Sunday, March 31, 2013

Beware segmentation: Don't consider that an audience should exclude anyone..

What a cool ad. And sensible that the audience should be women, mums/moms. But by keeping the appeal broad, P&G have not scotched their chance to sell to the other 50+ percent of the world's population. As a non mum, I'm still loving the ad.

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Fear is the weapon. Freedom is the resisting of it.

I have seen people make extraordinarily bad choices, and forget their own values, due to their own fear. And a real strength comes from resisting fear in two ways. The fact that fear is such a powerful motivator seduces us in two ways:

We are invited to succumb to our fears
We are tempted to use fear to control others

And the very best people I've met are those who resist both of those seductions.

The best and the worst
As a 30 year old sales guy we had a large-ish ($600,000pa) customer who had the shits with us, and was telling us that they'd pull the business. As I tried to infect my boss with my panic I was calmly met with "well if they start the process we'll take appropriate action". And the storm blew over as we worked our way through it.

By contrast, many of the worst I often see are stricken with fear about the worst of a dozen scenarios, of which "dozens minus one" will not occur. These people manage to successfully infect their staff with panic and the whole place breathes blame, defensiveness and distrust.

And again, the businessmen whose job it is to fly planes for people to jump out of. They hang out with their people, enjoy life when the fun's there and deal with any problems as (and before) they arrive.

Global management by fear
Fear has been the weapon of choice of "opinion makers" for all of my memories. My first memory was as a 12 year old, some troops buildup on the Russia/China border had me sleepless, because I'd read the paper. Nuclear war, red peril, yellow peril, immigrants, global warming, home invasions, drop bears. Many things are real, but what's more real is the fact:

Many good people do bad things and many clever people do stupid things because of fear

Where are the strong ones? If it's to be, it's up to me
Where are our leaders telling us that "there is nothing to fear but fear itself"? The optimistic urging of FDR as the US sat mired in the great depression. We seem to now be controlled by a thousand "men behind the curtain" a thousand weak, fraudulent Wizards of Oz.

I pray I can resist fear. To not give in to it, and that I can refuse to try to use it to control others. Because I know I'm not there yet.

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Friday, March 29, 2013

When "The world is warming" sounds like "turtles all the way down"

Hear me clearly. The world is warming. A look at any chart of global temperatures since, say, 1900 shows an upward trend. With some flat bits and steep bits. Warming.

But many commentators have clutched upon the fact that there has been about fifteen years without any statistical increase in global temperatures. The glee of Andrew Bolt - for instance - should not cause us to deny fact.

The UK met office seems to be taking the clever route. It would be my argument. Doing a "right click regression" can be a great tool for those who like to lie with statistics. Considering 15 years - no warming, considering 80 - warming. Now there might be some issue for the people who were predicting warming over the last 15 years, but that's entirely another issue.

If I wanted to try to lie with stats I could pick a six year period and get a cooling trend, but that would be disingenuous. As it (sort of) is to talk about no warming for fifteen years.

But don't get caught in the trap.
I've seen great brains like Dr Karl get caught in this, and others like Craig Emerson. Infuriated by Andrew Bolt's pointing this out they both called him a liar. But they were factually wrong. And that gives Bolta even more oxygen.

Turtles all the way down
Those who react and deny remind me of the apocryphal tale of the dopey believer:

A well-known scientist (some say it was Bertrand Russell) once gave a public lecture on astronomy. He described how the earth orbits around the sun and how the sun, in turn, orbits around the center of a vast collection of stars called our galaxy. At the end of the lecture, a little old lady at the back of the room got up and said: "What you have told us is rubbish. The world is really a flat plate supported on the back of a giant tortoise." The scientist gave a superior smile before replying, "What is the tortoise standing on?" "You're very clever, young man, very clever," said the old lady. "But it's turtles all the way down!"
—Hawking, 1988

Surely we can do better than simply adding another turtle to the picture.

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Thursday, March 28, 2013

Your regular users can cost you money

I watch a few coffee shop regulars a few times a week. They enjoy their coffee, it starts the day. 

Every day.

I spoke about this the other day in a lecture and in a recent blog. It's a metaphor for the bigger picture. They buy, probably 300 coffees per year. Its about $1200 a year per guy. Cool. They're valuable.  It's the whole basis of thinking about customer lifetime value. And in this case I don't think they're costing money to the business. But they they do take all four newspapers that are supplied for customers and have a few glasses of water.

Bt I remember a time where I was selling a typed of plastic wrap  to a big customer. He bought about $400k per year. It was a technology my company was getting out of - our equipment was old and inefficient. The market price for the product was well below what we could profitably make it.

As the sales guy I was caught in the middle. The customer (let's call him Vili) kept telling me he could get the product cheaper but was staying out of loyalty. The company kept telling me that I needed to get a better price. When it all fell apart, Vili had thought I was insulting him - asking $35.00 when he had quotes on his desk for $20. Live and learn. Today I might just tell him straight but back then I felt I had to look like I was trying.

I suppose the key message it that it's important to know how much you're making from each customer, and to think about it broadly.

Price reductions: surely these numbers are wrong?

I dont consider myself the oracle of numbers. But isn't there a bug here?  I can't think of any permutation that would come up with those % savings.

Surely the top one is more like 50% off, while the bottom is more like 25%? Perhaps it's a research project. Some maths educator may be  wondering how many people notice.

Saturday, March 23, 2013

The customer: not always right but they do get to vote with their feet

I'm irritated when a person "rolls the tape" without showing any real depth of thinking. "The customer is always right" is surely one of those lines. FFS there are dozens of instance where that is wrong. "I want to skydive without a parachute" - wrong. "I wish to buy that BMW motor car for $40" - wrong.

But the genius of that line is its subtle insight that the customer ultimately has control over whether or not they stay with you. They can vote with their feet.

I took a cheap mobile account six months ago. $19.90 per month with a GB of data. I knew the terms. Data excess charge at the huge 50c per megabyte but I'd never be silly enough for that. Got caught in the first month. Bugger. But it's a fair deal.

Lost my SIM card a month ago. The replacement got lost in the mail. Apparently (for the first time ever) Australia Post could not deliver to the address I gave. Not the carrier's fault, but a piss off.

And I ran over data again this month. I know I'll get a stinking excess bill, and I'm frozen for another week.

And my carrier hasn't done anything wrong. I made the mistake to choose a cheap account, I ran over data, the carrier didn't lose my SIM card - I did, and Australia Post. But screw it.

I still get the choice to move. And I will.

But I don't think the carrier has lost out, really. $100 two months ago and $150 this month. SIM replacement fee. They won an extra ten months of normal trade from the deal. Fine. I've learnt my lesson.

But now I'll change carriers.

The customer isn't always right but they do get to vote with their feet.

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Michael Buble's personal brand is everyday marketing genius

Because he rejected target marketing. Sure, he has his audience. Women love him. He's good looking, sings brilliantly, appears to be quite intelligent, and rich I suppose. Every reason for guys to hate him. And that would cruel half his market.

But he's a regular guy. At least in his own personal branding. On an interview as he was asked about the adulation from women he was coy. The "frankly it's a little embarrassing" line. Said how he's married and that he played hockey - real blokey stuff. He won me.

So Michael Buble keeps his appeal as broad as he can, allowing for reach as well as depth. He threw me a bone, an opportunity to like him. And I do. Everyday marketing genius.

And I love this song..

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Wednesday, March 20, 2013

Razor Makers: Loyalty from the "sunk cost" fallacy

Man. What a product category. How confusing and how expensive.  I know women argue that feminine hygiene is an unfair marketing business but this is pretty harsh too.

Guys like a system. They like to have interchangeable parts and not feel they've wasted any energy.
The Ryobi one+ range has tapped into that in a positive sense.

One battery for your drill, angle grinder,  torch,  radio,  hedge trimmer and dozens of others.

And the dark side. Razors. How confusing:

 And we are aked to pay about $13 for four razors. And we do it because we bought a handle. Like one of the ones I gathered together in a minute in my bathroom:

But then I played the "screw you" move and bought a Coles entry pack for $7 and four cartridges for $6.

I think these companies are trading on the "sunk cost" fallacy. I spent some money on a handle so it'd be stupid to buy another handle. Perhaps that's why I have so many handles.

But behabioural loyalty (the propensity to buy the same brand repeatedly) is often driven by inertia. What generates more inertia than being signed into a system where you think you're "wasting something" by getting a secong handle.

Don't worry, I get caught too. I just bought a Digital SLR camera and drfited strongly towards Pentax. I have two Pentax lenses.

We're all a part of the game. Sometimes we play, sometimes we're played.

When the press turns mean..

Im not sure how much the proposed media laws had to do with it but both Fairfax and News Ltd have had a fair crack at the PM today.

Perhaps it's just an idea whose time has come.

Monday, March 18, 2013

Traps for young players: Emailing up the chain too early

I love working with younger people. I am amazed how good many young people are. Somebody 20 years younger than me who can outstrip me on speed of work, clarity of thought, energy etc. Sometimes it happens and it always impresses me.

But my years in the trenches have taught me a few things. Traps that actually work against what you're trying to achieve.

One such trap is the emailing of everyone up the chain of command when you have a problem. Guilty as charged, at times.

The last time I made the mistake was when I thought I was working in a collaborative, solutions oriented environment. Effectively I had set off a series of minor explosions, a chain reaction of blame and counter blame. I can't believe I still get caught.

And I was recently on the downside of one. I spent the first few hours putting out the spotfires up the political chain before I could concentrate on solving the problem. The nice young person doesn't know how much extra angst they created.

Live and learn, I suppose.

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Friday, March 15, 2013

The riddle of the regular customer

It's something I muse over regularly. As I see the old guys at a coffee shop every day with their glass of water and their single cup of coffee I think about the idea of lifetime value.

But when I look at the Negative Binomial Distribution of customer purchase rates I know that - on a macro basis - the majority of volume that a business does is done with customers who may drop in once a month or even less frequently.

I still love the idea of taking care of the customer, but there is also the reality of "every customer matters"

Saturday, March 9, 2013

At Coles "How do you want that packed" is no accident

I had a great chat with the checkout person today. I hope she didn't mind. She asked me "how do you want that packed" and I was befuddled.

For sure I get cranky when "my version" of good packing is violated but this was forcing me to explicitly state it. To set the terms of a "packing contract" with the girl.

So when I asked if it was a "you" question or a Coles question she told me that she normally did something like that but that Coles had recently formalised it. That thete were "a lot of mystery shoppers out at the moment".

It's no surprise. In the world of service delivery, people with good sense are gold. But you can't expect all employees to have good service sense. And for that reason there are service standards. Managing the extra three Ps of people, processes and physical evidence. I remember in 1991 with Betts and Betts the service standards were inviolable.  A sackable offence.

So the uncomfortable question is not an accident. It's clever marketing.

Thursday, March 7, 2013

"Customers only" should include quite a few people

With time to kill in Melbourne before I go to the airport I went to go sit in the "Oaks on Market" lobby. It's a  nice place. I didnt stay at the Oaks on this trip and strictly, the management might think it a little odd, maybe annoying, that I would spend a little time sitting here.

Now I doubt that they'll kick me out. Melbourne businesses tend to do less of the "customer is an intrusion" thing than others. But the event brings me to a topic I ponder quite often.

What makes a customer a customer?
The topic has been around in Marketing Science for many years, professors Peter Fader and Bruce Hardie came up with a cool model (NBD/Pareto they called it) that aims to estimate how long a customer should go without repurchasing your product before you can safely call them lapsed.

But as a mere mortal I think of things such as using the compressed air at a service station. So I drive into my local service station and use the "free" air for my tires. And drive out. Should I feel guilty? Should the proprietor get shitty? It's a service for their customers, for sure, otherwise a sensible business wouldn't do it. But what do you mean by customer? How's this for a sliding scale?

  • Bought something today.
  • Bought something this week.
  • Bought something this month.
  • Bought something in the last six months.
  • Longer than six months
  • Haven't bought anything ever.
So as a manager, where do you start to tell someone to "piss off"?

Modern marketing science tells us that we should consider everyone on that list as somebody to be pleasant to.

I'll take the easy one first. A person who has never bought is at least in your geographical area. It may be the first of many, it may be random. But why alienate a potential customer?

Every single one of those other categories is easily explained by a marketing truth that was first noted in 1959. This Negative Binomial Distribution model is the natural shape of consumer purchases. A brand or product category has a huge majority of the customer base purchasing them once (or even not at all) in a week. If a brand collects its monthly figures, a few of those "zeros" get the chance to buy and become single unit purchasers. At six months many more "zeros" tip into the single purchase group.

If we run the time out to an extremely long period - say five years - the proportion of nonbuyers reduces to very low. Everybody becomes a customer.

And if there is no marginal cost increase to let those people use the service the what are you losing? So, run the compressor, leave the lobby free. It's no biggie.

I stayed at Oaks on Market last January. And will do so again. Such is the ebb and flow of life, and business. UPDATE: Of course, life always gives us a chance to curb our self righteous indignation. Perhaps just plonking oneself in a massage chair is stretching the friendship. Same principles probably apply.

Australia Post: Less dead than ever and now with self service

The predictions of pundits just sometimes don't reach far enough, do they? Fifteen years ago I might have predicted the demise of Australia Post. Email would mean less snail mail yada yada. ..
But the rise of ecommerce and ebay has meant more person to person single parcels. Australia Post was well positioned to service that work. Their challenge has been to cope with the volume increase with efficiency.

Getting the customer to carry some of the service load makes sense. Some customers prefer to spend longer at a self service station than to stand in a line and then get served. I'm one.
So, here in Collins street, Melbourne, I'm seeing what can only be described as a commonsense move.

Wednesday, March 6, 2013

Adam Hills' personal brand

I had a student yesterday saying that Stephen Fry's personal brand also had Adam Hills playing in the same territory. And I saw this today. I tend to agree.

Tuesday, March 5, 2013

Tutorial Whiteboard: A strong brand

Make sense of it if you like. We spoke about what a strong brand might have, both from a consumer side and how a brand might measure it.

We got off onto a useful tangent about loyalty and its two dimensions and how Dick and Basu (1994) did a clever 2x2.

Wow. I am back in front of a class. And my blogs might show it a little more. It's always great fun.

Indoor cricket: A perfect product lifecycle example

I was just asked to play in an indoor cricket team. Now, indoor cricket is every bit as new as squash but I remember when it was different.

Back in 1984 as I was just entering the workforce, two huge warehouses were built on then vacant blocks on Clayson rd Brahma Lodge. They crowded out the bowling centre and the squash/tennis centre.

Indoor cricket was everywhere and I was playing four nights a week.

Now indoor cricket is not so big, as with squash. Now there's probably only one business selling the product. Or fragments, struggling to make it pay.

Introduction Growth Maturity Decline. With market shakeout in there somewhere.

Product lifecycle.

Sunday, March 3, 2013

Sunday chill: A four way skydive

Reasonably feral. But we've never jumped as a team before. You can see we were working hard to match fall rates, but that comes with experience jumping together. We nailed the exit, moved to the second point well, almost got the block move and almost rebuilt as some compressed accordian thingy. Still time for Jed to "fruit loop" Shannon before we broke off and deployed. A lot of fun and - of course - everyone landed well.


Saturday, March 2, 2013

Irony: A cutlery set

Freakin' hilarious. The number one concern of my life at the moment is a little income security. An unfinished mortgage on a nice house and three half finished kids' educations will do that to you. Maybe.
Five years ago I left a pretty strong business (that liked me enough) for a different one. That hasn't worked out so well. But here's the joke.
  • Walk in "parcel for you to collect"
  • Look down "that's a big  parcel"
  • Crack it open - a million dollar cutlery set
Life just keeps on making these jokes. And of course the correct response is to laugh.
So if you see me laughing - you're in on the joke.

Jesus and Skydiving

I've always had something hanging off my neckand it tends to say something about me at the time. Ive worn a crucifix on a Bico chain for a while now. Jesus is cool, and Bico reminds me of Cairns, where I'd live if I could.

Mia got a Bico chain and charm on her last trip, and has worn it consistently. In a new, great, school that has a religious ethic children aren't allowed to wear ornaments that don't have religious significance. Fair enough, it's a uniform rule.

So Mia gets my crucifix and I get her Bico teardrop. And then I can put a skydive closing pin on it as well, the thing that holds your parachute in the bag until you want it out. The perfect blend of the things I believe, some people I love and the things I like to do.

How to embed YouTube into PowerPoint 2010

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Friday, March 1, 2013

Sweet Home Chicago

Vid taken on a mobile phone never does justice to the experience. But if you suspend critique for a moment you might just get a feel for how absolutely brilliant this night was...

I think I'll be going back on Friday March 15. This is a rockin' show.

Qualified Practising Market Researcher

Apparently. I did the theory and the practical exam late last year and need to keep a professional development diary. I suppose it's handy on a cv, and it's nice to have a piece of paper.