Payless, an American shoe retailer, faced this problem a few years back. Facing competitive threats from big-box discounters, a deteriorating customer experience, and a management team far-removed from the average customer, the company’s CMO tried to drive improvements in the customer experience but predictably failed due to lack of senior management buy-in.

Realizing that the company needed to make the lack of customer focus “real” to senior executives, Marketing arranges a series of executive-immersion sessions. They listen in on focus groups to learn the characteristics of core segments, then “act out” those segments in a series of visits to Payless and competitor stores – a constraint that forces them to remove their functional hats and view stores from the perspective of a consumer, rather than an operations or a finance executive.

A key part of the visits to Payless stores is that they are unannounced and incognito. Executives, assuming their roles as a particular customer persona, shop in the store as any other customer would, avoiding the problem of stores “preparing” for pre-announced visits.

The end result? Executives quickly figured out where the customer experience was lacking and identified a few key elements to fix, leading to higher same-store sales and increased foot traffic and customer satisfaction.

MLC members, check out the full case, or listen to this webinar replay on how companies – including Payless – have pioneered consistent, differenteated, and delightful customer experience.

I don’t think this is wrong, per se. But do I think it misses a key paradox. Jobs and the company he created did invent wonderful user experiences, but they did it in the exact way that most companies wouldn’t.

For most of us, a focus on the customer means that we make a commitment to go above and beyond to address customer complaints and needs, and that we find smarter ways to incorporate their feedback into all aspects of our business. So, a customer focus initiative might raise customer planning to the level of other important enterprise planning processes, like Tesco did. The basic model? If we listen better, and do a better job of incorporating our learnings into our products and services, we’ll resonate more with customers and sell more stuff.

By contrast, Jobs and Apple succeeded by having a compelling vision. They ignored their users almost entirely – at least in the product design process – and focused on an integrated, streamlined design – an enlightened, benevolent tyranny of sorts. Jobs was famous for a kind of perfectionism that most executives would think absurd: for instance, he once asked engineers working on the original Macintosh to re-design the computer’s motherboard – a part most users would never see – because it looked inelegant. OS X, Apple’s current operating system, was delayed by six months over Jobs’ dissatisfaction with the way the scroll bars worked. Taken individually, these are elements of design that very few users would notice or care about; but together they created the famous Mac user experience.

The user experiences of Apple products – from iOS devices to Mac computers – reflect the user experience Steve Jobs wanted, not the one his customers would have told him they wanted, if he’d bothered to ask. And it worked – but there are pretty big risks with going this route. Apple relied on Jobs’ design vision to make its products work, and if his vision had been faulty, or hadn’t resonated with the market, they’d be in trouble. His vision raised costs, both for the consumer and for the company itself. His insistence that the user experience be uniform across all applications significantly limited the developer pool for Apple devices (at least, at first, until the iPhone became an irresistible hit). The relative inability to customize the experience limited – and still limits – Apple’s penetration into the business market.

But Apple’s focus on top-down design – rather than the needs of customers, as they might report them – is a counterpoint to a growing trend in the corporate world of finding new and inventive ways to find out what customers want, and do exactly that. It’s a vote for visions over data, and that’s a dichotomy we’ll probably explore a bit in this year’s research.

Do you have thoughts on the right balance between vision and data? Let us know in comments.

Even though the weather and leaves are just beginning to turn, and we still have to get through Columbus Day, Halloween and Thanksgiving before turning our thoughts to visions of sugarplums and eight crazy nights, marketers are hard at work figuring out ways to close the year off strong with a good holiday season.

But how should they do it, while stengthening their brand positions for the year to come? We’ve got a few tips below:

Find ways to lighten the load. For kids, the holiday season is a magical, wonderful time of presents, candy, and sometimes magical elves. For adults, though, it’s probably among the most stressful times of the year – even if the stress is likely to pay off in the form of fun with family and friends.

Great brands recognize that not only is the season particularly hectic, the very act of brand interaction might be, too. Finding ways to save consumers time and money, as well as raising the chances they’ll make the right choice when it comes to gifts, can pay dividends throughout the rest of the year.

So how does this play out practically? Offer your consumers some measures of assurance that they’re making the right choices. Some brands we’ve studied have done this through transparent buying guides – presenting consumers with a range of criteria and offering relevant gift ideas for each – while others have gone the technology route, using social networks to make gift recommendations.

Clarify the brand promise – and deliver it, 100%. There’s no better time to make sure brand promises are airtight – and delivery consistent – than the holidays. The uptick in shopping offers brands an opportunity to make a positive imprint on the consumer, but if crowd-weary shoppers aren’t satisfied with what they get, you may suffer the consequences the rest of the year.

MLC has a wealth of material designed to help companies consistently deliver their brand promises: for instance, here’s how Exxon Mobile motivated employees to consistent brand delivery, how Starbucks ensured consistent brand delivery across all touchpoints – human and not human, and how we recommend brands ensure consistent brand delivery across geographies and segments.

Find avenues of emotional differentiation. Here’s the place where brands – particularly consumer and retail brands – have a golden opportunity to set themselves apart from the competition: finding areas of shared values and ways to emotionally differentiate themselves from competitors. We’ve found, for instance, that brands that align with consumers around emotional values perform at a much higher level than brands that emphasize functional differentiators.

Luckily, emotions are running high during the holiday season, and there are a number of brands that have particularly strong associations with the holidays. Macy’s, for instance, is associated in my mind with the holidays: their sponsorship of the Thanksgiving Day parade and the movie “Miracle on 34th St.” form that association in my mind, and I’m much more likely to shop there during the holidays than at any other time.

Understand and fit into seasonal routines. Routines shift a bit during the holidays for a lot of people and families. I’d say that, on average, one is more likely to bake cookies on a random Tuesday night during December than in other months; one is more likely to visit a mall in December than in other times, one is more likely to drive around looking at tacky Christmas lights – all sorts of things.

Brands that unearth subtle shifts in consumer routines during the holidays can capitalize big on them. For instance: there’s the classic case of General Mills’ Betty Crocker brand figuring out that parents often spent the first week of the holidays doing nothing special, then felt guilty about doing so. So the brand targeted cookie-baking in the second week of the holidays, figuring this was an easy way to assuage parental guilt about not being festive enough.

MLC members, how are you shifting your brand communications mix for the holidays? Let us know in comments below.

Indeed, given the inherent industry advantage, many manufacturers may feel entitled to think themselves relatively secure. But when customers are asked questions that entail comparison between manufacturers of the same industry, they become indecisive, delay contacting suppliers and are swayed by details that suppliers overlook. From a competitive angle, here’s how things shape up:

Your customers don’t think it’s hard to switch suppliers, in other words, they fail to see much of the difference between your offering and that of others’. They will call you only when they’re about 60% through the whole process, assuming that you make it into their consideration set to start with.

Your customers are price sensitive, as a result, 48% of manufacturers’ customers used RFP in their purchase process (the figure for service is 39%). And the top reason to issue RFPs? To compare prices.

Your customers are not in an exclusive relationship with you. They consider just as many suppliers as service buyers in the final stage of purchase.  Even though the winning manufacturers have on average known their customers for about 7.5 years, 25% of the time they lose to a younger, newer competitor.

Now while the win patterns are good news for challengers and bad news for incumbents, most companies wear these two hats at the same time. Fortunately, our data shows that there are levers you can pull to keep existing customers while attracting more. The key is to change the way you present information. Many companies settle for “boring”, just being interesting will put you one step ahead. Service providers and your progressive peers have had much practice at positioning complex offerings interestingly and you should try the same:

Engage customers by tailoring information. Sometimes you do the tailoring, other times you simply build the environment enabling a personalized experience. Hill-Rom, a medical devices manufacturer addresses customers’ differing needs through their Experiential Teaching Trade Show Booth, where customers experience the inconveniences faced by critically ill patients and the Progressive Mobility Solution Hill-Rom offers. This exercise support momentum-building by highlighting Hill-Rom’s unique strength while making an abstract concept concrete. Customers’ takeaways differ, but leave similarly impressed.

Make better use of cases and be thought provoking by linking to the customer’s end goal. Customers are much more receptive to feedback from their peers, especially those who resemble themselves.  Qwest constructed an authentic testimonial video library using the “90/10” rule – 90% of content is positive and 10% is negative. The short videos are neither scripted nor edited and are organized by industry, product, buyer role, business need and geography. With additional integration into their CRM system, Qwest is able to dramatically reduce sales reps’ effort while providing prospects with better, more targeted information.

“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.

And why not? Friends and followers are the simplest social media metric we have available to us, and the one that’s most likely to track real-world engagement with a brand’s online presence. In the presence of other pros who speak the social language, they’re an easy way to benchmark a campaign’s performance.

But out in the broader business world, we’re hearing that senior executives, especially ones without social backgrounds, are finding it hard to contextualize friend/follower metrics in a way that links back to business results. Former H&R Block social media ringmaster Zena Weist explains to us the limitations of traditional social metrics:

What’s more, we’re increasingly finding that friend/follower metrics have a less-than-concrete attachment to commercial metrics. Recent MLC research indicates that the average Facebook user is a fan of around 9 brands. Combined with an average of around 150 friends, how much “engagement” is really possible in a newsfeed crowded with friend and brand updates? What’s more, we also found evidence that most friends/followers are interested primarily in discounts; unless you have a proven strategy for moving those consumers up the value chain, a strategy based on friend/follower accrual might in fact be lowering your average transaction.

So what’s the solution? Think of it this way: if you’re American and wanted to tell a European about your SAT score, you wouldn’t just tell them you got a 1300; you’d tell them that, then make some reference as to what the score means (i.e. “I got a 1300, and I got into Berkeley”). Similarly, we can’t explain social media success in self-referential terms. Bridge metrics are intermediate steps in the causation chain that leads to business outcomes. To re-use our SAT analogy, where A is the initial metric, B is the bridge metric, and C is the outcome:

a. I got a 1300 on the SAT
b. Because of this, I was able to get into UC-Berkeley
c. Because UC-Berkeley is one of the best universities in the US, I now have a 20% higher earnings ceiling than the average American (made up, but you get the idea).

Now, bridge metrics and outcomes vary by organizational priorities. For Zena at H&R Block, the key bridge metric was displacement of call center volume, which was easily quantifiable in terms of real dollars. For your brand, it may be different. But rather than present Twitter followers as evidence of social media success, we’d all be smart to think through the alternatives.

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.

Faced with this challenge, Intuit built its advocacy program on the following insights:

• No matter what your product, there is a group of people which is naturally interested in it
• The product or something outside of it needs to be interesting to get people talking
• People hesitate in talking about products they like if they relate to personal matters like finances

So how did this work for Quicken? Intuit kicked off the Quicken advocacy program by inviting applications for brand ambassadors on its website. These advocates were existing customers who had a healthy interest in the brand. Intuit encouraged advocates to talk about the product by using rewards, such as the opportunity to interact with Quicken GMs over dinner. Also, being Quicken brand ambassadors served as the ‘something interesting’ that advocates could talk about.

Beyond equipping advocates, Intuit marketers identified barriers to advocacy.  For Quicken, the chief barrier came in demonstrating the product—turns out advocates get squeamish about showing the software to others with their personal financial situation front-and-center.  So Intuit developed fake screenshots of data to include in the product kit enabling advocates to give a demo without sharing their own personal data.

How do you create brand advocacy?

MLC members: Peter Karpas, President and Division General Manager of Intuit’s Quicken Health Group and formerly Intuit’s Chief Marketing and Product Management Officer, shared his perspective on developing high impact brand advocacy programs. We broke down Mr. Karpas’ valuable advice into short clips here, or listen to the full replay of the webinar here.

Bob Iger, CEO of Disney, talks about the way that the home video business has changed in the last few years. “People feel they do not have to own a movie unless they really like the movie.  It’s not just a buy because we may want to watch it one day. One of the reasons for that is the competition for their time.”  [italics are mine]

Similarly, Reed Hastings, CEO of Netflix, points out that it will compete with satellite and cable competitors much more directly, because “in the long term, we’re all competing for a time share of the consumer”.  In the past, separate media pipes (cable/satellite vs. Internet) meant these models didn’t compete as directly.  But with digital convergence, it’s easy to see how Netflix and Comcast are going to bump into each other much more often.

In both cases, the “time share” of the consumer boils down to the finite attention that consumers have to give.  Here are a few facts that bring the issue into vivid focus:

• Across the past 20 years, the volume of information flying at or available to consumers is increasing at 30-60% annually
• Across the same time period, humans’ ability to process information is increasing at roughly 5% annually (largely through multi-tasking)

These demands on consumer attention were already stringent 10 years ago, when Davenport and Beck wrote their work on The Attention Economy.  Today, ten years later, the information-attention mismatch has quietly but inexorably become the key underlying phenomenon putting pressure not just on consumer electronics and media businesses, but on  most all marketers—or for that matter, any party seeking the attention of large audiences.

This attention scarcity dynamic explains why Decision Simplicity turned out to be so important in our recently completed consumer research.  The research took a deep look at what drives consumers to form and then follow through on brand purchase intent with a high degree of confidence (we call this “purchase stickiness”).

Decision Simplicity is a set of drivers that factor together, including the ease with which consumers learn, trust and weigh the information they need to make a purchase.  It was the most powerful driver of purchase stickiness.  More powerful than brand affinity.  More powerful than brand “relationship”.  More powerful than the number of interactions with the brand.

The upshot for marketers?  Help your consumers traverse the purchase path by acting in service to their attention scarcity, not by exacerbating it.  We’ll share more specific solutions sets—what marketers should stop doing, and what they should start doing—in upcoming blog posts.

Here’s a teaser for one of the solution sets: refashion your advocate strategy into an advisor strategy.

MLC members, we’re working on a web resource center to bring you the full results of this research, including best practice examples and case studies from companies that are getting Decision Simplicity right.

In the meantime, attend a Council executive retreat (reserved for seniormost Council membership sponsors and one right-hand person)—we’ll be in Chicago, San Francisco, Sydney, and London in the coming months.

So there’s a market opportunity out there – but can your organization take advantage of it? Luckily, MLC has been investigating the drivers of brand loyalty for a few years now, culminating first in our 2009 study for B2C marketers, Accelerating Loyalty, and again in our upcoming work around consumer decision processes. To get a sense of what it takes to create deep consumer-to-brand connections, we decided to analyze the success of Zipcar – a company whose intense brand loyalty recently spurred it to a big IPO – within our framework.

Surprise! Zipcar scores high on all of our B2C loyalty drivers. Car rental is a commodity business with rather low margins; what is Zipcar doing that inspires loyalty far beyond the traditional players in the space? Three ideas:

Focus on shared values. Who is Zipcar’s typical customer? What enters your mind first when considering the question? For me, it’s a young (20 or early 30-something), carless, childless, relatively affluent, and likely single person living in a dense area of a big city. In other words, folks who see themselves as making lifestyle choices contrary to the dominant ones in America, perhaps ones that they themselves grew up with.

In a country where car ownership (outside of select metro areas) is nearly universal, not having a car is a strong statement of values – environmental and financial values chief among them – and Zipcar doesn’t just recognize this in its marketing materials, it plays an active role in helping consumers with these values achieve their goals. Except for the occasional pickup and luxury car, the entire fleet is fuel-efficient and much of it is comprised of Toyota Priuses. They’re located in the neighborhoods where their consumers live, in easy-to-reach places. And the company delivers on financial savings – just as one data point, I’m saving over $500 a month compared to the days when I owned a car.

Want to find the values you share with your consumers? See how LG did it.

Differentiate aggressively. The brands that inspire the most loyalty are those that are functionally differentiated from their competitors. Technically, Zipcar is a car rental company, but the reality is much more complex than that – the company’s competitors are overwhelmingly located at airports and train stations, not within customers’ neighborhoods; their fleets generally do not resonate with Zipcar’s customers; and they rent only by the day, not by the hour. Zipcar’s “car sharing” model gives the service a community feel, lowering overhead for cleaning and maintenance – in stark contrast to the sometimes-adversarial relationship between renters and big rental companies.

Want to learn how to select new product opportunities for maximum differentiation? See how Corning did it.

Engage your customers. Zipcar makes continuous efforts to rope consumers into the brand – through comprehensive wrapping of vehicles in Zipcar branding to “Zipster” events and discounts at area retailers and restaurants. But they’re smart about it: active brand engagement is not a requirement of being a customer, and many (like me!) never participate in these things at all. This is smart: some consumers want a low-effort brand experience – we want to get in and out quickly. Others, particularly for values-rich companies like Zipcar, want a more involved experience. Why not give us all what we want?

Want to find some brand advocates? See how Kodak did it.

But there is something more here than simply horses and well-dressed people. The event does a brilliant job of playing on traditions. A tradition is a ritual, belief or object passed down within a society, still maintained in the present, with origins in the past. Traditions can be both public and private but they often convey significant meaning to those involved and provide satisfaction by strengthening social bonds.

Why is this so important for brands? MLC research points to traditions as a critical driver of consumer “tunnel” behavior that is, consumers who never consider more than one brand during the purchase process.

The Derby is an event jam-packed with elements that experts typically look for when identifying traditions and rituals:

• “Script” (behavioral process and method): the University of Louisville Marching Band plays Stephen Foster’s “My Old Kentucky Home” and the winning jockey is presented with a lush blanket of 554 red roses.
• “Artifacts” (the tools needed for proper consumption/ enjoyment):   the famed Mint Julep and elaborate hats worn by fashionable onlookers.
• “Roles” (parts played by consumers in the process):  the spectators, the jockeys, and the band.

The Derby and numerous other sports events might be thought of as tradition/ ritual played out on a grand scale with prescribed behavior and artifacts. But tradition and rituals can also play out on a much smaller, personal scale. And this is where brands have an opportunity to build something new and, hopefully, meaningful and lasting.

Consider the ritual elements associated with dunking Oreo cookies in milk, pouring Guinness beer, or putting a lime in a corona. A more recent example is the ritual Irish cider Magners has created. The cider is served from a large bottle into a pint glass with lots of ice. This way of serving makes the product more drinkable, by making it really cold and taking off the sweet edge of the drink, and has helped re-define cider in the eyes of consumers.

While the ritual elements are not always fully developed, these brands have found ways to create their own personal rituals and created meaning for consumers in the process. These rituals are often shared with friends and family, take on greater meaning as time goes on, and become part of regular activities.

How can your brand create its own rituals, drive symbolized consumption, and encourage repeated behavior? Looking for opportunities to prescribe appropriate scripts, artifacts, and roles in consumption is often a first step.

Do you have other ideas about how to create brand rituals? Please comment here, or email bkelly@executiveboard.com.

In 1904, the California Fruit Growers Exchange hired legendary ad agency Lord & Thomas to – er – juice demand for oranges. Before the existence of refrigerated rail cars, oranges and other citrus fruits were not well known throughout the country – a trend that continued even after it was possible to ship the fruits far from places like California and Florida. The account team included Albert Lasker, often regarded as the founder of modern advertising.

In addition to creating a unified brand (Sunkist) for the disparate Growers’ Exchange and indulging in some giveaways and promotions, Lord & Thomas did something much more powerful – they invented a new use for the then-unfamiliar fruit: orange juice. They taught consumers how to squeeze orange for juices, and sold juicers so they could do so. In the process, they increased per-capita orange consumption 4-6 times.

What Lasker did was simple, but outlandishly effective: he created a new routine around oranges, one that consumers took to immediately – and that’s still possible today. We’ve recently been investigating the impact of routines on how people buy. Experts agree that about 45% of people’s behavior is repeated almost daily and usually in the same context – and these routines become even more important when consumer face time pressure and distractions, which they increasingly do in a mobile-enable world.

Here are a few other ways experts recommend harnessing routines:

Consider Consumer “Context Shifts”: Organizations should identify times when consumers are establishing new patterns of behavior in the absence of competing routine cues. People naturally experience changes in everyday contexts when they move to new locations, start new jobs, join new groups of friends, or change their lifestyles. Magazines and newspapers take advantage of this idea when offering free subscriptions to new home buyers in the hope that the new context can help spur new behavior. Having identified these shifts, brands can encourage habit formation by reinforcing the desired behavior with convenience and reward.

Look for Routine Triggers: Many companies take a narrow view – they fail to look beyond their immediate category to identify routines. Organizations should look more broadly by finding the cues that trigger a routine: a specific location or time of day, a certain series of actions, particular moods, or the company of specific people. Consider findings from BBDO that investigated the daily triggers of different routines.

Consider Ritualizing the Brand: A lot of organizations have succeeded in creating extra meaning for consumers by prescribing a formalized consumption routine. Oreos and milk, the Guinness pour, or Corona and lime are often cited. The hope is that more formalized consumption leads to additional affinity for the brand. When trying to develop your own rituals, consider common elements: “script” (behavioral process and method) “artifacts” (the tools needed for consumption), and “roles” (parts played by consumers in the process). These elements can encourage a symbolized consumption that may differentiate your brand from the next.

Have some other thoughts here? Please reach out to us at bkelly@executiveboard.com.

So what are B2Bs to do?  As Ana mentioned, one of the toughest parts of managing B2B word of mouth is ensuring the good-to-bad ratio falls in the supplier’s favor given how much more memorable complaints are than compliments.  In the B2C world, bad word-of-mouth is not only more memorable, it is also simply more prevalent.  A recent study by COLLOQUY found that 75% of adults share negative opinions about products and services with friends and family but only 42% do the same when they have a great experience.  One quarter (26%) of respondents flat out admit they are more likely to share a bad story than a good one.  COLLOQUY deems them “Madvocates.”

One strategy to up the “good” side of the ratio might be to identify those most apt to share positive stories through research and segmentation and target them with incentives to encourage more sharing of positive experiences.  Unfortunately, according to COLLOQUY, this approach has one big flaw – there is a big overlap between those who share positive stories and those who share negative ones.  Even among those who the organization defines as “WOM Champions” (consumers who are especially “loyal to, engaged with, and willing to share recommendations” about a brand), 31% admit they are more apt to share bad experiences than good.  The implication here: don’t tick off consumers who love you.  Disappointing your most loyal and engaged customers is worse than disappointing a regular Joe or Jane because they don’t take it lying down.

The truth is, some people are just more apt to share than others and be it good news or bad, they spread it.  The problem gets even more complicated when we take the sharing from dinner table and “water cooler” conversations to online mediums.  The vast majority of Internet users are “lurkers,” that is, people who just consume information and do not participate in its creation.  In 2006, usability guru Jakob Nielsen introduced the “90-9-1” rule: 90% of Internet users lurk, 9% contribute infrequently, and just 1% contribute frequently.  Put another way, 90% of web postings come from just 1% of users.  Undoubtedly those numbers have shifted a bit in the last 5 years as social networking and review sites have increased in popularity.  But even if there was a 5x increase in active participation, the numbers would still be dismally low.

To my knowledge there are not any good stats of this ilk about B2B customers and their propensity to share information.  But it makes sense that the same themes hold true: that bad experiences may be shared more commonly than good and that certain people are just more prone to giving feedback, writing reviews, participating in forums, and serving as references than others.  Nonetheless, it is critical for B2Bs to work harder to encourage creation of and enable access to word-of-mouth information.  B2B customers are also consumers and there is no brick wall separating their two “selves.”  The way they gather information and make decisions in their personal lives influences the way they do it in their business lives.

B2B marketers – I’d love to set up a conversation to discuss what you are doing to encourage positive word-of-mouth about your products, services, and solutions.  Email me if you have 30 minutes in the coming weeks.  Also, remember to register for our Executive Meeting where we’ll discuss the challenge in greater depth and preview some possible solutions.  We also have a few international dates – shoot me an email for more info.

The power of habits is undeniable and brands have long recognized the need to understand them.

“Our products succeed when they become part of daily or weekly patterns,” said Carol Berning, a consumer psychologist who worked for Procter & Gamble.

Studies reveal that as much as 45 percent of what we do every day is habitual — that is, performed almost without thinking in the same location or at the same time each day, usually because of subtle cues.

Researchers find that most cues fall into four broad categories: a specific location or time of day, a certain series of actions, particular moods, or the company of specific people. For marketers, understanding the cues associated with their products is obviously critical.

The New York Times told the story of P&G’s Febreze, which was originally marketed as a way to remove bad smells – for example, removing smoke smells from clothes after being in a bar. However, despite a lot of marketing, Febreze did not sell so well. One of the biggest problems, P&G’s researchers discovered, was that bad smells simply didn’t happen often enough in consumers’ lives. Because bad smells occurred too infrequently for a Febreze habit to form, marketers started looking for more regular cues on which they could capitalize.

The perfect cue, they eventually realized, was the act of cleaning a room, something studies showed their target audience did almost daily. P.& G. produced commercials showing women spraying Febreze on a perfectly made bed and spritzing freshly laundered clothing. “We learned from consumer interviews that there was an opportunity to cue the clean smell of Febreze to a clean room,” Dr. Berning said.

Plenty of other brands attach to habits as well:  Beer commercials feature groups of buddies, because research shows that groups of friends are one of the strongest habit cues. Candy bar companies, through commercials, have tied their products to low-energy cues, transforming what was once a dessert into a pick-me-up for cubicle dwellers.

So how can you encourage the creation and maintenance of new consumer habits? The short answer is it’s not easy but researchers emphasize the importance of understanding environment and triggers in shaping habits and routines.

Researchers Bas Verplanken and Wendy Wood point out the importance of environmental cues and suggest they represent an important point of vulnerability in encouraging new habits. Disrupting the environmental cues that trigger and maintain habit performance renders habits open to change during naturally occurring periods of change in consumers’ lives (e.g., moving to a new location, changing jobs).

Sublime Behavior Marketing offers the following methodology to help its clients’ consumers to become habitual purchasers and users of their products and services.

MLC members, if you have an interest, or a practice to share, in creating or tapping into existing consumer habits, routines, or traditions, please contact us at bkelly@executiveboard.com

Yet somehow I found myself watching Idol last Wednesday night and I was struck by their authentic call to action in support of the people devastated by the tragedy in Japan.  In case you missed it, the show began with the hosts announcing that revenue generated from music downloads after the show would be donated to Japanese relief efforts.  Idol certainly wasn’t the first to make an appeal to the American people but whereas the cynic in me often jumps to the commercial reasons that companies get involved in philanthropy, I had a different feeling last night.  Here’s why:

The folks at Idol get that social responsibility has a very different feel from corporate social responsibility in the mind of the consumer. MLC has been looking at the roles of shared values, emotional connectivity, and passion in consumer purchase and loyalty behaviors and what we’ve been seeing is this:  companies that “win” on loyalty understand that passion is about  linking what we do to what our customers are passionate about in their daily lives rather than creating passion for what we want them to care about.  It makes intellectual sense that pet food companies donate to animal shelters or that cosmetics companies donate money to breast cancer research.   But that’s often as far as it goes.  Corporate social responsibility taps into my intellectual, rational filtering process.  Social responsibility taps into my passion allowing me to bypass rational filtering altogether.  In other words, companies that make that link reach me in a way that allows me to stop evaluating alternatives, that says I can stop wondering if I’ve done enough research, and that helps me eliminate the angst of wondering if I made the right choice.  In other words, the cynical voice stops chattering in my ear.

Now it may be easy to blow off this blog post – after all, Idol isn’t a pet food or cosmetics company, and they have a different business model than many of us.  But if you stop for a second and let it sink in, you should realize that they’re not all that different.  They sell a product that has nothing to do with their philanthropic forays just like selling cosmetics doesn’t have anything to do with breast cancer.  Yet Idol is successful because they built credibility through their well-executed Idol Gives Back program.  They’ve already shown they care about humanitarian aid across the globe in previous seasons of Idol (their social responsibility efforts over the past few seasons that have been devoted to humanitarian aid) so it makes sense for them to respond quickly to this devastation.  They’ve approached their giving by doing more than attaching their name to the effort.  They don’t “sponsor” humanitarian aid.  The Idols and hosts travel to where the aid is provided and share the stories derived from those experiences.  It’s not the Executive Producer shaking hands and delivering an oversized check.  It’s not some “underling” doing the dirty work either.

We’d love to hear of other examples of companies that you think are doing this well.  My cynical side always likes to challenged.

MLC members, for more on mapping CSR efforts to shared values, check out our 2009 study, Accelerating Loyalty – specifically page 29.

1. Mobile is today where social media was 18 months ago and digital media about 5-7 years ago. While there is talk of 2011 being the year of arrival for mobile, marketing organizations still haven’t made changes to support these platforms as much more than an appendage to integrated marketing initiatives.  My prediction: mid-2012 (about a year from now) is when marketers get their act together on integration.
2. Start here: Three varieties of low hanging mobile marketing fruit. Marketers should first stand up a mobile website.  Then, they should be sure they’ve got a mobile search strategy in place.  Finally, they ought to think through all the ways they can use SMS-based marketing, which can be both inexpensive and effective.
3. Mobile search is going to be a really big deal. The rise of desktop search gave marketers a precious peek into consumers’ intent – but only every so often.  Since smartphone-armed consumers (most of whom keep their phones within arms reach 16+ hours a day) will be able to search on the go, marketers will get a more continuous view of consumer intent, often layered with the extra dimension of location.  As it happens, consumers use mobile search much closer to their points of decision-making—even more powerful than getting a Google user to click on your ad from her desktop, where she may be doing research a week out from her purchase decision.
4. Rule of Thumb: spend at least as much promoting and distributing your mobile execution as you do developing it. Too many marketers are taking the Field of Dreams approach – build it, and consumers will come -  with their mobile executions.  The vast majority of time, they don’t come.  Spend as much promoting your execution as you do building it.
5. A mobile bandwidth “day of reckoning” cometh.  Soon-ish. Mobile bandwidth is growing at a gentle linear rate.  Mobile data demand is growing exponentially—more consumers are getting smartphones, and those smartphones are ever more data hungry.  Somewhere 24-48 months from now, we will be facing some really big bandwidth problems.  Implication for marketers: make your mobile executions simple simple simple.
6. Mobile Thunderdome: apps vs. great mobile websites. I’ll spare you the “two enter, one leaves” cliché. Six to twelve months ago, before Android really took off, emphasis was on doing your mobile execution as an app (of the iPhone variety, mostly).  Since the market share of mobile operating systems has evened out with the arrival of Android (and to a lesser extent Windows Phone 7, now more significant with the Nokia partnership), opinion seems roughly split on the ROI of just doing a great mobile website (which anyone with a smartphone could access) and having to develop app versions for 3 or more mobile operating systems.
7. Mobile will lead marketers to give their segmentation approaches a fundamental rethink. We all know the relevance bar on mobile is far higher since the device is so personal and context dependent.  But, the amount and type of information available to marketers via mobile interaction also jumps dramatically.  Marketers will have all manner of variables related to time and GPS location potentially available.  So, your formerly demo/psychographically designated “Friendster Fran” segment may become “Friendster Fran at the mall on Saturday”.  That will require more advanced data infrastructure, analytics, planning and targeting approaches.  But the rewards of getting it right are potentially large.
8. Rewards, anyone?  Huge upside value for marketers in mobile loyalty/relationship-marketing. At the most basic level, mobile can help the average consumer manage her 27 loyalty programs.  But at a much more advanced level, marketers can create all sorts of unique experiences and high touch services for higher tier loyalty customers by weaving mobile data into their CRM databases.  Prepare for a giant database goldrush, as marketers scramble to gather mobile phone numbers and opt-ins, much like the rush in 1995-97 when consumers were establishing email addresses.
9. Mobile harmonizes traditional and digital media. It’s as simple as realizing that consumers will be able to scan (with QR code and the like) or otherwise recognize anything from billboards to in-store display via their mobile phones to unlock a richer, mobile interactive experience.  That will enable marketers to get their target consumers to traverse the purchase decision path much more quickly, potentially. Amusing sidenote: QR codes are already starting to show up on tombstones, allowing passersby to experience a multimedia obituary of sorts.  I suppose that could mean QR has jumped the shark.
10. Incoming!!!  Brands and retailers fight third parties for point-of-purchase attention. The point-of-purchase battle is joined.  Consumer goods marketers are partnering with retailers to develop in-store apps to “help” the consumer navigate the store and make purchasing decisions.  Of course, those marketers and retailers are hoping their branded app will displace Red Laser and Amazon Price Check as the consumer’s preferred app in the shopping aisle.  Color me skeptical.

Bottom line: it’s a fascinating time to be a marketer!  Much more on mobile marketing to come from the Council in the next few months.  In particular, mobile is shaping up to play a starring role in our major B2C research initiative this year, which is focused on how the best brands shape the consumer decision journey.   MLC members, reserve your seat now for the premier presentation of the research insights and best practice case studies in New York on May 26^th.

And sell athletic shoes, they did – capturing 50% of the market by 1980, before beginning large-scale advertising or even going public. But success attracts competitors and creates depressed margins, and as other companies got into the shoe game, Nike branched out to apparel, dress shoes (via an acquisition of Cole Haan), and niche sports (hockey, skateboarding).

But with the introduction of Nike+ in 2006, the company began selling something radically different: it began offering users a social platform, a place to connect with like-minded people from around the world. Sure, that platform will sell an awful lot of shoes – but for the thousands of Nike+ members, the social experience is the product and the shoes are an afterthought.

Beyond the platform itself, which remains extremely impressive from a technical perspective, the Nike+ community was an ingenious marketing move by Nike: for those who bought running shoes from the company in the first place, it was an opportunity to reinforce the brand relationship on a daily basis; for those who didn’t, it was a chance to get a piece of Nike hardware in the shoe anyway. As an avid runner, I’ve performed shoe surgery on several occasions to fit a sensor into a non-Nike shoe.

We’ve noted this trend playing out across the consumer space: players in industries from music to kitchen appliances are hoping to leverage the power of their userbase to create positive switching costs.  But there’s a big risk in putting your brand in the hands of a broad community: people aren’t always nice or helpful, they occasionally act in illegal or unethical ways, and even the majority who act in good faith can be thrown off by poorly-aligned incentives or bad design.

If social platforms are the products of the future, it stands to reason that community designers and managers are the marketers of the future – the ones who make interaction with the brand a useful, fun, and safe experience.

So what makes a great community manager? Academically,  a background in social science or humanities helps. Personality-wise, tech savvy, patience, understanding and meticulousness (for enforcing, to the letter, what can be arcane rules that govern interaction on the platform) are all important. A strong eye and brain for how people communicate on the web is essential.

Stay tuned in the coming weeks for more on how to design optimal user communities. In the meantime, MLC members can check out our social media resources and our work on radical innovation, which includes information on social platforms as lock-in devices.

Interested in other emerging marketing roles? Get a free copy of our profile of the New Media Ringmaster in Harvard Business Review.

While the report is a look at the key management activities across the executive suite, and not just for marketers, MLC members have an immense role to play in helping build the culture of intelligent growth. The first management discipline our team identified in building the intelligent growth organization is customer experience innovation – a marriage of product innovation and selling flexibility that achieves breakthrough revenue growth.

But how do you get there? CEB asked the best customer experience innovators and found two common factors: they focus on reinventing the buying experience for their customers, particularly their key accounts; and they use social media to activate latent brand advocates.

The report is a potent reminder of just how instrumental marketers have become to corporate success. In austere times, when governments and consumers are reducing their budgets and paying off debts, the drive on behalf of buyers towards commoditization can be particularly destructive. Marketing leaders’ success or failure in differentiating their companies through customer experience innovation could mean the difference between an intelligent growth organization and one where growth is anything but certain.

I could share more, but that would be giving away the store, right? If you’d like to learn more, please consider joining us for a webinar the second week of December. We’ll have sessions for all time zones from December 7-December 9. It’s open to members and non-members alike. To get a copy of the report, click here.

Fortune spends a lot of ink (or pixels, I suppose) analyzing aspects of Trader Joe’s success. It’s a good article, but what has made TJ’s such a cultural phenomenon isn’t too difficult to discern. I’d separate it into a few key buckets:

1) Take care of your people

At the large grocery store around the corner from my apartment, pay starts in the low teens per hour. Not so at Trader Joe’s, where full-time associates start between $40,000 and $60,000, and store management can earn salaries in the low six figures. The company also contributes over 15% of employees’ gross income into a retirement account.

But the benefits go beyond pay. TJ’s stores are small, and don’t require multiple layers of management. According to a study done in Los Angeles-area TJ’s stores, employees are trained in many aspects of store operation and feel empowered to make decisions – leading to a collaborative and energetic in-store culture. The results are easy to see – TJ’s has an estimated full-time turnover rate of 4%, much lower than traditional supermarkets.

2) Take care of the customer

When you take care of your people, they’re much more likely to take care of the customer – and that’s just what happens at TJ’s. The depth of the company’s customer orientation is impressive – listening to the customer is much more than a slogan. TJ’s gives no-questions-asked refunds, gives out cookies at store openings, hands out baskets to customers with their hands full, and indicates popular products with in-store signage. Store employees aren’t told the margin on their products, so placement is based on customer needs, rather than profitability. The cross-training mentioned above means that every employee knows where everything is – and will walk you there when you ask, rather than pointing. The result is a fun, casual atmosphere where shopping is enjoyable, rather than a chore.

What’s perhaps more important, though, is that TJ’s knows who its customers are – doing seriously innovative market research to determine if a given area will be open to its freewheeling gourmet ethos. Beyond the typical variables like population density and educational level, TJ’s looks at things like subscriptions to high-end cooking and culture magazines to find critical masses of foodie customers.

3) Keep it simple

What’s perhaps most notable about TJ’s is the size of the stores – typically much, much smaller than the average supermarket. Inventories reflect this: while many grocery stores stock 50,000+ SKUs, TJ’s carries around 4,000, most of which are private labels. Fewer SKUs and fewer brands means less customer effort, something our sister program, the Customer Contact Council, has found leads to better results in a call center setting.

But it also matters that parent company Aldi, which bought TJ’s in 1979, hasn’t tried to micromanage the brand or the culture and has instead let it grow organically (hah!). TJ’s corporate parents visit their US headquarters once a year.

Make no mistake – Trader Joe’s has a very favorable market condition. A major recession has left consumers cash-strapped, while concerns over health and the environment have inspired high-end eaters to embrace nutritious, organic, and locally-sourced foods. Any retailer combining the two would have succeeded in this climate, but the depth of Trader Joe’s success speaks to a serious marketing strategy executed well.

What else do you think TJ’s has done right in generating this kind of cultural cachet? What has parent company Aldi done right in making sure the brand is protected?

MLC members, for more on how your peers have managed the kinds of challenges Trader Joe’s faces, please visit our customer experience and product management topic centers.

By Erin Lynch-Klarup

Advocate amplification will always have a place in the B2B marketer’s toolbox, especially as the trend toward consensus-buying strengthens.  However, shortcomings of the strategy in today’s environment are causing marketers to scrutinize the investment.  Three factors seem to be sapping the power of advocate strategies.

#1 Ever More Customer Stakeholders Are Involved in Deals

This key change in customer buying behavior (noted in this Sales Executive Council post) makes an advocate’s job much more challenging.  Coming out of the downturn, businesses are keeping a tight fist on the moneybags by increasing the number of folks needed to sign off on a purchase or bringing in outside consultants to audit deals.  These moves severely limit an advocate’s capacity to influence broadly and deeply enough.

#2 Insight-Led Sales Require More Work from Advocates

We’ve found in previous years of research that customer loyalty is built by delivering insight.  In an increasingly commoditized world, insight-led marketing and sales (reframing the way the customer assigns value to things you excel in) is critical in driving an understanding of differentiators.  So an insight-based conversation is the best… but also requires the most peripheral knowledge from the advocate.  Convincing advocates to invest the time to understand insights to a point where they can teach others inside their organization is a tall order.

#3 Even Enthusiastic Advocates May Not Be Up To the Challenge

Insight-led sales and marketing engagement are very different from old world product/feature selling.  A marketing insight approach requires broad conversation and a willingness to challenge customer beliefs and assumptions.  Many sales reps struggle with this style.  Even loyal advocates may not be able to have this kind of challenge-oriented dialogue with internal counterparts.

So what’s next?

As the returns on investing in advocates become more questionable, we see an increased need for the value of a company’s solution to speak for itself.  This means that marketing content should be:

#1 Self-Evident

Simplicity and brevity have never been more important.  Whether it’s a value calculator, diagnostic questionnaire or customer reference video, it should only take 30-seconds for a prospect to grasp the salience of an idea.

#2 Highly Credible

Content that embeds social proof or incorporates the customer’s own information and data is the best way to go.

#3 Memorable

As the length of many purchase cycles extends, the value you provide needs to stay fresh in the customer’s mind.  One way to increase recall is by providing concrete solution steps.  Another is with (appropriately self-evident) case examples that bring underappreciated customer problems to light in a tangible way.

Interested in learning more?  Register to attend one of our upcoming executive meetings about reshaping customer decision criteria to your advantage.