Advertising, Behavioural Economics, Marketing Strategy

Seek familiarity, not fame

Everyone who comes in through our door wants a “viral” these days.

I explain as patiently as I can that “full-service” doesn’t include that sort of thing anymore and we’ve all had our jabs in any case.

They then look a bit confused until I put them out of their misery.

“Oh!” I say, “you mean a punchy little film created for next-to-no-money that suddenly hits the webby-big-time and gets shared by countless millions of chortling geeks, all for free?”

“That’s it!” they say, brightening visibly.

I guess it’s just a function of our preoccupation with celebrity and the parallel attraction of something for nothing.

But there’s usually a problem.

Scan the list of most shared videos online and count how many have commercial/branded origins?

Now take that list and count how many have succeeded in a way that is consistent with their brand idea and character and doesn’t contain a moonwalking Shetland pony.

(Although that was quite a good one.)

There are some, but we’re entering Lotto-style percentage territory.

What you can’t check is the same picture looked at the other way round.

How many truly appalling, cringe-worthy attempts have been made to leap this particular existential chasm, and how many mangled examples of ill-conceived, out of character nonsense now languish at the bottom of the trench, their abject failure indelibly tattooed on them for all to see: “143 views”.

More extraordinary still are those organisations that seem to think that they can swap their successful strategy of carefully deploying professionally crafted integrated marketing communications assets for an approach where you essentially stick everything on red and hope you hit the jackpot.

My point goes further, though, than showing how slim your chances of digital glory are.

Because even when it works, it doesn’t do you as much good as you might imagine. Successful brand marketing is about achieving everyday familiarity not about getting famous.

If the difference between these two things seems mostly semantic to you, consider the following:

Branded products are trusted over non-branded products. This is a fact. Branded products are more considered by potential customers than non-branded products. They also command higher price points and (usually) margins too. These things are also facts.

But why is this?

Marketing people, who seek constantly to impose rational order on the behavioural chaos that surrounds them, will usually argue that it’s because they have come to stand for something on which the customer can rely.

This is true. But it’s not as true as they imagine.

Research we conducted into a very undifferentiated, apparently price-driven market threw up some rather astonishing results.

Before I explain these results I need to emphasise a crucial difference between two commonly used marketing research measures: spontaneous brand awareness and prompted brand awareness.

Spontaneous brand awareness is measured by asking a question like:

“You’re thirsty and fancy a (non-alcoholic) drink. Which brands come to mind most easily?”

Prompted brand awareness is measured by asking a question like:

“Have you heard of Coca-cola?”

(Sorry if you already know this.)

We discovered that brand consideration was almost perfectly correlated with spontaneous brand awareness.

The correlation between brand trust and spontaneous brand awareness was also extremely high, in excess of 0.8.

Familiarity

We were a bit shocked. But we shouldn’t have been.

Actually the recent research into behavioural science confirms the power of familiarity. It seems our brains are hard wired to prefer the things they recognise and to fear unfamiliar things, people and concepts.

If you want a really shocking demonstration of how these effects influence all our judgements and prejudices, visit yourmorals.org and take a few of their online tests.

When you get into the science itself, it’s all part of the way in which our brain conserves energy, using data from previous experiences rather than recalculating anew each time.

We make choices that have worked for us in the past. When we have no experience, we search for instances of other people (as like us as possible) having positive experiences and we use that as a proxy.

“500 million Elvis fans can’t be wrong”, we say to ourselves and the job is done.

Another effect (called the “availability heuristic” in Behavioural Economic Science) means that we also tend to overestimate the prevalence of things we are familiar with and/or have experienced recently.

“Is this phenomenon widespread?” we ask ourselves. Off scurries the brain, searching for examples. If it can find two or three examples easily, it concludes the phenomenon is indeed widespread. If no examples come to mind, it concludes the opposite.

Here’s the next thing.

There is practically no correlation between prompted brand awareness and either brand consideration or brand trust.

So being famous (‘have you heard of) doesn’t get you trusted or considered. But being familiar (‘which brands can you think of now’) does.

I’ve used data from an undifferentiated market (where products are considered quite similar to each other) because that’s where this effect is most marked.

The more differentiated your product is within your particular category, the less important everyday familiarity will be, relative to other brand dimensions. But don’t underestimate its power, even in these instances.

Until you are talking about real fashion brands and high-end luxury purchases, familiarity remains the single strongest driver of both consideration and trust.

Despite this, an amazing number of marketing people insist on using prompted brand awareness as their key measure of success even though they can link it to no commercial effect.

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Behavioural Economics, Marketing Strategy

Only a producer society can give consumers what they want

Boy, I’m falling out of love with ‘customer-centricity’.

I embraced it, like everyone else, not just because the idea of customers getting decent service and value in exchange for their hard-earned cash just seems like common sense, but also because the single-minded pursuit of shareholder value had been such an obvious and abject failure.

The concept famously advanced by Milton Friedman – now widely known as “the world’s dumbest idea” – had spectacularly failed to drive improved outcomes, either for customers or – ironically – for shareholders.

But now I worry we’re getting ourselves into an even bigger pickle.

And I’m beginning to think marketing people are to blame.

Part of this is down to what Deloitte have called the ‘Big Shift’ – an apparent conundrum in which return on capital invested has fallen relentlessly since the 1970s even though productivity has more than doubled over the same period.

bigshift2

Deloitte’s theory is that customers have got the jump on corporations.

They’re technology enabled and so they can compare all the offers on the table in real time.

More often than not they know more about the product or service that they’re considering than the distribution channel selling it, because of the research they’ve already done (new business-to-business research suggests that 70% of the purchasing decision has been taken before the customer even touches the company making or selling the product or service).

Finally, their expectations of product delivery and levels of service have been rising exponentially as people compare their experiences – and certainly faster than companies are able to innovate or improve.

Companies are increasingly reliant on creative (expensive) employees to drive the improvements in customer experience that they believe are key to maintaining market share – which puts even more pressure on margins.

“Well, that’s a pisser for the corporations,” I hear you cry, “but at least the customer must be getting more of what they want and at less cost to boot”.

But if the customer is indeed king – it’s a very constitutional monarchy.

Because actually there’s almost no evidence that customers are more satisfied with what they’re getting.

And there’s plenty of evidence that exactly the opposite is true.

I blame professional marketing people. I blame the research companies they use. And I blame their bosses and the people who hold their purse strings for lacking the conviction of their predecessors.

Most of all, I blame the quarterly reporting public ownership culture, and super-computer driven trading optimisation algorithms that set more store by short terms results than long-term vision.

Here’s what’s happening in this increasingly vicious circle (IMHO):

Margins are under pressure, ergo business models are examined.

Patterns of increased customer dissatisfaction and purchase promiscuity are discovered.

Customer research is conducted using quantitative (quite dangerous) and qualitative (very dangerous) surveys.

Please note: all the competitors are going through the same process, using the same process and the same methodologies. They’re also asking the same customers.

They’re also (of course) getting the same answers.

So they do the same things:

  • Process improvements (which costs money)
  • Staff recruitment and training (which costs money)
  • Product and proposition innovation (which costs money)

Soon the customer has got what he or she said they wanted. And they have plenty of people to buy it from – because they’re all the same.

So margins remain under pressure and business models are re-examined.

More patterns of increased customer dissatisfaction and purchase promiscuity are discovered.

More customer research is conducted.

And so on.

Why does the customer remain dissatisfied, when his or her needs are being so slavishly satisfied?

The first part of the answer is that customers don’t know what they want. And so there’s no point asking them.

Henry Ford is supposed to have said, “If I had asked people what they wanted, they would have said faster horses.”

Later on David Ogilvy put it even better, from a marketing perspective:

“Consumers don’t think how they feel. They don’t say what they think and they don’t do what they say.”

But actually the answer goes deeper.

Psychological and social research reveals that satisfaction depends as much on the have-nots as it does on the haves.

Humans turn out to be significantly more loss-averse than they are acquisitive. And these tendencies ossify as age increases.

Other studies show that miserable people remain miserable when their circumstances improve and happy people are stoic when their luck fails.

It’s all about relativity.

A broken nail can ruin a whole day in downtown LA, whilst many an African woman can consider herself very fortunate indeed if only half her offspring die before their fifth birthday.

Equality seems to be such hell for humans that even the most idealistic communist and egalitarian societies quickly introduce their own hierarchical conventions.

How to escape? Grow some balls.

Businessmen and women need to grow some balls. They need to stop asking people what they want and just do what they feel is right to the best of their ability.

They need to remember that the secret of success in business, just as in art and negotiation, is to charge a great deal for something that costs you very little (most businesses at the moment appear to be increasingly predicated on the precisely opposite notion).

Investors need to grow some balls and invest in the ideas that show genuine vision for the future – recognising that some (most?) will fail, but the ones that succeed will enjoy spectacular growth and high margins, whilst they last.

Most of all Marketers need to grow some balls and to stop doing everything by rote. They need to recognise – or rather remember – that needs and desires can be created far easier than they can be satisfied. And that weakness can be spun into strength simply by a change of emphasis, of environment – sometimes just through the passage of time.

By Malcolm Gladwell’s reckoning David was never the underdog. We should sympathise instead with poor old Goliath, whose size, strength and heavy armour equipped him to deal only with enemies of a similar stature, fighting in a similar way.

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