January 19, 2013
The notion that passing a standardized test qualifies someone for something is completely fallacious. It’s a fallacy based on ignorance at best, and profit at worst.
a. True
b. False
c. No comment
d. Don’t rock the boat
November 29, 2012
This blog has shown before why low wages and benefits are bad business. A Bloomberg Businessweek article by Stanley Holmes and Wendy Zellner shows that there are better alternatives to the Walmart model. The article explains that Costco Wholesale Corp. (COST) continues to beat Wall Street expectations because Wall Street seems to be drinking the kool aid that the ”Wal-Martization of the U.S. economy” is something to be desired – even as it hollows out the middle class and drags down the national economy.
Wal- Mart is appreciated by Wall Street for its poverty-level wages and denial of health insurance benefits to more than half of its 1.2 million U.S. workers because Wall Street apparently believes thatshareholders are best served when employers do all they can to hold down costs, including the cost of labor.
BusinessWeek compared Costco and Sam’s Club (the Wal-Mart warehouse unit that competes directly with Costco) and found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco wins on many measures, including:
According to Bloomberg:
The cheap-labor model turns out to be costly in many ways. It can fuel poverty and related social ills and dump costs on other companies and taxpayers, who indirectly pick up the health-care tab for all the workers not insured by their parsimonious employers. What’s more, the low-wage approach cuts into consumer spending and, potentially, economic growth. “You can’t have every company adopt a Wal-Mart strategy. It isn’t sustainable,” says Rutgers University management professor Eileen Appelbaum, who in 2003 edited a vast study by 38 academics that found employers taking the high road in dozens of industries…Says Costco CEO James D. Sinegal: “Paying your employees well is not only the right thing to do but it makes for good business.”
Who says labor and management must have an adversarial relationship? When they work well together, everybody benefits. Costco is a case in point.
Sam’s hourly average wage for full-timers is $11.52, and the typical Wal-Mart average wage is $9.64. Costco pay its workers $15.97 – which is 40% more than Costco pays.
Costco also pays thousands more each year for health and retirement, including more of its workers in its health care, 401(k), and profit-sharing plans. And labor is appreciative. Rome Aloise, chief Costco negotiator for the Teamsters, which represents 14,000 Costco workers says approvingly that “They take a very pro-employee attitude.”
It’s a win-win. Costco benefits through one of the most productive and loyal workforces in retailing:
Only 6% of employees leave after the first year, compared with 21% at Sam’s.
Here’s why Costco’s productive workforce more than offsets the higher expense. According to Costco Chief’s Financial Officer Richard Galanti, “Paying higher wages translates into more efficiency:”
If Mitt Romney’s presidential run demonstrated anything, it’s that “efficiency experts” just aren’t good businessmen. Not only was his record campaign spend was poorly managed, but Romney’s business history at Bain Capital demonstrates that gutting companies for their assets isn’t a viable management strategy. One of the major drawbacks of the financialization of the economy is that running a business as a going concern increasingly takes a back seat to exploitation of the workers and community for the benefit of major shareholders.
Costco succeeded through old fashioned honest business management. Holmes and Zellner sum it up well:
Costco is also savvier than Sam’s and BJ’s about catering to small shop owners and more affluent customers, who are more likely to buy in bulk and purchase higher-margin goods. Neither rival has been able to match Costco’s innovative packaging or merchandising mix, either. Costco was the first wholesale club to offer fresh meat, pharmacies, and photo labs.
If America really wants to get serious about addressing its fiscal problems, it must first address the socio economic causes: the financialization of the economy, the corporatization of government, and the so-called “free market” policies of the 1%. Wealth must be created, rather than just redistributed from wealthy patriarch to heir and through corporate welfare. Government needs to develop a plan to wean the defense, energy and banking industries off of the public dole and redirect its efforts at supporting the kinds of business practices that created America’s middle class.
November 24, 2012
A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly wage of around $50, in today’s dollars, including health and pension benefits. Today, America’s largest employer is Walmart, whose average employee earns $8.81 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t qualify for benefits.
One of the reasons for the decline of the middle class in America is the decline of labor unions. Membership is down from 33% of private sector workers in the 1950s to fewer than 7% today. Walmart’s employees have no union to represent them, and have been receiving a tiny portion of the corporate earnings compared to that the United Auto Workers members received in the 1950s.
Last year Walmart earned $16 billion, reporting a 9% increase in earnings ($3.6 billion) in the third quarter, but most of the profit went to Walmart’s shareholders, including the Walton family.
The employee strike on Friday was a show of protest against wages as low at $8 an hour, unsafe and unsanitary working conditions, excessive hours, and sexual harassment.
Walmart fought back, filing a complaint with the National Labor Relations Board to ban the strikes. OUR Walmart, the worker organization that is coordinating the protests backed by the United Food and Commercial Workers Union, estimates that nationwide, there were more than 1,000 individual actions. But Walmart chose to put out dishonest talking points, saying that less than 500 workers absented themselves. Bill Simon, president and CEO of Walmart U.S. issued this lie:
Only 26 protests occurred at stores last night and many of them did not include any Walmart associates. We estimate that less than 50 associates participated in the protest nationwide. In fact, this year, roughly the same number of associates missed their scheduled shift as last year.”
On a conference call Friday, Dan Schlademan, director of the union’s Making Change at Walmart campaign, said that, while his organization does not yet have a precise count of the number of workers who walked off since the strikes are ongoing, there were hundreds of workers and thousands of supporters. Many cities around the country had higher-than-expected turnouts. According to The Huffington Post’s Alice Hines and Kathleen Miles:
At the Walmart in Paramount, where The Huffington Post counted 600 people at one point, organizers later said that a total of 1,500 people had shown up. Nine people were arrested for sitting in the street, which had been blocked off for the protesters. Those arrested included three Walmart employees, a father of a worker, a former worker, two clergy members and two other supporters, according to organizers.
In places where fewer strikers than expected joined the protests, one reason is that the company intimidates anyone who considers joining a labor group. Three workers who did not participate strike told The Huffington Post that they shared the concerns about low wages, lost benefits and retaliation for speaking up, but they were too afraid of losing their jobs to strike. Jaime Durand, a Walmart human relations manager said:
In Texas, we own our parking lots. We won’t ask them to stop what they’re doing, but we will be asking them to leave private property so we can maintain a safe area for our customers.
What happens at Walmart has far-reaching economic consequences. Its pay scale and working conditions set the standard for competitors. Today, the median wage is 8% lower than it was in 2000. Without a vibrant and growing middle class, the economy will continue to falter. This is especially true now that most new jobs in America are in personal services like retail, and have low pay and bad hours. According to the Bureau of Labor and Statistics:
A new study by the think tank Demos reports that low salaries actually depress the economy. The report finds that even raising the salary of all full-time workers at large retailers to $25,000 per year would lift more than 700,000 people out of poverty. The cost: only a 1% price increase for customers.
But what would the wage increase cost retailers? According to the report:
The real costs of Dickensian labor policies like those practiced at companies like Walmart and Hostess are more than our economy can afford. At Hostess, labor unions were unfairly blamed for a pending bankruptcy that was caused entirely by this kind of mismanagement. The end result is that the workers, company and consumers all lose.
The Real Story At Hostess Brands: Hostess Brands, Inc., maker of Twinkies, founded in 1930, is about to permanently shut its doors, putting 18,500 people out of work. While management has been placing the blame on the BCTGM (Bakery, Confectionery Tobacco and Grain Millars International Union), the union representing Hostess employees, the real cause was inexcusably poor management.
Yet, the company was never moved to employ sound business practices to improve it’s market position.
To make matters worse, rather than face the fact that they were a company in distress, and working to improve their market position and rationalize their management, the company chose to ignore its fundamentals:
Even so, following In the wake of Hostess’ 2004 bankruptcy, the union (BCTGM) did what they could to help, giving back $110 million in concessions. They showed more business acumen than the highly paid executives. They provided the give backs in exchange for the company’s promise that it would invest in new machinery and new technology, and improve it’s market position.
Hostess broke that promise, and failed to follow through on those long-term investments. Instead they continued to churn their assets and their CEOs, rewarding themselves bigger bonuses. Rather than address their failing business model, here’s how they hey attempted to keep the scheme going by doing the following:
The union and workers by now understood what was going on. Hostess management could not be counted on to run a business. By a 92% vote, the union rejected the massive cuts, knowing the company was no longer sustainable.
Labor has a huge stake in the operations of a company. By excluding them from the table, American businesses have written their own epitaph. While the corporate propaganda machine would have you believe that mismanagement of the American economy is the fault of the government and regulations, this is not even close to the hard economic truth that large corporations are running their businesses as cash cows for their top executives without regard for the real long-term interests of the company, it’s employees, consumers or the economy at large. David Macaray sums it up well:
Hostess is a cautionary tale. It’s a company that was not only systematically picked clean by Wall Street vultures, it’s one whose executives lavishly compensated themselves during its death throes. For Hostess, it’s been one reckless, greedy move after another — one management fiasco after another — and yet they’ve been unwilling to blame themselves. They blame the union for this whole mess.
Given the increased power of these vulture capitalists, Americans increasingly feel powerless to do anything but express angst in unfocused displays of tea party revolt. Rather than learn the lessons of history, our anger is increasingly coopted by corporate populist fronts like the tea party. The very fact that incompetent heirs like corporate vulture Mitt Romney and George W. Bush were considered to be viable presidential candidates is indicative of the extent of the problem.
So what can we do? Stand with the workers of Walmart, as they express their grievances.
November 9, 2012
Even in a poor economy, people seeking extra income are lured by the promise of potential earnings. Avon advertises:
Choose to work as little as 20 hours a week — and you’ll probably earn more than from a ‘regular’ part-time job.
Professor Malaviya invites you to do some simple math. To get a rough estimate of what the average salesperson earns, divide a company’s annual revenue by its number of salespeople. Also factor in the facts that the company’s cut is often 50%, and salespeople incur other expenses. Using this math, Kelli B. Grant notes:
For the direct-sales industry as a whole, with its 15.6 million sellers, following that math results in estimated annual sales of $1,914 per seller. [DSA spokeswoman] Amy Robinson says that calculation fails to correct for the many salespeople who only “sell” to themselves. The median annual income for salespeople, she says, is $2,400. (FitzPatrick, in turn, says the DSA’s figure is inflated.)
Inventory costs: Tracy Coenen, a former Mary Kay rep and founder of PinkTruth.com, a site where ex-employees complain about the company, says that Mary Kay Cosmetics sellers have to order at least quarterly in order to get wholesale prices, as well as regularly buy samples to keep up with new product launches and replace products handed out at parties and demonstrations.
Training expenses: After the initial free mentoring, there are costly training materials, seminars and conferences.
Direct-sales companies offer representatives bonuses and commissions on sales made by their recruits. as well as recruits’ recruits. Some bonuses extend to recruits further down the chain, so that high-level salespersons can earn bonuses worth up to 35% of their team’s sales.
But, as Susan Solovic, chief executive of SBTV.com and small business expert points out,What happens when all your friends and family sign up beneath you, and now they’re your competitors?
Additionally, the local market may be saturated with other sellers from the same company who have already cornered the market on customers. There are millions of sellers who are personal acquaintances, or use Facebook or Twitter as sales tools, creating massive pitch overload. Solovic of SBTV.com points out that sellers risk getting blocked or unfriended by their networks:
You have to be very cautious. You get your friends and followers because they trust you, but people find it awkward to be pitched, no matter how good the product is.
In addition to the daunting odds against success, the product benefits are often exaggerated. The Food and Drug Administration has taken action against direct-sale companies for marketing issues, including faulting Avon’s claims about some of its anti-aging products, which may have veered into drug-marketing territory, violating the Federal Food, Drug and Cosmetic Act.
While other businesses receive similar regulatory scrutiny on quality and marketing, direct-sales companies face an added challenge in being responsible for claims made by their independent contractors, as well as by company materials. If a company is sanctioned, it could be difficult to recoup commissions owed or get refunds for unfilled orders.
October 30, 2012
Heidi Grant Halvorson, Ph.D., motivational psychologist and author of ‘Succeed’ and “Nine Things Successful People Do Differently” writes a must read article for HBR.org and the Huffington Post titled “The Presentation Mistake You Don’t Know You’re Making.”
Dr. Halvorson discusses an important principle in behavioral economics – a pervasive bias in presenter thinking (“more is better”) that actually runs counter to an equally pervasive consumer perceptual bias (less is more). The implications for marketing are significant.
In 2012, psychologists Kimberlee Weaver, Stephen Garcia and Norbert Schwarz undertook a robust series of seven studies into the “presenter’s paradox” in the Journal of Consumer Research, Inc. Their findings in impression formation demonstrate that:
Perceivers’ judgments show a weighted averaging pattern, which results in less favorable evaluations when mildly favorable information is added to highly favorable information…We show that presenters…instead design presentations that include all of the favorable information available. This additive strategy (“more is better”) hurts presenters in their perceivers’ eyes because mildly favorable information dilutes the impact of highly favorable information.
We assume when we present someone with a list of accomplishments or a bundle of product and service benefits, that consumers will see what we’re offering additively. The example Dr. Halvorson gives is this: In applying for a job, we may list the following qualifications:
Knowing that the company does business in Latin America, we add the following skillset:
But the client or buyer reasons differently: Consumers don’t add up the impressiveness, they average it, seeing the big picture by looking at the package as a whole, rather than focusing on the individual parts. Their perception:
The better proposition is to not add the less impressive benefit or accomplishment (2 semesters of Spanish.) The consumer averages this as follows:
So mentioning an additional benefit of lessor value makes you a less attractive candidate than if you’d said nothing at all.
They reasoned that the overall punishment was on average less disparaging because two hours of community service isn’t really that bad.
The research examines the implications of this effect for a variety of marketing contexts. Buyers were presented with an iPod Touch package that contained either an iPod, cover, and one free song download, or just an iPod and cover. The surprising result:
Yet, a second set of participants asked to play the role of marketer and judge which of the two packages would be more attractive to consumers overwhelmingly (92%) choose the package with the free download.
Medicare Advantage products offered by private insurers provide an alternative to traditional Medicare. They are aptly named since have some significant advantages: they are more comprehensive, covering deductibles and copays that traditional Medicare does not, and prescription drug coverage as well, if elected.
They also provide some additional ancillary benefits, including vision care and wellness benefits.
One of the big providers, Humana, aired an infomercial during the end-of-year open enrollment period. The infomercial devoted a disproportionate amount of time to hawking the benefits of, and showing client testimonies about, membership in the Silver Sneakers fitness program. The value of health club membership is rather insignificant in comparison to providing comprehensive care in the event of chronic and life threatening illness. The presenter’s paradox informs us that devoting so much time to calling out this benefit of lesser value cheapens the consumer’s perception of the brand.
More is actually not better, when you add a benefit or feature that is of lesser quality than the rest of your offerings. Its dilutes the favorability of core benefits.
Dr. Halvorson’s advice: to stop ourselves from making this kind of mistake, marketers should think “big picture:
What does the package I am presenting look like taken as a whole, and are there any components that are actually bringing down its overall value or impact?
Related articles by Heidi Grant Halvorson, Ph.D.: click here.
October 9, 2012
Brad Smith of Social Media Today discusses the dilemma of corporate social media accounts – they don’t spread like wildfire. So they try posting more frequently, or using the latest tactic, and still, the results don’t come.
According to Brad, they need to revisit their social media strategy for the reasons no one shares their content. Consider these 3 reasons:
Brad puts it succinctly: “Nothing kills social media activity faster than a sales pitch.” Of course, you have to sell with social media at some pointm and this raises a key question that I have explored in this blog: how to turn social media into conversion opportunities. Since you can’t pressure the consumer to buy, but you also can’t just sit around and hope for the best, what can you do to better control the situation?
Brad’s corrective strategy: Create “shareable content“ to promote. Give every social media update an interesting hook that grabs attention interests your customers. “Shareable content” has to meet the following criteria:
If content is interesting enough to spread it will be because people are spreading the story first. Then after getting attention and interest, the company can be introduced.
Financial Services Applications: It’s hard to get people to engage with you or share your content in “aggressive industries like insurance, real estate or other financial services.” So you need to change the positioning from products to match the worldview of your consumers – promote their lifestyles. The focus should be on what people care enough about to want to protect or build: family and career, lifestyle and the sense of social purpose that underlies money. In the crowded auto insurance field, Progressive promotes the ease of the online experience in which you can compare prices.
The use of incentives remains one of the best ways to get engagement and participation, as well as sharing. Brad’s corrective strategy: “Focus on your customers pain points, and position your content, social media updates and products/services as the solution.”
Ask the question: “Why should someone interact with you in the first place?” Brad suggests that the need for relief drives engagement.
Take humor: it’s a release of pent-up tension. An interesting angle that benefits the audience can offer them relief from a problem that’s on their minds.
Best Practice: PayScale helps job candidates, employees, job seekers, and employers (HR) to compare their salaries across job titles, industries and locations. What’s the benefit: sought after information, research and insight to business professionals and hiring managers. So PayScale analyzed their data and created an infographic about how employers are using and managing social media for their employees, and contracted with Mashable to publish it. The results:
To stand out – and be remembered – in a crowded field in a crowded medium, you obviously need to be seen as unique, interesting or different.Approaches that seldom work are ones that focus on product attributes, rather than consumer beliefs and values. For instance, everyone claims to be:
Worst Practices: For instance, Dunkin’ Donuts recently baffled the advertising world by offering the 19th century strategy of filing to register the phrase“Best Coffee In America” as their trademark, which, according to Huff Post, is so old that it’s “hardly worth more than a lukewarm cup of coffee.” In the past, the Patent and Trademark Office has sometimes declined to grant registered trademarks for such superlative phrases, and, in financial services, it would be a compliance non-starter. When the Boston Beer Company sought to claim the phrase “Best Beer in America,” the office said the wording was too generic for any one company to own as a trademark. In 2006, Walmart tried unsuccessfully to trademark the smiley face, claiming that the image had become associated with its stores in the retail sector. Taglines or slogans are only a small component of a value proposition. As Brad puts it: “Stand for something.” Best Practice: Stone Brewery, Southern California’s largest brewery, and one of the biggest craft brewers in the country, announced in 2011 an expansion plan that includes a 18.7 acre organic farm so they can use the best ingredients in their beer and restaurants, and a possible tourist hotel because their brewery is one of the largest tourist attractions in San Diego. These are consistent with a strong stand that they have taken:
They’re unabashedly against light, tasteless lagers (and the people who drink them). And as the scrappy up-start, they’re the complete opposite of the large, stuffy corporations in the industries.
The label on one of their most popular beers, Arrogant Bastard, warns:
Their social media updates are consistent with this: “witty, interesting, and slightly arrogant in a funny-sarcastic way.” So Stone’s social media are an extension of their originality and bold positioning – an extension of their brand.
If your social media accounts are not an extension of your brand, you’ll lack engagement for a glaringly obvious reason: because people don’t care enough about you:
Even if you’re never heard of Stone Brewery before (and whether you agree or disagree with their philosophy), you already have an opinion. And that’s the first step to getting people to talk about you. Or interacting and engaging with you in social media.
In summary, make your content shareable, beneficial, and bold.
October 1, 2012
Click to view the Facebook Marketing Humor and Wisdom Page
In life insurance sales, it is often important to instill a sense of urgency with a prospect. There are two reasons for this:
The Right Way: So long as this part of a frank and honest discussion, then it’s a win-win scenario. Since there are numerous real life instances of people who put off the decision to buy life insurance only to leave their families in financial distress, if a strong need has been identified then it’s in both parties’ interests to have a candid discussion about the choices the prospect faces:
Your challenge is to prove to the prospect that buying now is best for them and you must be able to offer support and quality reasons why. What will they miss if they wait even one more day? What are the potential opportunities if they go ahead and get started on the program now? Why is it important for them to buy now? In other words, what`s in it for them? Remember…the reason a customer buys your product or service is because of what it can do for them. Tell them.
The Wrong Way: On the other hand, the sense of urgency is often used dishonestly as a technique to rush the prospect into a buying decision regardless of whether it is to that person’s advantage.
For example, I often receive telemarketing calls from electricity suppliers. My home state has recently allowed consumers to shop around for their power suppliers. Penelec remains the electricity provider, providing the power lines and infrastructure, but the consumer may now shop among power suppliers whose rates for the electricity vary. If you choose to switch suppliers, the supplier’s name will appear on your monthly Penelec bill.
The solicitor rarely bothers to identify themselves as a representative of a particular company but attempts to pass himself off as a Penelec representative. The last call I received went like this:
Telemarketer: ”Hello. You may recall having received a notice from us that you were eligible to take advantage of an offer to receive a 17% rebate check on your Penelec bill. We show that you haven’t responded to take advantage of the offer.”
Me: “Would I have to change my electric company?”
Telemarketer: ”No, you wouldn’t Penelec would remain your provider.”
The telemarketer is dancing around the fact that he is with an outside company. He is hoping to gloss over this fact until I am enticed by his offer of receiving a rebate check. Then, at the close, he will reveal that fact to me. The purpose of this approach is to gain my trust by virtue of confusing me into believing that he is calling from my current provider.
Once I’m interested and ready to buy, he’ll disclose that I’d have to commit to a long-term contract for variable monthly rates that are not guaranteed to be lower than those under my current supplier. That means that, after the initial 2-month period, the rate could actually be higher than the rate I am currently paying. But I’ll be locked into a one-year contract.
Compounding the dishonesty of that approach is the high pressure sense of urgency pitch:
We mailed you an offer, and you didn’t respond. So we are calling to let you know that this is your last chance to take advantage of our offer.
Snap! principle of the “this is your last chance” sales pitch:
Any worthwhile offer should stand up to careful consideration and analysis. If you’re being pushed to act now or never, choose the latter.
September 25, 2012
Companies can improve their performance by moving from the common Ready, Fire Aim approach to a Ready, Aim, Fire approach.
Invest 10% of your product development budget up front to make sure the remaining money is spent right.
Case Study: Using a formula given in the book, Rob Adams provides an example that he has implemented to launch a startup marketing campaign. For the sake of simplification, the figures have been rounded.
What is the rationale for such a large expenditure on validation?
I would rather have my name on a $25,000 hole in the ground than a $1 million hole in the ground.
1. Wasted Resources: In an article in Inc., Rob points out that more than 65% of new products fail, for a total loss of $260 billion a year in the U.S. alone. With start-ups, the failure rate jumps to 90% – numbers that have been constant over thirty years.
2. The Customer is the Key to Your Success: Products usually fail to generate enough revenue because they don’t sell well enough, and can’t generate enough revenue to cover their expenses. That means that customers either feel they’re not compelling enough, or not worth the value for the price. Startups typically can’t survive the failure of a company’s first product. The failure of a new product in an established business can risk the company’s stability, depending on:
And Rob is quick to point out that, while investors or a parent company might cover shortfalls for a while, the offering must eventually generate returns that justify the capital and the risk that went into creating, marketing, and selling it, or the company will tend to fail.
3. Leapfrogging the Competition Puts You At the Leading Edge: Another important reason for Market Validation is to leapfrog the competition. Innovation tends to follow a fixed path, with one big idea begetting another, and so on. That linear approach to innovation doesn’t always get companies ahead of competitors, especially in the digital age. Consumers often learn that as soon as they buy the latest technology, the next big thing quickly emerges, making their purchase obsolete. Businesses often learn the same difficult lesson as they bring products and services to market, only to be trumped by companies with more sophisticated offers and deeper pockets. Companies have to continually innovate in an unending, linear cycle just to keep up. Companies that leapfrog the competition have an opportunity to change the game.
Case Study – Apple: Apple’s reinvention of the computer from a business to personal asset created a game-changing new industry, as did their reinvention of the mobile phone from a telephonic device to a mobile computing platform. More recently, while traditional laptop vendors focused on the technology- adding more speed, more memory, bigger screen size- Apple focused on how people use the technology, and made innovations on adding battery life, ease of use, and quick Web connectivity, and making their machines virtually bullet proof against virus. The result: unless Apple severely stumbles, their customers are committed and wouldn’t consider another vendor. Until other laptop manufacturers can make a compelling case, Apple has the corner on this market. Rather than trying to compete on price or technology, Apple discovered a way to leapfrog competitors on customer focus. The compelling case for Apple isn’t based on either technology or price – Apple is the most expensive in the market for comparable performance. For Apple’s market, price isn’t the deciding factor. Yet, without Market Validation, opportunities like these may not be recognized.
Market Validation is performed to probe, test, and validate a market opportunity before you invest large sums of money into product development. Whether you are designing, building, or selling products, whether you’re in a large corporation or a tiny start-up, whether your business is service- or product-based, Market Validation will significantly increase the likelihood your product will succeed in the market.
Developing a Real-Win-Worth Methodology: Using a Real-Win-Worth strategy of market validation (Is It Real? Can We Win? Is It Worth Doing?) has helped me to launch products to bypass the market share of major competitors. Real-Win-Worth was developed by by George S. Day, a Geoffrey T. Boisi Professor of Marketing and a codirector of the Mack Center for Technological Innovation at Wharton as a strategy tool for “undertaking a systematic, disciplined review of your innovation portfolios and increasing the number of major innovations at an acceptable level of risk.”
To do this, Day recommends two tools that can increase the proportion of major innovations in your portfolio while carefully managing their risks:
To evaluate the risks and potential of an individual project, you should be able to answer and score these three fundamental questions about the market opportunity: Is It Real? Can We Win? Is It Worth Doing? To do so, ask these six fundamental questions:
Assemble a team to assess each innovation project’s potential risk using these criteria:
Worst Practice Study: McDonald’s once started offering pizza, assuming that the new product was closely adjacent to existing ones, and targeting its usual customers. The problem is that it violated McDonald’s service-delivery model: employees couldn’t make and serve a pizza within 30 seconds, and the project failed.
This tool is used to repeatedly test each project’s viability throughout a product’s development. The R-W-W screen exposes faulty assumptions, knowledge gaps, sources of risk, and problems suggesting termination. To use it, you need to develop a set of criteria such as the following:
Result: The company, which had not typically been a first-to-market company, was first to market with this product. Sales goals were exceeded profitably, and we usurped the leading competitor’s market share.
September 4, 2012
Lora Kolodny highlights on TechCrunch a new report from RightNow and Harris Interactive showing how much brands stand to lose from poor customer service, and how much they stand to make if they can deliver a superior experience. The study, titled The Customer Experience Impact 2010 report tells an interesting story about how important a value proposition customer service is to consumers, and just out of touch U.S. brands can be:
Survey data from 2007 vs. today show changing dissatisfied customer’ expectations. When trying to resolve a problem, here are their contact preferences:
In 2007:
In 2012:
The more digital communication options that consumers have, apparently, the more they crave human interaction in real time, apparently.
My recent post on Progressive Insurance shows that customer dissent online is difficult to quell. Kolodny highlights some other notable cases:
Considering all the effort to generate positive associations through advertising, it’s more than a little ironic that one account of bad customer experience has the potential to offset all that investment. Companies facing a bad customer service comment should work to improve the customer experience they provide, internally and develop a systematic way of focusing on customer responsiveness, while continuing to generate positive word of mouth, positive reviews and online feedback. Friends’ and colleagues’ endorsements, discussed in real life or through Twitter and Facebook updates, are more likely to drive sales than even a positive online user review.
In an era when customer service is largely viewed as a cost center, RightNow’s study strongly suggests companies now invest more time and money in customer service as a leading revenue generator, and not just an operational function. The study highlights why customer service is a bottom line revenue generator:
Snap! principle of Customer Service Marketing:
August 27, 2012
The notion of ”Socialism” vs. “Capitalism” is a manufactured polemical dichotomy. Framing economic issues in terms of false dichotomous categories effectively conceals the actual dynamics of the economy. The purpose of this article is to examine how to step outside the predefined conceptual box and think an issue through critically and independently. Herein I will:
Capitalist Defined: First, let’s define “capitalist.” A capitalist, strictly speaking. is one who invests in the financial instruments that support a business entity. Realistically speaking, in today’s America, the capitalists are overwhelmingly wealthy interests that hold majority stakes in the large corporations that dominate the economic – and political landscape.
Labor Defined: While the capitalists in our society may hold positions and titles, and some may even dirty their hands in the actual work of a business, they don’t actually need to because they rely primarily on interest and equity instruments for their income.
Why We Identify Ourselves as a “Capitalist” When We Really Aren’t: If you are a small investor or a small business owner, you are not actually a capitalist; you are labor because you don’t just invest for a living, but you actually still need to work for a living. Notwithstanding, you have been taught to think of yourself as a capitalist and to worship the notion of capitalism.
A measure of the effectiveness of our inculcation into the worship capitalism is illustrated by the fact that ieven President Barach Obama, a mainstream political instrument of capitalist Wall Street, can be labeled a socialist, and a good percentage of the population will actually believe it.
What is actually happening here? We are continually being socialized into the cult of capitalism. Recall that the function of a cult is to generate a sense of group identity. The cult of capitalism has its roots in Social Identity theory.
According to the social identity theory developed by social psychologists Henri Tajfel and John Turner, one’s self image is defined in part by the social group or groups one considers oneself part of. Tajfel’s experiments found that placing people into one or another group by such meaningless criteria as a coin toss was enough to make group members increasingly loyal to their own group and cause them to discriminate against the members of the other group.
This is used in political economic sphere to get people to vote against their own interests even though elections are essentially a ratification of plutocrat-selected representatives to begin with. In politics, this is known as “Identity Politics,” and it hinges on the strategy of creating two ideological groups who can be distracted from any substantive economic issues by feelings personal enmity toward a perceived enemy. Two ideological alternatives are presented, while the two parties purporting to represent these views actually represent the same underlying interests.
Statistics clearly show that you are much more statistically likely to become poor than wealthy, or even to remain comfortably “middle class.” However, by stoking the myth of upward mobility – holding out the carrot of rags to riches – you can be made to support the interests of the top 1% instead of your own interests as a member of the labor class.
The political phenomenon of Sarah Palin is an interesting study in political populism. She may act like trailer trash, but make no mistake about it: she is a plutocrat. Somehow, she lucked into wealth and has parlayed her fame into a platform for amassing more wealth and adoration. She used her public profile to launch a book Going Rogue that sold more than two million copies, provide political commentary for the abymally yellow journalistic Fox News, and hosted a television show, Sarah Palin’s Alaska for TLC whose first episode lured in a record five million viewers.
She was chosen because she is seen as a voice for the the most naive, gullible and least educated Americans who comprise the tea party. Because she feels like one of us, she can get us to vote against our own interests for the plutocratic class to which she is actually beholden.
Americans would rather vote for a plutocratic tool of limited intelligence like George W. Bush than an intelligent wonk like Al Gore because “he seems like somebody I could have a beer with.” The price of beer: the greatest recession since the Great Depression of the 1930′s, soaring deficits, continued loss of employment, increased economic disparity, burgeoning poverty, and diminishing economic prospects of the middle class.
It has increasingly become clear that the issue of government overreach is nothing more than a Republican Party ploy to portray the economic overlords as saviors, and override any attempts to hold them to a sense of social responsibly. They can point to the fact that, while the Democrats advocate regulation to prevent economic exploitation, those regulations are themselves problematic. This is because the political process is itself corrupted. Jack Abramhoff pointed out that well-intentioned regulations purporting to curtail lobbyists from bribing politicians are so riddled with holes that they make little to no difference.
The fact is that corporate, not government, overreach is the real economic reality. While corruption pervades all three branches of government, as well as the Fourth Estate, bear in mind who/what the corrupting influence in fact is. I wrote here about the agenda of corporate/judicial activism at every jurisdiction that has led to today’s economic debacle.
Although both 1972 Nixon-appointed Supreme Court justices Powell and William Rehnquist were conservatives, the principled Rehnquist resisted Powell’s radical corporatist views. From Alter Net a brief background of the under-the-radar agenda that got us where we are today:
Despite the Rehnquist dissents, Powell’s vision of an unregulated corporate political “marketplace,” where corporations are freed by activist courts from the policy judgment of the majority of people, won out. Powell, of course, could not have…moved a majority of the Court to create corporate rights if no one had listened to his advice to organize corporate political power to demand corporate rights. Listen they did — with the help of just the sort of massive corporate funding that Powell proposed.
Corporations and corporate executives funded a wave of new “legal foundations” in the 1970s. These legal foundations were intended to drive into every court and public body in the land the same radical message, repeated over and over again, until the bizarre began to sound normal: corporations are persons with constitutional rights against which the laws of the people must fall.
Huge corporations, including Powell’s Philip Morris, invested millions of dollars in the Chamber of Commerce’s National Chamber Litigation Center and other legal foundations to bring litigation demanding new corporate rights. In rapid succession, corporations and supporters funded the Pacific Legal Foundation, the Mid-Atlantic Legal Foundation, the Mid-America Legal Foundation, the Great Plains Legal Foundation (Landmark Legal Foundation), the Washington Legal Foundation, the Northeastern Legal Foundation, the New England Legal Foundation, the Southeastern Legal Foundation, the Capital Legal Center, the National Legal Center for the Public Interest, and many others.
These foundations began filing brief after brief challenging state and federal laws across the country, pounding away at the themes of corporations as “persons,” “speakers” and holders of constitutional rights. Reading their briefs, one might think that the most powerful, richest corporations in the history of the world were some beleaguered minority fighting to overcome oppression. The foundations and the corporate lawyers argued that “corporations are persons” with the “liberty secured to all persons.” They used new phrases like “corporate speech,” the “rights of corporate speakers,” and “the corporate character of the speaker.” They demanded, as if to end an unjust silence, “the right of corporations to be heard” and “the rights of corporations to speak out.”
The answer lies in where our education system has failed us – critical thinking skills.
Politically speaking, as someone who has made a disciplined habit of being non partisan and seeing beyond the dichotomous conceptual frameworks of left/right, capitalist/socialist, etc. I understand that elections remain a matter of voting for the lesser of two evils with no realistic expectation that the our political mascots represent us. Republicans represent the fast track to the plutocratic power grab, while Democrats can’t be trusted to stand up to these same lobbying interests either.
Ideologically speaking, it is important to become aware of the effects of ideological conditioning and overcome it to develop a truly independent analysis.
Practically speaking, it is important to become a critical thinker to become a more proficient analyst and decision maker. Let’s discuss how to cultivate critical thinking skills.
The conceptual rigidity of the popular culture means that most opinions revolve around confirmation bias, and will only change to the extent that they fit that bias. I believe that the ability to change one’s opinion depends on the individual’s conceptual rigidity. Most opinions seem to revolve around confirmation bias, and will only change to the extent the new viewpoint fits the existing bias. In future articles, I will examine some of the studies and research literature on critical thinking. Herein, I would like to speak from personal experience. Becoming a critical thinker, rather than a merely coopted polemicist means that you should aim not for fixed positions, but dynamic judgements.
I use a 3-pronged approach to arrive at dynamic judgements rather than fixed positions:
1- Research:
First, research a topic in depth, familiarizing yourself with the facts and the circumstances around them, as well as the analyses of people with differing perspectives. Get your nose out of dumbed-down, dishonest, tainted partisan sources like Fox News, since research that has been duplicated over several studies shows that Fox News viewers are the least informed of all news viewers.
2- See past the dichotomy and agendas:
Debates are typically frameworks that frame the issue narrowly in terms of a pro/con black and white bifurcated structure. I look past the framework to the underlying facts, to better understand the spin on both sides, as well as the real grays of the issues. I often find that the issue is framed in a certain way to serve particular interests and agendas. Furthermore, I find that it is not necessary to frame the issue in this way, and that a more meaningful understanding is found in “thinking outside the box.”
3- Fluidity:
To remain open to new information, when formulating my own analysis, I remain cognizant of the temptation to hold to a strict pro/con stance, and make a point of leaving an opening on all sides of the issue. Even if you disapprove of a certain perspective, you still need to do the legwork to at least understand it on its own terms.
For instance, in determining that Medicare Part D is a special-interest driven agenda that increases the costs of prescription drugs, I can still acknowledge that it does provide some basic coverage and is in that sense better than nothing. In this way, the possibility of improving the current structure remains open.
Likewise, if I conclude that a program is mostly positive (such as I judge the ACA to be) I nonetheless remain clear of its shortcomings and improvement opportunities. Either way, if a better solution comes to light, I am prepared and equipped to analyze it on its merits rather than adhere to a fixed position.
During the process of this dynamic analytic approach, if you don’t form a preconceived position in advance, your analysis can accommodate contradictory information. The “judgement” isn’t a destination or final product, but a journey of discovery. The result is more serviceable as it provides opportunities for learning, logic and perspectives that can point to new and possibly original possibilities, solutions and approaches.
As Marketers and customer-facing brand ambassadors, we need to remain open to all perspectives on issues. When we “drink the kool aide” of our own product and rhetoric, we often neglect to understand that, as gung ho as we may be about our product or service, what really counts is the consumer’s needs, values and perceptions. This doesn’t mean that we should become shifty and try to be all things to all people. Effective marketing targets the most likely users of our products, the ones whose needs we can best be in a position to address. The problem is, we don’t always engage enough in the ethnographic research to understand and empathize with our consumer segments. The case study below sheds some light on this.
Recently, I ran into a brick wall in dealing with Cigna Insurance when the claims representatives stonewalled my wife’s chemo prescription.
The Situation:
Since the last treatment stopped working and there was progression, a new chemo treatment was prescribed. Cigna kicked it to a medical reviewer without allowing either the oncologist or me to speak with even the representative’s manager.
The Response:
With a sense of urgency, given the time element in the progression of the disease, I spoke with 2 representatives who both became argumentative and arrogant. Young, male Customer Rep “TJ” complained to me during my call that the oncologist didn’t provide him the information he requested and had hung up on him in frustration. He also said that the call had “become adversarial, much as this one has.” I immediately corrected him – “No, I am not being adversarial. I am advocating for ny wife and asking for your help.” One wonders what arrogance on his part caused our oncologist such frustration that he hung up on him.
Adding insult to injury, the Rep stated that “if the doctor hadn’t been adversarial, we’d probably already have already approved the treatment” – which was a misrepresentation that was in direct contradiction to his earlier statement that he was not authorized to make a decision and that it had been mandatory for him to refer it to a medical director.
The Result:
I was informed that there would be a 24 hour turnaround time and our only option would be to wait. The doctor’s office was subsequently informed that it was a 72 hour turnaround. A week later, there was still no response. Eventually, the oncologist caved, prescribing an alternate treatment. This is the second time Cigna has done this to us, and we never did get any response the last time this happened. As a consequence, when the opportunity presents itself for me to switch carriers, I will do so, depriving Cigna of a customer. Furthermore, consistent with research showing that dissatisfied clients spread the news widely on social media, bad publicity could exact and even greater toll on their business, as it did with Progressive.
What could Cigna have done better?
They could have a better understanding that all customer-facing and even non customer-facing employees are brand ambassadors. The brand promise must be delivered at every touch point. To do so, they need to develop a process to be:
The customer service representatives could have done a better job by:
