Quality Crowd

“Communities must be cultivated, respected and deftly managed if they are to come together to create economic value. This takes talented staff, and a set of skills not taught in journalism or business schools.”
Jeff Howe, Wired Magazine

My mind is about to explode this week. As I get ready to finish my Digital PR class at Johns Hopkins I am also getting ready to go on vacation. In the meantime, my group is in the final stage of completing an engagement plan for an experimental film site. After all the meetings and discussions with my group I am still looking for an insight that will lead to a unique product and campaign for my client. I thought that community sourced film would be a great start, but for my surprise, some people have already developed and implemented the idea. No wonder my teacher is so skeptical about my insights…

Among several open sourced movie projects, “A Swarm of Angels” deserves special attention. In an interview for “Assignment Zero” — an online community journalism site – Matt Hanson explains his purpose and different possibilities he sees in having a crowdsourced and crowdfunded movie production. Anyone can join the project for ₤25 and, in exchange, give inputs during the movie making process.

Gosh… that was one of my ideas for my client… Now what?

Hanson says one has to go through a lot of junk to find some quality films in sites such as Youtube but there are some people out there who are looking for “more distinctive and personalized content”. It is very easy to create a site and ask for people to feed stories, footage, etc., but when it comes to putting together quality, art, business and a serious and dedicated community you need someone equally passionate, knowledgeable, and who is willing to work pretty darn hard to put these pieces together and transform them in an amazing product.

So, yes, there is hope for my client if he is ready to commit to hard work, community, passion, and leadership. And yes, there is hope that my group will put something amazing together for our presentation by Monday night. And yes, there is hope that my client and teacher will be satisfied with our engagement plan…

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Another Week of Wikinomics

I am trying to remain awake while reading Wikinomics’ repetitive stories about how masses of people are changing businesses, economies, countries, and even the world. Blame it on the hot weather in D.C. but I had enough of Procter & Gamble, IBM, and other large corporations cited as examples of the success of Social Media. What about the smaller ones? Any interesting facts? And what about other types of scenarios that may result from so much information disclosure?

Tapscot and Williams give an optimistic and perfect picture for a future when digital communities will be able to discover cures for diseases, solve environmental issues, and develop innovative businesses. Sounds like the perfect world and perhaps it will be. But it will depend on the integrity of constructive partnerships. Unfortunately, Wikinomics does not address other types of scenarios that may occur especially when you disclose an immense amount of information. I wonder why the authors do not address issues such as revenues, competition, security, as well as the fact that a large amount of digital opinion and creation is in the hands of platforms of inexperienced teenagers? Surely it should. And if it won’t, I certainly hope someone else will!

Wikinomics for Wikimorons

This morning I had coffee with a History professor. I had been thinking before about Web 2.0 and whether it would usher in big changes in our world or not. Well, as the caffeine in our blood got us energized, he and I entered into an interesting conversation about social media (my favorite topic since beginning this course). As a good History teacher, Darrel took me back to one of the most important communication revolutions ever experienced: the creation of the printing press.

The invention of the printing press in the 1400’s created new forms of political thought and major social and scientific innovations. It helped spread thinkers’ revolutionary ideas; it created new forms of democracies and technology. The world has never been the same ever since.

After this conversation, I am convinced that we are not far from experiencing a very similar phenomenon. This time, the phenomenon is Web 2.0.

The book “Wikinomics” provides very good information on the subject, especially for those who wish to expand their businesses and understand what drives competitiveness and decision-making in today’s world. In their book, Tapscott and Williams describe Web 2.0 as the unique space and platform where ordinary citizens create news stories, movies, music, software, and even find cures for disease. Even more fascinating is how Web 2.0 develops new ground as individuals share, discuss, and develop a new language based on openness and trust. Web 2.0 promises to directly impact our life, wallet, and well-being, so the more we know about it, the better.

So, if you are one of those people who think Web 2.0 is just a game for teenagers, wake up and smell the coffee too.

Corporate Social Responsibility: It’s not Ronald’s fault…

What exactly is the role of marketers?  Are they supposed to protect the public interest or clients’ profits?  Phillip Kotler offers some interesting insights about where you draw the line between marketing practice and unethical behavior.  Happy customers create good businesses and steady profits, no doubt, but to what extent do companies truly care about consumers’ lungs, throats, and hearts?  Are businesses willing to reduce profits and take the responsibility for customer’s health and well being?  Should they?  Perhaps the government should be accountable?  What about the public?  Do citizens have the power and tools to protect their interests?   

Capitalism offers an infinite amount of choices and prices; we love that!  We also have plenty of access to information; we know exactly what is inside that McDonald’s burger, but we choose to eat it, blame it on Ronald, and take a Zantac afterwards. Is it fair to blame corporations and the government for our poor choices?  Who is accountable?  Are we capable of creating a new market where citizens have more power and responsibility? How can we accomplish that?

We must take advantage of new communications tools that offer us a platform to express ourselves against those who threaten our environment and provide incentives to those who try to improve it.  Social media is becoming the public’s greatest ally for creating an environment that requires trust and honesty.  As this new type of democracy emerges, businesses develop a higher ethical behavior in response to the public’s demand; customers feel happier, safer, and therefore buy more products and services from those they trust. Perhaps then marketing and ethics will not sound like an oxymoron.

Questions About The Ultimate Question

How do you win and maintain customers? How do they become part of your team? What about your employees? Do they really care about you and your business? “The Ultimate Question” simplifies basic rules that we tend to forget when we focus on profits only. Reichheld encourages organizations to create close, unique, loyal relationships with customers and staff; sooner or later the effects will emerge and everybody will be happy. Reichheld’s NPS formula of enrolling and taking care of promoters t makes sense in a perfect world, but he does not acknowledge other issues that businesses have to face. For example, Reichheld does not elaborate much on detractors, unethical customers, and dishonest sellers. I hear horror stories from friends who work in retail and who many times have to to accept returns from clients who used the product or outfit (with makeup on it) several times and pretend that nothing is wrong.

My sister owns a photo business in a small town in Brazil. Foto Hugo is well known for its service, quality, location, and tradition. The employees are genuinely nice and loyal; they have been working for my family for more than 15 years. They work hard and they are part of the family; my sister prepares their lunch (nice hot meals) every day and they usually eat together in a nice little dining room in the building. Most of their clients are low to middle-class; some are upper middle class; they keep coming back because they get good products for a good price and an excellent service. Staff are trained to always find a way to please the customer; clients do not leave that store with less than they expected. In addition, they always create a promotion especially for the poorest; they make an extra photo of the child and put in a calendar or go to the central plaza with their cameras and take free pictures of kids with Santa during Christmas time. Gosh, I never thought they were so cool before reading this book and writing this blog.

Regardless the fact that the business is located in a small town of a developing country it does a good job in creating and maintaining good customers; the products are interesting especially because they are specialized in children’s photos; they make people happy and always find a way to suit their needs; and they have earned respect from a community in a city that is becoming a major industrial center. Nevertheless, they still struggle with having a family-owned business in a country that is still economically challenging and where the middle class is almost inexistent. As a result their clients are poor and do not pay them sometimes; the prices of film and other raw material increase quite often; such price increases do not match the yearly minimum salary increase and the business suffers while trying to keep clients happy.

I wonder what Reichheld or you would recommend based on what we have learned so far from theory and how it could be applied to a business like Foto Hugo. Should they continue being so generous? How can they keep up with their expenses and maitain low prices? How can they please a low-class clientele who is also passionate and proud of having their children’s photos? How can they maintain their generous and authentic attitude and improve profitability?

Who loves you?

How do you measure word of mouth?  How do you get people to promote your business?  Forget those long impersonal surveys or those telephone calls while you are having dinner; people will hate you even more.

The book “Ultimate Question” introduces a formula for measuring how liked you are by your customers.  How does it work?  Just ask “how likely is that you would recommend company X to a friend or a colleague”; give them a Likert Scale from 0 to 10 and voila!  Customers who score between 0 and 6 will be your detractors or enemies; those who rate you between 7 and 8 are indifferent and those who rate 9 to 10 will be your promoters or greatest fans.  Next, subtract your detractors from your promoters and get your Net Promoter Score or NPS.  Sounds simple?  Perhaps, but it gives you a starting point on how your customers see you and how would they talk to others about you. 

The NPS score will probably be an unpleasant surprise for businesses who believe they are doing well just because they generate profits or because clients keep purchasing from them but it does not mean that these customers have any sense of loyalty towards you. As a matter of fact they might not even like you.  They can leave you at any point for someone else who treats them better, respects who they are and make them happier than you do; does it sound familiar?  If so, you must focus your business energies in distinguishing good profits from bad.

Marketing NPV describes 4 different types of loyalty based on clients’ needs, options, benefits, and risks; they include:

1. Contractual Loyalty – when a customer has a formal agreement with you; a formal contract; like my contract with Cingular – I am not happy with them but the contract is still on….it works for me, it works for them (obviously), but there is no passion between us.
   
   
2. Transactional Loyalty – based on price or convenience but a customer may switch at any time; i.e. your credit card company; it may be convenient to keep it because you have a good mileage but you may always switch to someone else who offers a better deal.
3. Functional Loyalty – when products are perceived as superior; some people wear certain brands of tennis shoes because it fits exactly their needs.
4. Emotional Loyalty – when customers develop an emotional attachment to a brand based on their ego, values, or sensibilities; i.e. I know some people who drink coffee only from a specific place and made by a certain barista.  OK, these people may be high maintenance but their emotional loyalty and how well they talk about the café keeps the business safe.

Besides measuring NPS and clients’ loyalty you must value your promoters; they sell more than you think.  But don’t underestimate your detractors; they may cost you more than you can afford (in 2003, Dell’s 15% detractors cost them $68 million).  They key is to generate authentic and solid relationships with clients and create communities of enthusiastic advocates for your business by listening to your clients needs rather than giving them long and meaningless surveys that nobody will care about anyway.

Did you bite the Apple?

I just came back from the Apple store and I still have a scene in my mind: a crowd of people surrounding and starring at the new IPhone; I almost bought one too! But do we really need the IPhone? What makes us so insane when we see a a new and cool product? What makes us pay $500 dollars and change our phone plan? Are today’s purchase influences the same as they were 20 years ago? The stimulations are the same but the process that takes us to the cashier has changed because today we have more and better tools to do our own research and acquire knowledge faster. If you have some desire to purchase a product and if this product gets endorsement from community of experts that you respect, you will probably buy it soon. This new purchase environment requires businesses to create effective marketing strategies. Apple serves as an example of success based on rich research and creative promotion.

According to an article in Principles of Marketing, internal and external influences determine our desire or need to consume. Internal influences originate from our basic human design based on knowledge (information retained), attitude (beliefs, feelings), personality (personal characteristics), lifestyle (activities we engage), roles (our position in our environment), and motivation (desire to achieve a result). External factors include circumstances outside our control such as culture, social status, family, friends. These internal and external forces tcombined with a 5 step process will determine our potential to purchase a product. The 5 steps are:

 a “need” to improve a situation;
 a search for information (internet, others);
 an assessment of all the options available;
 decision to purchase;
 post-purchase evaluation.

Marketing research is a fundamental tool for marketers to learn what is inside consumers minds and what is driving them to purchase certain products or brands. It allows marketers to learn about a product and be statistically confident that their product will sell. Apple has certainly done an amazing job in creating new products or new needs endorsed by an amazing advertising campaign that makes people drool in front of the TV or around the little IPhone in their store. After reading the articles and visiting their store I can clearly understand the work, effort, creativity, and brains behind the IPhone.