on harnessing the power of consumer advisors click here.

The latest tactics for breaking through increasingly high barriers to attention all have some serious limitations:

• Tactic: Create such attention-grabbing ads that consumers stop and watch or even actively seek them out (the Old Spice strategy). Limitation: There was only one Old Spice campaign last year. There’s just no process for reliably producing viral hits.

• Tactic: Encourage consumers to sign up to regular targeted communications e.g., email newsletters, mobile alerts, Twitter feeds, Facebook news feeds. Limitation: Marketing message saturation is hitting consumers’ inboxes and news feeds.  Soon it’ll be just as hard to stand out there as it is elsewhere.

• Tactic: Hyper-targeting, i.e., send such super-relevant messages that consumers take notice. Limitation: Marketers often underestimate the bar for relevance that has to be met before a consumer actually clicks on an ad. Even with new data and automation tools, hyper-targeting is still pretty hard.

Leading marketers realize this and are adding an extra strategy to the mix. Instead of doing more to get consumers’ attention, they’re doing more to get through to consumers WITHOUT their full attention.  MLC members, we recently added a set of tips on low-attention branding to our website. Here are the basic steps to take:

Redesign ads/packaging to maximize unconscious information absorption. Consumers do absorb some information even when they’re not really paying attention. Marketers are now turning to new technologies, e.g., eye tracking, pulse/sweat sensors and even brain scans, to help present information in the most compelling and natural manner.

Establish routines around product use. Product routines secure repeat purchase without the need for in-your-face reminders.  The problem is, disrupting existing habits and cementing new ones is incredibly hard.  See how one CPG managed it here.

Publish useful or entertaining content on consumers’ interests with subtle branding in the background. Instead of forcing consumers to pay attention to explicit ads, brands are creating interesting/fun content and hoping the subtle background branding will create positive associations. Learn more here.

Identify and activate consumer cravings. Better understanding of cravings also helps boost product use without the need for explicit messages around product benefits etc. Some marketers of consumable products are turning to fMRI brain scans to identify the precise moment of consumption that provides the biggest dopamine hit. Creating ads focused on these moments improves effectiveness when consumers are only half-listening.  See  how a CPG used brain scanning to identify and activate consumer cravings here.

MLC members, learn more about low-attention branding, and consider taking this anonymous 7-minute survey on future trends in marketing. We will share aggregate results with all survey takers to give you a sense of how your peers think marketing is evolving. Thank you!

The simplest retail experiences involve staff who help you find the right products for your needs.  But with high turnover, it can be hard for sales reps to learn different segments’ needs and product preferences.

What store staff need is a simple way to guess what customers want. Since preferences aren’t always visible, staff need a few quick questions for diagnosing needs – and the fewer the better (to avoid annoying customers).

In some ideal cases, a single question will be enough to send shoppers to the right section of the store.  One pet store, for instance, asks the question, “Do you buy your pet a Christmas present?”  This question alone helps determine whether to direct pet owners to the luxury section of the store or not.

Another great example of the single-question segmentation technique comes from a beer maker. To identify their target customers, they simply ask: “Do you like to get drunk quickly?”  An elegant segmentation technique indeed!

But finding those one or two questions that accurately predict shopper needs is no easy task. Most companies turn to their segmentation studies, but these are typically 100+ question surveys that can’t possibly be repeated in a store environment.

La-Z-Boy has solved this conundrum.  They reduced their 100-question segmentation survey down to just 2 simple diagnostic questions.  These 2 questions enable floor staff to predict which section of the store will be right for each shopper – with about 80% accuracy.

MLC members, to see La-Z-Boy’s in-store segmentation questions and learn how they came up with them, please click here.

In our conversations with CMOs and marketing leaders around the world, the consistent theme we’re hearing is one of agility – marketers and their teams need to be able to tackle a wider variety of tasks and responsibilities in order to take advantage of fast shifts in the market.

Want to develop a more agile team? Read on for some tips gleaned from our conversations:

Develop a T-shaped workforce. These are employees with one deep area of expertise, but also a wider breadth of skills/knowledge.  This is important in a world in which roles are more ambiguous/complex & staff need to collaborate with other roles/functions (and therefore need to understand them).  Having a T-shaped workforce also helps shift people about, an important organizational capability in times of turbulence.

Use multi-directional career pathing. Instead of simply assessing an individual’s potential against one linear career path, assess potential (in terms of both strengths & proclivity/willingness) to fulfill a range of future roles.  Knowing all the different roles an individual could step into puts an organization in good stead for turbulent times.  If staff members have to leave, their positions can be more easily filled, and if new roles emerge, it’s clear who’s best for them.

Employ “reverse shadowing”. Get senior marketers to shadow new hires or even interns to learn how to communicate in a world of social and mobile connectedness.  This can take the form of weekly learning sessions or just an effort to get executives to attend interns’ final presentations.

Focus on judgment, not data crunching. Now that “big data” is so freely available, some marketing functions are making it part of everyone’s jobs, blindly giving everyone access to data and encouraging them to use it to inform their decisions.  The problem is, this eats into execution time, runs the risk of data misinterpretation, and leads to conflicting analyses and a lack of accountability . Instead of trying to boost data analysis skill and making this part of everyone’s jobs, focus on good judgment instead. This includes qualities like (appropriate) cynicism, knowing which questions to ask, and a certain degree of intuition.

Instead of hiring supermen/women, pair up employees with complementary skill-sets. It can be very hard to find job candidates with a combination of analytical/technical and creative/judgment skills. Instead of searching for these elusive few, consider pairing up employees with a marked strength in one areas and weakness in the other.

Increase rotations & role changes. Stop people from getting stuck in their ways by continually adjusting their roles.  This also helps staff learn new skills, form new connections within the organization, and ultimately increases agility and the t-shaped workforce.

Hire learning-agile staff. Hire people who seek out new opportunities and learning experiences, rather than those who find it hard to adapt. Personality is the biggest factor in determining an employee’s ability to adapt & perform well under change.

Don’t stifle natural agility. Our sister program, the Communications Executive Council, found that people are far more agile in their personal lives than at work. How can employers take advantage of that natural agility? Make work more like real life: tie outcome metrics to day-to-day duties, and put work in the context of organizational growth and long-term priorities.

MLC members, what else can marketing organizations do to keep their teams agile? Let us know in comments, and check out our Organizational Management topic center for more on running an effective organization.

MLC’s collection of best practices in marketing planning all have one thing in common: reducing complexity.  These best practices all involve stakeholders from outside Marketing, keep detail to a minimum, and make evaluation metrics explicit.

For more, check out our insights on Avoiding the Pitfalls of Marketing Planning.

Step 1: De-silo the planning process. Effective marketing planning processes involve stakeholders and points of view from around the organization. There are two key ways to do this:

-First, link marketing’s goals to broader corporate goals.  MLC members, see how Tesco embeds corporate priorities into its annual marketing plans.

-Second, interview senior leaders in other functions and get their view on plans and metrics.  MLC members, see an internal stakeholder interview guide inspired by Xerox.

Step 2: Simplify the inputs and the outputs. Colleagues outside of marketing suffer from information overload and are relatively unfamiliar with marketing-centric metrics. To get their buy-in for Marketing goals, plans must be extremely simple. MLC members, view MasterCard’s “Plan on a Page”, a concise marketing plan that is easy for external stakeholders to digest and understand.

Step 3: Make metrics clear; embed accountability. A recent study found that 73% of CEOs say marketers lack credibility because they fail to quantify the success of campaigns. To get the organization to buy into plans, marketing must clear metrics for success. MLC members, see a list of the most popular metrics for establishing Marketing’s effectiveness here.

MLC members, for more tools, tips, and case studies on marketing planning, please see MLC’s planning resource center.

MLC members, for other best-in-class examples of social and mobile executions, please see MLC’s Mobile Marketing Resource Center and Social Media Showcase.

At the ANA’s Digital and Social Conference, Gap’s marketing director (Chris Gayton) and CRM director (Summer Riley) gave a very enlightening talk on their work.  Here are some of the top lessons from Gap’s approach to SoMoLo:

Don’t underestimate the importance of online/offline integration. Gap consistently uses social media to drive store traffic and traditional media to drive social traffic.

• Online to offline: Gap’s Groupon and Facebook Places promotions both drove strong foot traffic (in fact, the Groupon deal was so popular that it crashed the social buying site within the first hour).  Additionally, Gap partnered with Starbucks by putting an ad on their wi-fi home page that took you to nearby stores and offered a promotion to use in those stores. This had click-through rates three times higher than the average rates.

The key success factors with these deals are 1) ensuring store staff are aware of the deal and  2) having back-ups planned in case the deals go viral and run out (this happened with the Facebook Places deal, but Gap offered a smaller discount as a back-up).

• Offline to online: Gap ran an ad in Glamor Magazine offering 40% off items for any consumer who ‘liked’ Gap on Facebook.  The 40%-off code was redeemed in-store, enabling efficient tracking.

Use mobile to simplify consumers’ lives. As MLC’s 2011 b2c research shows, simplifying consumers’ purchase decisions is the best way to boost brand loyalty.  In fact, using social and mobile to simplify consumers’ lives has a far bigger impact on loyalty than using social/mobile to ‘engage’ consumers.  Gap has found some creative ways to simplify consumers’ purchase experience via mobile.

• Gap made it easier for consumers to use its 50% off deal on Black Friday by texting them reminders.  Consumers could text WAKEUP to Gap in order to receive a reminder on the morning of the sales.

• Gap is also partnering with Swagg, a mobile app that allows consumers to upload plastic gift cards to their phones.  This saves consumers the effort of carrying multiple cards everywhere.

Infuse gaming into the purchase experience. Making purchase decisions more fun is another way to simplify the experience.  By turning decisions into games, brands can potentially reduce consumers’ sense of anxiety at dealing with all the product choice/information out there.

• Gap’s “Say Your Price” campaign turned typically fraught value decisions into an exciting game.  Customers browsed GapMyKhakis.com, picked items, and submitted a bid for a price.  The winning bid was selected using an algorithm that managed to a target margin rate (not revealed to customers). Winning customers won coupons to redeem in store.

MLC members, for more information on simplifying consumers’ purchase decisions, please click here.

To keep consumers’ attention despite all these distractions, many brands seek to boost brand engagement.  They aim to stay top of mind by building “personal” relationships with consumers via Facebook or interacting more frequently with them via email newsletters or mobile alerts, for example.

However, MLC’s 2011 study for B2C brands, including a survey of 7,000+ consumers (in the U.S., U.K., and A.P.A.C) found that engagement isn’t the best way to win shoppers over.  In fact, in many cases engagement efforts don’t help at all.  Frequency of interactions (i.e., email newsletters, mobile alerts) has no significant impact on loyalty (i.e., intent to purchase, purchase, repurchase, recommendation).  Strength of relationship with a brand does improve loyalty, but few consumers (typically, just 1 in 5) are open to brand ‘relationships’.

The biggest driver of loyalty was decision simplicity, i.e., how easy consumers find it to learn about the purchase, trust the information they receive, and compare options.

The reason?  Consumers are overwhelmed by all the information and choices out there.  Indeed, almost half of consumers feel anxious about their purchases and a quarter continue research even after buying – because they’re not sure they picked the right option.   Engagement efforts don’t help consumers navigate complex purchase decisions – and in some cases might even add to stress and confusion.  Efforts to simplify the purchase by making information more credible and concise have a far higher impact on loyalty.  Indeed, moving from the least simple quarter of purchase decisions to the most simple quarter increases follow through on intent to purchase from 36% to 67% and likelihood to recommend from 33% to 71%.

To improve decision simplicity, leading brands are taking three steps:

• Make purchase information more credible by harnessing consumer-to-consumer advice.
• Streamline the learning journey by tailoring information to each stage of the decision making process.
• Help consumers pick the right option by providing schemas, transparent buying guides, and personalized suggestions.

Stay tuned to Wide Angle for the next few weeks, when we’ll talk about strategies brands are deploying to help consumers trust brand communications, learn about products, and weigh their options.

MLC members, click here to learn how leading brands, such as Intuit, Ford, and Southwest Airlines, are simplifying consumers’ decisions.

“Doing a Domino’s” entered the vernacular following Domino’s self-critical 2010 campaign, which acknowledged that its pizza “taste[d] like cardboard” and promised to improve the taste.

Domino’s mea culpa coincided with a 14% revenue boost, a 10+ percentage point increase in taste perceptions, a 613% growth in Facebook fans, and a 83% share price increase.

Could admitting your failings do the same thing for you?  MLC’s 2011 research on purchase drivers suggests so.

Our survey of 7000+ consumers found that decision simplicity – i.e., ease of trusting, understanding, and weighing information – is the biggest driver of follow through on intended purchase, repurchase, and recommendation (bigger even than brand affinity and engagement).  Brands with more credible information have far ‘stickier’ consumers than others (i.e., less attrition).

A great way to boost consumer trust is to acknowledge your weaknesses; especially those that consumers are already fully aware of (dodging the topic is suspect).  This wins you the credibility needed to talk about your strengths.  Of course, highlighting your flaws is a pretty risky strategy though – and needs to be approached the right way.

Dennis Maloney, Domino’s Pizza’s VP Multimedia Marketing, gave a great talk at the ANA’s Digital and Social Conference about how Domino’s iconoclastic campaign came about.   Here are a few of my biggest takeaways:

Only focus on widely-acknowledged flaws that can be addressed. And only when your strengths are already well-known.

Domino’s Insights group discovered that consumers perceived Domino’s to be:

• Best at service/ fast delivery (versus its five main U.S. rivals), but
• Worst at taste

It wasn’t ranked middle on taste – it was bottom – and across the board (not just according to a few customer segments). Luckily, taste is something that can be easily changed.

Instead of creating more ads about Domino’s great service, which consumers already knew about, Domino’s took a counter-intuitive approach.  They led with the negative, but promised to right their wrongs. They showed that they’d listened, they admitted to being wrong, and they committed to investing in improvements.

Get consumers to confirm that you have changed. Once Domino’s had changed their recipe, it wasn’t enough for them to assert that their pizza was better.  “New and improved” has been an empty claim for decades. To be credible, Domino’s needed consumers do the talking for them.  First, they added unfiltered consumer tweets about the new recipe to their homepage.  Second, they promised not to doctor photos of the new pizzas – because they looked good enough naturally. Instead, they asked consumers to send in their own photos.

Demonstrate a continued commitment to listening and reacting to negative feedback. Once a brand positions itself as honest and transparent, consumers hold it to a higher standard.  As such, Domino’s had to acknowledge negative feedback received in the call for consumer tweets and photos following the change.  Instead of filling ads with all the flattering photos consumers had sent (see image left), they focused on one of the negative images a consumer had sent it (see image right).  Once again, they acknowledged a mistake (careless delivery) and committed to trying to do better.

Humanize your apology. Domino’s had its CEO to apologize and commit to making changes on TV commercials.  By personalizing the mistake, it seems more human, and consumers are more likely to be forgiving.

MLC members, to learn more about boosting trust in your messages, please attend our 2011 meeting series.

Instead of targeting recommenders, brands should be targeting advisors: consumers who teach other shoppers when, why, and how to buy. While recommenders focus on features and benefits and only discuss positive points, advisors cover both pros and cons and also share information about the best usage occasions and retailers. This extra detail makes their suggestions far more persuasive and helpful. The chart below outlines the key differences between recommenders and advisors.

There are two challenges with harnessing consumer advisors:

1. How to find consumers who will make good advisors (not just good recommenders)
2. How to teach consumers to provide better advice

Intuit’s Quicken Software group has done some good work on both fronts. First, they have a thorough ambassador screening process that ensures selected consumers are both genuine brand lovers and also credible sources of information. MLC members, see their screening questions here.

Second, they don’t just do research to understand what kinds of advice shoppers’ need. They also interview advisors to understand barriers to advice-giving, e.g., it’s hard to bring up the topic of personal finance. Based on the findings from this research, they create a toolkit of educational materials and incentives that target ambassadors’ top concerns. MLC members, see their research and targeted ambassador toolkit here.

One academic paper, The Plastic Trap: Self-Threat Drives Credit Usage and Status Consumption, offers some interesting insights. The authors – professors at London Business School and Cornell – set out to explain why people on a low income spend a proportionally larger amount of their earnings on status goods than those with a higher income. The traditional explanation – that “individuals conspicuously consume to signal their wealth” – only seemed like part of the picture. The study found that status purchases aren’t just about impressing others, but also about making ourselves feel better when we’re down – or, more specifically, about repairing bruised egos.

The study used lab-based experiments to deflate participants egos by, for example, getting them to take simple tests and showing that they scored worse than others. Next, participants were asked how much they would pay for luxury goods, such as cars or watches. The result?  “Individuals whose self-worth was harmed sought affirmation in high-status goods.”

If low self-esteem makes you desire luxury goods, we can assume that losing your job or your house would actually increase your chances of forking out for a high-status item, even though this is when you can least afford it (as this commentary points out).  Problematically, financial difficulties might actually make you more likely to overspend to get that temporary ego boost, despite the dire long-term consequences.

The study also went one step further and looked at the impact of credit vs. cash payment.  It found that belittled participants were more likely to seek the pain-free experience of credit payment and that this painlessness further increased chances of buying status goods.   The authors conclude that a combination of low self-esteem and credit payment creates a “perfect storm” in which consumers who can least afford it are most at risk of overspending on luxury goods.

This second finding about the dangers of credit cards has been confirmed by a number of other studies (described in more detail by Jonah Lehrer).  One such study by professors at MIT involved a real-life auction for baseball tickets. Half the auction buyers were told to pay with cash, the other half with credit.  The professors then averaged bids from each group.  The contrast was pretty stark: for heavy credit card users, the average bid was nearly twice as much as the average cash bid. The paper was entitled: Always Leave Home Without It.

Neuroscience research helps explain this phenomenon. Typically, spending money activates the insular cortex – the part of the brain that imagines pain when seeing other people suffer and responds to nicotine withdrawal.  In order to buy, the anticipated pleasure of owning a desired good must activate the nucleus accumbens (the brain’s pleasure center) more than the price tag activates the insular cortex. It is the interaction between the brain’s pleasure and pain centers that regulates our spending. The problem is, when you spend on credit, the insular cortex doesn’t seem to get it. “The nature of credit cards ensures that your brain is anaesthetized against the pain of payment.”  And since spending doesn’t feel bad, we spend more, whether or not we can afford it. Jonah Lehrer prophesies that this problem will only get worse as cell phone payments take off – since payment will be even easier and more pain-free.

MLC members, for more information on consumer decision making, please attend this webinar or meeting series on the changing purchase process.

Enter Agent-Based Modeling (ABM) – a technique best known for predicting disease outbreaks by simulating interactions between individuals and organizations. This approach tests different marcomm mixes using computer simulations.  The “Agent” is the simulated consumer – programmed to act like the brand’s target population in terms of media consumption and purchase habits. By simulating the likely impact of various touchpoints on consumer purchase behavior (rather than relying purely on historical spend/sales data), ABM can predict the influence of emerging touchpoints.  And since ABM takes all touchpoints into account, it can shed light on cross-touchpoint synergies.  Further, by modeling the behavior of individual consumers, ABM can account for differences between segments.

This technique won’t (and shouldn’t) replace mix modeling or in-market testing, but can be used in conjunction to gain deeper understanding of how the mix influences consumer purchase behavior.

How Agent-Based Modeling Works

Step 1: Recreate the target population’s media consumption and purchase habits (ABM vendors, such as ThinkVine or DemandROMI have expertise here).

Step 2: Simulate the impact of proposed marcomm plans on consumers.

Step 3: Validate the model against actual sales data and refine over time.

What You Can Model:

• Different touchpoint mixes, including emerging media and word of mouth
• Different messages/creative
• Price changes
• Changes in distribution
• Competitors’ actions
• Impact on multiple segments

Benefits

• Behavioral Insights: ABM explains how the mix works (e.g., what actions each touchpoint drives, how different segments react), not just that it works.
• Holistic Understanding: ABM takes touchpoint interactions into account and also isolates the impact of both emerging and traditional media.

Drawbacks

• Cost: An annual subscription with ThinkVine will set you back $150,000, versus about $85,000 for a one-off advanced mix model.
• Culture Change: Shifting from “last click” attribution of sales to a more accurate, multi-touchpoint attribution can be threatening to direct marketers who may feel the impact of their work is diminished.

Agent-Based Modeling in Practice

ThinkVine – an agency specializing in Agent-Based Modeling – shared a few case studies with us.

• One company wanted to optimize digital media investments in the mix and planned to eliminate Print in order to boost digital media spend. ThinkVine’s agent-based model revealed that print drove a significant portion of digital traffic (after seeing print ads, consumers would search online).  As such, the company decided to reduce Print spend only slightly and increase creative alignment between Print and digital media to capitalize on touchpoint synergies.
• Another company used ThinkVine to understand the impact of Hispanic-focused marketing campaigns on non-Hispanics. While traditional regressions only look at one segment at a time, agent-based models can test knock-on effects more effectively.

MLC members, to learn more about agent-based modeling please attend our 2011 meeting series on Simplifying Consumer Purchase Decisions.  For a comparison of marketing measurement methods (Mix Modeling, In-Market Testing, Market Contact Audit and ROMI), please click here.

To simplify, many brands have been creating clearer decision guides (e.g., product comparisons or financial calculators) to help consumers understand which products best fit their needs. Leading brands, however, are going one step further.  They’ve realized that the loss of trust following the crisis was so severe that their own purchase guidance will never be enough. Consumers need extra reassurance that there are no hidden costs – and they need it from sources they trust. As such, leading brands are collecting customer ratings and reviews.

USAA and Pemco are two brands that has done well with this. They’ve added ratings and reviews to most of their products and also feature select reviews on the home page, helping boost buyers’ confidence.  To improve the credibility of reviews, both brands ask reviewers to share a nick name and their number of years with the brand. Pemco goes further and asks for age and location, which helps readers find relevant reviews to them.

To reduce risks, USAA piloted the program on a small scale to make sure the reviews were mostly positive.  Reviews were then kept hidden for the first few weeks until average ratings stabilized. USAA also checks all reviews before posting them to remove profanity/private financial information etc.  Pemco takes a similar approach and saves time by advising customers not to share these details on the review form itself.

Frost Bank has also started out on this journey. They’ve launched a new website called What Frost Believes on which they post customer stories about that brand’s values. This is a very low-risk strategy, since only positive reviews are shared, but it still adds credibility to the bank’s own claims and helps bring their values to life.

Another bank that’s done some impressive work with customer reviews is BBVA.  This Spanish bank has pioneered a wide range of simplification techniques in their Tú cuentas (“you count”) program.  Tú cuentas is a mobile- and web-based platform that allows consumers to manage their finances better.  First, BBVA allows users to aggregate all their financial information on the BBVA site – giving them a full view of their finances. BBVA then allows consumers to compare their spending habits with peers (anonymously) in graphic form. It then uses this customer data to provide targeted financial advice. By combining the spend data collected with customers’ stated preferences and financial objectives (which it asks customers to provide) as well as peer reviews/behaviors, BBVA is able to provide highly relevant financial tips, news, customer reviews, and product recommendations. This strategy boosts both retention and cross-sales.

MLC members, to learn more about simplifying consumers’ purchase decisions (both in financial services and other categories), please attend our 2011 meeting series on Purchase Decision Simplification. Please click here to register or for more information.

As Karen’s post explains, only a third of consumers follow the traditional ‘funnel’ path (i.e., start with many options in mind and winnow down to one), while another third follow a ‘spindle’ approach (i.e., continuously add options to their consideration set before choosing one).  The final third follow a ‘tunnel’ purchase path. That is, they never consider more than one brand – and simply buy the first brand they consider.

‘Tunnel’ purchasers have stronger brand intent, are less likely to switch, and are more likely to repurchase and recommend.  As such, we’ve been looking into what makes people ‘tunnel’ and how brands can drive more ‘tunnels’. The findings have surprised us.  It turned out that all our assumptions were wrong.

Assumption #1: Tunnel purchasers are your brand loyals. Wrong.  In fact, the opposite is true. Consumers following a ‘tunnel’ purchase path tend to have lower levels of brand-loyalty than funnels/spindles.  This made us wonder what else was driving tunnel buyers’ focus on a single brand – perhaps just a good experience with the product/service?

Assumption #2: Consumers follow a funnel/spindle purchase path the first time they buy, but may ‘tunnel’ next time around – once they know they like the product/service. Wrong again. The majority of ‘tunnel’ purchasers are actually buying that product/service for the first time (57%).  This begs the question, what makes someone so sure of wanting one particular product/service if they have no first-hand experience of it?

Assumption #3: Consumers ‘tunnel’ for simpler, low involvement categories – because they just don’t care enough to consider multiple options. Nope. In fact, we saw high numbers of tunnel purchase paths across more complex categories, such as cars, luxury, or financial services (though, as expected, consumers tunnel more for simpler, lower price products).

Combining these last two findings, we saw that percentages of first-time buys actually increase for more complex, expensive items. Indeed, around 80% of luxury and car ‘tunnelers’ are first-time buyers.  This made us really curious about how a consumer can be so confident in one brand, that they ignore all other options – even for such important, risky purchases.

Assumption #4: “Tunnel’ purchasers are just different people – probably older, less sophisticated shoppers who can’t be bothered to invest effort in research. Here came yet another surprise.

Tunnel purchasers actually skew young and are also more sophisticated shoppers. They’re more likely to be mobile-savvy, social media-savvy, and willing to try out new stores through social buying.  In addition, they’re more likely to buy status or luxury goods as well as products that support a cause.  In short, they were more likely to be millenials – the consumers who usually care about purchases and deliberate decision-making the most.

So, if tunnel buyers aren’t brand-loyal, nor repeat buyers, nor purchasers of low-involvement goods, nor unsophisticated shoppers – what’s making these people so laser-focused on one single brand?  There are two key drivers: learning about the product via a friend’s recommendation, and using the product as part of a regular routine.

These drivers work in very different ways.  The recommendation gives the buyer enough confidence that they feel no need to explore other options.  By contrast, the routine saves the consumer the time and energy of exploring multiple options. Tunnel buyers have far lower levels of anxiety than funnel/spindle buyers – a clear benefit to this approach.

We’re now looking into each of these drivers in more detail. We have another consumer survey in the field right now, asking what makes a recommendation powerful enough to make you tunnel. For example, does it have to come early in the purchase process?  Does it need to come from someone very close or with very similar tastes, needs to you?  We’ve also been doing research into how brands can embed their products in consumer routines. For instance, how can you find emerging, untapped routines (i.e., ones that aren’t already occupied by competitors’ products)? And how can you effectively insert your products into those routines?

MLC members, if you’re interested in learning more about tunnel purchasing, recommendation, or routine, we’ll be presenting our findings at MLC’s 2011 B2C meetings on compressing the decision journey.

Based on this, we decided to explore the impact of word of mouth in our 2011 research on consumer purchase drivers, expecting it to be a strong driver of purchase intent, purchase, and recommendation.  Yet the 6000+ responses to our survey tell a much murkier story – with evidence both supporting and questioning its impact.

In support of word of mouth’s importance, the survey shows that consumers are more likely to consult friends and family for product advice (35% of our sample did so) than use branded information (just 26% did). Beyond friends and family, 17% of consumers use sites like Yelp and Consumerist, 8% use social media, and 4% use affinity groups (e.g., communities aligned around a passion).  Consumers also report that word of mouth information is slightly more useful than branded information.

However, our regressions to date have shown no correlation between word of mouth use (on any channel) and likelihood to purchase, repurchase, or recommend – a finding that has surprised and even somewhat baffled us.  As we’ve been exploring why, we’ve come to the conclusion that it’s the quality of word of mouth that is at fault. The web is increasingly flooded with word of mouth comments about products and services from anyone and everyone, often consumers with little authority or expertise. Many comments are irrelevant, inaccurate, contradictory, or just plain unintelligible. Looking for a good restaurant or hotel online now requires filtering through swathes of consumer comments – and can take fairly sophisticated analytical skills to work out who to trust and how much one bad review should matter.

This explanation is supported by another survey finding– that information clarity, i.e., how easy it is to find, prioritize, understand, and trust information, is the biggest driver of repurchase and recommendation.  The more time and effort consumers put into gathering and processing information and comparing options, the more anxious they become and the less likely they are to stick with their original intention, repurchase, or recommend.  Although they claim they’re happy with the amount of choice/information available if we ask directly, the data clearly shows an information overload problem.  Unfortunately, a large portion of online consumer comments actually make information overload worse, not better.  But not all.

The best brands are updating their word of mouth strategies to help reduce information overload. Leading companies are focusing on identifying and harnessing consumers who are naturally good at giving advice or educating well-respected consumers on how to give better advice.  Many companies are also doing more to aggregate word of mouth and highlight the most relevant comments for different users and different needs.  Brands do this by tagging consumer reviews/comments by both content and author, which enables prospective buyers to search for like-minded people offering relevant advice.

As such, we recommend a third generation of word of mouth strategies. Era 1 was just about increasing mentions of the brand (epitomized by viral videos that had little connection to products). Era 2 was about generating product recommendations from evangelists. Era 3 will be about getting consumers (ideally good teachers, but not necessarily evangelists) to give each other advice on how to buy.

We’re currently exploring best practices in this area. If you’ve done any experiments or had any successes here, please let us know! (Email abird@executiveboard.com)

MLC members, for more information on how to streamline word of mouth and highlight the best advice, please attend our 2011 meeting series on Compressing the Purchase Journey.

Register here for meetings in New York, Chicago, San Francisco, Sydney and London.

Why It’s Important

Brand publishing may not be new, but a combination of lower barriers to entry (brands own their own media sites) and diminished effectiveness of traditional advertising, related to consumer cynicism, have made it more important than ever.  Other reasons for the rising popularity of branded content include:

• People don’t have half an hour for brands, but do have half an hour for a good story.
• It’s cheaper to create your own publication than put an ad in a magazine.
• Consumers don’t distinguish between branded and unbranded content; just between good and bad.

Keys to Success: Brand Publishing

• Think about readers, not consumers.  Work out who your readers are, what their pains points/needs are and how to tell them compelling stories across multiple channels.
• Separate the editorial team from the pure marketing team to avoid being salesy and losing trust/putting readers off.  PC World, for instance, launched an independent content division; while others have hired a Chief Content Officer.
• Curate and publish competitors’ content on your site, otherwise your content won’t be of use to your user base and they’ll go elsewhere.
• Build and store up a set of special features to run.  Run them when the real world scenario occurs, tweaking as needed.
• Set aside a portion of budget for what-ifs to enable fast reactions to new developments on a daily basis if need be.
• Let your audience define both language and content. Conduct key word research, monitor forums, and ask consumers directly what content they’d find most useful.

A Few Examples

P&G’s Home Made Simple, which offers tips and tricks about cleaning.

Pepsi’s daily video updates from Internet Week, which provided real value to both attendees and those who couldn’t make it.

Keys to Success: Branded Entertainment

• Make sure the brand is a natural part of the plot and forwards the action, just as everything else in a story does. If it distracts or confuses, it’s too much. HP did a great job of this with their live improv events shown on YouTube. Anyone in the world could email an idea to an HP printer, which the improv team would print out and perform.  The printer was a natural part of storyline, rather than a separate message of “buy my printer”. The event was so popular that HP extended it from 1 to 5 days.
• Disrupt the agency model.  If you’re using the agency like a studio, pay them for ideas and not time.
• Consumers can get turned off by a brand voice, consider using brand mascots to give your content more character. This also helps because people like conversations more than information streams. The more you develop characters the better (they need to be consistent at a bare minimum). The best examples of this include a full cast of characters and a proper storyline.

MLC members, for more on B2C social media capabilities, please check out our resources on social media management and governance.

Anthony and I have just returned from South by Southwest, where a whole host of events (including “The Science of Influence,” “Influencers Will Inherit the Earth – Quick Market to Them!” and “Everyone’s Wrong about Influence except Your Customers”) tackled the topic of influence.  Presentations explored how messages spread, what motivates influencers, and how to identify and target your influencers. Here’s a quick summary of the most interesting insights.

Everyone is an influencer

A number of speakers took issue with the term “influencer,” reminding us that everyone is an “influencer” to some degree (i.e., most consumers have at one time or other recommended or advised against a brand/product). One speaker shared data suggesting that quantity is more important than quality when it comes to influencers. He presented an illustration of how messages spread over time, which looked like an upside-down pyramid, i.e., many people spread the message at first, but over time fewer and fewer people spread it. As an example, the internet meme around Nelson Mandela’s fake death was started by someone with just 70 followers (not your typical influencer) and spread by many other individuals with smallish networks.

Marketing should certainly encourage advocacy from everyone (e.g., by creating experiences worth talking about, crafting messages worth sharing, and thanking customers for their patronage). But marketers can’t target everyone individually, hence the focus on finding those super-influencers.

Identifying super-influencers

There was a lot of talk of Klout Scores – the influence rating based on how many followers you have (+ how many followers they have), how often you post, and how often those posts are retweeted. To the objection that this score only measures online influence, panelists retorted that online influencers tend to be more influential offline as well.

The speaker from Lithium Technologies was particularly scientific about identifying influencers.  His company looks for people with six key qualities: 1) credibility, 2) bandwidth (frequent and broad communication), 3) relevance, 4) timing, 5) channel alignment (influencer and target must be in same place), 6) target confidence (target trusts influencer).  If any piece is missing, influence won’t work.  To identify people with all six traits, they use “intelligent filtering.” This involves mapping friend networks, overlaying relevant comments (e.g., iphone mentions, positive vs. negative), adding a time dimension (e.g., comments w/in 1 month) and filtering out everyone who doesn’t fit. The next generation of algorithms will add in two additional dimensions: relationship strength (since closer relationships also mean more influence) and brand passion.

Influencing Influencers

Having identified your influencers, the next step is to understand their interests and motivations, in order to engage them effectively.  Core motivations include the desire to have a voice and feel in control by affecting the opinions of others. Ultimately, one speaker concluded, this boils down to a basic human desire to boost our social status.

Consequently, the best way to engage influencers is to listen and react (giving them that sense of control) and also to recognize and highlight their social status.  One panelist recommended 4 key actions here: 1) connect (the most important action), 2) listen and learn (ask your influencers how they would improve your products), 3) act on their feedback, 4) thank them and remember their help.

Another panelist agreed that the best way to engage influencers is to co-create with them, which again builds on that motivation of voice/control.  He suggested building a community of influencers and allowing them to shape your brand and products.

Other panelists focused on the “social status” motivation, recommending special treatment and recognition for influencers, but never financial incentives, which undermine influencers’ credibility.  They advocated for elite groups/statuses for influencers as well better CRM systems to enable companies to spot influencers as they enter a store/website to give them special treatment.

All panelists agreed about the importance of targeted outreach.  You can’t just blast out automated messages; you need to personalize the message for it to be meaningful.

Finally, for a more tactical tip: just ask for a re-tweet – this actually works! One panelist shared his research into the most retweeted comments. He found that top tweets typically include some form of call to action, e.g., “please pass on,” “please retweet.”

MLC members, for more information on engaging advocates, please see this case study from Intuit: Recommender-in-a-Box.