Tuesday, August 15, 2017
World Wide Reputations and Their Impact for Word of Mouth
2:40 pm edt
When we advise
marketers that to increase recommendations and word of mouth for their brands they need to provide motivation, content and
opportunity, we frequently hear the response, that’s a great idea, but HOW?
A study of the international
reputations of companies, conducted by the Reputation Institute (RI) and reported in Quirk’s
Survey Monitor, June 2017, (https://www.quirks.com/articles/survey-monitor-june-2017) offers a flood of ideas
about how to build one’s reputation – and from our point of view how to also build positive word of mouth. RI’s 2017
RepTrak 100 report identifies the most reputable brands in the world. Findings are based on
more than 42,000 respondents’ feelings about 800 companies. RI claims to have quantified the linkages between
reputation and various behaviors including willingness to: purchase a company’s products, recommend a brand, invest
in or even work for a company.
The RI questionnaire asks consumers to rate brands on seven factors which
RI says comprise reputation, with the following percentages indicating their relative influence as ‘drivers of
19.3% - Products and Services
13.7% - Citizenship
13.6% - Innovation
13.2% - Workplace
12.4% - Leadership
Want Some Specific Positives?
One big gainer in the RepTrak 100 rankings this year was Kimberly-Clark.
The company’s strong focus on CSR with key initiatives around sourcing sustainability and product donations, plus product
innovation helped to drive Kimberly-Clark’s “excellent” rating.
A strong improvement
was also enjoyed by Google. According to RI they enjoyed a notable ranking increase by focusing on sustainability and
donations to charity in lieu of employee-bonuses.
We imagine that to achieve such advances in their rankings
both Kimberly-Clark and Google likely promoted their good efforts. Hopefully that promotion included well-crafted communication
to their loyal customers and employees (though we don’t know that they took full advantage of those potential advocates
and ambassadors. Perhaps they missed that opportunity.)
On the Negative Side
Not surprisingly, RI reports that Samsung dropped from #3 to #63 in the top 100 ranking based on the headlines
about its Galaxy Note 7s catching on fire and the subsequent recall. Other companies that fell in the rankings were American
Express and Yahoo! (Yahoo’s decline no doubt a result of the long delays in Verizon’s acquisition of the web portal
as well as its reported series of data breaches.)
Ironically, these declines in reputation might possibly
have been blunted by communicating more effectively with loyal customers and employees thereby allowing them to generate their
own flood of supportive word of mouth.
An Insight from the RepTrak 100 Report
From our point of view the categories of RI's model suggest some great
thought-starters for those charged with developing content for more active and effective customer advocates and employee brand
ambassadors. Don't assume that customers and employees have sufficient information across these categories! Be they customers
or employees (see our recent article, "Employees: Your Best Brand Ambassadors?") your potential advocates
need specific stories about your brand’s efforts in: innovation, product quality, citizenship, and more. With
this sort of information they'll be 'armed' to write or speak to their friends, relatives, neighbors, co-workers and followers
about your brand. They need your help.
Tuesday, August 8, 2017
Is "Loyalty a Crock"?
2:31 pm edt
Author Byron Sharp
was given cover story coverage by Ad Age magazine a few weeks ago. Sharp's book How Brands Grow: What Marketers Don't Know and its challenges to conventional thinking have, according to Ad Age, "taken root with major marketers". Having ourselves
written, Loyalty Myths,
for many of the same purposes, we were interested in what a fellow writer had to say, and the proof he offered for his beliefs.
While the impact
of this marketing professor from the University of South Australia may be strongest on media and advertising - the way they're
purchased and used, his theories have a potentially far greater influence. His pronouncements include both cavalier
attacks on industry maxims and provocative alternate explanations of some loosely-authenticated tenets. Among them:
- Loyalty is a crock.
- Broad reach can be more productive than surgical targeting.
- 20% of your brand's biggest buyers
don't really account for 80% of sales.
"loyal" consumers aren't really that loyal.
- The best way to grow is to get more sales from people who care even less about your brand than the loyalists.
- We're all "polygamist consumers".
We're loyal, but within a range of things, which is why people have two or three types of shampoo in their shower.
- Ditch influencers: They are too small
to be of consequence.
- The odds
of moving the needle by getting light-buyers to buy just a little more is better than going after heavy-buyers, in part
because there are so many light- buyers, and the heavy-buyers are more likely maxed out.
- People don't care much about your well-reasoned messages: Buying is
based more on emotion, habit and established "memory structures". Distinctive brand names, logos,
taglines, symbols, celebrities or ad campaigns all help create these structures that make a brand easier to buy during
the snap decisions people make.
advertising only maintains market share: Just because sales don't rise doesn't mean the ad isn't working. Since
competitors are always fighting to take fickle customers away, it may be helping the brand prevent declines—often
by replacing heavy buyers who drop off with more purchases by light buyers.
Where We Think Sharp's Right
In some cases we agree with Sharp when he claims (#1)
“Loyalty is a crock”. Our agreement, of course, depends on how loyalty is being defined, and what type of
products and services are included in the discussion. Loyalty that doesn’t produce profit is a crock.
Much of the hype about loyalty is a crock. Sharp may be guilty of using shock appeal to sell his book, rather than presenting
a well-documented counter argument. He backs down on his bold statement when in (#6) he admits that,
in fact, consumers are ”loyal within a range of things”.
We might also agree if he is referring
to loyalty programs. That's because with so many consumers being polygamists (buying a variety of brands and joining
all their programs) it’s very possible that when all real-costs are accounted for few if any such programs can actually
be shown to have increased profits.
We also agree with Sharp that in most product categories (though not all
as he seems to suggest) that (#9) "People don't care much about your well-reasoned messages: Buying
is based more on emotion, habit and established memory structures." While Sharp is likely directing this message at advertising
strategies we think he’s inadvertently explaining why loyalty does work and why loyal customers are so important to
a brand. Habit, emotion and established memory structures cause consumers to look for one cereal brand over another
and whether he wants to call that “loyalty” or not, that’s why big brands that provide the right value equation
for their customers continue to be market leaders.
“Most advertising only maintains market share. Just
because sales don't rise doesn't mean the ad isn't working. Since competitors are always fighting to take fickle customers
away, it may be helping the brand prevent declines” (#10). We won’t claim to be ad experts,
but we do remember that existing customers are more likely to pay attention to messages from their favored brands, therefore
helping to retain (current) customers.
Where We Think Sharp's Wrong
We will be honest and admit that we haven't read How Brands Grow, so our comments are based solely upon Jack Neff’s Ad Age article. We will assume that this entire philosophy is based on a review
of fast-moving consumer package goods like snack foods, shampoo and soft drinks. But we know some of Sharp’s readers
will attempt to apply his message more broadly, so we feel it's important to challenge some of his key points.
There’s a lot of generalizing going on here. The author tells us that “all” consumers are polygamists (#6),
as if a consumer who buys their favorite brand 99% of the time, but purchases a competitor when his/her brand is out of stock,
is not loyal. He supports this with a UK research study that reported “More than half of Coke buyers also buy Diet Coke,
Fanta or Pepsi in a given year”. But he apparently doesn’t answer the logical follow-up questions of: Was
the consumer very thirsty and in a location where Coke was not served? Was it just one glass of the competitor’s
product in the entire year? And most importantly, did the consumer like the competitor’s drink, or did they even drink
Yes, the chance of “getting light buyers to buy just a little more” is probably a better
bet than getting those who are totally loyal and “maxed out” to buy any more (#8), but increasing the consumption
of light buyers could be horribly expensive. It also appears to ignore the fact that if a brand ignores its current
loyal/heavy buyers, causing these loyal customers to defect, that will leave a huge hole to fill.
influencers: They are too small to be of consequence." (#7). We have long believed in the value
of satisfied customers as advocates for a brand. Twenty years ago we had a difficult time convincing most marketers
of the value of word of mouth. Today the internet and social media make word of mouth a potent tool; Sharp appears to
overlook the dynamics of today's market. We aren’t just thinking about high-priced, paid influencers and their
millions of followers, but of the power of online product and service reviews and of the millions of consumers communicating
online and offline with their 50 or 100 best friends, relatives, neighbors, fellow students and co-workers.
“The best way to grow is to get more sales from people
who care even less about your brand than the loyalists"(#5). Sounds great, but it’s not that easy
to do, and it can be downright impossible for a brand that cares about being profitable in the next few quarters (or even
the next few years). Sure you can saturate the market with advertising, lower your price, deluge the landscape with
coupons – and you will get some new trial purchase. But it will cost plenty, and the consumers you attract are likely
buying competitive brands today which means fighting an uphill battle against what Sharp himself admits is embedded “habit,
emotion and established memory structures”.
"Broad reach can be more productive than surgical targeting"
(#2). The key word here is “can”. Yes, in certain circumstances, in certain product/services
categories, for brands of a certain maturity, broad reach can be more productive. But the wonderful thing about this claim
by Sharp is that it really doesn’t take a position at all. It can just as easily be flipped to state "Surgical
targeting can be more productive than broad reach".
Would Love to See How Sharp Supports His Position
We would love to understand what Sharp means in claim #3 ("20%
of your brand's biggest buyers don't really account for 80% of sales"), and how he supports it. Does it apply to
brands in general, both B2B and B2C, or did his research address only a narrow collection of packaged-goods? How many
brands did he study?
We support provocative attacks at ‘sacred cows’. We think such attacks
strengthen our knowledge and expand our belief systems. And, we’ve ‘thrown quite a few stones’ ourselves.
But we’ve always tried to provide sufficient evidence to justify our criticism. Bold statements lacking definitive
support, don’t help a science grow, they only cause momentary disruption.
Wednesday, August 2, 2017
Don't Overlook Problems Concealed by Statistical Composites
8:37 am edt
Be mindful of the possibly 'concealing nature' of summary statistics like means.
We are highly passionate about how any survey results are published and communicated
and we're likely the only ones you'll hear this warning from. There is certainly the need to provide concise results
that clearly report findings. And, any reporting of findings shouldn’t rely on exotic or esoteric statistics.
Typically 'means' are used as ‘measures of central tendency’. In simple terms, measures of central tendency
depict “the tendency of quantitative data to cluster around some central value.” Means, medians, and modes
are all such measures. But the mean or average is certainly the most widely used and likely the most widely understood.
We hedge our statement of understanding because while most corporate executives could explain the concept, there
is something beguiling and seductive about the simplicity of the mean. Living in a democracy, we place great value in
the will of the majority. But, as business people we shouldn’t overlook the feelings and opinions of important
minorities. Highly dissatisfied customers are such an important minority. They are the faction of our customers
who are most likely to defect from our brand.
Small Groups of Your Customers
When we report an average customer satisfaction of 7.8, or an NPS of 16 we are providing useful statistics which
can be longitudinally compared to previous periods’ reports. From this comparison we can make inferences about
the direction our business is headed. But the speed with which the trend is realized is hard to predict, unless the
trend is a precipitous change.
We worry that the ‘comfort’ of a familiar level for a reported mean,
relaxes those to whom the statistic is reported – keeping them from questioning the extremes of the distribution underlying
the reported mean.
Simple, But Not Frequently Employed
For decades marketing researchers have focused on the ‘top box’ score as possibly being more indicative
of future actions. In our own work on The Customer Delight Principle, we’ve encouraged practitioners
to be more concerned with the percent of their customers who are delighted (usually top-two boxes on a 10-point scale) or
in pain (bottom three to four boxes). And, recently we’ve come to recommend to users of the Net Promoter Score
(NPS) to similarly examine the percent of customers who are 'deep-detractors' (those scoring the brand only a "0",
“1”, “2”, or “3”). While both extremes are generally reported for Customer Delight
(22% delighted; 14% in pain), we recommend primarily using the ‘deep detractors’ in
conjunction with an NPS report (NPS of 16 with 12% deep detractors). Deep detractors are the customers
who are most likely to defect in the immediate future. And, their problems or issues may ultimately impact more customers
within a customerbase. So, what they have to say could be critical to survival!
Our 'Bottom Box'
So, regardless of the specific criteria questions you ask, we urge you not to
settle for reporting just one measure, be it a mean, an NPS score, or the percent of delighted customers.
Instead offer your audience more insight into the distribution of the data by including at least extreme statistic - deep
detractors; customers in pain; % totally dissatisfied; etc.. The % of delighted customers, a high NPS score are accomplishments
to be proud of, but it's the number of your customers in pain, or who are deep detractors who are most likely to impact the
immediate future of your brand, either by defecting or/and by circulating negative word of mouth. Don't
prevent your internal client from understanding the threat of this minority of extremely unhappy customers