Research: Pain triggers memory in the same way as great advertising

20 May

Related imageToday, NPR reported on the link between pain and emotion in a segment titled “How The Brain Shapes Pain And Links Ouch With Emotion.” The heart of the story is new research that explains the evolutionary origin of the link between physical pain and emotion.

According to researchers, two things happen when we feel physical pain. First, we physically feel the pain when heat, force, or chemicals trigger nerve endings (nocicepters) in the effected part of the body. The feeling of pain is to warn you of the danger — to get you to immediately pull your hand out of the fire or to escape whatever is causing you bodily injury. It’s a quick response as nerves send messages up your spinal cord to your brain.

The second thing that happens is interesting: when the body feels pain, it often triggers emotions such as sadness, anger, or depression. Once the pain signals reach the brain, it stirs up a complex set of responses, often including deep emotions or feeling of suffering. Why does this happen? According to Robin Crook, a brain researcher and biologist who has been studying this, “Having that emotional component linked to the sensory experience really is a great enhancer of memory. [With this mechanism] humans, for example, can remember a single painful experience sometimes for their entire lives.”

Here is the fascinating thing not covered in the NPR segment: this is a great example of the brain evolving to trick itself into memory creation using the same mechanisms that modern advertisers tap into. Research on advertising is very clear: emotional advertising outperforms rational advertising because we’re more likely to remember something when it is linked to a feeling or emotion. In other words, we remember the ads that make us laugh or cry. When an advertiser pulls at our heartstrings, research shows we’re more likely to retain the ad or brand in our head for a long time.

While there is lots of evidence to show the link between emotion and memory in advertising, it is fascinating to see the brain use the very same mechanisms to make sure that we don’t repeat the actions that once caused us pain.

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Brex: A reminder about digital vs traditional acquisition

13 Nov

Brex is a billion-dollar valued startup that makes charge cards for startups.

One of their most profitable acquisition channels is . . . . . billboards:

Image result for brex billboard

BILLBOARDS!!!! While this is going to be surprising to many, it fits with what we’ve  learned from many advertising experiments: the things that are hardest to measure often provide the best opportunity to create value.

These billboards — which were blanketed across the Bay Area for $300,000 — significantly outperformed the digital channels that seem so obvious for a brand targeting U.S. startup execs. They use the billboards to get companies to sign-up for their charge cards: there goal is to get startup founders, CEO’s, or CFO’s to take action and adopt or switch to Brex’s cards for their employees.

Why do these billboards outperform digital acquisition channels for Brex? One factor is that digital channels work best for things that have a large stream of search activity, for products that are easily merchandised visually, and where there is an obvious audience that is under-targeted by other companies. None of these things are the case for Brex. Digital channels are easy to test and scale and the end result is that the market price for a conversion scales very high very fast: it’s going to be set by the company that has the highest monetization value per impression which requires a big stream of revenue and a high conversion rate.

Billboards offer opportunity for customer acquisition for a few reasons. First, traditional billboards are hard to setup and tough to scale. To get a billboard ad running, you need to develop a visual advertisement, get on the phone and deal with a media agency or outdoor advertising company, research locations for each billboard you want to buy, and do a bunch of other things that make tests slow and costly. Second, billboards and other “out-of-home” advertisements are tough to measure. Brex, like many smart companies, solved this by asking prospects in their sign-up funnel how they heard about Brex making it easy to attribute conversions back to their billboard investments.

It’s also worth noting that Brex’s advertising creative is quite strong: It’s readable, memorable, visually distinctive, and clear. This is hard but necessary for performance.

 

 

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Science, creativity, and contradiction: the making of a modern TV ad

3 Oct Indeed TV Ad

In this age of ubiquitous technology, it should be quick and easy to create a 30-second TV advertisement. How complex can it be? The answer: shockingly hard if you do it right. To get TV advertising right requires a near impossible mix of science and creativity – disciplines that are in many ways diametrically opposed. It requires small teams that protect the purity of great ideas and big audiences that provide the feedback required to avoid mistakes. Great ads requires creative ideas that strike the most personal human chords with an appeal that spans cultures and continents.

Among all of these contradictions, the core challenge of advertising is that you are delivering a message that nobody is looking to hear. When it comes to both TV and online video, the ads are the price of the programming and the competition is steep — in the U.S. the average person is exposed to more than 5,000 brands and ads every day.

And many companies are organized to systematically dilute the power of great ideas. Creative advertising requires powerful ideas, emotion, and beautiful execution. Science requires the sort of measurement and optimization that slowly erodes the punch out of many creative endeavors. Keeping performance and creative impact in balance is difficult. Too many powerfully creative ideas are weakened by endless rounds of negotiation, revision, and compromise.

Embracing these challenges, today our team at Indeed launched the first ad in our latest global TV campaign. The ad, titled “what / where” in reference to the highlighted Indeed search boxes that are featured throughout, will begin airing today in the United States. Additional versions will start to appear in 6 other countries over the next few weeks.

This is my favorite Indeed ad yet — for me it strikes the right balance between emotion, inspiration, and performance. Like many strong ads, the final version is very similar to the first concept. We’ve  worked hard to make sure that our tweaks didn’t erode the power of the creative idea.

While the creative idea was the starting point, we had four practical things we wanted to accomplish with this ad:

  1. Performance: Indeed’s mission is to help people get jobs. After family and health, career may be the most important dimension in our lives. We know that if someone hasn’t heard of Indeed, we won’t be able to help them get a job. We advertise to drive awareness and carefully benchmark for each ad the cost per new person aware of Indeed in the labor force.
  2. Salience: We hope people will think about Indeed when they think about looking for a job. We want people to know that we’re the largest job site in the world, that we are a search engine for jobs (not a job board), and that an incredible # of new jobs are added to Indeed every day. We look for ads that build memory structures around these ideas.
  3. Global Relevance: We’re working hard to build Indeed into a global brand. To this end, we look for campaign ideas that get to the heart of human emotion, hopefully transcending culture and geographic boundaries. Practically speaking, we try to design TV ads that can be adapted to work in many markets around the world.
  4. Effective across multiple media channels: We talk about TV but we run adapted versions of our ads on youtube, full episode players like Hulu, other digital video networks, and social networks like facebook. This ad, in particular, was designed to work with or without sound.

And as we developed the ad, we did three interesting things:

  1. Protect the creative idea: By keeping our internal advertising teams small and by ensuring that we have minimal processes for internal review, we try to limit the number of people designing, reviewing, and refining an ad. Our goal is to keep the creative idea as intact as possible as we bring the ad from concept to launch.
  2. Transparent development: In a previous post, I wrote about the importance of transparency as a core marketing value. With this belief, we’ve made our entire advertising development process completely open and transparent within Indeed. Any of our 3,000+ employees can see all of the 500+ ad ideas we’re working at any time. We solicited company-wide feedback on the four most promising concepts prior to the final round of edits. The feedback was phenomenal — it helped is make the ads more relevant to more people around the world.
  3. Pre-launch testing & benchmarking based on emotion: Finally, when we have an ad that we think might meet all these requirements, we test and measure the emotional reactions to the ad in markets around the world. We then benchmark this measured emotional response against a database of ads to model likely performance. Only if it tests better than all of our previous ads will we put it into market.

So that’s it — the difficult process of creating a good global TV ad. And even with all of that work and preparation, we won’t know how many people a new ad can help to find jobs until we release it at scale globally.

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How to Measure TV advertising ROI (and the surprising distribution of performance by network)

26 Sep

If you want to build a great global brand, you’ll likely need to buy TV advertising. For most marketing organizations this means big budgets, a dependence on agencies, opaque pricing, and imprecise performance and ROI measurement. Even highly sophisticated marketing organizations struggle to get the most from their TV investments.

tv

The challenge with TV advertising is that it’s difficult (if not impossible) to identify people that saw your ad and to know whether the impression led to real-world action or behavior change.

How to measure TV advertising

To measure and optimize the impact of TV ads, you need to do two things. The first is to measure the aggregate impact of TV advertising as a marketing channel. This can be done through very granular purchase analysis or surveys that measure brand awareness and preference changes modeled against media investments. If your marketing investments are at scale, you can typically measure the impact of different advertising channels (TV, social, online video, email, banner, and even out-of-home) on the results that matter to you.

For most TV advertisers, however, this aggregate channel view is not enough: it’s essential to get closer to spot-level impact to get the most value for every invested dollar. While not all brands can do this, it’s typically possible if your TV advertising drives an immediate measurable action such as branded search for your company/product or visits to a digital site or application. If you can measure a digital outcome granularly, then it is possible to statistically model the cost per engagement for categories of TV spots such as particular shows or TV networks. The more ads you run during a show or network throughout the season, the more accurate this measurement might be.

Doing this right requires the ability to look at your search and engagement data over time — ideally by second — attempting to pick-up the engagement bump attributable to a specific TV advertisement. These bumps are typically quick and recognizable. While they may only measure a portion of customer engagements (some happen much later), they provide a good statistical measure of performance. While they may not capture all of the benefit of advertising, it should help identify the relative performance of ads to help better optimize your TV spend.  If you run very few ads, you will not have enough data for this type of analysis.

The surprising distribution of performance by network

When you finally see the details of show-by-show and network-by-network TV advertising performance while also measuring daypart and spot length, the results are surprising. In our own analysis, we looked at performance of our ads across more than two dozen networks and a hundred programs with significant numbers of ad impressions.

The results were shocking. While we expected the impact-per-dollar-spent on a TV spot would vary by network, show, daypart, and program reach (high-reach programming is more expensive than low-reach programming), we were surprised by the broad distribution of results.

In our analysis, we looked at the the cost to drive a web visitor with TV advertising. The range of real-world results was spectacular: On a network level (CBS, NBC, ABC, CNN, ESPN, etc), we found cost per engagement varied by more than a factor of 15. That’s right: the impact of 1$ spent on TV ads run on the highest performing network equaled the impact of more than $15 in advertising from the lowest performing network.  In other words, a portfolio of ads run on the lowest performing network were less than 7% as effective as a similar portfolio of ads run on the best performing network.  Not surprisingly, when you look at show-by-show performance you will find an even greater range of performance variation.

Why do these differences exist? There are a few reasons. First, demographics vary by network and different audiences respond differently to any one company’s ads. Second, TV ad pricing is partly based on the reach of a show (high reach shows include valuable light-TV watchers) and the desirability of the program with advertisers. The wider the audience and the more popular the show with advertisers, the more expensive ads will be on a per-impression basis. In the highly-fragmented U.S. TV advertising market, there are many opportunities to lower costs by aggregating audiences.

For marketers buying TV advertising, it’s nearly impossible to get great results without a clear picture of awareness gains or cost-per-engagement by network, show, spot length, day part, and ad version. By optimizing all of these factors — smart TV advertisers can improve TV advertising performance and ROI by 500% or more while still maintaining target market reach.

 

 

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The three core values of successful marketing teams

7 May

indeed_office

I recently read that the average tenure of a Chief Marketing Officer is 24 months, up from 18 months not very long ago. While that’s good progress, it’s still much shorter than other c-level positions.

Why is CMO tenure so short? It often comes down to the credibility of the marketing team. Too many marketing organizations erode trust by focusing on activities instead of results, by taking credit for things that can’t be proved, and by building walls between their teams and the rest of the company. Furthermore, marketing is such a broad discipline that there are always many possible marketing solutions to any business problem. The breadth of viable approaches makes for an infinite opportunity for misalignment between CMO’s and their leadership peers.

In this environment, what becomes important for CMO’s is how we build teams that work well with the rest of the organization. To this end, here are the three values that we have developed for marketing at Indeed:

Value #1: Test many things. Fail often. Stay grounded in the data.

When it comes to both our marketing and the product, we are continuously surprised at what works and what doesn’t. Companies that measure learn quickly that it’s very difficult to guess what will have the biggest impact on the business. Results will continually surprise all of us. What we do know is that if we continuously test lots of different ideas, we’re more likely to find approaches that really move the business.

One of the best examples of testing vs. intuition came from when Indeed product management finally tested the words on the Indeed job search button that allowed users to create job alerts. The original button — which said “save alert” — had been used for years but never tested. Product management came up with six new options to test: Sign up, get jobs, save, subscribe, activate, and send me new jobs. Two interesting things happened with the test: First, every single tested option outperformed the original best guess of the team that originally created the feature. Second, the highest performing option, “activate,” took all the experts by surprise. With a 12.8% increase in job alert creations from that one change, Indeed was able to send more than 1/2 billion additional job alert emails that year.

At Indeed, we’re lucky to have incredible access to data and a culture that embraces testing. So what do we test? Everything. Here are a few illustrative ideas of things we test: video ad creative for salience and recall, headlines for effectiveness, sales presentations for conversion, every word and every visual on call-to-actions for app downloads, the subject lines of email for click-through rate, the creatives for promotions for conversion effectiveness, and just about anything else where optimization can have an impact on performance.

To make testing easy, we’ve established a campaign lab that helps with the orchestration of tests supporting all of our functions. With more than 500 documented tests completed since the beginning of the year, we encourage our teams to test many permutations of tactics, messages, and creative approaches. The vast majority of these tests fail but the benefits of the few that succeed more than cover all of the expense. By staying grounded in data and encouraging our teams to fail, we discover impactful ideas and approaches that we otherwise never would have attempted.

Value # 2: Be transparent and avoid marketing ourselves

As marketers, we only get the full-impact of measuring and testing if we pair it with a marketing culture that looks objectively at activities and results. As a marketing team, there is often a temptation to apply our craft to our own results. Nothing diminishes our trust faster than spinning results or sharing only the good. On the other hand, few things can increase trust faster than being transparent about our struggles and failures.

Not marketing marketing is one of the hardest adjustments for new employees to make when they join our team. Although it is difficult, we ask everyone to be objective about the impact of our programs. It’s easy to find a metric that went up and to call a program a success. We try to be careful to not “spin” our programs to look better than what we may really know. We look at all of our results with a critical eye and are careful to present results impartially inside and outside our organization.

Being transparent requires us to make data on our tests and performance available as broadly as possible. By sharing data and insights and avoiding marketing our own work, we all learn the same lessons together. This makes us better. When we hide bad results, we lose the opportunity to share in the learning and risk repeating the same mistakes.

Over the last month, we’ve even set up mechanisms for anyone in the company to see and provide feedback on new advertising at all stages of production. In many companies ads are worked on secretly by a small team and then unveiled with grant fanfare upon completion. By sharing our work broadly at all stages, we get useful ideas, feedback, recommendations that helps us make all of the work stronger.

Value # 3: Our most powerful impact will come when we work through other teams

One of the things that I worry about most is that as our company and team continues to grow, we’ll lose some of the fun and impact to a monotony of meetings, complex approval processes, and uncoordinated projects spanning disconnected organizations.

For this reason, we’ve structured marketing to embed directly with the teams that have the center-of-gravity for every initiative that we support. When we’re the center of gravity, we ask other teams to embed with us. With a shift of our traditional online marketing teams to a growth marketing model, our teams are spread out and embedded directly with the product and engineering teams for the products we’re working on. As we support sales, we’ve centered our marketing planning efforts around our country marketing managers who sit with the sales teams and directors we support all around the world.

For everything we do, we ask where the most appropriate center of gravity should be — whether that is sales, client services, product, engineering, international, marketing or any other team. We then sit and work with those teams together as one team focused on solving problems together with as much day-to-day collaboration and as few giant meetings as possible.

While these three values may not be unique to our marketing team, they are part of a deliberate effort to avoid the silos, hype, misalignment, and politics that undermine the credibility of too many marketing organizations.

 

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The ONE valuable marketing lesson we can learn from Trump

14 Jan

In today’s world of fragmented media and divided attention, the best way to get attention is to be interesting. What the current Presidential campaign has shown us is that simply being worthy of conversation will often beat being right or responsible.

To this end, I really have three key lessons that we can learn from the trump campaign (the one key lesson headline seemed more interesting so I led with that). Here are the top three marketing factors that have propelled Trump to his current spot atop the Republican pack:

  • Be interesting: There is a lot of noise out there and media will flock to what gets people talking and tuning in. In today’s media world, nuance is less important than splash. The best way to get media coverage is to be controversial and salacious.  For Trump, the innate ability to turn any sentence into a show has resulted in spectacular media attention. Through the critical early summer campaign months, research shows Trump received twice the coverage of his 16 rivals combined. In fact, Trump received an average of 36 minutes of coverage on the three major network’s nightly news programs (ABC, NBC, CBS) every day. During this period, for example, Marco Rubio received an average of 1 minute and 35 seconds of coverage, Ben Carson received 11 seconds of coverage, and Ted Cruz received an average of 3 seconds of nightly coverage. The same phenomena absolutely applies to brands: today we all know AirBNB which credits much of its current awareness to the observation that media is more likely to cover companies with interesting things to say. Brian Chesky, the founder of AirBNB, stated this clearly in a recent interview: “We found that with press the more absurd the idea — the better story it makes. Being provocative was good because people would tell other people about it.”
  • Be distinctive: In a crowded marketplace, distinctiveness is essential to attracting a loyal following. This is true for political candidates and brands. Trump is a unique character that effectively makes all the other candidates look the same. His ubiquitous media exposure has led a large proportion of voters to think about whether they would vote for him. For many republicans, the first question they ask is whether they will vote for trump. If the answer is no, only then will they consider the other candidates.
  • Let familiarity breed likability: Research shows that repeated exposure to a person (or brand) increases the likelihood of attraction, likability, or favorability. While we like to think otherwise, people really know very little about the brands and candidates that they choose. In reality, we choose from the very small subset of options that are most familiar with. When it comes to presidential politics or brand building, ubiquity provides an enormous advantage.

While being interesting, distinctive, and familiar has provided a big advantage to Trump during this election cycle, there are many examples of strong political and brand narratives rapidly changing. In the same way that new information can change the way we think about Volkswagen or Enron, political candidates rise and fall quickly with the narrative that surrounds them. In particular, the risk of being controversial is that the narrative turns against you as a candidate or brand. Being interesting is a double edged sword that can drive either growth or deterioration. But for those that are good at tapping into ideas and controversies that people want to endlessly discuss, the opportunities are enormous.

 

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Public Relations, the “Comma Comma” Effect, and the Health of Your Brand

10 Dec

When media covers your brand, they’ll summarize the zeitgeist of your company’s identity with a handful of words that distill what readers or viewers need to know in the most succinct possible form.

For example, a recent article in the New York Times on Volkswagen started with: “Volkswagen, the German automaker, now at the center of a firestorm over its cheating on diesel emissions, . . .” using a sentence between commas to provide context to readers on what Volkswagen does and how they are currently perceived.

For brands regularly covered in the media, the  “comma comma” effect refers to the common descriptor that becomes used across multiple media channels as the shape of a public brand forms.

A major newspaper or media provider’s “comma comma” description of your company can be an important gauge of the health of your brand. No matter what words are used to describe your company in a press release or announcement, good journalists will always choose non-promotional descriptive language that reduces your identity to what people really need to know. This independent, and sometimes brutally honest, description can provide a good read on how a company is perceived.

For example, we can look at the “comma comma” description of Volkswagen over the last 73 years to see exactly how the brand has evolved in the eyes of American journalists. Over this period, the New York Times has continually evolved their description of the company as the Volkswagen brand’s role in the world has shifted.

Here are the last 70 years of “comma comma” descriptions of Volkswagen from the New York Times:

  • Volkswagen, a small german automobile (1942)
  • Volkswagen, a german version of a jeep (1944)
  • Volkswagen, the German people’s car that Adolf Hitler promised to his faithful (1945)
  • Volkswagen, or “people’s car” (1947)
  • Volkswagen, or People’s Automobile (1950)
  • Volkswagen, the biggest European producer of low-cost automobiles (1954)
  • Volkswagen, the biggest single exporter of cars to the United States (1955)
  • Volkswagen, West Germany’s largest exporter (1969)
  • Volkswagen, West Germany’s biggest car maker (1984)
  • Volkswagen, Europe’s largest auto maker (1993)
  • Volkswagen, Europe’s largest car maker (2000)
  • Volkswagen, Europe’s largest car maker (2002)
  • Volkswagen, Europe’s biggest auto maker (2007)
  • Volkswagen, Europe’s largest auto maker (2013)
  • Volkswagen, the German automaker, now at the center of a firestorm over its cheating on diesel emissions (2015)

Every marketer and communications professional has a set of messages and attributes that they hope people will think of when they think of their brand. One of the interesting things is to see how often these messages are pulled through in media descriptions of your company. For Volkswagen, the “comma comma” description often included powerful proof points related to the company’s size and clout. In bad times, it framed the company based on its problems.

Since the strength of a brand is also related to the consistency of perception, it can be interesting to look at the way that a brand is described across multiple media channels. If different publications and media providers describe your brand differently, or have trouble understanding what you really do, it’s probably sign of the broader perception challenges your brand is facing.

 

 

 

 

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It’s Time to Kill the Marketing Budget and Think About a Marketing P&L

8 Mar The Magic of the Marketing P&L

To their own detriment, many traditional marketing departments are organized around the annual marketing budget.

Every year the budget is passed to the CMO and subdivided among marketing functions and geographies to meet business and constituent needs. In these traditional organizations, the structure and hierarchy of the marketing team is often organized around the details of the budget allocation.

The problem with being oriented around the marketing budget is that it disconnects marketing from the real business needs. Many companies that focus on the marketing budget view marketing as a cost of doing business and not a measurable investment in growth. The pattern of investment in marketing in these types of organizations mirrors investment in other things that feel like discretionary costs: In tough years the budget is cut mid-year and in good years budget growth is based on based on the CMO’s ability to lobby and build a case for investment.

In today’s era of marketing and “growth hacking,” a focus on the marketing budget is a sign of a weak marketing department. The alternative is to focus on a marketing P&L.

A marketing P&L allows businesses to invest infinitely in the portion of the marketing that drives profitable growth within the financial reporting period

A profit and loss approach to marketing works for the portion of the marketing budget that directly drives near-term revenue. The question comes down to how much a company is willing to spend within a financial period to drive incremental revenue in that period. That number will be different in different businesses: it may be worth spending $1,000 to drive $1,000 in incremental quarterly revenue if that means thousands of additional dollars in future quarters. It may be worth just $50 to drive $1,000 in incremental revenue if your business has low margins and a low rate of repeat purchase or revenue.

No matter what the number is — almost every business has a customer or revenue acquisition cost at which they should buy as many customers or much revenue as they can during any financial period. By limiting spend with a fixed budget and applying budget cuts during tough times, businesses unnecessarily handicap their growth. Instead, businesses should invest infinitely in the portion of the marketing budget that drives profitable growth within the financial reporting period.

Here are examples of types of investments that work perfectly with a marketing P&L approach to investment:

– Search engine marketing expenses to drive profitable online ecommerce transactions

– Lead generation expenses that drive incremental net profit in the financial reporting period

– Expenses that drive profitable incremental absorption of any perishable product such as unsold theater tickets, unsold hotel rooms, unsold airline capacity, open tables at a restaurant, etc

But the list is really endless: the key is that the investment drives incremental profit that is greater than the incremental marketing spend during the financial reporting period.

How to switch from a traditional budget to a marketing P&L

How does this work in practice? the first step is for marketing and finance to split the budget into two categories of spend:

(1) spend that directly drives measurable incremental near-term revenue and

(2) other investments

The “other” part of the budget can remain a traditional fixed budget allocation. But for the spend that drives incremental revenue, marketing and finance should agree on a target return on investment and a timeframe for that return to be realized. Once this is done, smart organizations will let marketing acquire as much incremental revenue as possible at the target ROI without traditional budget constraints.

I’ve seen many profitable, visionary, typically private companies take this further by letting all customer acquisition activities scale without fixed budgets — even if the returns come over multiple future financial reporting periods. If it costs you $500 to acquire a customer in Q1 that will result in a $400 loss during Q1 but $2,000 in incremental profit over three years, you can maximize growth by buying as many of these acquisitions as your cash flow will support. In public companies which need to carefully balance current period earnings and future growth, these sorts of investments are much more difficult to make.

The marketing P&L changes the focus of marketing

As marketing teams align more of their marketing budgets to drive incremental revenue and growth, the way marketers organize and optimize is also changing. Marketing organizations with infinitely scaling acquisition budgets figure out how to drive as much growth as possible within their profitability constraints. By focusing on cost per acquisition and revenue per acquisition and testing multiple acquisition channels to improve profitability and scale, the marketing P&L allows marketing to take the lead in driving long-term growth.

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The Hierarchy of Startup Marketing Needs

6 Nov

For emerging businesses, it’s often difficult to know where to start with marketing. With finite resources, entrepreneurs need to focus on the things that will have the biggest impact at each stage of the business. Since marketing includes so many different types of tasks and activities — from researching customer needs to building demand — it can be challenging to find the right place to start.

While every business is different, it is helpful to think about marketing as a series of distinct activities with a proper sequence. The first thing to think about — getting your product right — is the precursor to everything else you’ll do. The most aspirational stages such as building broad awareness and love for your brand require all the other parts of your business and business model to be working well.

Hierachy_startup_marketing_needs

I think about the sequence or hierarchy of startup marketing needs as a simple pyramid with the essential marketing activities on the bottom and the aspirational activities on top. As entrepreneurs go up the pyramid, the marketing components become more expensive and more complex and return on investment becomes increasingly difficult to measure.

The pyramid has seven layers starting with a product foundation and building up to brand love. Here are a few thoughts on each of the levels of the marketing pyramid:

Product — You can’t build a great brand with a mediocre product. Marketing requires making promises to potential users and customers. If the product doesn’t live up to expectations, nothing else matters. Get the product right first before even thinking about investing in other marketing activities. Read more here.

Personality — The world is full of perfectly functional products that nobody cares about. The most successful products have personality: they are interesting, engaging, and likeable. They find their voice. They define what is special about the way they serve their customers and use their mission and values as a filter for product design and communication. They are willing to take a stand and fight for what matters to them and their customers. For more, read this classic blog post on Minimum Viable Personality.

Experience — So you have a product and personality, it’s now time to take the next step and make sure that every interaction with customers is as good an experience as it can possibly be. Great customer experiences are carefully crafted and orchestrated and — increasingly — this is the job of the CMO.

Experience is different for every company but almost always requires coordination across multiple people and disciplines. You may need to think through the purchase experience, the way you interact with customers, the experience of opening product packaging, the way that people reach you for questions,  or how customers  get help when something goes wrong. You’ll need to think about the way you communicate with customers, the way you thank customer for their business, the way that you train employees to create as consistent an experience as possible. It’s the visual identity that you use to make sure company or product and all of your communications recognizable.

Demand — Demand drives sales which drives revenue and profits which are the lifeblood of any business. For this reason, too many entrepreneurs  jump first into demand generation before thinking about product, personality, and experience. This is almost always mistake.

For most businesses, the quality of the product, personality, and experience determine the economics of demand generation. If you product is differentiated, compelling, and enjoyable than your cost of acquisition will be lower. When you acquire a customer they will be more likely to refer their friends or colleagues. Good things will happen.

While there are a near infinite number of methods to generate demand, management of demand generation really comes down to a few metrics and techniques. The starting point for demand generation is to set a targeted cost per acquired customer (or product sale) based on the financial model of the business. The next step is to test — to try as many methods and messages and designs and to measure the results. The best demand generation methods are scalable and able to deliver large numbers of  acquired customers at the targeted price.

Demand generation is where many companies begin to invest significant resources on marketing as part of their business model.  The more revenue and profits marketing programs are able to drive, the more smart businesses are willing to spend.

Credibility — For people to trust a new product, company, or approach, they need a reason to believe. It’s marketing’s job to help potential customers understand why their offering is better than other alternatives that a business or consumer might consider.

In consumer categories, credibility may come from expert opinions, celebrity associations, exclusive distribution arrangements, or relationships with other businesses that people trust, among other options. In the seventies, for example, Trident’s claim  that “four out of five dentists surveyed recommend sugarless gums for their patients who chew gum” provided credibility for their saccharine-sweetened gum. Sporting gear manufactures relationships with prominent athletes and teams provided similar credibility for their products. For many business-oriented and technical products, credibility often comes from commissioned research, surveys, white papers, awards, or benchmark reports that help people understand the value of the offering.

Credibility comes next in the pyramid because it’s the first step towards broad awareness. To engage people who are less likely to be early adopters of your product or service, you’ll need to be able to demonstrate credibility.

Awareness — For people to choose your product or service to solve a problem or meet a need, they need to know that your solution exists.

The first step to building awareness is clearly defining the audience that you need to reach. The narrower the audience, the easier (and cheaper) it will be to grow awareness. For a useful pharmaceutical that requires a prescription, it should be easier to get thousands of doctors to prescribe the product than to get millions of patients to request prescriptions. If you are selling auto insurance, you probably only want to reach people who own or drive cars.

Once you define your audience, there are many ways to build awareness. In the strongest businesses, awareness grows naturally and virally as your customers naturally interact with potential customers. Unfortunately, few businesses are lucky to have these dynamics. Other businesses need to invest to get their message out through advertising, public relations, social media or through the development of programs that encourage customers to recruit other customers.

Unlike demand generation techniques which typically focus purely on return on investment, many types of awareness investments are more difficult (but not impossible) to measure.

For consumer businesses, building broad awareness for a product requires strong execution on all of the levels of the hierarchy plus sustained investment in building awareness over time. In 2013, for example, 9 companies spent more than $2B each on U.S. advertising.

Brand Love — This is where every business wants to be: to have their product or services broadly known and loved by the people they target. Typically, it takes perfect execution on all of the above marketing elements to achieve brand love.

To get to brand love, you need to start my measuring every element of the customer experience. Using a tool like Net Promoter Score which looks at high likely a customer is to recommend your product or service.

But measurement isn’t enough to be great. You’ll need to get it right at every level of the pyramid including a great product, personality, a memorable product experience, and broad awareness in the markets that you care about.

 

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How breaking a promise can break your brand

25 Sep

While not a true crisis, a Texas lightning storm last week provided a striking example of how far off track a big company can go and how smart a start-up can be. It should be the other way around but too many big companies seem unable to get the customer experience right. At the same time, I’m amazed at how many small startups are super customer savvy.

The storm that swept across Texas was a big one. It dropped 6 inches of rain in a couple of hours and brought strong lightning, wind and thunder. Apparently, the lightning was close enough to bring down our power, Internet, and cable TV. While the power company restored power in less than a day, it’s been more than a week since we’ve had Internet or TV.

When our Internet went down, it took with it a variety of Internet-connected devices including light switches, thermostats, and music players. They all worked but they could no longer communicate back to the companies that service them. The day after the outage, I received a personal note from support at a company called Rachio which makes an Internet connected sprinkler system that I use. They are a small company and they could see that our device went offline. They proactively checked in to make sure that everything was working well with their device and whether I needed any assistance. This is truly amazing customer service considering the fact that they don’t have anything else to sell me and since they don’t earn any ongoing revenue from their device.

On the other end of the spectrum was AT&T — who I pay thousands of dollars per year — who should have the resources to turn this small crisis into an opportunity to strengthen our relationship. During a crisis, the best companies are proactive, share information, work hard to over-deliver on commitments, treat customers with respect, and are generous to make things good when unexpected events create new problems. Like Rachio, AT&T has the data they need to be proactive with support. They certainly have the financial resources to create a great customer service experience if they choose.

When we called AT&T after the storm they set up a appointment 3 days later on Monday at 8am to fix our Internet and TV. To our surprise, nobody came to make the repair and nobody called us to provide an update. We called again and were told that their window was extended to 7pm. Again, nobody came and nobody called.  At 7pm we called them and were told that they weren’t going to come and that, in fact, nobody had even been assigned to our ticket. They could not estimate when anybody would come. They would not schedule another appointment. They blamed dispatch and said they had no access to information.

As infuriating as this experience was, it was just the beginning. Tuesday, Wednesday, and Thursday were exactly the same: each day an AT&T representative would commit to send someone and nobody would ever come or call. They systematically made and broke promises. They lied to us. We spoke to managers and supervisors but there was no path of escalation and no accountability.  More than a dozen AT&T employees made promises to call us back or to take an action and then failed to honor their commitments. They made it our job to spend hours on the phone.

In these interactions, AT&T committed the two most fatal brand mistakes: they created a bad customer experience and they broke their own promises. While it is inevitable that customer service mistakes happen, it’s clear that AT&T’s problems are structural. They are a choice. AT&T has decided they are going to save costs by providing limited customer service. Further proof of this can be seen in their crediting policies. Surprisingly, they didn’t proactively offer to credit us for the service they weren’t providing. When we asked for a credit, they still wanted us to pay for part of each of the days that they were unable to provide service. We now must call back every day to get additional daily credits for the outage.

On Tuesday they sent us a customer satisfaction survey which allowed us to write, at length, about the promises they made and broke. The survey was smart: it clearly asked if our issue had not been resolved. When we said it hadn’t, the survey asked us to provide a phone number so that someone could immediately reach out to address our issue. This was a great opportunity for AT&T to escalate our issues and get the relationship back on track. We provided the number and requested follow-up but nobody called.

As a marketer, I know the work that it takes to build a great brand. AT&T’s CMO certainly understands that their brand is only as good as the promises they keep and the experiences that they create. AT&T’s broader executive team, no doubt, speaks personally about the importance of honesty, integrity, and keeping promises. They have all the data they need to spot problems and proactively help customers. They have the data they need to spot customers who they have let down. Why is it that they are unable to treat customers with honesty and integrity? Why don’t they invest to save customer relationships that are worth thousands of dollars when they know they are at risk? How much financial damage does this cost them in any given year?

The difference between AT&T and Rachio runs very very deep. Rachio is clearly being built from the start as a company that values an exceptional customer experience. Like Apple, Tesla, AirBNB, Zappos and other strong companies, they are using the customer experience as a tool to build their brand. AT&T has never been this type of company and it’s probably impossible to change the culture enough to positively impact the brand.

For Chief Marketing Officers, it’s important to remember that building a great brand almost never starts with great marketing. It starts with building a great product and a great customer experience. Your brand is the promises you make. When you break those promises, there is no amount of advertising spend that can get your reputation back.

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