The Zappos Approach - Why aren't Other Companies Following Suit?

Zappos is renowned worldwide for exemplifying exceptional customer service. The company's founder and CEO Tony Zappos wrote a book, Delivering Happiness, that was listed on The New York Times Best Sellers list for 27 consecutive weeks.  In fact, I include this book as required reading for my online marketing course at Columbia University, School of Continuing Education.

“Zappos invests in the call center not as cost, but the opportunity to market,” Joseph Michelli told me. He also wrote a book about the company's model called The Zappos Experience. Oddly, few companies heed their example.

So how do you create this Zappos-like culture. It starts with the basics – performance metrics.

It's About Total Call Time 
Zappos’s longest call on record lasted more than eight hours, and guess what? This interaction was lauded by leadership as a stellar example of serving the customer.

Instead of valuing quick time to resolution or processing high call volumes, Zappos looks at the percentage of a time an agent spends on the phone. Agents are expected to spend at least 80 percent of their time in customer-facing communications. This measure – called personal service level – is a way to empower the team to utilize their time how they see best promotes customer loyalty.

Wow Moments Are Rewarded
Zappos measures calls against a 100-point scale called the “Happiness Experience Form.” This is based on answers to the following questions:

1. Did the agent try twice to make a personal emotional connection (PEC)?
2. Did they keep the rapport going after the customer responded to their attempt?
3. Did they address unstated needs?
4. Did they provide a “wow experience?”

Agents are expected to achieve a 50-point average or higher. Agents earn incentives for meeting their goals, while under performers are required to take extra training.

Idle Chats Are Important
Zappos monitors “abandonment time,” or periods when an agent has a session open even though the customer already disconnected from the chat. Customer Loyalty Operations Manager Derek Carder said sometimes agents do this purposely to avoid responding. This strategy of looking for idle chats zeroes in on the cause of unproductivity. When agents aren’t productive, customers wait longer. And the longer they wait, the more apt they are to abandon the session.

Improving Performance Through Attendance 
Zappos uses a program called Panda to combat absenteeism. Employees receive a point for every day they miss work or come in late. Staff with zero points in a given period receive a varying number of paid hours off. These hours can be accrued and stacked for an entire paid day off, Carder explains.

The primary take away is that Zappos created metrics that emphasize creating a relationship with the customer rather than rushing them through the call. At the same time, these KPIs still successfully improve performance and make employees feel appreciated and rewarded.

Ashley Furness is a market analyst with Software Advice. She has spent the last six years reporting and writing business news and strategy features. Her work has appeared in myriad publications including Inc., Upstart Business Journal, the Austin Business Journal and the North Bay Business Journal. Before joining Software Advice in 2012, she worked in sales management and advertising. She is a University of Texas graduate with a bachelor's degree in journalism.

It's no surprise that JC Penney has tweaked their pricing strategy again

I just read an article from Fox10TV.com that mentioned JC Penney has tweaked their pricing strategy again.

My June 20th post questioned the validity of the new "fair and square" strategy, as it required consumers to change their shopping behavior.

When I stumbled upon the latest news regarding "updated" pricing effective August 1st, I had to chuckle when I saw the following quote...

"We thought: 'Why are we trying to teach customers new language to shop?'" he said. "We're just trying to be straightforward."


I agree.  Clear and concise messaging is the ideal way to attract shoppers.
The company is also changing it's advertising to reflect a simplified message just in time for back to school shopping.  After JC Penny watches the impact of their updated strategy on revenues, they will have more data to determine if the tweaks were effective enough to ring in a prosperous holiday shopping season.  It will be interesting to see how Wall Street reacts in the coming months.

Global Social Media Check-up 2012 from Burson-Marsteller

Here is an insightful report from Burson-Marsteller on Global Social Media trends for 2012.  I will be sharing this with my students for the Fall semester.

Burson-Marsteller looked at corporate usage of Twitter, Facebook, YouTube, Google+ and Pinterest.

• 2010 social media usage began
• 2011 engagement with users grew stronger
• 2012 10.4+ million mentions of Global 100 brands in just one month

What are the top 10 brands mentioned?

• HP
• Ford
• Sony
• AT&T
• Samsung
• Toyota
• Honda
• Walmart
• BP
• Verizon

 Interesting to see 3 of the top 10 brands are automobiles.

Curious about the rest of the findings?  View the Infographic for a quick glance at their findings.  Read the Executive Summary for a high level view.

The Social Media Revolution 2012 Video

This video is a favorite amongst my students.  Erik Qualman author of "Socialnomics: How Social Media Transforms the Way We Live and Do Business", put this video together.  It's a continuation of Carl Fisch's "Did You Know" series, that I've admired for years. (I'm happy to say that Carl Fisch is a Computer Science teacher here in Colorado, and I was fortunate to have met with him in person several years ago.)

This video addresses that social media is not a fad, hype or a buzz word.  It's an effective means of communications to assist organizations in their 1-to-1 dialogue with their customers.  The focus is to move away from broadcasting your message to the masses, and narrowcasting to those who want to know about your brand, and will more than likely become an advocate for your brand.  The video provides interesting statistics and insights.  Enjoy!

J.C. Penney’s pricing strategy - will it succeed?

Last January, J.C. Penney announced the roll out of its “Fair and Square Everyday Low Pricing Strategy.”  Six months later, the company president, Michael Francis, exits the company  after taking over the helm last October.  Francis was a former Target Corp. executive. 

I spent some time in the investor relations section of the J.C. Penney website to see if I could identify early warning signs for why the strategy may have gone astray.  I reviewed their SEC filings, annual report and sales presentation from Q1. I could hear an optimistic rally cry that 2012 was going to be the year J.C. Penney rejuvenated it’s 110-year old brand.

It’s almost as if the company used a retailer checklist to tackle their rebrand and fresh new approach…

• New, hipper brand identity to replace the original stuffy one:            Check!
• Change store layout and design, create a modern concept:                   Check!
• Add new recognizable brand names to the product mix:                          Check!
• Expand home accents and furnishings:                                                         Check!
• Convince customers that coupons and discounts are tedious:                            Ooops! 

Although I appreciate they landed Ellen Degeneres to promote the new pricing strategy, J.C. Penney didn’t anticipate that her "Main Street America" appeal, wasn’t enough to convince consumers that the everyday low prices were truly going to save them money and provide the best deal.

Our society has been conditioned to look for the best deal possible.  "Paying retail?  Be sure to load up with coupons, cash in rewards, pre-pay, or find a promo code to use online."

• TV shows such as “Extreme Couponing” are educating America that you don’t have to pay more than a couple of dollars (if any at all) to get $1,500 worth of groceries, simply by clipping coupons from newspapers and mail flyers. 
• Rewards points are cashed in for free coffee from Starbucks, free airline tickets, hotel rooms and car rentals, and other goods and services.
• Groupon and LivingSocial have shown us that we can get a great meal, vacation, shopping spree, or just about anything, for less than half the cost if we purchase it in advance.
• Websites such as Retailmenot.com and promotionalcodes.com provide us with promo codes to shop online and get free shipping or a percentage off your entire shopping cart.
• Retailers such as Bed, Bath and Beyond allow you to bring in a fistful of coupons to use 1 per item purchased, even if the coupon has expired. 
•  Finally, grocery stores show us how saving 25-35% off your entire grocery bill is easy, simply by swiping your rewards card or entering the phone number associated with your account.  On top of that, your dollars spent contribute to additional discounts.  If you buy gift cards, you can earn 4x the points for fuel discounts at the pump.

Everywhere we turn, we are inundated with messages to save money and get the best deal.  We don’t actually believe that the price on the tag is necessarily the final price we’ll pay at the register.  We want to see the savings appear at the cash register screen and then print out on the receipt.  This psychological approach can actually release endorphins, giving us “buyer’s delight” rather than buyer’s remorse.  

So when J.C. Penney decided to do away with what society has come to love and embrace - using coupons, rebates, rewards, pre-paid gift certificates, promo codes, etc. – they are interfering with that “feel good” sensation. 

According to today’s Wall Street Journal, J.C. Penney will tweak their messaging, not their strategy.   How long will it take for them to drop the strategy completely?  Everyday low prices may work for Walmart; they serve different market segments.  Time will tell if message “tweaks” were effective.  I don’t think the decline in 2012 sales is tied to J.C. Penney’s messaging.  I believe it’s tied to the pricing strategy.   Convincing their target audience that what they see, is the best deal they can get, is going to be a challenge that they may not be able to overcome.  Perhaps J.C. Penney is going to target different or new market segments with this new messaging.  Perhaps these segments will be convinced.  I believe it is unlikely that the majority of their customer base will buy it.

When you’re looking for a job, package yourself as a product unique from all other products. Sell your personal brand to land the job.

The national unemployment rate is 8.2 percent. According to a recent Bloomberg article, the breakdown reveals that nearly half of the states in the U.S. are equal to or higher than 8.2. That means if you are looking for a job, you are up against significant competition.  What can you do to stand out?  Establish your personal brand.  Do you articulate your value proposition as well as you could be?  Is your value proposition similar to everyone else competing for the same job?   Applying marketing concepts to your personal brand is a direction you can take.

You can apply these concepts when you are looking for a new job, planning to transition into another career or even climb higher in your existing career.  

The book “A Brand Called You” written by Peter Montoya and Tim Vandehey is a guide that can walk you through this process and is definitely inspiring.

Another inspirational resource is Denver-based speaker, Jung Park. 

 He’s a good friend of mine who travels across the country to educate organizations and college students about how to discover your personal brand.  One of his keynote topics is “Finding Your North Star: Using Identity and Passion to Find Success.”  Jung has helped many navigate their way to achieving personal goals.


Once inspired, it’s time to get introspective, which can be difficult or daunting for many.  Particularly if you are stressed out from diligently submitting your resume to dozens (or hundreds) of open job requisitions and you haven’t received a response.  Your resume may be getting stuck in the sea of resumes that companies receive every day. 

It’s important to revisit the value that you bring to an organization.  It’s more than where you’ve been and what you’ve done in the past.  It’s about how you can walk into a new organization and begin to deliver value immediately.  Position yourself as a better “product” and communicate effectively the value you deliver.

If we apply marketing concepts used to sell products and services to your personal brand, we can begin with the Marketing Mix, or 4 P’s.  Product, Price, Place and Promotion.  The “product” is you, your brand and your value proposition. Your personal brand is about your entire package, ranging from resume, cover letter, LinkedIn profile and other social media profiles, to how you physically present yourself.  The “price” is the salary or consulting fees you are looking for.  “Place” is where you deliver your brand.  It can be within an organization as a full-time employee, or as a consultant/freelancer working from home, etc.  “Promotion” is how you communicate your brand.  What you say (your content strategy) and where you say it (communications vehicles).

Bottom line - figure out your strategy.  Fine-tune and crystalize “you” as a product and define your value proposition. Let people know you exist. Similar to corporations building awareness of their products and services to customers, you need to build awareness of your product/services.  What’s your plan? Where do you start?  Begin by writing your story about delivering value.

How you present and package that value is up to you.

Navigating Your Way Through the Marketing Environment to Manage Risks

A recent Harvard Business Review article “ManagingRisks:  A New Framework” (June 2012) states “risk events are fatal to a company’s strategy and even to its survival.”  The article categorizes risk into three categories:

1.      Preventable risks (internal risks that should be eliminated or avoided)
2.      Strategy risks (high risk/high reward; a key driver in capturing significant gains)
3.      External risks (macro-environmental events outside the company beyond its influence or control).   

Preventable risks are managed with internal controls and operational processes.  Strategic risks often leverage scenario-planning tools for measuring probabilities of various outcomes via risk management systems.  External risks are not preventable but they can be identified with proper monitoring of the macro-environment.  Establishing early warning indicators are key to adjusting and responding to what is happening in the marketplace.  As we know “hindsight is 20/20” but prevention and avoidance of potentially fatal events because you could prepare for their impact, needs to be part of an organization’s day-to-day operations. 

As the HBR article aptly points out “...people overestimate their ability to influence events that, in fact, are heavily determined by chance.  We tend to be overconfident about the accuracy of our forecasts and risk assessments and far too narrow in our assessment of the range of outcomes that may occur.”

I agree that often times executive management tends to have a bias that supports their preconceived notions about the future state of their particular industry.  Information that proves to be contradictory is either ignored or used to hasten their course of action down the wrong path.    I’ve seen this occur throughout my entire career, and now studies have proven this risk aversion exists and companies continue to “throw good money after bad.”

I believe by hiring experts within an organization to monitor, analyze and provide insights back to management, is essential for company, marketing and product strategies.  Collaboration and communication with various departments or functions within the organization is key.  The insights need to be communicated in order for informed decision making to occur. 

As I look back at major brands that are no longer in existence today, I wonder if they had the right people on board and processes in place to identify risk events and establish early warning indicators, so they could create a plan of attack to mitigate the risks and keep the organization on the path to profitability and sustainability.  Brands such as Pam Am (1991), Wang Labs (1992) Lehman Bros. (2008), Blockbuster (2010), etc., were market leaders in their industry yet their demise came anyway.  If we look at “Porter’s 5 Forces” you can see that competitive assessments need to go far beyond the cursory SWOT analysis and feature-to-feature comparisons.  It’s about understanding the competitive rivalry in the industry; look at existing competitors, identify threats of new entrants or substitute products, as well as the bargaining power of suppliers and customers. 

Porter’s 5 Forces uncovers just one piece of the puzzle.  The other pieces of the puzzle include political, technological, sociological, environmental and economic forces, just to name a few.  However, this is just the beginning to understand and view the entire picture of what is occurring within your industry, and with your direct and indirect competition.  Navigating your way through the marketing environment isn’t rocket science, but it does require the right level of expertise.  It also takes empowerment from the executive team to report and share insights across the entire organization for making informed decisions.  Today, companies cannot afford to throw good money after bad.  They need to be strategic and mitigate risk as much as possible.  Otherwise, their brand may be added to the “brands that no longer exist” list.

The 2 Main Questions to Address When Creating a Marketing Strategy

strat·e·gy/ˈstratəjē/

1  -   A plan of action or policy designed to achieve a major or overall aim.     -    The art of planning and directing overall military operations and movements in a war or battle.

The development of a strategy may be daunting for most organizations.  Common questions include:

“Where do we start?” 

“We came up with a great idea for a product (service, app, etc.).  Can’t we just build it,  put it out there, and see what happens?”

That’s fine if you don’t know where you want to go or how you should get there.  I wonder how many individuals randomly purchase a ticket to hop on a plane to go some where, not knowing what they’ll do when they get there, or how they will manage once they get there.  Perhaps there are some fly-by-the-seat-of-your-pants types of individuals out there, but most select a destination, prepare some sort of itinerary and purchase the ticket. 

I advise  a lot of start-up organizations, including graduate students developing business plans for their own potential start-up.  They all have one thing in common - a great idea.  The idea is that they’ve come up with a “bigger/better/cheaper/faster” type of product or service than what currently exists in the marketplace.  Perhaps at a cursory view of the business problem/pain point they are trying to resolve, it is better, bigger, faster, etc.  However, once they take a closer look at the competitive and industry landscape, the result is that they need to go much deeper with the product development.  Establishing a marketing strategy from the onset will save you a lot of development time building the wrong solution.

There are two key questions to address when developing a marketing strategy:

•       Which customers will we serve?  (involves segmentation and targeting)
•       How will we create value for them? (involves positioning and differentiation)

“STPD” is an acronym to use to remember the main components to address.

“Segmentation” – select the market segments you will serve.  It can be grouped by geographic, demographic, psychographic, behavioral, etc.  Most important, the segment should be measurable and large enough to earn a profit.  Understanding the size of your markets is important.  Also, they need to be reachable so you can communicate how/where they can purchase your product.   Once you select and understand the market segments (“target markets”) you are going to sell to, it will help you define your marketing program.   

“Target Marketing” -  there are four basic strategies to address target markets:  

•        Undifferentiated marketing (mass marketing)
•        Differentiated marketing (a very clear competitive advantage)
•        Concentrated marketing (focus on a very specific target market)
•        Micromarketing/ Niche marketing. (subset of a market segment; addressing the needs of a small group)

“Positioning” – create an identity, or impression, in the minds of your target market.  Focus on separating your product and brand from the rest of the pack.

JackTrout first addressed the concept of positioning back in 1969 with his paper in “Industrial Marketing” - Positioning" is a game people play in today’s me-too market place."

“Differentiation” – is a source of competitive advantage.  Create a product/service that separates you from the competition, and is attractive to your target markets. 

A quick way to see if you truly are unique compared to your competition is to take the marketing collateral (one sheet, sales sheet, etc.), cover up your branding and read the content and ask yourself “Can our competitors say the same thing?”  I’ve found that 9 out of 10 times, the answer is “yes.”  Most companies believe they have done an excellent job in creating something unique, but the reality is, it’s not.  

Where do you go from here?  Take an unbiased look at your marketing materials as well as your products and services.  What value are you truly delivering?  Ask your customers why they use your product, what could be improved, etc.  Listen to what they have to say and incorporate that into your product development.  Take a look at what your competition is saying in the marketplace.  Finally, take a look at what’s being said by the media, industry analysts, bloggers, and more.  Analyze and synthesize the data to glean insights that can help your organization get to the next level.  There are a lot of great ideas out there.  It’s how they are executed in the marketplace that will determine how successful and profitable your organization becomes.

Zappos Creates Value that Truly Develops Customer Loyalty

For the past 3 semesters, I’ve been fortunate to have a senior member of the Zappos Customer Loyalty Team guest speak in my Intro to Marketing & Marketing Management course for graduate students at Columbia University.  

The Zappos case study is an exemplary way to showcase a company that understands what “value” is all about.  Add “Delivering Happiness”, authored by Tony Hsieh, CEO of Zappos, as required reading for students, and they quickly see how the value proposition is providing a “Wow!” experience. 

Zappos is doing something right.  FORTUNE magazine has included them on their list of “100 Best Places to Work” for the past four years, most recently at #11.  A company that focuses on delivering the best possible service and experience to customers, mirrors that philosophy in how they treat employees.

Some may say that Zappos is the biggest online shoe store.  They wouldn’t be incorrect since the company has more than 5 million products in their warehouse, ready to be delivered at a moment’s notice.

Others may say that Zappos is one the biggest online marketplaces, selling shoes, apparel, accessories and many other types of products.  That is true as well. Zappos carries more than 1,000 brands, over 200,000 styles, and over 900,000 unique UPCs.  100% of their products are inventoried in their robotic warehouse in Kentucky.  

However, Zappos defines themselves as “a service company that happens to sell clothing, handbags, shoes, accessories, housewares….”

The company’s #1 core value is “deliver WOW through service.”  That’s the true value proposition.  Zappos doesn’t call their call center a customer service department, it is the customer loyalty department.  The 500+ person team will grow to more than 600 by the end of this year.  Unlike traditional call centers, the Zappos team doesn’t have call time limits (in fact, their longest call was 8 hours and 28 minutes, but that was an extreme outlier).  The team doesn’t have any sales performance goals. They are there to satisfy their customers, period.   They do so via phone (which they love), live chat, twitter, email, zappos.com and other social sites.

The proof is in the pudding. 

·      Customers come bac. – approximately 75% of purchases are from returning customers.

·      Customers come back, order more often – repeat customers order >2.5x per year.

·      Customers come back, order more often and order more – repeat customers have higher average order size vs. 1^st time customers

·      Another interesting fact is that their most profitable customers are those that have the highest product return rates. 

It’s no surprise that Zappos hit $1B in revenues prior to their 10^th anniversary and revenues continue to grow exponentially today.  Since the company has been transparent about the key to their success, I continue to wonder why other companies haven’t embraced  service and loyalty as their value proposition.  After all, the key to sustainability is about creating value for your customers and building long-term, profitable customer relationships.  Zappos has the formula for how to do it right.  When will this type of focus become the norm, rather than the exception?

Social Media Marketing Magazine's Top 100 Twitter List

I've been following the Social Media Marketing Magazine's "Top 100 Marketing Professors on Twitter list for a while now.

I was informed today that I became #19 on the list.  How exciting - thank you SMMM!

I'm a firm believer that Twitter is a powerful communications tool.  Yet it is still underutilized by the majority of SMBs.  I continue to hear push back from executives and marketers within organizations about social media becoming a core component of their communications strategy.  "I don't get it..." is the most common statement, followed by "our customers don't use it".  If only they truly knew the habits of their customers.  After probing about the reluctance to use social media in general, the root cause typically ends up being resources.  It requires attention from someone (or an agency) to initiate a dialogue, monitor the conversations and keep the engagement flowing.  I chock that up to not wanting to add something new to an already overflowing plate. I get that.  However, social conversations about products and services will continue regardless of the resources an organization has to monitor it.

My advice is to embrace the technology (from the top down), create guidelines on what can and cannot be shared (excluding proprietary information of course), and identify resources (internal or external) to lead the effort.  Listen to what your competition is saying.  It will give you a baseline for where to start.  Jump in and get started and adjust accordingly as you learn and grow.  Monitor industry analysts and media and retweet when appropriate. Soon you will become a thought leader with followers that monitor your conversations.  All it takes is that initial step - embrace the technology.

Tune out the Noise and Tune into Conversations Meaningful to you via Social Media

I remember how excited I was when Google Alerts first came out.  I signed up for updates on many keywords so I didn’t miss out on anything, and had them delivered “as-it-happened.”  Then I realized I had to switch to the daily digest to try to manage everything hitting my email inbox.  Soon I started to ignore my alerts altogether.  Google Alerts is a great tool to “pull” information I was interested in, into my inbox.  As soon as I started to tune into a variety of social media networks, my inbox was constantly full and I became addicted to checking my email every couple of minutes from the moment I woke up in the morning, until I went to bed at night.  I was in a quandary.  I really loved having instant access to updates in my industry or with competitors but I was drowning in the fire hose. 

I looked for ways to just tune in to what I really needed to know, and tune out what I absolutely didn’t have to pay attention to every minute of every day.  Eventually I discovered what my favorite tools were for tuning in (or out) – Twitter, Google Reader, Google+ and Unroll.me. 

Twitter

        Turn Mobile notifications on for individuals, media outlets or competitors that you need to have up-to-the-second information from.  I use this personally and professionally.  I receive a text message when my teenage daughter tweets, and when my favorite media outlets and bloggers tweet.  I can quickly retweet and share with others.  This makes a lot of sense when your twitter feed consists of the posts from the 8k+ people and brands you are following.  You can never keep up with your twitter feed.

Ø   Lists – there are a lot of media outlets and competitors that I don’t need to have notifications up-to-the-second.  So I group them into lists and I can quickly scan my list of media & analysts or competitors.  And within a couple of minutes I can peruse all of my competitor’s tweets for the past several hours  or days (depending upon how frequently they tweet).

  Keyword Monitors – how do I know when someone has tweeted about me or retweeted a tweet or even DM’d me (direct messaged me)?  All it takes is to set up the twitter names and keywords you want to monitor and you will receive a digest of it as often as you’d like (I set up daily).  It’s a great way to tune into a conversation about “spring skiing”, “spring break” and even “staffing industry”, which I’m monitoring right now.  Type in the twitter name for an individual or brand, as well as any keywords  you don’t want to miss out on.   There are many tools that can do this for you, but my favorite is SocialOomph.com.  You can even schedule tweets for the future, saving you more time.

Google Reader

There are so many interesting and informative blogs and websites out there that provide content that is meaningful to me.  How can I possibly read them all?  I don’t have to.  Bookmarks are great to remember the web sites you would like to go back to later, but it’s not an efficient way to read through news headlines.  Sign up for RSS feeds via Google Reader if you are already using Gmail, Google+, Google Play and more.  Everything will be accessible from one place.  All your favorite blogs & sites appear in the left nav bar and if new content exists, it becomes bold.  Now you can scan and quickly click on the latest headlines that interest you.  I know folks use aggregator sites but I find Google Reader to be a quick and easy way to read 50 different sources in just minutes.

Google+

I’m moving from Facebook to Google + because I like the privacy controls.  You can create circles of all the brands, individuals and media outlets you are interested in.  I can push out, and pull in information from my various circles, whenever it is convenient for me.  I often find things posted in Google+ that are not available elsewhere.  It’s another method to get “inside scoop” – particularly about your competitors!

Unroll.me – I aggregate all of my email accounts into Gmail so I only have one inbox to visit.  I set up all the various signatures associated with each POP mail account, and so far it’s been easy to work with.  However, I have at least 200 emails waiting for me first thing every morning.  Unsubscribing from my favorite retailers and other types of services, proved to be unsuccessful.  In fact, I think it triggered me to get added to other email lists.  So I stopped unsubscribing one by one.  I created rules to send email to my junk or “read later” folder, but more often than not, I missed very important emails.  Then I heard about a new service that is currently in beta – Unroll.me.  It’s an awesome tool that helps you declutter your inbox.  You give it permission to access your Gmail inbox and then it sorts everything for you and provides a list to either unsubscribe with a simple click, or roll it up into a daily digest.  I went from over 200 subscriptions down to 21.  I unsubscribed from 112 emails instantly, and have the remaining 100+ now come as one digest message that I can simply scan headlines and click on the articles that I'm truly interested in.  I absolutely love it!  I’ve been using it for a couple of days and I’m already thrilled with the quality of the service.  A more manageable inbox means I’m no longer a slave to my inbox.  It’s about time!

Netflix DVDs More Lucrative Than Streaming

Harvard Business School wrote a case study about Netflix in 2007 and revised it in 2009 (Shi, Kaufman, Spinola).  It's time for the 2012 update.  

I include this case in my Intro to Marketing/ Marketing Management course within Columbia University's Business Certificate Program.  This case has been the most robust and engaging discussion for the past three semesters.  There are many lessons learned.  Our discussion is focused on product strategy, keeping a pulse on your target market's wants and needs, and monitoring the marketing environment.  It's interesting to discuss how Netflix addressed the convenience of having DVDs delivered to your mailbox and the ease of returning DVDs via U.S. mail.  It took a toll on Blockbuster as we saw DISH Network buy the company's assets for $228M in cash in April 2011 at the bankruptcy auction.   Blockbuster didn't respond quickly enough and aggressively enough to compete with the likes of Netflix.  

Last August, we watched Netflix flail after they made the decision to split the company into two businesses - Qwikster for DVD rentals, while Netflix would focus on streaming movies.   Subscribers would have to go to two different websites and pay two separate bills.  The subscription fee was $7.99 for each service; double the existing subscription price.  Consumer outrage began.  Within 3 months (October 2011), the company realized they alienated their customer base, and retreated on the strategy.  I was fascinated by the arrogance of the company right when competitive pressures were heating up from Amazon, Hulu and Redbox.  

Here we are in March 2012 and Techcrunch announced that Netflix has purchased the domain DVD.com.  Netflix states that the purchase is "part of a bigger strategy to improve user experience in the U.S."  Interestingly, the article addresses that the DVD business is more lucrative for Netflix:

Q42011 - 

11.1M DVD subscribers, $370M revenues versus 

21.6M streaming subscribers, $476M revenues.    

There is some overlap between segments, but for those that prefer one method of delivery over the other, having different strategies does make sense.  Once you break down the profiles for the typical DVD consumer, streaming service user and those who utilize both services, you can start to sharpen and fine-tune your messaging and value proposition for each segment.  As I mention in my class, creating value for your customers and building long-term, profitable customer relationships is the goal of a consumer-driven marketing strategy.  Everything in between those two bookends are the basics from any Intro to Marketing textbook.  However, as we have seen with Netflix (and Blockbuster and countless other brands) the basics are often overlooked.  This short cut approach may get a company to one finish line (lots of publicity), but not "the" finish line of having a profitable and sustainable business.

Small Businesses Jump on the Social Media Bandwagon - Where should they begin?

Small businesses often contact me to inquire about the value of social media.

• Can social media bring value to their business?
• Everyone else is doing it so it's about time we get on board.  Where do we begin?
• Our customers are using it, but we don't know how.
• Will it impact my bottom line?  How?
• How much time do I need to dedicate to it?
• Should I hire someone to do it in-house or just outsource to an agency?
• How much does it cost to build and implement a social media program?
• What should I expect?  
• When should we begin?

The list goes on and on.  This post is about my thoughts on the subject.  It doesn't matter if you are B2C or B2B or B2B2C focused.  The approach is the same, the messaging will differ.

Identify your market segments.
Who do you want to communicate to?  Do they use social media networks?  Is there a particular social network more prevalent than the others?  Once you understand who you need to communicate to and how you can reach them, then you can begin to prioritize where you should begin your efforts.  

Create your messaging.
What do you need to communicate?  How often?  Create a calendar of major company milestones and news so you can earmark them into a schedule, then fill in the holes around them.  Special offers and promotions, company news, special events, trade show attendance, articles written in-house, editorial coverage, etc.  Write about all the areas that make your company shine and noteworthy.  Every company has something important to offer, otherwise you wouldn't be in business.  Focus on the value you deliver to your customers.

Begin building the social networks.
Based on your prioritized list created above (where you can reach your customers), start building a company profile on each one.

• Facebook - a business page is definitely appropriate for B2C companies and may be appropriate for B2B companies, depending upon how you use it.  Having a Facebook presence isn't required.  There are privacy issues to deal with.  Your employees may not want to "like" your company page and you may not want your customers to see your employees' pages.   There are plenty of destination places, retail brands and more that are utilizing Facebook as a sales channel, thanks to F-commerce (Facebook Commerce).  But if you're there just to build community, you may look at LinkedIn and Google+ as a better alternative.  Don't just create a Facebook page because everyone is doing it.  That's not a strategy.

• LinkedIn - this is one of my favorite tools for businesses because it has many advantages.  Not only is it a great lead gen tool for sales, but it's a great way to build community with a Company page.  Your customers can "follow" your company, you can post new job openings, highlight your existing employees, showcase your products and services, post status updates that can feed to Twitter, and include other company updates.  Investigate the "Groups" section as well.  Do industry groups that are relevant to your business exist? Perhaps you can create one and create a continuous dialogue with prospects, customers and colleagues.

• Blog - WordPress and Blogger are two fantastic blogging tools that have prebuilt templates and plenty of add-ons or plug-ins to beef up your presence.  The blog is a great tool to provide updates on your product or service, position yourself as a thought leader in the industry and engage in a dialogue with your readers if you allow for commentary on your posts.  The RSS feed will be invaluable in disseminating your information to your potential customers, members of the media, and more.  Have a link to your blog directly from your main navigation on your website.  If you don't have a website, then let the Blog do the talking for you!  Be sure to include your social icons so people can share your posts - tweet, +1 and comment on Google+, email, etc.

• Google+ - I love the simplicity of Google+ and the ability to control who has access to your posts.  You can make the posts public to all, and be found in search engines, you can have circles for your prospects, clients, employees, media, and more.  Post targeted messages to each circle.  Privacy control is the primary advantage over Facebook.  Plus, it's easy for people to share and comment your posts.  

• Twitter - my favorite tool of all.  I think of it as a megaphone to get messages out to anyone who is listening, anyone around the globe.  That's powerful.  Too much noise out there?  Utilize tools to tune in to what is relevant to you.  Just like tuning to 93.3 FM on your radio dial.  Business professionals and consumers are both leveraging tools to access the information that they care about via alerts, lists, text messages, etc.  Socialoomph.com is one of my favorite tools and it allows me to monitor conversations that are happening, so I just listen to what I care most about.  Plus as a company, it provides you the ability to listen in to what is being said about your brand.  This is truly a 2-way dialogue - listening and responding to your prospects and customers.  Twitter is one of the few tools where it doesn't matter how big your budget is to be effective.  That's the beauty of it.

You just need to get started.  Think about the day when you wondered if you really needed to use email or surf the Web.  We've come a long way in a short time. Imagine what social media will look like 5 or 10 years from now.

LEGOs - are they delivering value to their customers with products catered to girls?

You may not know there is an organization petitioning The LEGO Group to stop creating LEGOs for girls.  The product line is called LEGO Friends and features LEGO's that come in girl-friendly colors such as pink and purple.  The kits also come with girl figurines.  The product line was developed after conducting market research for four years with boys and girls to see how they interact with LEGO products.

Tens of thousands of parents (mostly moms) are annoyed that the girl kits come mostly prefabricated, requiring less building of the structure and allowing more play time.

I don't understand the controversy.  The company's market research showed that boys enjoy building while girls primarily enjoy playing.  Hence the company created product lines that better addressed the needs of one of their market segments.   Sounds pretty straight forward right?

When I first heard about the outrage and the petition signing, my immediate reaction was also somewhat negative towards The LEGO Group.  I wondered why they would create a "dummied down" version of LEGOs for girls.  Different colors were fine with me, but pre-building "scenes" for the girls seemed a little insulting.  Then I did my own research.  I looked at The LEGO Group's corporate website to learn more about the company.

I learned the brand name LEGO was an abbreviation of two Danish words "leg godt," meaning "play well."  The company is family-owned and was founded in 1932 in Denmark.  The company has been passed on from father to son to grandson.  It is the 4th largest toy manufacturer in the world, with products sold in 130+ countries.  The LEGO Group's mission is to "inspire and develop the builders of tomorrow."

Their brand values include Creativity, Fun, Learning, Caring and Quality.
My favorite 3 sentences from their brand values are:
"Curiosity asks, Why?"
"Playfulness asks what if?"
"Free play is how children develop their imagination - the foundation for creativity."

I believe The LEGO Group is true to their brand values.  By spending four years conducting market research with their true customer - children - they were able to observe and learn how children interact with their product and listen to their comments about their needs, wants, frustrations, etc.  Note that the research was with the "user" of the product, not the "buyer" of the product.  That is key to fully understand the voice of your customer.  The 35,000+ petitioners who want to stop the selling of LEGOs for girls are not the actual users of the product.   The company is carrying out their mission and doing the right thing by listening to their customers.

The LEGO Group created their "Friends" product line not because they think girls are not smart enough to play with the traditional LEGO products.  Quite the contrary.  The LEGO Group continues to listen to their customers desires.  Over 4 years, the girls communicated what they would like to see in products created for them.  That's where the colors came into play. That's where the "scenarios" for the kits came into play such as the Cafe, the house, etc.  Even the use of larger figurines so it was easier to play with them like dolls.

So as a marketer, I had to ask myself these questions:
1.  Is The LEGO Group creating value for their customers?
2.  Are they building long term customer relationships?
3.  Are they listening and responding to their customers wants and needs?

The answer to all 3 questions is yes.  They are absolutely gathering feedback from their customer base (the end user), and incorporating that feedback into new products to satisfy the needs and wants of one of their market segments, girls. Is it all girls?  Obviously not, but clearly it is for the majority of girls since the product was launched in 2010 and the petitioning has been done in recent months.  The product has been on the market for nearly two years.  Why all the fuss?  Because moms are becoming outraged without finding out all the facts.  How can a product line that engages creativity, fun, learning, caring and quality be so offensive to parents?

Parents seem to forget they have a choice about what to buy.  Many choices actually.  They can choose to not buy the LEGO products for girls or continue to buy "generic" primary colored LEGOs.  Does it really matter that they have a choice?

At the end of the day it's all about The LEGO Group providing products in the marketplace that satisfy their customer's wants and needs.  They have been successfully delivering value to their customers for 80 years, and they continue to do the right things.  Having a choice has become the American way.  Remember in 1909, Henry Ford said "any customer can have a car painted in any color that he wants, as long as it is black."