Real marketing innovation

I almost turned the page this morning, mistaking Hyatt's newspaper ad for a pharmaceutical long copy dirge.  Fortunately I skimmed the headline and was pleasantly surprised to discover something genuinely rare in travel marketing . . . a new product.

Hyatt now offers hypo-allergenic rooms in 125 properties.  Branded Respire by Hyatt, every room undergoes a rigorous six-step process that dramatically improves air quality and removes irritants.  Improved HVAC systems and filters, special cleaning of hard and soft surfaces and encased mattresses and pillows are some of the things that make these rooms different.

Hyatt is targeting the 25% of Americans who are affected by asthma and allergies.  That's a sizable market.  My question is who of us wouldn't want one of these rooms given a choice?  Every road warrior can reel-off cringe-worthy tales of odors, mold, pests and grunge discovered in their hotel rooms.  Clean and healthy could be the new premium designation in travel.

Just a year ago I was panning Hyatt for not anticipating the backlash from draconian measures to take cost out of their housekeeping operation in Boston (they instructed housekeeping staff to train "vacation help" that turned out to be their outsourced replacements).  Ironically, by looking at housekeeping and room cleanliness as a feature as opposed to a cost Hyatt can use it to differentiate in a commodity category.

Hyatt has hit on real, meaningful product innovation.  Travel marketing is overdue for a new idea. Not since boutique hotels and later some of the larger chains decided to make hotel beds aspirational as opposed to punitive have we seen anything like this.  Traditional hotel marketing tools are getting tired.  Loyalty programs have devolved into parity and we're all numb to glossy images of models posing in infinity pools.  I think Hyatt has a winner on its hands.  Now if they could only figure out how to make an ad that is as good as the product.

The real cost of saving money.

Internal Dell documents indicate the company shipped 11.8 million computers  between 2003-2005 with potentially faulty motherboards using capacitors that could leak and cause the machines to fail.  According to an article in The New York Times, it appears Dell attempted to feign ignorance and sweep the issue under the rug.

It just crawled out.  Documents from a three-year-old law suit have recently been unsealed shedding light on this brand equity train wreck.

Unlike competitors who stopped shipping equipment with the faulty capacitors, Dell apparently kept pushing them out the door - mainly to large corporate customers.

It looks like Dell didn't exactly take the high road when the magnitude of the problem became known.  It's never good when employees send emails saying things like,  “We need to avoid all language indicating the boards were bad or had ‘issues’ per our discussion this morning.”  In other documents about how to handle questions around the faulty OptiPlex systems, Dell salespeople were told, “Don’t bring this to customer’s attention proactively” and “Emphasize uncertainty.”

Dell has already spent millions extending warranties and defending this suit.  Should Dell lose, they could be on the hook for a large penalty.  That figure will certainly be dwarfed by the long-term damage done to the Dell brand by this news.  The corporate customers who originally built the Dell brand will now have to think twice before specing the company's hardware.

I'm guessing the Dell manager who made the decision to try to keep a lid on this in the name of short-term cost containment had no idea he or she was making one of the biggest marketing decisions in the history of the company.

No ignoring the pain in social media

Great story today on AdAge Daily regarding AT&Ts growing social media customer care initiative.

What caught my attention was AT&T's realization that they had to first deal with significant customer dissatisfaction issues before social media could be effective as a public relations and marketing tool.  The story includes this poignant quote from an AT&T marketer - "We started using social media as a PR tool," said Susan Bean, who leads an eight-person social-media strategy and execution team within AT&T corporate communications. "With marketing, we discovered that for social media to be successful we really needed there to be customer care. Otherwise all anyone would want to talk about is: 'solve my problem.'"

One of the wonderful things about social media is the ability to force a brand to acknowledge obvious negative issues prior to engaging us with marketing. If only TV worked like this.

AT&T has a lot of work to do to improve their network performance.  An honest and responsive customer care program using social media may help the brand keep customers in the meantime.  Just responding and acknowledging an issue can earn a brand points.  It will be interesting to see if AT&T can add bandwidth (while soothing customers) fast enough to blunt the eventual defection once Verizon lands the iPhone and iPad.

As marketers we should avoid the temptation to sweep a product performance issue under the rug while  promoting our brands as usual (especially in social media).  Negative issues generally always emerge from the other side of the rug larger and nastier than ever.

A diamond in the tar ball?

Suspended plume-like, deep in the first official BPGlobalPR press release is a kernel of truth all marketers should consider:

You know the best way to get the public to respect your brand?  Have a respectable brand.  Offer a great, innovative product and make responsible, ethical business decisions.  Lead the pack! 

This advice rings true for all brands, not just the ocean fouling kind.  While obviously irreverent and occasionally sophomoric, the spoof BPGlobalPR Twitter stream is touching a nerve.  Over 110,000 Twitter followers are tuning-in to this unlikely authority.  Humor and a shared sense of outrage are certainly key drivers.  I believe the followers are also responding to the dissonance created when traditional corporate messaging with it's "put a good face on it at all costs" philosophy runs headlong into 24/7 coverage of a truly awful situation.

Social media has created a platform for viral public response that is forcing PR people to consider a new approach to "crisis management." Clearly, the old model just backfired. In a transparent marketplace, a company's words have to match the pictures.  There are no more short-term fixes delivered by a deft spokesperson.  It's not a PR problem.  It's a marketing problem and a brand's character and past behavior are the only valid tools in a situation like this.  A lack of sincerity at the press room podium will only add fuel to the fire.

See the entire press release here.

Will Facebook help you choose your groceries?

I've been preaching the Transparency Gospel for over three years - suggesting that as technology allows more people to find out how good a product really is (from objective experts or digitally aggregated peers) it will become more and more important to actually have great products.

The theory is a no-brainer in considered purchase categories. But even I wondered if this behavior would ever trickle-down to the grocery store shelf. Will people actually take the time to compare the ingredients or the carbon footprint* of two different brands of baked beans?

Apparently people will take the time and are interested in these rational issues when it comes to food purchases. As reported by Marketing Charts, Deloitte's new "2010 Consumer Food Safety Survey"spells it all out. As you might expect, most of the study relates to food safety but a few of the findings have broader marketing implications. First, people are going online to do their homework prior to shopping shopping for food items: Twenty three percent of consumers visited a food company's website to get product information while 23% of consumers made a food purchase as a result of something they read online.

More interesting was the impact of smartphone technology. As the chart below illustrates, 7% of people have used their phone in-store to learn about potential purchases (click chart to enlarge).


These data demonstrate people have an appetite for detailed and objective information regarding their food purchases. Technology is filling a need that apparently is not being met on the package.

Where is this going? According to comScore, approximately 17% of the U.S. (age 13+) had a smartphone in December of 2009. That means over 40% of those with the ability to use a smartphone while shopping for food did so. Multiple sources predict smartphone penetration to increase to 40 or 50% in the next 24 months. Assuming the rate of usage for food shopping stays flat, that would translate into 16-20% of food shoppers using their smartphones to learn about food products in the store. To be sure, we don't know frequency of use or the actual impact on what was purchased. Price comparisons and coupon hunting are a big part of this dynamic. But this behavior is more than incidental and it's bound to increase.

The quality of information available in-store will only get better. The folks at GoodGuide provide detailed information regarding the health, environmental, and social impacts of over 70,000 products in your home. Their clever iPhone app is no doubt driving some of the in-store usage unearthed by Deloitte. Walmart's sustainability index initiative will surely catalyze this transformation.

And yes, I imagine someone at Facebook has mocked-up a "Liked" product rating index calibrated to the tastes and preferences of your very own social network. Your old high school girlfriend may finally add some value by helping you pick the right can of baked beans. Seriously, every aspect of a product - good and bad - will soon be transparent. How will marketers respond when their product is naked on the shelf?

In this environment, Job One for marketing will be to make the product and usage experience extraordinary. Domino's recent moves to improve their product show that this strategy can drive significant increases in sales (see It worked! below).

Smart shopping at the shelf will also impact other elements of the marketing mix. Traditional product demonstration and affinity advertising strategies will likely have a hard time competing with hard data in the store. How many FSI drops or TV target rating points will it take to top the impact of significantly superior quality or sustainability score - not to mention a timely digital coupon? If trends continue it may well become less expensive to differentiate and gain market share by improving product quality or how that product is made, shipped or recycled. A bigger question is how many TV TRPs will it take to counter a negative product performance issue? It's going to get interesting. Fast.

* measured prior to consumption

It worked!

Congratulations to the Domino's team for delivering a jaw-dropping 14.3% same store sales gain in Q1. Advertising Age today reported the big news.

Back in early January, I wrote about Domino's gutsy decision to reformulate the product in my post, Marketing with a capital "M." The Pizza turnaround worked. Make the product better and apparently more people will buy it.


Ad spending was up 9% for the period but that alone would not account for the increase (Papa John's sales were flat for the same period). Social media played a role here. When I wrote in January, 170,000 people had seen the four-and-a-half minute Domino's YouTube video. As of today, the number is up to 640,000. That kind of momentum can only be sustained with sincere consumer interest and active social sharing. Domino's made real news by being honest about their situation. This campaign was not spin and people responded.

This is a potent reminder that real marketing is more than ads and promotion. Product (and the product usage experience) comes first in a transparent, socially connected marketplace. Way to go Domino's!

Busted for being opaque

Corporate Responsibility Magazine shines a light on the Russell 1,000's least transparent companies.

The Black List details 30 companies for whom zero points of relevant data can be found to compare their transparency to that of colleagues on the Russell 1000 list of large-cap firms.

These companies are saying nada about things like climate change performance or broader environmental performance. The issue is bigger than the 30 companies on the list. 161 companies did not even have basic disclosure about their employee benefit programs.

The magazine approaches this situation from a corporate governance/investor relations perspective. Their audience is the corporate executive charged with maintaining good "corporate responsibility."

In the past, avoiding disclosure may have been a smart way to dodge controversy, oversight or unwelcome attention. Now choosing to not be transparent has its own cost. Remember that the next time you venture into an Abercrombie & Fitch store.

Yelp steps into the sunshine

Yelp just announced two substantial moves to eliminate the controversy brewing around alleged linkage between retailer advertising support and review quality.

The company is making it possible to see how their review filter works and will even show you the reviews that have been filtered. They are also eliminating the "Favorite Review" feature. Why you see what you see on Yelp just got a lot more transparent.

In retrospect, these changes are actually product improvements. Better information and less fog obscuring motives. For a company built on the idea of using consumer feedback as a weapon to reward and punish marketers, it's ironic they took this long to act on the input they were receiving themselves.

Our natural reaction as passionate, competitive marketers is often to try and argue with the public when we feel they misunderstand our company or actions. That knee-jerk reaction immediately puts us in an adversarial role with consumers. It's hard to pull out of the ping-pong match once things escalate.

At some point perhaps Yelp realized the angry hoards might have a point - maybe they could actually improve their product by making it more transparent. On the other hand, Yelp may view these recent steps as necessary concessions - conceding they could never argue the social media beast into submission. Either way, they made the right decision. Chalk one up for the meritocracy.

Time traveling

I want to share an amusing peek at the future of traditional advertising agencies.

The Last Advertising Agency On Earth from FITC on Vimeo.

The joke has been told before but this rendition nails a real truth - fewer and fewer consumers are influenced by blunt force attempts at persuasion. If not avoided or ignored altogether, traditional advertising rarely delivers the influence conveyed when one's peers weigh-in on the merits of a product or company via social media or in person.

Many agencies ironically miss the point and assume they simply need to migrate to newer, digital communication channels. The transformation underway is not analogous to adding a department as agencies did during the mid-century transition from radio to TV. To be sure, "ads" will still be around to do things like rally enthusiasts and announce new products. But agencies will be distinguished by the ideas they bring that materially improve the customer experience or enable brand evangelists to share their convictions.

We're coming full-circle back to an era where people rely on word-of-mouth and reputation to make purchase decisions. Technology will make it easier and better than ever but I think marketing in 2020 may work a lot more like marketing in 1820 than the way it does today. That's good for (good) brands and good for consumers. I predict a buyer's market for slightly used Foosball tables.

Who will be the Southwest Airlines of car rental?

I saw yet another article today on ways brands extract revenue from customers with occasionally clever but more often blunt force add-on fees and charges.

Elizabeth Olson of The New York Times illustrates the recent escalation occurring in one particularly brutal category in her story, The rental car squeeze. Being charged $13 a gallon to refill the tank after dropping off your car (yes, this happened in Maryland) may generate a ton of cash in the short term but it can't help your brand. Not surprisingly, the percentage of dissatisfied travelers has nearly doubled from 12% to 21% in the last six years according to J. D. Power and Associates' annual Car Rental Experiences survey.

This is not big news to anyone who has rented a car in the last six years. What is newsworthy is the inability of any brand to leverage the brewing customer revulsion. Twenty one percent of the market represents a ripe opportunity. A tactic like Guaranteed, out the door pricing at the time of booking would be a game changer. It could also help reverse an increasingly adversarial relationship with at least one car rental brand. Does this sound risky? Fortunately, a very similar approach has succeeded wildly just one floor up from the rental counters.

Southwest Airlines is arguably the sole differentiated brand in the airline category. They have customer loyalty scores that are off the chart. So is their valuation when compared to the competition. Part of the Southwest appeal is their determination to not stick it to customers with add-on fees or similar "gotcha tactics."

It's time for a rental car executive to take the escalator up to ticketing to see how a successful travel category marketer delivers superior value for shareholders by making customer satisfaction (not short-term revenue enhancement) job #1.

Toyota: doomed by its own culture?

I've resisted posting on the Toyota mess up to this point feeling that mainstream media may be piling-on a bit. The debacle is not going away. It seems a new embarrassment for the company surfaces roughly once a week.

A recent article in Automotive News by James Treece sheds new light on the culture inside Toyota and how that may be the root cause of the company's troubles. Treece spent 22 years living and reporting on the auto industry in Japan and brings firsthand knowledge of the situation.

Treece's article, while a bit inside baseball, paints a clear picture. Toyota's insular, secretive culture drove their attempts to stifle early safety concerns rather than openly vet and address them. Initiatives to suppress the damage by playing it down with the media, strong-arming regulators and what appear to be partial technical fixes have caused the biggest brand image backfire in modern marketing history.

Toyota rode one attribute, "quality" to the top of the automotive category. That's gone now. We won't know for years if they will be able to reclaim it. I'm not sure their snazzy styling or impressive handling will carry the day in the absence of the quality gene. The irony of Toyota defaulting on it's core equity is not lost on owners of Toyota vehicles.

What's missing at Toyota is the ability to be open and transparent internally and with the public. A transparent corporate culture is not a "nice to have" or a fashionable marketing trend. It's an essential means for earning the public trust. The modern marketplace rewards brands that behave with integrity. It punishes those that demonstrate they are not trustworthy. As a Toyota owner, I feel the sting every time I turn the key.

Walkin' the talk

Fast Company today details 11 Ways That Walmart Is Changing Retail -- for Good with respect to sustainable business practices. These are the same 11 ways Walmart is differentiating itself from most other big box retailers by demonstrating extraordinary social integrity. Not surprisingly, these are also the 11 ways they will probably save significant money over the long run.

Perhaps a better title for this article might be "11 ways Walmart won't have to compete on price." It's a fun slide show worth a few minutes of your time. Last post on Walmart for a while. I promise.

Attention shoppers: Zero landfill corn chips are now available in aisle nine.

Great article by Kate Rockwood in the new Fast Company on Walmart's Sustainability Index.

What caught my eye was a quote from the Walmart SVP of Sustainability, Matt Kistler. He said of this initiative, "it is creating a new level of competition in ways that, historically manufacturers have not competed." Kistler went on to confirm that high-scoring products will earn preferential treatment -- and likely more shelf space -- in Walmart stores.

There. It's official. In addition to how well your product does what its supposed to do and how much it costs, there will soon be a third horse in the marketing race - the impact of the product (and company that makes it) on our planet and society. Shoppers won't be at the mercy of "greened-up" packaging or vague sustainability claims thanks to this quantified and verified index.

Will a killer carbon footprint rating trump a super Sunday supplement coupon offer? We'll have to wait a little longer to find out but thanks to Walmart's clout, it looks like this is really going to happen.

Read the article here.

Is Blue Shield of California about to step on a land mine?

Advertising Age today covered Blue Shield of California's announcement that they would provide a forum on its website for customers to share ratings and reviews of its various plans. The program is just emerging from a pilot phase so there are not yet a ton of reviews.






















So why are they doing this? As heath care and heath insurance in particular tend to be frustrating (occasionally maddening) for many of us, isn't Blue Shield of California just setting itself up to get hammered with negative comments from unhappy customers? Won't those comments turn-off prospective consumers? These risks are real. I'll attempt to illustrate why this might actually be a good idea in the context of marketing:

1. People will be able to find this information elsewhere anyway (Consumer Reports for one offers in-depth reviews of individual insurance plans with extensive reader reviews). Why not get points for making it easy to find and acknowledging that's how the world works now? It also makes it easier to stay on top of the conversation.
   
2. Positive customer feedback in the context of an open forum (alongside negative comments) is the most credible endorsement you can get. Take away the negative comments and you have a very expensive brochure.
   
3. Customer feedback might help prospects do a better job of choosing the right plan for their needs. Lower selling costs. Higher customer satisfaction. Win-win.
   
4. Blue Shield of California might actually learn about what satisfies and dissatisfies customers. Isolate the hot buttons that drive purchases. Identify the things that cause you to lose customers. Beats mall intercepts.
   
5. If Blue Shield of California substantially addresses the issues they learn about in this forum they have the potential to create brand evangelists. The most persuasive endorsers are often those who've been wronged who go on to have their problem resolved. It happens so rarely in the context of large corporate service providers that the occurrence is generally noteworthy. These turnaround experiences are genuinely tweet-worthy (as is ignoring a negative situation).
   

Clearly this bold step is not without risk. If Blue Shield of California is to do more than ride the popular trend of being transparent they need to act on what they learn in this forum or it does have the potential to backfire.

Marketing with a capital M

So imagine you run marketing in a company that sells 400 million units of anything a year. You're one of the largest players in what most people consider a promotion-driven, commodity category. You must be doing something right. Right? So naturally you go to your boss with the idea to radically reformulate almost every aspect of the product. That's apparently what happened at Domino's where they just introduced their "Pizza Turnaround." New crust. New sauce. New cheese. On virtually all their pizzas. The only thing they did not change appears to be the round shape. See the details (as have 170,000 or so other people) in the video below.




Why gamble with a product that's so ubiquitous and successful? For one, I'm sure there's a lot of pressure on that poor little original recipe over time. Decades of procurement and operational "refinement" as well as vapid focus group input can really have only one effect - to identify the lowest cost item acceptable to the most people.

Instant gratification through speedy delivery originally distinguished Domino's. Aggressive promotional marketing drove things further. Product quality was never a big issue for most of the brand's history.

Competitors like Papa John's hammering for years about how their "real" and "fresh" ingredients are superior helped illuminate the issue. Old fashioned conversation amplified by newfangled social media makes product quality transparent. We've reached a point where Domino's is the least objectionable, instantly available but virtually unloved option in our personal pizza pantheons.

Hat's-off to the Domino's team for having the stones to tackle the real issue. That's marketing with a capital M. Taking a step like this is rare in a world where brand and product managers often want to make their mark with a quick but modest win then move on in 12-to-18 months.

Here's what I think Domino's is doing right with the introduction:

1. They are honest and genuine. They admit to what we all know (they actually say "cardboard crust" out loud multiple times in the video) and get credibility points for doing so. Communications are straight forward and feature the head of the company and what appear to be real employees emoting honestly about their problem and their enthusiasm for doing something about it.
   
2. They are giving "the people" credit for identifying the issue. A little pandering here for sure but Domino's seems a little less like a faceless corporation by actually appearing to listen.
   
3. They went "all-in." Domino's did not decide to offer this as a new menu item or "premium" offering. It's appears to be on every regular Domino's pizza from now on. By going all-in, people sense sincerity and conviction. You don't bet the farm on spin and people know it.

In a time where the quality of your product (and that of your competition) is transparent, marketing needs to think beyond promotion or even what we used to call "brand building." A move like this could yield exponential growth in category wallowing in incrementalism.

We don't know if history will lump this effort in with Apple's overhaul of Macintosh with the eMac or the misadventure of New Coke. Maybe people actually like the lowest common denominator. That reminds me - the new season of American Idol starts January 12th.