Outimagining the Competition

As I flutter in and out of companies who have their share of the market, I realize the rigidity in the thinking installed from people who have worked hard, taken risks then stopped completely. The thinking has become preventitive. To prevent something from going wrong. This of course is what Roger Martin dean of the Rottman B-School at the University of Toronto refers to as the business-as-usual companies. This guy says what I would like to say about design thinking in management, but better. This from an article in The Fast Company magazine...  

Forty years ago, Thomas Watson Jr., chairman and chief executive of IBM during its most explosive period of growth, famously proclaimed, "Good design is good business." Corporate America, however, barely looked up from its work. Except for a few mavericks such as IBM, Kodak, and Xerox, it would take years for design to move in from the fringes of business. But today, companies are creating products and services that delight customers with the grace of their fit and finish, and their exacting performance. Design, in short, is becoming an ever more important engine of corporate profit: It's no longer enough simply to outperform the competition; to thrive in a world of ceaseless and rapid change, businesspeople have to outimagine the competition as well. They must begin to think--to become--more like designers.

Even as design gets its due, however, some business types wish the clock could be turned back to a time before all those designers were running around urging people to let their creative juices flow. And they resent that even as design is forced upon them or insinuated into their work, the designers themselves are often not held accountable for meeting firm revenue and profit targets--the primary form of business discipline.

This tension between business-as-usual and business-by-design is not new, of course. Many businesspeople have long regarded designers as mere stylists. More than a few designers see businesspeople as Neanderthals all too willing to forfeit quality for the sake of profit. Their mutual pique springs from a fundamental difference in the way each side thinks about creating value: Corporate types, by and large, seek to fuel growth by building from bulletproof, reproducible systems; designers generally attempt to do so by imagining something new, different, better. That difference can be seen as a trust in reliability on the one hand and in validity on the other.

A reliable process--which tends to attract folks in finance, engineering, and operations--produces a predictable result time and again. This is business as algorithm: quantifiable, measurable, and provable. It hews to that old management adage, "What doesn't get measured doesn't get done." Wal-Mart, Dell, McDonald's --each started out with a novel idea, yet each went on to standardize every aspect of its operation and blow it out across the United States and then the world, creating billions of dollars of wealth along the way.

A valid process, on the other hand, flows from designers' deep understanding of both user and context, and leads them to ideas they believe in but can't prove. They work in a world of variables: the unpredictable, the visual, the experimental. Great designers worry less about replicating a successful process than about producing a spectacular solution. Design leaders like Panasonic, Timberland, and Bombardier have grown exponentially since their inception, yet each continues to put a premium on judgment, experience, and gut instinct.

Valid thinking demands an inspired leap of faith. Before John Mackey launched one of the country's first supermarket-style natural-food stores, for example, nobody could prove that Whole Foods Market would succeed at all, let alone become the most profitable food retailer (in terms of profit per square foot) in the United States. But Mackey did it anyway. As the computer scientist Alan Kay put it so memorably, "The best way to predict the future is to invent it." And that is what design-centric organizations do: They peer into the needs and desires of their customers, identify patterns of behavior, refine ideas that tap into those behaviors, then push into the unknown--or at least the uncertain.

Businesses have to outimagine the competition, to think--to become--more like designers.

If an organization wants to reap the benefits of design, it must do more than just hire "hot" designers or declare itself to be "design oriented." The challenge is to manage the chronic push and pull between a value system premised on what's valid and one based on what's reliable. As the management theorist James March has argued, by focusing on the intuitive and experiential, organizations explore new sources of competitive advantage. By looking to the provable and replicable, organizations better exploit the innovations they've brought to market. To prosper over the long run, a company needs to succeed at both. It must mesh the classical workings of a traditional organization with the prototypical features of a design shop, especially in three key areas: reckoning the future, organizing work, and establishing status and rewards.

1. Reckoning the Future: Prove It or Invent It?

Perhaps the most glaring difference between the worlds of business-as-usual and business-by-design is the way each side actually thinks. In traditional organizations, the dominant forms of logic are inductive (demonstrating through observation that something actually works) and deductive (reasoning from a set of existing principles to prove that something must be). For example, Costco might study the current cost structure of all of its outlets in order to set, inductively, future cost targets for the whole chain. Or Clorox might use a core operating principle--"build market share and profits will follow"--to deduce whether to launch a new kind of sanitizing spray. Corporate folks typically believe they can "prove" the future by applying rigorous inductive and deductive logic to the present.

Designers use inductive and deductive reasoning as well, but they also rely on a third type: abductive reasoning, the logic of what might be. A.G. Lafley, the chief executive of Procter & Gamble, understands the need to braid all three forms of creative thinking. While he is a true data hound, Lafley also pores over anecdotal research and allows customer comments to influence him even if they are not rigorously collected or statistically significant. Lafley was relying on that kind of anecdotal evidence when he championed the conversion from big-box to compact detergents--one of P&G's most important decisions over the past 15 years, and one that flew in the face of the available hard data. That decision opened a multibillion-dollar market for P&G and demonstrated that simply regressing the past isn't enough to bust a daunting challenge. As Bernard Arnault, chairman of the French luxury-products group LVMH once put it, "It is not enough to have a talented designer; the management must be inspired too."

2. The World of Work: Permanent Tasks or Temporary Projects?

Those different sorts of logic are also reflected in how work is typically organized in the business and design communities. Daily work at a tradition-bound firm consists of a series of permanent, ongoing tasks: Make the 30-day forecast, upgrade the core product, manage the next sales initiative. Each person's role is clearly staked out, and compensation is closely tied to the position's responsibilities, which vary little over time. In a design shop, however, everyone "lives in the projects," as the business-management strategist Tom Peters once said. All work is temporary and project-based, and people are judged by their ability to add value to it.

Both approaches to work are necessary, but insufficient. In the hurly-burly of day-to-day business, work is really a combination of ongoing activities and discrete, time-bound projects; the trick is to pick the style of work that best fits the problem. After all, company-defining products such as the iPod, the Razr, and the Mini didn't emerge from a fixed, standardized process--they were born in the projects.

And so, as a rough rule of thumb, when your challenge is to create value or seize an emerging opportunity, the solution is to perform like a design team: Work iteratively, build a prototype, elicit feedback, refine it, and repeat. Give yourself a chance to uncover problems and fix them in real time, as the process unfolds. On the other hand, running a supply chain, building a forecasting model, compiling the financials--these functions are best left to people who work in fixed roles with permanent tasks, people more adept at describing "my responsibilities" than "our responsibilities."

If that sounds like a schizophrenic way to run an organization--where one-half functions like an accounting firm and the other collaborates like a design shop--well, perhaps it is. But that's the way Google does it. CEO Eric Schmidt has said that the part of Google that looks like a normal company (sales, marketing, operations) is run like a normal company, but the part that defines what the customer sees and experiences (software coding and engineering) feels more like a design shop free from top-down control. Call it schizophrenic, but the challenge for CEOs like Schmidt is to manage the paradox of freewheeling innovation and buttoned-down operational discipline. (For more on reconciling the two, see "Design Intervention")

3. Source of Status: A Large Staff or an Outsize Success?

In traditional firms, status--the protein that nourishes the ambitious as they claw their way up the corporate org chart--is conferred on those who run brawny organizations with big-time budgets. The relationship between size and status is pretty straightforward: The larger the revenue and the bigger the staff, the higher one's station and the greater the reward. That's why most executives prefer the known to the unknown. It's a lot easier and safer to run a billion-dollar business than it is to invent one.

Among designers, however, the tinder that fuels the creative fire comes from solving wicked problems. The best designers are not necessarily known for the revenues they've generated, but for the challenges they've cracked. In the business world, for instance, Hartmut Esslinger is recognized as the founder and CEO of frog design, an international creative consultancy that counts Hewlett-Packard, Disney, and Nextel among its clients. But in the designer's universe, Esslinger will be forever famous for conceiving the look and feel of the Apple IIc, now in the Whitney Museum of Art.

Companies like P&G have figured out that rank and title alone are less-than-stellar motivators. So, to keep its people priming the growth engine, P&G imported the designer's ethos to "do meaningful work." When the company created its Global Business Services unit in 1999, its new head, Filippo Passerini, moved to a business-by-design model when he essentially challenged his information-technology group to become problem solvers. Having outsourced the bulk of P&G's mundane, day-to-day IT operations to HP and IBM, Passerini freed half of his 2,300 staffers to become high-end matchmakers. As he told CIO magazine, "They match what's needed in the business with what's possible with technology." Today, his supergeeks are experimenting with virtual-reality technology and coding new applications to improve customer- relationship management systems.

By creating a problem-solving culture, Passerini has transformed a workforce of back-office drones into a tribe of intrapreneurs who are creating tremendous value for P&G. This past August, his IT managers won bonuses when the GBS unit met an unprecedented challenge following P&G's acquisition of Gillette: integrate 95% of Gillette's systems capabilities into P&G within 15 months. Marta Foster, a VP who oversees the IT team's business-solutions work, says the project, which required a workforce of 600 coders and engineers, was "incredibly energizing. It's far more meaningful when our work is tightly aligned with the company's strategy. Our people talk about their projects like they're running their own businesses."

Managing the yin and yang of business-as-usual and business-by-design means striking a balance between any number of countervailing impulses: Give people the freedom to follow their nose, but hold them accountable for their performance. Set a high bar, but recognize that failure is an unavoidable consequence of pushing into new territory. Do everything possible not just to thrill your customers but also to wring costs and efficiencies out of vendors and suppliers. The biggest challenge for all of us, designers and businesspeople alike, is to become equally adept at quantifying the now and intuiting what's next. There's simply no other way to win.

Laughonomics

Hot off the keys from Bert Decker, who always has insightful things to say, is an idea which seems obvious. Keep them happy. Boring doesn't equate to professional or efficient. I know it and do things which appear ridiculous but three years later people are still talking about. Efficient? Of course. Never forget your real objective when you present. How much is retained. Enjoy...  

 New research! Look at the clip in #1below - laughter is the best medicine.

"Laugh and the world laughs with you." (Anthony Burgess 1917 - 1993). ("Snore and you snore alone," he added.)

Here are five reasons you should use humor - not only in your speeches, but in creating your 'communications experience' with those who are important to you.

1. It works. There is scientific evidence that laughter makes a big difference in people's emotions, and makes them more receptive. Look at this clip and be surprised. (It's 2 minutes - see it to the end to get the best.) LaughterYoga with Dr. Madan Kataria may seem far out, but it works. You can adapt the principles - it will make you smile, at least.

2. Surprise Broca. Courtesy Roy Williams, The Wizard of Ads. That's the area of our brain that craves stimulation for attention. Humor gives you a change of pace.

3. People buy from people they like. We stay in long term (selling) relationships with people we like, people who are fun to be with, and often funny. We do not buy anything from someone we don't like. And remember, whenever you give a speech or an important message, you are selling ideas. It's a shame so many presenters in business take themselves so seriously - and lose the human connection. It's their loss. Take your subject seriously, take yourself lightly.

4. It's not hard. Now I'm not a funny guy - so I have to work at putting some humor in my speaking. I don't tell jokes, and don't recommend anyone tell jokes (unless you are one of the 1 in 100 who can tell jokes well.) What I do is find the quick aside, or use funny video clips, or cute visuals, and definitely tell stories - often when the goat is yours truly.) Humor is one of our five SHARP Principles that enable people to communicate to influence.

5. You can learn. Humor is actually the toughest subject to teach (particularly if you're not funny.) I know there are a few good humor teachers, but usually those are geared to jokes and timing - there's a simpler way. Just do two things. First, find out what makes you laugh, then use it. Consciously, every day, work at it until it becomes a way of being. And secondly, smile. Simple as that - we get engaged by the friendly, smiling face, not by the frown. Think funny.

Other tips:

• Smile on the phone. We do so much on cell phones and with voice messages, be sure you smile as you talk. You can hear a smile - literally.
• Keep a humor journal for a week. If find you haven't put anything in it, maybe that tells you something. As you make entries you will see what makes you left, and bring it up to the conscious level, and use these things in your communications.
• Be creative in your PowerPoints. Not just cartoon art, although that works. But funny video clips, contrasts and counterpoints - the essence of humor - surprising Broca, and using humorous quotes in print. Look at Presentation Zen - a great blog and resource.
• Go back and look at that clip in point #1 again - feel the difference when you smile (or maybe even laugh.)

There are 4,234 laughing babies posted on Youtube. That tells us something. And here is a classic - if this laughing baby doesn't make you laugh out loud, you perhaps might take a look at your humor quotient. And reread this post from the top.

Keep on laughing...

 

 

Control and the Art of Silence

I asked a group of marketing people yesterday if they had considered blogging for their company. They looked at me like I was from outer space and said they were happy with their internet presence (conventional site). Eventually in the to and fro of the conversation one of them said blogs were difficult to control. There it is the famous word which sends shivers down the spines of heirachies everywhere - control. 

No, you can't control the reaction to the blog but you can't control the reaction to your site either, it's just that you don't know when people are reacting or not. If you want your users to begin to talk about your products you must stop trying to control them. The marketing people were scared of hearing what they don't want to hear and prefer to continue in their bubble where the silence can be interpreted in any way they choose. Here is really what they control - nothing. But it's a nothing which can be interpreted creatively.

I found this at Marketing Profs by Stephan Spencer for the brave who take the plunge and how to not get too badly burnt in the blogosphere... 

The prospect of business blogging can terrify the inexperienced blogger. They may wonder: "What if I do it badly?" "What if I somehow manage to damage or destroy my or my company's reputation?!" Scary thought! But once you start blogging, I think you'll find those fears just melt away....

Having a "safe haven" where the newbie business blogger can experiment with their new craft can be just the thing that eases their initial fear and insecurity. By "safe haven" I mean a private blog on their intranet or extranet, or a blog that's password-protected where access is only granted to a select audience. Then they won't have to worry that all of their customers, competition, and the media will be watching their every move as they find their feet.

Practicing a speech is quite a different thing from giving that speech in front of a live audience of a thousand people. So too is blogging on a private test blog versus crafting blog posts that you know will become public as soon as you hit the Publish button. Thus, don't be surprised if the posts published to the sandbox don't pass muster. They won't serve as a very accurate indication of the blogger's potential either. The exercise of blogging to a private test blog is really only meant to build confidence, nothing more.

There is another important aspect to getting acclimated to the blogosphere that is sometimes neglected by newbie business bloggers. That is the practice of commenting on others' blogs. The number of comments that the newbie blogger posts to others' blogs should far exceed the number of posts published to the sandbox. If that isn't the case, then that blogger is not adequately engaging in online conversations during their training/residency. Toby Bloomberg of blog consultancy Bloomberg Marketing makes a strong case for the benefits of commenting:

"As with any relationship, the more you interact with a person, the stronger and faster friendships form. So it is with joining the conversations in the blog-world. The more consistently you reach out to new colleagues, through value added comments, the sooner and stronger those relationships are built. Within a short time something interesting happens. You find you are part of a community of people who have similar interests. You've extended your resource network ... the lines of online and offline begin to blur. There is a light bulb moment. You realize that blogs are one more medium to foster and manage communication among friends."

A blog is a conversational medium, not just an opportunity to 'get up on one's soapbox'. It's through comments that a blog blossoms into a community. Comments are key -- both on the bloggers blog and out in the greater blogosphere.

Go forth and blog!

Measuring WOMM

Is There a Reliable Way to Measure Word-of-Mouth Marketing?

 

If you have a few minutes read through this one. Something I find interesting is the want for people to regulate and standardize phenomena. This article from Marketing NPV tries to pin it all down... 

ord-of-mouth (WOM) marketing is one of the recent darlings of the marketing industry. It’s becoming increasingly more common to find large firms retaining specialized WOM agencies in an effort to counteract the rapidly rising CPMs of the fractured media landscape. Some are even hiring marketing managers specifically for word of mouth. Industry associations are tripping over one another with conferences and workshops to share best practices and develop standardized codes of ethics, while marketing trade publications extol the virtues of harnessing the holy grail — getting one person to “objectively” influence the opinions (and hopefully buying behavior) of another.

Beyond all the energy, enthusiasm, and hype, only two things are known for certain:

1. WOM can have a very positive impact on a brand marketing plan. Case studies abound — both B2B and B2C — that bear this out.
2. Metrics are all over the lot. We count almost 50 different measures being used by WOM “experts” to calculate the value of word of mouth.

Most telling in underscoring the challenges in measuring WOM are the publications of the Word of Mouth Marketing Association (WOMMA) itself. In their comprehensive 2005 report on the subject, they readily admit that there is no simple or direct way to understand the financial payback from WOM investments. Even experts quoted in the book disagree on which metrics make sense and which don’t.

Defining Word of Mouth

Try to define word of mouth and you’ll quickly hit the first gap. There’s no consistent lexicon yet for understanding how it works or how to talk about planning, executing, and measuring a campaign that exploits its capabilities. In WOMMA’s report, their executives do a good job of explaining WOM simply. Brad Fay, managing director of GfK NOP says: “The purpose of … word-of-mouth marketing is … to enlist target consumers to become senders of marketing-relevant information to other consumers, who will ultimately go on to buy products and services.”

Karthik Iyer, senior vice president of business development for Intelliseek, adds this clarifying thought: “If marketing is the science of moving things from a producer to consumer, then word-of-mouth marketing is the science of understanding the kind of moving that goes on, one consumer at a time, from consumer to consumer to consumer.”

Most expert-practitioners agree there are two types of word of mouth: organic — that which happens naturally — and amplified — a campaign that the marketer facilitates. The former can be measured through traditional brand tracking, reputation surveys, and customer experience monitoring, while the latter can also be measured through traditional campaign tracking tools.

However, some marketers lean heavily toward measuring the online portion of WOM to the detriment of their offline segment, because online is easier to track. But WOM research and consulting firm Keller Fay notes that nearly 80% of word of mouth occurs offline. For Vocalpoint, a social networking website for mothers, that number approaches 90%.

The Intuit Experience

Intuit practices amplified word of mouth extensively and even has an executive dedicated to it. Kira Wampler, word-of-mouth senior marketing manager for Intuit’s Home & My Business segment, treats WOM the same way she would any other marketing discipline — first by understanding the key customer insights and marketing goals for the product being featured — Quicken, QuickBooks, or TurboTax.

Intuit’s recent efforts provide as close to a best-practice example of how to measure an amplified word-of-mouth campaign as you’ll find. The firm had recently launched its new portal Web site jackrabbit.intuit.com, which provided new small-business owners with actionable content and tools they could find useful in starting and building their businesses. The content came from both Intuit and other industry sources.

Since the site was in beta, Intuit wanted to create buzz, but wasn’t ready to commit to a full-blown marketing campaign. They started building relationships with five influential bloggers, giving them access to the site before it went public. Then, two days before the public launch, they gave an exclusive to two bloggers, asking them to look at the Web site and then share their thoughts. Intuit didn’t attempt to influence their comments. Wampler notes that one of the bloggers did a lot of her own legwork to determine whether the site was relevant to her readers. Her post, which was positive, was picked up by 13 other bloggers, creating exponential visitor growth.

As measures of success, Intuit counted the number of blogs that picked up the story or wrote their own and noted the velocity (whether it took a month or happened in two days); share of voice (how much talk occurred in the blogosphere); voice quality (what was said and the extent to which those comments were positive or negative); and sentiment (how meaningful the comments were) of each.

Solid execution; yet, like Intuit, most WOM efforts today focus on “stroke counting” — page views, number of eyeballs, etc., rather than ROI or financial payback.

The Difference between B2B and B2C WOM

In the B2B environment, word of mouth historically has manifested itself in the amplified category through conferences, sales calls, and special-interest communities. In the tech sector, customer reference programs are common, where potential clients are introduced to existing clients they can grill about how well the product works and meets their needs.

But the main difference between B2B and B2C is that B2C WOM occurs pretty much anywhere, according to Steven Nicks, EVP of client services for The Phelon Group, a customer intelligence consultancy. For instance, a self-acclaimed TiVo buff, he admits that while sitting on an airplane, he might go on and on to the person next to him about how great he feels TiVo is. But opportunities like that are few and far between in the B2B space. As a result, he notes that organizers of conferences such as EMC World in Boston have begun providing such WOM vehicles as specialty cafés that foster the ability for people to congregate, connect, and chat. Five years ago, such an idea might have been considered a waste of space. Today, it would fall under the category of “marketing opportunity.”

Walking a Thin Line

There’s been a lot of press recently about how some WOM tactics walk a thin line between what is ethical and what is shady. Questionable methods include hiring people to go into bars and loudly order a specific branded drink, or sending an “actor” out with the latest cell phone camera to ask tourists to take his picture as a means of getting the device into their hands and creating opportunities to talk about how wonderfully miniature it is.

In addition, there are companies that charge advertisers to take their message and distribute it out to a “network” of agents (for instance, teens or seniors) they maintain. Agents get paid to promote advertiser messages on blogs, in chat rooms, at events, or to talk it up with their friends. Teens are paid to talk up certain candy bars, clothing items, or music to their friends, while grandmothers earn points for sharing their knowledge of over-the-counter medications with others at the senior center.

Nicks says that unethical word of mouth is not as prevalent or noticeable in the B2B space as in B2C. However, there are a number of B2B initiatives he would classify as bad ideas. First, if a company is going to connect two people together, telling Person A what Person B is concerned about before introducing the two is a good idea, and prepares Person A to speak intelligently; however, telling Person A what’s important to say is not.

Second, companies exist that offer discounts to current customers for talking to prospects, or for allowing their case study in the media. There are also sophisticated blogs that compensate people around their activities. Anything that removes the genuineness and openness and dilutes the quality of the message, Nicks feels, devalues what you’re trying to do, noting that word of mouth has to be truly genuine to have real impact.

While the vast majority of WOM network companies employ clear rules of conduct, it would be difficult to ignore the enormous potential for abuse here, particularly where measurement is concerned. First, the quality of the context for these types of in-person contacts cannot be monitored, so a small spike in sales can be easily be misconstrued as a success. We wouldn’t even know if the agents were just buying more of the product themselves. Even more importantly, such a program could give word-of-mouth a bad reputation, quickly equating it to spam, exposing the category to potential regulation and legislation and effectively killing it before it even has a chance to mature.

The WOMMA Framework

The Word of Mouth Marketing Association came together in 2005 to create a framework around word-of-mouth marketing, including defining it, and developing standards, metrics, and measurement tools. They concluded that a WOM “episode” involves four components:

• Participants: Creators, senders, and receivers who can be measured on their propensity, demographics, credibility, and reach;
• WOMUnit: A single unit of (media-agnostic) marketing-relevant information;
• Action: What participants do to create, pass along, or respond to a WOMUnit; actions can be measured on velocity, distribution/spread, and source diversity; and
• Venue: The medium or physical location where the communication takes place; venues can be measured on total potential population vs. actual audience received.

A single “episode” achieves one in five outcomes, each of which serves as a trackable event:

• Consumption: The receiver absorbs the information but takes no action;
• Inquiry: The receiver seeks additional information;
• Conversion: The receiver completes a desired action;
• Relay: The receiver redistributes the WOMUnit to another person; or
• Recreation: The receiver creates a new WOMUnit.

WOMUnits can also be broken down into more distinct measurable parts, including:

• Topicality: The degree to which the marketing message is contained in the WOMUnit;
• Timeliness: Whether the WOMUnit arrives in time to be relevant to a specific campaign;
• Polarity: The positive vs. negative content of the WOMUnit;
• Clarity: Determines if a message is understood by the receiver in the way it was intended by the sender; and
• Depth: The amount of visual, written, or verbal information included in a WOMUnit presumed to increase message persuasiveness.

Tying WOM to Experience

For organic word-of-mouth, both Wampler and Nicks use Fred Reichheld’s Net Promoter Score®1 (NPS) as their main measurement tool. The score is based on the concept that all customers can be divided into three categories: promoters (your best customers), passives (satisfied but unenthusiastic), and detractors (unsatisfied customers at the highest risk of defection and producing negative WOM).

To build the score, companies must first ask their customers the “ultimate” question: “How likely is it that you would recommend our company to a friend or colleague?” Answers range from 0 (least likely) to 10 (most likely). Nines and 10s are promoters — your best referral sources.

Your Net Promoter Score would then be determined by subtracting the percentage of detractors from the percentage of promoters (%P – %D = NPS). The resulting number should serve as your starting benchmark as you try to turn more customers into promoters. WOM programs are measured on their ability to impact the NPS.

But even the Net Promoter Score requires a lot of effort and back-end work, says Gary Spangler, e-business leader for the electronic & communication technologies platform at DuPont. Wampler cautions that often, when people evaluate their NPS, they are simply handed a number and don’t do anything with it. To really get value from it, companies must look at the underlying drivers that would make someone more or less likely to offer a recommendation. Getting a handle on those drivers, she says, will, in turn, drive the decisions used to affect change within an organization.

The flaw, says Nicks, is that the score only tracks what people are saying they would say about you, not what they’re actually saying about you. A better measure to have in a marketing dashboard, he feels, would be the percentage of deals that word of mouth is being leveraged on and how those deals compare with non-WOM deals — a true tie-back to sales.

Alternate Approaches

An alternate metric suggested by The Phelon Group is “return on reference,” which measures the impact of satisfied customers on recruiting new customers and on shaping the impressions of influentials. Phelon often measures, for instance, whether a customer-reference program is able to shorten the sales cycle.

While we agree it may be a good idea to measure the correlation between WOM and the sales cycle time, we don’t recommend using vague phrases such as “return on reference,” as they tend to undermine the credibility of the effort in the eyes of the CFO for whom “return on …” is a sacred pretext to “investment,” “capital,” or “sales.”

DuPont, in the early stages of WOM adoption, intends to look at measures such as campaign scale (how far it reached); speed (how fast it spread); share of voice in that space; whether it achieved positive lift in sentiment; whether the message was understood; whether the messages was relevant; whether the message had sustainability (something you can add to or a one-shot); and how far it moved from its source. Spangler is also trying to define financial metrics, such as whether WOM will increase sales, revenue, inquiries, and lead conversions, but admits it’s tough to articulate a tried-and-true method for getting there.

Nicks feels that the ROI of WOM may be easier to track in the B2B space because, while it’s hard to single out its impact by specific account, it is possible to measure overall lift for campaigns with WOM against campaigns without WOM, something he calls a lift “in combination.” That’s a hard notion for executives to accept though, he says, because everyone wants to know the exact revenue impact.

The Paradox of Measuring Financial Return on WOM

Even if you could isolate the specific revenue (or profit) created by WOM, the measurement effort itself could eat up all your profits. Consequently, many advocate either the stroke-counting approaches mentioned above, or other “strategic” frameworks.

Dr. Walter Carl, assistant professor at the Department of Communication Studies of Northeastern University, measures the “credibility” of word of mouth in six ways¹:

• Credibility effect: Whether the information provided by the participant’s conversational partner made information heard from another source (such as the media) more or less believable;
• Thinking change: Whether the episode resulted in a change of thinking or ideas about the product or service and the action a person plans to take;
• Inquiries: The likelihood that a person will seek additional information after a WOM episode, such as visiting a Web site;
• Purchase likelihood and behavior: The likelihood of the participant to purchase or use the product or service;
• Pass-along likelihood and behavior: The extent to which the participant will tell other people about the product or service; and
• Relationship consequences: Whether the WOM episode has an effect on the participant’s relationships when they engage with their friends and family, etc.

Measurement solutions provider CRM Metrix recommends companies measure “the perceived newness and differentiation of their messages” and message “talkability,” while Brandimensions suggests companies focus on “buzz,” which is a proxy for awareness, and “sentiment,” which Wampler uses. On a 1-5 scale, sentiment reflects the degree to which consumers are feeling negatively (1) or positively (5) toward the brand and its attributes.

Others use automated media analysis solutions from organizations such as Biz360 and Delahaye to measure the number and nature of media references picking up the WOM message.

A Prescription for WOM Measurement Progress

Most vendors and consultants working in WOM circles today profess to tie word of mouth to sales or some other form of financial payback. However, too often, these efforts fall back on traditional tracking methods such as web metrics, pre and post surveys, and publicity monitoring. These types of measures are a good start, but they don’t go far enough. Too many companies are settling for what they can get, rather than trying to develop processes that directly correlate to increased sales.

It seems to us that the right process for measuring WOM would include the following steps:

1. Define objectives. Clearly and succinctly state the intended outcome of the campaign expenditure in economic or behavioral terms. If your primary goal is to influence awareness or attitudes, attempt to forecast how that will translate into an increase in profitable customer behavior patterns. If the objective is to shorten the sales cycle, develop hypotheses about how much shortening you can do and what the economic value of a shorter sales cycle would be. If you’re intending to influence the net promoter score, be clear on your expectations for the financial outcome associated with a 1%, 5%, or 20% improvement.
2. Test message strategy effectiveness on behavioral intentions. There are many choice/options techniques available today that can tease out the potential impact of subtle changes in message execution. Much of this can be done quickly and inexpensively via online research panels.
3. Construct experimental designs to validate the relationships between intended behavior change and actual behavior change. Develop test/control constructs to determine the true predictive value of the awareness or attitude change. Try to control WOM message exposure either geographically or, if that’s not possible, on the basis of targeted delivery channels, demographic sub-segments, or simply time (pre-launch vs. post-launch). Methods of controlling for extraneous environmental factors are readily available from your local statistician or academic.
4. Conduct post-campaign interviews with current and new customers, and those who still resist your value proposition to find out what did/did not influence their decisions to act/not act as you desired.
5. Review your proposed measurement methodology with key constituents of the outcome in advance. If the campaign results are positive, who is most likely to challenge your eventual findings? Ensure that finance, sales, and operations are able to air their concerns about the validity of the approach before you launch and ask if they have any better ideas.
6. Keep the proper perspective in mind. Effectiveness and efficiency are only relevant in the context of your expectations. State them clearly and in as close-to-financial terms as you can. Did you achieve the specific result you expected? Did the result come at a favorable cost? If the answers are both yes, you likely have a successful WOM campaign on your hands.

Word of Mouth in Action:
What are marketing agencies tracking and measuring?

We asked a few leading marketing agencies to tell us what they track in word-of-mouth marketing campaigns. They told us:

• Exposure and interaction with the content, by those receiving content directly and by those receiving content from another individual in their network;
• Influentials;
• Pass-along rate;
• End-actions, such as Web site visits, registration, and acquisition
• Most passionate brand advocates;
• A participant’s role in brand information propagation;
• Tools used to communicate;
• Consumer conversations;
• Referral names and addresses; and
• How incoming buyers heard about us.

Blog, social networking, and other buzz metrics include:

• Volume of discussion;
• Share-of-voice compared with competitive products;
• Message type, i.e., positive, negative, neutral;
• Message segmentation — how do consumer-generated messages compare to desired positioning;
• Recommendations — either positive or negative;
• Blog site hits.

Sources: MRM Worldwide, Starcom Mediavest Group, and Wunderman.

Protecting the Future

Measuring word of mouth is certainly a work in progress and companies have gone to great lengths to drill down below the surface and understand its value drivers. Now it’s time to link those drivers to results. Key WOM metrics that can move the needle on brand equity, customer franchise value enhancement, or short-term cash flow should be elevated to the dashboard level and monitored frequently. The potential impact of WOM is enormous if we can keep it from being discredited before it gets a chance to mature as a valuable marketing tool.

Net Promoter is a registered trademark of Satmetrix Systems Inc., Bain & Company, and Fred Reichheld.

¹ Source: Measuring Word of Mouth, WOMMA, Summer 2005.

For a word-of-mouth metrics glossary, click here.

How to Avoid Going Soft

Lesson #391: Sometimes, without a good fight to keep us sharp, without barbarian at the gates, without a serious threat to keep us awake at night, we just... go soft.

Good lesson, horrid photo from Olivier at The Brand Builder 

The Art of the Graph

I love this blog. Funny, poetic and I admit I steal ideas to illustrate points regularly. 

Play it again!

Boom!

From the consistently brilliant Presentation Zen comes a nifty idea. Now I am not a linguist either but I think this is right on the money.

Onomatopoeia is not a word you use everyday, yet hardly a day goes by that we don't use several onomatopoeic words and phrases in daily conversation. Onomatopoeia refers to words that imitate the sound they represent such as "kerplunk" or "boing" in English or "doki doki" in Japanese. We might not hear onomatopoeic words used in formal written speeches so often, but we certainly hear them used in everyday conversation. I am not a linguist (so please chime in if you are one; love to hear from you) but perhaps this is one reason why informal "naked presentations" or good impromptu or extemporaneous speeches are often more interesting or engaging than speeches which are merely read word for word from a script. In the U.S., celebrity chef Emeril Lagasse is famous for punctuating his presentations — in his case entertaining cooking demos — with the onomatopoeic phrase "Bam!". Emeril's use of "Bam!" is well documented and has become a signature of sorts for him. I do not have a video of him actually using "Bam!" but this promo video for his show gives you an idea of his presentation style on the show. Of course, this guy was know for this onomatopoeic phrase long before Emeril.

I knew of Emeril's "Bam!" but was unaware of Steve Jobs' "Boom!" I had never noticed that Jobs peppered his speech with "Boom!" in his demos, though I certainly have noted here many times that his tone is almost always informal and conversational. Jobs is using the onomatopoeic word, probably unconsciously, to emphasize the quickness of a process or the ease of a task: "Step one, step two, and Boom! — There it is!" At other times Jobs seems to use "Boom!" as a kind of "voilà!" or "presto!" or "ta-da!"

There is really nothing educational about this post of mine today. I just thought you would enjoy watching Steve Jobs say "Boom!" in myriad ways. So there you have it — boom!

Link
Onomatopoetic English-Japanese Dictionary

 

How to get a Free Meal with Ducasse

 

I couldn't help myself. This is communication at it's best... 

Chutzpah, Truffles & Alain Ducasse

It occurs to me at the end of this post that I didn't, in fact, tell you what a white truffle tastes like. How to describe it? It's really the smell that gets you--the smell is pungent and earthy and unlike anything else you've ever smelled. See, wasn't that helpful?

I also want to mention here at the end how incredibly generous and kind and surprisingly unpretentious everyone was who interacted with us. Perhaps they appreciated our enthusiasm for the food as opposed to those who dine there to show off their wealth. They're closing up at this location soon and moving to the St. Regis in the spring. Maybe this is their chance to rise above their reputation for being fussy and over-the-top. Judging from our meal, Alain Ducasse is ready to be born anew.

Free Trade Works

This is a snippet from the ever quoteable Tom Peters. I address it to all the scaredy nay sayers who are incapable of seeing the future or too constrained to project into it with the type of gusto needed to become truly remarkable. Not wanting to bring this blog down into politics but read attentively the first one...

* Free markets work! Free trade works! Rise of India-China = Good thing. Fight back with Excellent Performance: Add "insane" amounts of value! Become a "Lovemark"!!
* Brand You. Self-reliance!! Mastery!! Liberation!!
* Survival = PSF/Professional Service Firm "mindset." Goal #1: Enable clients to become successful beyond their dreams!
* Fun! ("Cool" is Cool.)
* Service-obsessed!/Experience-obsessed! (Object: "Raving fans.")
* Passion-Exuberance-Enthusiasm. "Hot" Language! WOW! Insanely great!
* The "right thing" is the profitable thing.

 

Be Prepared

Great presenters are not born — they are prepared. Here are some tips on how to give a great presentation from the masters.

Good legwork from the pros over at KnowHR.  If you click into all of these sites you are already in the top ten percent of presenters. If you follow the advice you will be in the top two. Good luck.

A Few More Presentation How-To’s. Kathy Sierra from Passionate talks about what could “turn a ‘regular’ person into an excellent presenter.”

How to Get a Standing Ovation. Guy Kawasaki gives 11 points on how to give great speeches. Number 1: Have something interesting to say.

The 10/20/30 Rule of PowerPoint. Another Guy Kawasaki classic. He says, “It’s quite simple: a PowerPoint presentation should have ten slides, last no more than twenty minutes, and contain no font smaller than thirty points.”

PowerPoint is Evil. Edward Tufte says, “PowerPoint Corrupts. PowerPoint Corrupts Absolutely” in this Wired article. Read what the author of The Visual Display of Quantitative Information has to say about PPT.

The Best Presentation. Seth Godin says the best presentation may just be no presentation at all. He says, “So, here’s what I’d like you to consider: Skip straight to the part that people seem to like the best, and that you’re the best at: the Q&A.”

My Best Presentation Tricks. Chris Brogan talks about how you need to bring out “your inner David Lee Roth” and be both a storyteller and entertainer in this Lifehack.org article.

Now That We Have Your Complete Attention. This article is subtitled “Here’s Fast Company’s eight-point program for presentations guaranteed to keep your listeners on the edge of their seats.” Perform, don’t present is one of my favorites.

How To Give Great Oscar Speeches. Ah, such agony, sitting there waiting for the great Academy Award speech, only to hear an actor prattle on about his agent. Ugh. Great advice: Be honest, be authentic, and be concise.

If You Don’t Fall Over, Then You Weren’t Going Hard Enough. Here’s a one minute interview of management uber-guru Tom Peters. Pump up the noise, and give it your all.