Friday 26 June 2009

If knowledge is power is personal knowledge empowering?

Today I was told by someone that they hadn’t seen me for over 23 days, that I had lost 4lbs but was still overweight. In fact, after interacting for only a few minutes I was also told that my sense of balance seemed to have improved.

imageThis certain someone wasn’t a tactless friend with a strange ability to visually gauge weightloss and posture but instead was my Wii Fit which keeps track of both my weight, BMI and exercise plan – when I use it.

The Wii fit is just one product that keeps track of your health and fitness – there are a multitude of other services online whether it’s fitness specific like Traineo or weight specific sites like Weight Watchers which allow you to set goals, plan meals and track your progress over time.

This isn’t just fitness though - there is an emerging trend toward what is termed “self-tracking” – whereby people utilise various tools to track key activities – from what they listen to, what they eat, where they travel, what they read, what they spend or how much energy they use.

Nike+ is probably one of the most well known self tracking solutions.

Like many manufacturers, Nike would typically be removed from the consumer, with retailers owning the consumer interaction and any ongoing relationship. With Nike+ however, they have essentially created a connection with some of their best customers as well as an ongoing interaction.

nikeA recent article in Wired about Nike+ provided some interesting insights into self-tracking and the scale of it saying:-

By combining a dead-simple way to amass data with tools to use and share it, Nike has attracted the largest community of runners ever assembled—more than 1.2 million runners who have collectively tracked more than 130 million miles and burned more than 13 billion calories.

Now that’s loyalty and as strong a brand as Nike is, that’s a level of ongoing interaction they would have struggled to have garnered in more ordinary ways.

So providing consumers with access to information – their information – may actually help to build loyalty.

For many loyalty programmes it is typical for early behaviours to be indicative of future behaviours and engagement. For example, within credit cards, balances at 90 days tend to be indicative of balances at 14 months, so the challenge is to get people engaged with the right behaviours early on.

Apparently Nike found a similar pattern within it’s Nike+ service. For them the magic number was 5, whereby once a user had uploaded 5 runs they were then much more likely to continue using the service - making runs and uploading and sharing their data. As Wired puts it -

At five runs, they've gotten hooked on what their data tells them about themselves.

The thing which really interests me about this though is not just the “stickiness” which self tracking can bring – getting people hooked on the data - but it is the potential change (normally upwards) in behaviour as well.

Termed the Hawthorne Effect, the basic idea is that people who are observed change their behaviour. This is the idea behind the proposed roll-out of smart energy meters around the world – the hope being that as people see their energy usage and that of others, they will change their behaviour to bring it into line.

Rather than saying a watched kettle never boils, you could say a watched kettle may actually boil faster.

There are potentially a number of effects at work here though.

The first is the Observer or Hawthorne Effect as discussed, but there is also the Power of Communities – the principle being that peers influence behaviour and create an element of competition. Indeed, the Latin root for the verb “to compete” is "competere” which means “to seek together” or “to strive together”.

Whilst seeing your own statistics can be a powerful driving force, seeing others and having them see yours can be even more.

Whether it is positive encouragement, the fear of failure or just the simple desire to be the best, letting people see their data in the context of others can help to change behaviour.

The great thing is that these principles can be applied to many industries, not just health and fitness. All loyalty programmes gather information but typically this is kept locked away, being used at best to derive personalised one to one communications.

What Nike+ shows however is that if this information is presented back to consumers, it can actually make them more loyal and allow them to change behaviours. Essentially empowering them to take more control of a particular aspect of their lives and giving them visibility to compare, contrast and compete.

I think there is a great opportunity for loyalty programme owners to think anew how they can best use that most valuable of asset – the data – opening it up and making it work hard to better engage and retain consumers.

All that said though, my Wii Fit spends more time hidden behind the telly than being used in front of it – so I’m not hooked quite yet.

Sunday 21 June 2009

Second best sales promotion gives first rate results

I think it’s interesting how sales promotion is changing and the pace of change is quickening – yet some in the industry don’t get it.

In reviewing the latest Hula Hoops promotion, Ian Moore, Marketing Promotions and Incentives blogger and board member of the ISP gives his opinion on sales promotion generally stating:-

“The way I understand snack promotions is that if you can get the kids to raid the kitchen cupboard you've cracked it - that next pack might just be the one with the £20 note or the iPod inside - and, hey, what the heck? - you can always eat another pack to save it from going stale.  Next thing Mum's back at Tesco and sales are on the up.”hulahoop This is certainly an interesting take and I wouldn’t disagree with it in part.  The role of a good sales promotion is obviously to encourage that next purchase and hopefully to do this without actually giving that next purchase away in some form of buy one get one free.  It completely misses the point though that the role of a great sales promotion is to actually put some longevity into the process.

Whilst sales promotions are sometimes touted as a means of hitting this quarters numbers – just lifting sales today - I suspect there aren’t many brand managers that short term and most of them actually want to develop their brand - increasing and maintaining the penetration gains that sales promotions can bring.

So while Ian may think that a promotion is there to get the next pack consumed by stuffing it with a £20 note, in reality the sales promotion campaign should actually add value to the brand.  It should be as much about increasing sales and penetration tomorrow as it is about increasing them today.

Ian then goes on to say “But what if you can't afford a proper promotion like this?  Well, second best is to go for some sort of collector scheme, and accept the drawback that 90% of the population can't be bothered with garnering proofs of purchase.”

This comment really surprised me.  To think that some form of collector scheme is a poor relation to a instant win promotion is to completely misunderstand how these work and is shocking when you look at the success these generate.  Probably the best performing sales promotion of 2008 was Walkers Crisps and Brit Trips – a second best promotion apparently.

On continuing to review the Hula Hoops promotion, Ian then goes on to say “As far as I can tell, there's no POP requirement - other than you need a couple of Hula Hoops to make your movie - so on the face of it the brief had no sales objectives in its midst.  Leaving sales aside, then, all that really remains is awareness”.

Maybe, just maybe, what Hula Hoops is actually looking for is for people to spend time with the brand, spend time thinking about the brand, spend time speaking with others about the brand.  Maybe what they are looking for is advocacy.  I realise that this is slightly more long term than £20 stuffed in a bag of crisps, but the rewards can be much richer and will result in a sales uplift and more importantly a sales retention.

If Ian cared to have a look at the top performing FMCG brand website on Nielsen, it might come as a shock that this is CokeZone – a collector scheme – gathering more views and more dwell time than any other brand.  Some of the other top performers include Walkers – a collector scheme and Cadburys – online interaction through gaming.

It seems strange to me that members of the ISP, the organisation with a vested interest in promoting good sales promotion techniques don’t seem to get the changing landscape in sales promotion and are spending more time stopping people getting hold of money off coupons and “saving customers money” than recognising and encouraging brands which are pushing the boundaries.

garyThe latest Walkers scheme is a great promotion, but when viewed in context with their activity over the last couple of years, it’s clear to  see there is a longer term strategic plan here.  Combining different promotions together to acquire and then retain consumers, using engaging and interactive elements.

It exciting, it’s new and it works.

This isn’t second best – this is sales promotion at it’s best.

Wednesday 10 June 2009

A new beginning for automotive?

car_dealer I’ve spent the last few weeks looking around for a new car.

This is actually quite difficult for me as I’m one of those people who makes snap decisions and if I walk into a dealership I’ll walk out with a car. 

So knowing that, I’ve been researching cars online and it has been an eye-opening experience just how bad and how backward the automotive industry is.

The problem is that my expectations have been set by other industries.  If I was looking for training shoes I could completely personalise them from style to colour and have these custom manufactured and delivered to my home.  If I was buying music I could order the CD, download the track or listen to it on demand.  If I was buying a book I could order it online, preview it online or download it immediately to my e-reader

So why is it when I start looking for a car the experience is so different.  Here’s what I’m trying to do - I want to design the car I like, then price it, then work out ways to finance it and then I want to know if they have a used model with same spec.  I want to compare the car with a loan, with Personal Contract Plan, with difference deposits.  When I get stuck, I’d like to ask someone a question – no strings attached – and get an honest and accurate answer.

In short – when buying anything, I want to play with all the options, in real time, in my time and online.

The first hurdle though is just finding information on it.  Take Mazda for example - on their website I can request a brochure, find my dealer and arrange a test drive.  All very last century.  Oh, and I can see some glossy photographs (and download a wall paper) and a view videos.  What I can’t do is build my own car and have it priced. (So that's the RX-8 out!)

Then I want to understand how much it costs.  Now I could only find Audi willing to show me finance options online – everyone else wants me to speak to the finance team at the dealer.  Not even my bank expects me to have to go into a branch these days.  In fact I don’t have a bank branch, I don’t have a post office and I don’t want a dealer – I just want answers and I want them at 11pm on a Saturday night.

When I want to ask questions there are few options available as you basically have to go through dealers and that can be experience in itself. 

I sent emails to 4 different dealers asking for finance options on a number of different cars.  Honda was the only one to come back to me quickly and accurately.  Two different Audi dealers either failed to respond at all, or responded to only part of my query and incorrectly (so no TT!). 

In one email where I had explicitly said that I didn’t want to chat on the phone and to only communicate via email, I was surprised when within seconds my phone rang with a salesman on the line.  Top marks for being on the ball - but they completely failed to deal with me on the channel I wanted.  If I’d wanted to speak on the phone, I’d have picked up the phone.

So is it me – am I expecting too much?  Well it seems not as recently had an article discussing this exact issue.  They put it succinctly when they said

“in the age of Amazon, it seems almost quaint that there’s no way for you to choose your options for a new car on a manufacturer’s site and push a “buy” button”

Some of the issues are the way that the automotive sales channel is structured.  Car manufactures in many cases cannot sell direct to consumers and individual dealers don’t have resources to create the online experience required. 

However, another issue is how the sales staff are remunerated.  As many of them are bonused, anything which might take away sales - such as online purchases  - or might not result in immediate sales - such as an email question - doesn’t get priority.

In fact when the salesman who rang me found out that I didn’t want to setup an appointment that weekend, he basically just put the phone down – so there’s another one off my list.

This culture wasn’t just limited to automotive, but other industries have seen the writing on the wall and are changing.

Both Carphone Warehouse and Comet have recently announced changes to how sales staff are compensated so that there is less focus on the sale and more focus on the customer.  When trialled by Carphone Warehouse, contrary to expectation, staff retention actually went up and the trial has been deemed a success. 

Staff are now rewarded not on sales but on net promoter score post sale – essentially on how the customer found the whole process and whether they would recommend them to someone else. 

It is reported that promoters are nearly 10 times more likely than detractors to repurchase or lease a vehicle of the same make or brand as their current one.

Given the recent reports on customer expectations for service overall and their willingness to drop any brand not meeting them and the strong link between customer experience and loyalty, this is not an area any industry can afford to underperform in – especially one in such dire straits as automotive.

On the upside, it is expected that as automotive companies emerge from this crisis, especially in the US there could be be changes to the buying processing.  Craig Cather, CEO of forecasting firm CSM Worldwide says "A lot of new business models could emerge,  we could see some crazy things in the next few years."

In the article in Wired, they put forth their vision for an automotive customer experience saying:-

“What would a car industry without dealerships look like? In our dreams, they’d be a lean network of showrooms offering hands-on experience with a range of vehicles from a variety of manufacturers and help from salaried employees who won’t lose a commission if you walk.”

That sounds like a vision I’d like and if they could just integrate the offline with the online I may actually enjoy looking for a new car. 

Until then I will continue to be underwhelmed by the search, uncomfortable with the negotiation and ultimately feel like I’ve been ripped off when I actually own it – but I’m happy to be proved wrong.

Thursday 4 June 2009

The Game of Life


Guess a number between 1 and 100…

5? 37? 56? 82?

I’ve no idea what you’ll have selected but I can guess it will be pretty random so lets change the rules a little.

What if I ask everyone reading this blog to guess a number between 1 and 100, but the person who’s guess is closest to two-thirds of the average value selected by everyone else wins £100.

Now what number have you chosen…

Well to save you time, it can’t be over 66 (2/3 of 100 = 66.6)- but then if everyone works that out we have a problem as no one will guess more than 66. So do you assume that everyone gets it and go for two-thirds of 66, which is 44? But then you might not be the only one thinking this way…

Interestingly it seems that for most normal people the average value comes out around 22 and indeed in one test run by Danish newspaper Politiken, over 19,000 people took part and the winning value was 21.6 with the prize of 5000 Kroner.

What’s interesting about this is that with a reasonable incentive ($1000) people actually thought about how to achieve this reward by working out what other people would be thinking.

They essentially came up with a strategy to win and changed their behaviour to follow it.

This is known as the “Two-Thirds Game” and is just one example of Gaming Theory (and there are lots of other games too).

It shows that with an element of competition and an incentive you can begin to direct behaviour. Games like Dollar Auction also show how people will actually take a course of action which seems irrational just to not lose the game (or the most money).

This isn’t just about games or mathematics - this approach can actually be used in the real world to change peoples behaviour

A great example of this was in an article on which discussed how using gaming elements could change or encourage behaviour. In one example a developer launched a social networking application called “foursquare” which allowed people to track places they visited and publish these to friends. The application awarded points for visiting the same place multiple times in a day and badges for roaming far from home, with a leader board to provide an element competition. The result - he says “We created a monster here”, people were racking up points and checking in dozens of times a day.

And its not just for entertainment. The classic loyalty example of the frequent flyer programme which had people making return flights for no other reason than to achieve the required points to reach a tier upgrade shows the lengths people will go to to reach a goal and gain a reward.

We’ve been doing this for years one way or another within channel and employee programmes, using league tables and comparisons to create competition between participants.

A more tangible and better design example however is that used by LTSB for an internal employee ideas programme. As I’ve discussed previously, this programme known as the Innovation Market creates a game out of ideas, using a currency and a stock market type environment. As James Gardner, Head of Innovation and Research at LTSB says “we coupled ideation and innovation together in a way that's fun. It was an interesting revelation to us”.

An example of a loyalty programme using gaming is that run by Ladbrokes, a offline/online betting company in the UK with its OddsOn! programme. Within this scheme customers earn points for every £1 of money staked but can then redeem these points for bonus vouchers which can increase the winnings of any bet by 5%-20%oddson. In essence these vouchers are acting as wild cards, letting punters change the odds in their favour. How and when they use this voucher will differ by customer, but it changes the rules and allows the loyalty programme to actually become part of the game.

At a recent O'Reilly Emerging Technology Conference, Jane McGonigal, a well known game designer and researcher said

"Games create drama and excitement - we've done that for years with videogames, and now we can apply that thinking to the rest of life."

I have to say I agree with Jane and think that applying the gaming approach specifically to loyalty programme design could have dramatic effects on engagement and activity.

There is no denying that at a basic level, the loyalty programme itself could be viewed as a game, with rewards for certain activities and features such as tiering to encourage customers to “play the game”. Indeed, some programmes include features such as progress charts – showing a participants distance from the next reward.

Whilst these features can all be somewhat motivating to the individual, it’s not going to unlock the competitive streak you’d see if your friend was getting there quicker.

Indeed, as social media expands into more mainstream loyalty programmes, this opens up the possibility and acceptability of peer-to-peer comparison and the naturally competitive nature this will engender if the right types of gaming elements can be created.

I think using gaming to motivate and change customer behaviour is an interesting concept and applying it within the context of a loyalty programme could be, quite literally - game changing.